02-10-2004 02:42PM FROM-RatnerPrestia T-862 P.001/011F-032

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DATE: &10/04 OUR REF.: Admin
TIME: YOUR REF.:
T0: Attn: Harry I. Moatz (OED Ethics Rules)
COMPANY: U.S. Patent and Trademark Office
FROM: Paul F. Presti a
FAX TELEPHONE: 703 306 4134
OFFICE TELEPHONE: 703 305 9145
77TLE OF-DOCUMENT.- Ethics Rules Comments

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February 10, 2004

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Mail Stop OED-ETHICS RULES
United States Patent and Trademark Office
P.O. Box 1450.
Alexandria, VA 22313-1450
Attention: Harry 1. Moatz

Dear Mr. Moatz:

RatnerPrestia submits the following comments to the Proposed Changes to Representation of Others Before the United States Patent and Trademark Office in accordance with the notice In the Federal Register, Volume 68, No. 239, dated Friday, December 12, 2003.
Preliminarily, we generally support the update of the Office's rules on professional conduct to harmonize them with the Model Rules of Professional Conduct adopted by most states. To the extent, the proposed rules depart from the model rules, and In some cases impose greater burdens, we do have reservations, as indicated in the comments and suggestions below.
Nor do we object to the imposition of continuing legal education requirements. We do object, as indicated in the comments and suggestions which follow, to a number of aspects of those requirements and implementation of those requirements, as presently proposed.
Our comments and suggestions, as to the specifically identified sections of the proposed rules, follow:

RULE 11.8 Oath. Registration Fee and Annual Fee

Rule 11.8 establishes an annual fee for practitioners. These fees are required at different times of the year depending on the first initial of the practitioner's last name. This creates an overly burdensome payment schedule. It would be more efficient, both from an administrative and a bookkeeping standpoint, to have one payment period for all practitioners, regardless of the first initial of the practitioner's last name. Even

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though the Office of Enrollment and Discipline (`OED') has replied that the purpose of the schedule is to alleviate an overload of work and paper that would be faced if one deadline were established, practitioners should not be inconvenienced by the OED's inability to handle the fees that the OED proposed to require. Moreover, the number of payment communications, likelihood of missed dates, reminders, late payments and corrections for paperslost in the PTO will go up astronomically if patent departments and firms must submit payments for different practitioners at different times in the year.

An additional comment on this proposed section relates to the statement "By adopting an annual fee to be paid by registered practitioners, the cost of these activities is not passed on to applicants." This completely ignores the fact that the burden of paying the fee, in reality, will be passed from the practitioner to their clients (i.e. applicants).

RULE 1.12 Mandatory Continuing Training for Licensed Practitioners

To the extent the Office has made any showing of a need for enhanced professional competency among Office practitioners, there has certainly been no showing that the burdens on practitioners contemplated in these requirements justify what limited reasons there may be for that enhanced competency. What follows are specific comments to Proposed Rule 11.12.
Rule 11.12(a)(3) asserts that, "Each practitioner shall be responsible for ascertaining whether the PTO Director has required completion of a mandatory continuing education program during a fiscal year, and complying with the requirement." If the purpose for updating the roster, as explained in the comments to Rule 11.8 is "maintaining the roster of registered practitioners up-to-date by (i) annually surveying the practitioners for current address/telephone/e-mail information, and (ii) daily updating the roster with new changes of address," then it would be feasible for the Office and/or the PTO Director to utilize this newly updated roster and notify practitioners if, In fact, there is a requirement for completing a mandatory continuing education program during a fiscal year. It would not be overly burdensome on the Office to notify practitioners individually. Moreover, it would certainly not be more burdensome than the burden facing thousands of practitioners to keep the roster updated.

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RULE 11.13 Eligible Mandatory Continuing Education Programs

Most objectionable, however, is the form of, the required CLE. Given the PTO's reputation for the quality and relevancy of questions from previous registration exams, there is serious concern as to the quality and relevancy of questions that will be asked on the proposed PTO CLE exams and as to the competency and fairness with which such tests will be administered. There is no provision for appealing questions or inquiring about a particular question's legitimacy. Testing should not be part of the CLE program.
As to other issues with this proposed Rule, it is noted that Rule 11.13(c) refers to paragraph (a)(2):"sponsor in accordance with paragraph (a)(2) of this section," when, in fact, there is no such section to be found in Rule 11.13. Similarly, Rule 11.13(d)(1) and 11.13(d)(2) refers to paragraph (b)(2): "program in accordance with paragraph (b)(2) of this section," but there is no such section to be found in Rule 11.13.
Because the OED intends to burden practitioners with CLE requirements, there should not be an additional procedural burden to attend an "approved" CL15 program which by definition precludes most of the traditional CLE providers. If It is the OED's intention that CLE requirements be comparable to the requirements of CLE in state bar associations, this proposed rule is not consistent with that objective. Rule 11.13(g)(4) provides, "Law firms, professional corporations, and corporate law departments are not eligible to become approved sponsors." There is no logical explanation for this requirement. Many corporations and law firms currently offer CLE programs to the public. Without these courses to fulfill the PTO CLE requirement, the number of providers would be reduced. The OED has presented no evidence that these programs are of a lesser quality than those offered by other organizations who may become providers. Indeed, the requirement that these programs be pre-approved would remove any question as to their quality. Because this exclusion appears to be entirely arbitrary, we submit that it should be withdrawn and that professional corporations and law firms should be allowed to become CLE providers, subject to reasonable advance approval of course subject matter and administrative procedures.
Also burdensome is the "double" approval which providers must undergo in accordance with proposed Rule 11.13(e)-(g). That is to say, each such program must be made by a "pre-approved sponsor" and then, the pre-approved sponsor must have its program approved. It seems that it might simplify the procedure if a pre-approved sponsor was able to provide courses without each individual course being pre-approved. In this fashion, the OED could monitor the pre-approved sponsors for compliance from

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time to time and revoke any approval of the sponsor if program requirements are not met. This would simplify the burden of "double" approval of programs.

RULE 11.22 Investigations

Rules 11.22(b) and (d) state that the Director may require that a report or complaint made by a non-practitioner against an attorney or agent is in the form of an affidavit. Thus, the rule states that, absent action by the Director, no oath or declaration is required in support of the complaint or report. Given the problems that a disgruntled inventor could cause to an attorney, we believe that there should be sanctions in the rule that would prevent a non-practitioner from submitting a false report or complaint. The requirement for an affidavit should not be left to the discretion of the Director. Also, the use of the word "complaint" in 11.2z(d) is confusing as it appears to have a different meaning than "complaint" used in 11.34.
Rule 11.ZZ(j) gives the OED Director excessive power. For example, the OED Director, in the course of an investigation, may request information from a non-complaining client and any other party who may be expected to have information about a practitioner. The OED Director may initiate such investigations before the filing of any formal complaint against the practitioner. The OED Director may also close an investigation without any warning. It may be better if this power, instead of being granted to the OED Director, is granted to a panel of the Committee on Discipline.
In any event, the OED Director's power should be limited to questioning the practitioner under investigation and the complaining party. Going beyond that will raise serious issues of client confidentiality, the maintenance of which is a fundamental requirement of the Model Rules and of every state bar known.
Another dramatic and draconian departure from common state ethics requirements is that which would permit the OED Director to request financial records and any trust accounts maintained by the practitioner. Compliance with such a request would likely involve disclosure of client confidential information in violation of other ethics rules, as indicated above.

R,UJLE 11.23 Commiittee on Discipline

Rule 11.23 concerns the qualifications for membership on the Committee on Discipline. The requirements are merely that the person be an attorney in some state and a PTO employee or an AP). Given that the hearings before the Committee will

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involve presentation of evidence, we believe that these qualifications are too lax. Committee members should also be required be an API or at least to have two or more years of litigation experience or to receive special training, perhaps administered by the Solicitor's office. The credibility and objectivity of the Committee would also be greatly enhanced if its membership included professionals experienced in practice before the office and not employed by the PTO.

RULE 11.34 -Complaint

Rule 11.34(b) reduces the requirement for publication in the Official Gazette from four (4) consecutive weeks to two (2) consecutive weeks. It would be fairer, and therefore advisable, to keep the period as four (4) weeks. There should also be a requirement that the OED check the practitioner's address based on a recent case handled by that practitioner,

RULE 11.35 Service of Complaint

Rule 11.35 concerns service of the Complaint that is issued by the Committee on Discipline. This rule provides for service 1) in person, 2) by mail and 3) by publication in the Official Gazette. The Official Gazette, however, is no longer published in paper. This may create a problem for older, less computer literate attorneys who have moved and have not notified the PTO of their new address. Given the ease with which address information may be obtained on the Internet, we believe that the PTO should try more diligently to contact the attorney or agent, perhaps by checking the address used in the last patent application filed by the practitioner, or by consulting one of the many on-line telephone directories.

RULE s1.49 Burden of Proof

Rule 11.49 requests comments on the standard to be used by the Hearing Officer in finding a violation of the Rules of Professional Conduct. The choices are 1) clear and convincing or 2) a preponderance of the evidence. In view of the draconian effects that a finding of an ethics violation would likely entail, we believe that a clear and convincing standard should be used.

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RULE 1.50 Evidence

Rule 11.50 forbids the use of depositions for discovery, allowing them only for testimony before the Hearing Officer and only when the deponent is unable to appear before the Hearing Officer. As this is a judicial proceeding with character assassination and disbarment among the possible results, we believe it would be beneficial to know how a witness will testify in order to mount a defense. Accordingly, we would advocate for allowing witnesses to be deposed.

RULE 1L5 -Suspended or Excluded Practitioner

Rule 11.58 governs how a suspended attorney or agent may work with a licensed attorney or agent on matters before the PTO. We would be In favor of retaining paragraphs (c) and (d) and adopting paragraphs (e) and (f) but additionally suggest that, in such circumstances, there should be a requirement of written notice to any client for whom the suspended or excluded attorney does work, by which the client is informed thereof.

RULE 11.101 Competence

Under this section, a submission on an outdated form could be a violation of the Rules of Professional Conduct. Even the PTO employees have difficulty staying current on the PTO forms. Language in the rule or the definitions should be clarified to eliminate the possibility that minor changes in procedure could be the basis for a rule violation.
Under the same section, a practitioner is prohibited from filing and/or prosecuting an application claiming a frivolous invention. The proposed rules explain that a "frivolous invention" is one where the claim of patentability should have been known by a reasonably prudent registered practitioner to be unwarranted. There would be no objection to a requirement that the signature of an attorney or agent on any document filed with the PTO carries with it an implied certification that, to the best of the attorney's/agent's information and belief, the document is filed in good faith and that the substance thereof has legal and factual support. Nothing more should be required. The inherent difficulty In determining when something is legally "frivolous" is self apparent.
Furthermore, the proposed rules may impede the development of the law. If the proposed rules are enacted, practitioners may find themselves in a quandary between following the PTO rules to zealously represent their client's interests in pursuing a

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patentable, albeit technically frivolous invention (because the PTO does not currently recognize it as patentable subject matter), and abiding by the professional conduct rules prohibiting frivolous inventions.
Additionally, concerning §§11.101, 11.301, and 11.304(d), these sections should not in any way impede a practitioner's discretion and freedom in making legitimate strategy decisions. Eliminating the word "frivolous" wherever it appears would be a first step in that direction.
Apart from all other questions, however, and transcending the mores specific comments above, one must also question how many applications have been received in the past which would be considered "frivolous," under the proposed rules. In other words, how much would this requirement reduce the PTO burden and has the proposed new rule been justified?

RULE 11,102 Scope of Representation

The comment is unclear in that it states that "legal representation should not be denied to people, including applicants, who are unable to afford legal services." The language of the rule does not state or imply that applicants unable to afford services should be represented, so there is no apparent support in the rule for the comment. The comments should reflect what implications the rule will have on current practice, such as the practice of filing a petition to withdraw based on a client's failure to pay legal fees, such petitions are commonly granted by the PTO. Depending on such comments, the Rule may be highly objectionable.

RULE 11.193 Diligence and Zeal

This rules requires that the practitioner "shall act with reasonable promptness." The comments specifically address two circumstances: 1) where the client's legal needs are affected in substance and 2) where "the client's interest are not affected in substance, [but] unreasonable delay can cause a client needless anxiety and undermine the confidence in the practitioner's trustworthiness. Neglect of client matters is a serious violation of the obligation of diligence." Now consider that the PTO Procedures allow for extensions of time for up to six (6) months. In addition, there are procedures to petition when an application becomes unintentionally abandoned. We submit that the comments indicate a violation of this section could occur (based on client subjective reactions) when a practitioner acts within the prescribed Rule of the PTO Procedures.

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Moreover, the rule Is entirely devoid of fairness to practitioners if it permits a finding of an ethical violation, based entirely on a client's subjective reaction. The section of the comments concerning circumstance 2) should be deleted in its entirety.

RULE 11.104 Communication

The rule establishes a requirement for practitioners to communicate directly with their client. The intent of the rule is to circumvent practitioners associating with invention promotion firms by requiring the practitioner to communicate with the applicant and not through the promotion firm. Realizing that such a rule would dramatically impact current practice by many firms dealing with clients referred through a foreign agent, an exception to the rule was provided in §11.104(a)(2) if the practitioner obtains written consent from the foreign client. Even with the written consent exception, this rule unnecessarily burdens practitioners and does nothing to serve the policy behind the rule change of preventing fraudulent invention promotion firm practices. The written consent exception should be modified to be an unqualified exception for clients referred and represented by a foreign agent. The foreign agent would serve to protect the client from fraudulent practitioners, and continue to offer legal advice in harmony with the foreign patent rights, as well as translation services.
The requirement for written consent imparts an additional complication for foreign applicants, making U.S. patent protection more costly to foreign applicants. Without some evidence of improper representation or communication with foreign applicants, It is unnecessary to require written consent to continue to communicate with foreign agents in lieu of clients directly.

RULE 11.117 Sale of Practice

The proposed rule states that the sailor of a practice Is prohibited from private practice In the same jurisdiction. This proposed rule discriminates against older practitioners by eliminating retirement options. On its face, this provision would prevent the owner of a law firm from selling his or her interest to a partner and continuing to work in the firm as an employee.

RULE 11.303 Candor Toward the Tribunal

The rule or comment should be clarified to eliminate any requirement to report claims of inequitable conduct made during litigation. In the course of litigation, an

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assertion by a party that a patent is invalid based on inequitable conduct is common practice. The practitioner involved in the prosecution of the litigated patent may not be involved at all in the litigation proceedings and the OED may be inappropriately notified if there is ultimately no finding of inequitable conduct.

RULE 11.504 Professional Independence -of a Practitioner

Currently, the rule prohibits partnering between patent attorneys and non-patent attorneys who have not registered with the PTO. Proposed Rule 11.504(c) states that "a practitioner shall not form a partnership with a nonpractitioner if any of the activities of the partnership consist of the practice of law before the Office." According to proposed Rule 11,1 "Practitioner" means . . . (2) an individual authorized under 5 U.S.C. 500(b) or otherwise as provided by §§11.14(b), (c), and (e) to practice before the Office in trademark matters. This definition in Rule 11.1 needs clarification. As currently written, it does not include individuals authorized by §11.14(a), (i.e. attorneys who have not applied for registration or recognition before the PTO) and, thus, would prevent a general practice law firm from having partners who are patent attorneys unless all of the general attorney partners apply for registration.
Because the comments to proposed Rule 11.504 do not address such a dramatic change in practice, it appears that there is a technical error in proposed Rules 11.504, 11.1, or 11.14 concerning the definition of "practitioner."

RULE-11.803 Reporting Professional Misconduct

The proposed rule states in paragraph (a) that a practitioner shall report misconduct of another practitioner. This rule should be crafted to exclude reporting conduct related to inequitable conduct claims in patent litigation. The assertion of invalidity based on inequitable conduct in patent litigation is merely an accusation, and a practitioner failing to report an accusation should not be required by the rules of professional conduct to report an accusation that may not be supported by court or jury. Also, this proposed rule creates a difficult tension for practitioners with proposed Rule §11.804(h)(10) which prohibits frivolous accusations of misconduct. It is unclear from the rules when an accusation is with "knowledge" and when it is "frivolous." These are loaded and generally undefined terms. Again the potential for character assassination and disbarment make this requirement onerous and objectionable.

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Sections 11.803(d)(1)-(2) require information concerning practitioners' criminal record be reported to the OED Director. While the purpose behind this rule is understandable, it should be amended to clarify how this information should be submitted and what precautions are to be taken by the OED to ensure confidentiality of non-public information, policies regarding dissemination of this sensitive information, and the length of time the records will be kept.

We hope the foregoing comments and suggestions are helpful. Please do not hesitate to contact the undersigned if any clarification or amplification Is required.
Very truly yours,
Paul F. Prestia

vw
Paul F. Prestia
PFP/7HS/dhm/b

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