By Andrew Williams --
The U.S. Patent and Trademark Office ("USPTO") published its final rule in the April 3, 2013 Federal Register (78 Fed. Reg. 20180) in preparation for adopting new USPTO Rules of Professional Conduct ("USPTO Rules"). As we reported previously when the proposed rules were announced (see "USPTO Proposes Update to Code of Professional Responsibility"), the new USPTO Rules seek to conform the ethical obligations for representing others before the USPTO to the ABA Model Rules of Professional Conduct, which have been adopted in some form by every state (except California) and the District of Columbia.
The adoption of the new USPTO Rules is significant for any patent practitioner that has a USPTO registration number. On the one hand, the updated USPTO Rules are welcome news for attorney practitioners, because currently such individuals are required to know and abide by the ethics rules of the state or jurisdiction in which they practice. Because the USPTO had been operating under the Patent and Trademark Office Code of Professional Conduct, which was based on the former ABA Model Code from 1980, patent attorneys were required to maintain adherence to two different sets of ethical obligations. On the other hand, non-lawyer patent practitioners (patent agents) will now be subject to the new USPTO Rules, even though they may not be aware of the differences and subtleties of the ABA Model Rules. It will be important for these individuals to become accustomed to the new USPTO Rules, especially where they differ from the previous Patent Office Code. In fact, Dennis Crouch, Associate Professor of Law at the University of Missouri School of Law and author at the Patently-O blog, submitted a comment expressing the concern that the Patent Office not unduly focus on the experience of attorneys at the expense of these non-lawyer patent practitioners. The USPTO Rules will go into effect on May 3, 2013.
Confidentiality of Information
After the proposed rules were promulgated on October 18, 2012, nineteen individuals or organizations submitted comments to USPTO. This author submitted a comment on behalf of Patent Docs regarding concerns about the new disclosure-of-confidential-information rules, as outlined in a previous post (see "USPTO Proposes Update to Code of Professional Responsibility"). These concerns were echoed by the four organizations that filed comments: the Intellectual Property Owners Association (IPO), the American Bar Association (ABA), the American Intellectual Property Law Association (AIPLA), and the Minnesota Intellectual Property Association. Even though each of these comments addressed the problem slightly differently, the underlying concerns were still the same.
In a nutshell, new rule § 11.106, which is based on ABA Model Rule 1.6, states that a practitioner shall not reveal a client's confidential information without informed consent, implied authorization, or permission under the rules. Both the new USPTO Rules and the ABA Model Rules include circumstances in which a practitioner "may" reveal such confidence, such as disclosing information that may prevent death, bodily harm, or fraud. However, even in the cases where death, bodily harm, or fraud may result, the practitioner is still not required to reveal such information, but rather has permission to do so. The new USPTO Rules diverge from the ABA Model Rules in one important respect: the new USPTO Rules at § 11.106(c) include a type of information that is mandatory to reveal: "A practitioner shall disclose to the Office information necessary to comply with applicable duty of disclosure provisions." In other words, under this proposed rule, a finding that relevant information was intentionally withheld by a practitioner involved in the prosecution of an application will not only subject a patent to becoming unenforceable, it will result in an ethical violation by the practitioner.
Of course, this requirement has the possibility of trapping a patent practitioner between two ethical obligations -- a proverbial rock and a hard place. Importantly, this obligation to disclose is not limited to the confidential information from the particular prosecution client, but instead extends to any confidential information belonging to any other client, provided it is material to the first client's application. To be fair, a similar quandary may have already existed, because if a patent attorney is aware of such third-party confidential information, there was already a requirement to disclose it in order to prevent the patent from becoming unenforceable. Nevertheless, most clients would prefer that confidential information not be made publically accessible in another client's patent file because the practitioner was required to satisfy his or her ethical obligation to the other client.
The biggest concern expressed in the comments about this issue was whether an attorney in such an ethical quandary would be able to withdraw from the case, and thereby discharge the ethical obligation. In the published final rule, the USPTO addressed these comments, but did not change the proposed rule. The USPTO's response provided some justification for the rule as drafted. For example, the USPTO appears to suggest that such an ethical quandary is unlikely because the restrictions on conflicts of interest "would generally prevent a practitioner from accepting clients who may have potentially adverse interests." Of course, this is not the test for whether there is a conflict of interest under ABA Model Rule 1.7 or USPTO Rule 107. Instead, a concurrent conflict of interest exists where the representation of two clients would be directly adverse, or where there would be a significant risk that the representation of either client would materially limit the representation of the other. Indeed, a requirement to disclose confidential information can arise when a current client discloses information to a practitioner that happens to be material to the patentability of another client's application. Conflict screening will generally not prevent these ethical quandaries.
This does, however, bring up another interesting issue regarding the interplay between the duty to disclose and the rules on whether a conflict exists. The USPTO Rules include a version of ABA Model Rule 1.10, in which the existence of a conflict of interest is imputed to everyone at a firm. In other words, if another attorney at a firm is performing legal services for a client, then every attorney at that firm is thought to be working for that client, even if the other attorneys at the firm have no knowledge of that client. Moreover, unless the conflict arises from an association with another firm, it is generally not possible to "screen" or "wall" those attorneys off to avoid the conflict. Instead, in such instances where a conflict would arise, the firm is forced to decline the work that would cause the conflict. This is not true of the duty of disclosure. Whether a practitioner is aware of a reference that is material to the patentability of an application is personal to that patent attorney or agent. Knowledge of a material reference is not imputed, so different attorneys representing different clients in similar spaces could be aware of art that would be material to the other client's application and not be required to disclose it. This is because that attorney needs to have actual knowledge of the reference.
Nevertheless, whether those attorneys had actual knowledge of such a reference is a factual matter, and the consequences of a court finding such knowledge can be catastrophic for a client. Therefore, firms can take precautions to avoid even the appearance of impropriety. For example, firms can obtain separate USPTO customer numbers for use with specific clients. That way, if one client's reference becomes relevant to another client's application, as long as the attorneys of the second client are not associated with the first client's customer number, a presumption could be drawn that they never had knowledge of the reference in the first place. The only problem with this approach, however, is that clients often hire a firm because of the firm's experience prosecuting particular types of applications. Unfortunately, it is this experience that can potentially give rise to these conflicts, or requirements to disclose information.
Ultimately, the USPTO did respond to the expressed concern by noting that a practitioner in such a situation could be able to withdraw from representation. In the response to this comment, the USPTO pointed to § 1.116 of the new Rules, which provides that in certain situations, a practitioner may seek to withdraw to avoid a conflict of interest. Moreover, in the "Discussion of Specific Rule," the USPTO specifically stated that "if a practitioner has a conflict of interest in a given matter, arising from a different client, timely withdrawal by the practitioner from the given matter would generally result in OED not seeking discipline for conflicts of interest under part 11." Even though the use of the word "generally" is troubling in this explanation, this is probably the best practical solution short of amending the rules.