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.