Review of IL Ethics Rules and the USPTO Rules of Professional Conduct Richard Linn Inn of Court February 13, 2014

Conflict of Interest and Duty of Candor

Scene 1: New Business!! An associate attorney tells a partner that has the potential for a big new client....

Correspond to ABA Rules The new USPTO ethics rules correspond to the ABA Model Rules ABA Model Rule 1.7 (Conflicts of Interest) corresponds to USPTO Rule ABA Model Rule 3.2 corresponds to USPTO Rule

Interpretive Guidance 1. The ABA Model Rule Comments and Annotations. 2. Opinions and case law from adopting jurisdictions, but “State case law and opinions are not binding precedent on the Office” 3. PTO precedent under the old rules 78 Fed. Reg response to Comment 8 (Apr 3, 2013) and 77 Fed. Reg (Oct 28, 2012)

Conflict of interest; Current clients. Part a (a) Except as provided in paragraph (b) of this section, a practitioner shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) The representation of one client will be directly adverse to another client; or (2) There is a significant risk that the representation of one or more clients will be materially limited by the practitioner’s responsibilities to another client, a former client or a third person or by a personal interest of the practitioner.

Scene 2: Similar Areas The next day, after conflicts had run....

Conflict of interest; Current clients. Part a (a) Except as provided in paragraph (b) of this section, a practitioner shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) The representation of one client will be directly adverse to another client; or (2) There is a significant risk that the representation of one or more clients will be materially limited by the practitioner’s responsibilities to another client, a former client or a third person or by a personal interest of the practitioner.

Conflict of interest; Current clients. Part b (b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a) of this section, a practitioner may represent a client if: (1) The practitioner reasonably believes that the practitioner will be able to provide competent and diligent representation to each affected client; (2) The representation is not prohibited by law; (3) The representation does not involve the assertion of a claim by one client against another client represented by the practitioner in the same litigation or other proceeding before a tribunal; and (4) Each affected client gives informed consent, confirmed in writing.

Scene 3: Current Clients An associate tells a partner that one of the firm’s existing clients has acquired a patent portfolio that encroaches on another of the firm’s existing clients...

Between Rock and HardPlace What should the attorneys do? Withdraw from representing HardPlace on the patent application? Withdraw from representing Rock entirely? Ethical wall?

Later that day....

Hypothetical for OED Law firm is prosecuting a patent for client A; client B’s patent is cited by the Examiner as a basis for a rejection in the prosecution for client A; law firm needs to argue that client B’s patent does not disclose some things; that argument might hurt client B on 112 or infringement in subsequent litigation. What should law firm do?

Scene 4: Previous Clients An associate enters a partner’s office to discuss some potential new work for an existing client on an inter partes review proceeding.

Scene 4: Previous Clients A law firm currently represents DIY Company, who wants to file a petition for inter partes review of a patent owned by HammerTime, a division of Massive Corporation. The patent relates to metals. The law firm used to perform patent prosecution for Car Talk, a different division of Massive Corporation. The prosecution related to metals. Section covers a practicioner's duties to former clients.

Section (a) A practitioner who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.

Questions Is HammerTime a former client of the law firm? Is this potential inter partes review "the same or a substantially related matter" to the prosecution the law firm conducted for Car Talk?

Section (b) A practitioner shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the practitioner formerly was associated had previously represented a client: (1) Whose interests are materially adverse to that person; and (2) About whom the practitioner had acquired information protected by §§ and (c) that is material to the matter; unless the former client gives informed consent, confirmed in writing

Section (c) A practitioner who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter: (1) Use information relating to the representation to the disadvantage of the former client except as the USPTO Rules of Professional Conduct would permit or require with respect to a client, or when the information has become generally known; or (2) Reveal information relating to the representation except as the USPTO Rules of Professional Conduct would permit or require with respect to a client.

Questions Did the law firm acquire information relating to the representation of Car Talk? Would the law firm risk using that information relating to the representation to the disadvantage of Car Talk in the potential inter partes review?

Scene 5: Duty of Disclosure The associate and partner continue discussion on the Rock and HardPlace applications....

Comment 22 Comment 22: Several commenters raised concerns about the interaction of the duty of disclosure provisions, such as 37 CFR 1.56, and a practitioner’s duty of confidentiality under § Specifically, the comments raised concerns about the balance between the practitioner’s duty to disclose information to the Office and the duty to protect confidential information of third parties, including that of other clients.

Response to Comment 22 Response to Comment 22: The Office appreciates the comment. Sections (a) and (b) generally permit a practitioner to reveal confidential information under certain circumstances. [Citations omitted.] Additionally, Section (c) states that ``[a] practitioner shall disclose to the Office information necessary to comply with applicable duty of disclosure provisions'' and is provided to make clear that the duty of disclosure is mandatory, not optional. ** *

Section (a) A practitioner shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, the disclosure is permitted by paragraph (b) of this section, or the disclosure is required by paragraph (c) of this section.

Section (b) A practitioner may reveal information relating to the representation of a client to the extent the practitioner reasonably believes necessary: (1) To prevent reasonably certain death or substantial bodily harm; (2) To prevent the client from engaging in inequitable conduct before the Office or from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the practitioner's services; (3) To prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime, fraud, or inequitable conduct before the Office in furtherance of which the client has used the practitioner's services; (4) To secure legal advice about the practitioner's compliance with the USPTO Rules of Professional Conduct; (5) To establish a claim or defense on behalf of the practitioner in a controversy between the practitioner and the client, to establish a defense to a criminal charge or civil claim against the practitioner based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the practitioner's representation of the client; or (6) To comply with other law or a court order.

Section (c) A practitioner shall disclose to the Office information necessary to comply with applicable duty of disclosure provisions.

Response to Comment 22 N.C. Ethics Op. 2005–9 (2006) (lawyer for public company may reveal confidential information about corporate misconduct to SEC under permissive-disclosure regulation authorized by Sarbanes-Oxley Act, even if disclosure would otherwise be prohibited by state’s ethics rules).

Response to Comment 22 Additionally, Section (c) states that ‘‘[a] practitioner shall disclose to the Office information necessary to comply with applicable duty of disclosure provisions’’ and is provided to make clear that the duty of disclosure is mandatory, not optional. Section (c) merely continues the current duty of disclosure provision set forth in 37 CFR 10.23(c)(10). See, e.g., Manual of Patent Examining Procedure, 8th Ed., Rev. 9 (Aug. 2012) Ch While paragraph (c) does not impose a new requirement, the express provision may be helpful in responding to any allegation of an ethical violation before a State bar in a situation where the practitioner engaged in particular conduct to comply with this USPTO Rule.

Response to Comment 22 The comments also suggest that a practitioner’s representation of one client could be directly adverse to another client in some circumstances. However, the restrictions on conflicts of interest that may appear between clients would generally prevent a practitioner from accepting clients who may have potentially adverse interests. See §§ , In certain situations a practitioner may seek to withdraw from representation under § to avoid a conflict of interest.

Later that day....

Question to OED Law firm is preparing IDS for client A; through work for client B, law firm becomes aware of published and unpublished applications that it needs to disclose in the IDS. How does the law firm handle that situation? Knowledge of B’s applications is confidential. How can law firm raise the issue with client A without client B’s permission? Client A’s prosecution is confidential; how can law firm ask permission from client B without client A’s permission?

Inventorship

Linn Inn Meeting Feb. 13, 2014 Application names Alice and Bob as inventors. Alice tells the attorney in confidence that Bob was named as an inventor as a result of deception. What should Attorney say? A. Don’t worry. It’s not a problem. Your secret is safe with me until the end of time. B. Unfortunately, my client is your employer, not you, and I have a duty to tell their management, including Bob, about our conversation. Moreover, you have admitted to misrepresentation of inventorship with deceptive intent, which cannot be corrected. Is there anything else I can help you with right now? C. I don’t have all the answers at present, but fortunately, I have a Linn Inn meeting this evening at which the best legal minds in Chicago will be gathered, and I can tap into the collective wisdom. I’ll give you an answer in the morning. Hypothetical

Linn Inn Meeting Feb. 13, 2014 Can the attorney ethically ignore the inventorship issue? If the patent application proceeds with both Bob and Alice named as inventors, and if Alice is correct in stating that Bob was not telling the truth, will this affect validity and/or enforceability of any patent that issues? Feb. 13, 2014 Questions

Linn Inn Meeting Feb. 13, 2014 Larson filed a patent application falsely claiming to be the inventor, when in fact the inventor was an Automotive employee. The truth came to light in an interference with Automotive. The interference was settled. The Larson application was assigned to Automotive as part of the settlement. Automotive sought to enforce the Larson patent and two others. Relief denied due to unclean hands. Feb. 13, 2014 Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery 324 U.S. 806 (1945)

Linn Inn Meeting Feb. 13, 2014  (a) Correction.— Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent, the Director may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issue a certificate correcting such error.  (b) Patent Valid if Error Corrected.— The error of omitting inventors or naming persons who are not inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned and the Director shall issue a certificate accordingly. Feb. 13, U.S.C. § 256 – CORRECTION OF NAMED INVENTOR

Linn Inn Meeting Feb. 13, 2014  What should the attorney do now?  Are there any ethical issues with the attorney telling Bob or others what Alice told him?  Does the attorney owe a duty of confidentiality to Alice with respect to what she told the attorney?  If the attorney determines that inventorship is presently incorrect, and that Bob represented himself as an inventor with deceptive intent, can attorney correct inventorship now? Feb. 13, 2014 Questions

Confidentiality

Scene 1 A brand new attorney meets his attorney mentor who has been working for a few years Confusion ensues……

What issues does this situation raise? Did the young attorney violate client confidentiality with his advertisement?

May 2013 Changes to Disclosure of Client Information Pre-May 2013 change – Section 10.57(b) “[A] practitioner shall not knowingly [r]eveal a confidence or secret of a client.” “Confidence” refers to information protected by the attorney-client or agent-client privilege under applicable law. “Secret” refers to other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client. May 2013 change – Section (a) – Confidentiality of Information A practitioner shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, the disclosure is permitted by paragraph (b) of this section, or the disclosure is required by paragraph (c) of this section.

Illinois Rule 1.6: Confidentiality of Information (a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, or the disclosure is permitted by paragraph (b) or required by paragraph (c). ….. (6) to comply with other law or a court order.

Scene 2 A client and their defense attorney discuss a possible infringement lawsuit Things do not look promising……

What issues does this situation raise? Are the attorney’s client names confidential? May an attorney be forced to over his client list?

37 CFR § – Confidentiality of Information (a) A practitioner shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, the disclosure is permitted by paragraph (b) of this section, or the disclosure is required by paragraph (c) of this section. (b) A practitioner may reveal information relating to the representation of a client to the extent the practitioner reasonably believes necessary: …… (6) To comply with other law or a court order.

Illinois Rule 1.6: Confidentiality of Information (a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, or the disclosure is permitted by paragraph (b) or required by paragraph (c). …… (6) to comply with other law or a court order.

Unintentional Delay in Paying Maintenance Fees

Time for payment of maintenance fees. (a) Maintenance fees as set forth in § § 1.20 (e) through (g) are required to be paid in all patents based on applications filed on or after December 12, 1980, except as noted in paragraph (b) of this section, to maintain a patent in force beyond 4, 8 and 12 years after the date of grant. (b) Maintenance fees are not required for any plant patents or for any design patents. Maintenance fees are not required for a reissue patent if the patent being reissued did not require maintenance fees. (c) The application filing dates for purposes of payment of maintenance fees are as follows: (1) For an application not claiming benefit of an earlier application, the actual United States filing date of the application. (2) For an application claiming benefit of an earlier foreign application under 35 U.S.C. 119, the United States filing date of the application. (3) For a continuing (continuation, division, continuation-in-part) application claiming the benefit of a prior patent application under 35 U.S.C. 120, the actual United States filing date of the continuing application. (4)-(5) * * * (d) Maintenance fees may be paid in patents without surcharge during the periods extending respectively from: (1) 3 years through 3 years and 6 months after grant for the first maintenance fee, (2) 7 years through 7 years and 6 months after grant for the second maintenance fee, and (3) 11 years through 11 years and 6 months after grant for the third maintenance fee. (e) Maintenance fees may be paid with the surcharge set forth in § 1.20(h) during the respective grace periods after: (1) 3 years and 6 months and through the day of the 4th anniversary of the grant for the first maintenance fee. (2) 7 years and 6 months and through the day of the 8th anniversary of the grant for the second maintenance fee, and (3) 11 years and 6 months and through the day of the 12th anniversary of the grant for the third maintenance fee. (f) * * * (g) Unless the maintenance fee and any applicable surcharge is paid within the time periods set forth in paragraphs (d), (e) or (f) of this section, the patent will expire as of the end of the grace period set forth in paragraph (e) of this section. A patent which expires for the failure to pay the maintenance fee will expire at the end of the same date (anniversary date) the patent was granted in the 4th, 8th, or 12th year after grant. 37 CFR § 1.362

Acceptance of delayed payment of maintenance fee in expired patent to reinstate patent. (a) The Director may accept the payment of any maintenance fee due on a patent after expiration of the patent if, upon petition, the delay in payment of the maintenance fee is shown to the satisfaction of the Director to have been unavoidable (paragraph (b) of this section) or unintentional (paragraph (c) of this section) and if the surcharge required by § 1.20(i) is paid as a condition of accepting payment of the maintenance fee. If the Director accepts payment of the maintenance fee upon petition, the patent shall be considered as not having expired, but will be subject to the conditions set forth in 35 U.S.C. 41(c)(2). * * * (d) Any petition under this section must be signed by an attorney or agent registered to practice before the Patent and Trademark Office, or by the patentee, the assignee, or other party in interest. 37 CFR § 1.378

More than 7 months later…

“It is professional misconduct for a practitioner to: * * * (c) Engage in conduct involving dishonesty, fraud, deceit or misrepresentation.” USPTO/OED Rule §

EFS-WEB Form for Delayed Payment

How many in the audience would place your name and registration number as “the undersigned” attorney filing the petition on these facts? AUDIENCE QUESTION

How many in the audience would place your name and registration number as “the undersigned” attorney filing the petition on these facts? How many would REFUSE to do so? AUDIENCE QUESTION

“Reporting professional misconduct. (a) A practitioner who knows that another practitioner has committed a violation of the USPTO Rules of Professional Conduct that raises a substantial question as to that practitioner’s honesty, trustworthiness or fitness as a practitioner in other respects, shall inform the OED Director and any other appropriate professional authority.” USPTO/OED Rule §

2-1 split (Clevenger dissenting) allowing revival of patent where patentee (U.S. Navy) claimed abandonment was unintentional. State Farm argued the patentee committed inequitable conduct by intentionally abandoning the patent when it did not appear commercially beneficial and then reviving the patent after its licensing value became evident. District Court held on summary judgment that patentee committed inequitable conduct in claiming its abandonment was unintentional, rendering the patent unenforceable. Network Signatures v. State Farm (Fed. Cir. Sept. 24, 2013)

Fact Summary Patentee U.S. Navy instructed non-payment of 7.5-year maintenance fee. Network Signatures had inquired before then about licensing, but was not directed to the IP department until 2 weeks after the patent had expired due to non-payment of the maintenance fee. The Navy filed the pro forma petition to revive based on “unintentional abandonment,” which was granted without the PTO requiring any proof. Network Signatures v. State Farm (Fed. Cir. Sept. 24, 2013)

After evaluating the record and considering MPEP § 711 (which addresses the “unintentional” standard for pending/abandoned applications, the Federal Circuit (Newman, Wallach) reversed, finding that the fact that the patentee followed the PTO’s procedures for delayed payment and paid the fees did not provide clear and convincing evidence of a material misrepresentation. Network Signatures v. State Farm (Fed. Cir. Sept. 24, 2013)

Attorney sticks to her guns and does not file the petition. Client seems to accept the decision, but the client “dries up.” Three years later, Attorney is served with a lawsuit alleging malpractice under the precedent of Network Signatures (i.e., the attorney should have advised the client differently and paid the fee) and seeking damages in the form of lost profits from the $7.1M+ in revenues that ABC Corp. reported in a shareholder newsletter and attributed to its product that would have been covered by the now-expired patent. How should that case turn out, and why? AUDIENCE HYPOTHETICAL

Thank You