«DAVID HRICIK Associate Professor of Law Mercer University School of Law 1021 Georgia Ave. Macon, GA 31201 hricik_d State Bar of Texas 20TH ...»
Thus, although patent agents should be treated as lawyers for purposes of discipline, when applying the case-by-case approach to disqualification, the Patent Office should be extremely cautious in applying non-PTO Code authority to patent agents, even though the office has the statutory authority to do so. Patent agents should not be treated as lawyers for purposes of ethics and disqualification in the Patent Office if doing so will either unnecessarily create Requiring attorneys to supervise nonlawyers does not mean the nonlawyers are themselves subject to the disciplinary rules, however. Indeed, bar associations lack authority to prosecute nonlawyers for violations of the disciplinary rules, since those rules, by their own terms, apply only to lawyers.
David Hricik, Aerial Boundaries: The Duty of Candor as a Limitation on the Duty of Patent Practitioners to Advocate for Maximum Patent Coverage, 44 S. TEX. L. REV. 205, 246 (2002);
Simone Rose & Debra Jessup, Whose Rules Rule? Resolving Ethical Conflicts During the Simultaneous Representation of Clients in Patent Prosecution, 12 FED. CIR. B.J. 571 (2003);
uncertainty and confusion over their duties, or subject them to inconsistent obligations under state rules to which they have not consented to be subject.31
The prior work of a patent agent for a former employer can serve as the basis for a disqualification motion or the basis of a grievance based upon a conflict of interest.32 This section analyzes whether a patent agent in the context of a law firm that includes lawyers who do not limit their practice of law to patent prosecution should be treated as an “attorney” or as a “nonlawyer” for purposes of conflict of interest rules for purposes of discipline or disqualification in state or federal court.33 The characterization of a person as a lawyer or nonlawyer is usually not an issue.
However, it can be a critical distinction in determining the propriety of a representation, for courts and bar associations often treat lawyers and nonlawyers differently for purposes of imputation of conflicts of interest: if a lateral employee is a lawyer, then generally the lateral’s conflicts are imputed to the firm;34 if the lateral is a nonlawyer, then the majority rule is that conflicts are not imputed.35 Hiring a lawyer who has a conflict of interest will, by imputation, disqualify the entire firm or subject it to discipline; hiring a nonlawyer will not: screening is
This also suggests another reason why the PTO Code should be deemed to preempt state law on this issue:
if it does not, then patent agents could have different obligations concerning their duty of disclosure than do lawyers.
That would defeat the objective of the Patent Office to have uniform disclosure obligations. See generally, _____________.
E.g., Am. Roller Co. v. Budinger, 513 F.2d 982 (3rd Cir. 1975).
See generally, In re American Airlines, Inc., 972 F.2d 605 (5th Cir. 1992) (discussing role of federal law in deciding disqualification motions filed in federal court litigation).
Amon Burton, Migratory Lawyers and Imputed Conflicts of Interest, 16 Rev. Litig. 665, 681 (1997) Id.
permitted of nonlawyers, but not, generally, lawyers.36 If patent agents are “nonlawyers” for purposes of imputation, then firms which hire them will not be conflicted through imputation of their conflicts in jurisdictions which follow the majority approach.
The only court located that addressed the issue viewed the patent agent in the case as a lawyer for this purpose, but it did not analyze whether that was appropriate to do so.37 Thus, it imputed the conflict faced by the patent agent to all lawyers in the firm, and disqualified the entire firm.38 There are at least two reasons to believe this is incorrect. First, the rule that imputes conflicts of interest imputes conflicts of lawyers, and basically provides that if one lawyer cannot represent a client in a matter, no lawyer associated with that lawyer may do so, either.39 Patent agents are not lawyers, and so the rule simply does not apply. Second, as noted above, bar associations deem patent agents to be “nonlawyers” for purposes of fee splitting and partnering with lawyers. It would be anomalous to treat them as lawyers for purposes of imputed disqualification, but not for those other purposes.
Thus, although the only authority available holds that patent agents are lawyers for purposes of imputed disqualification in litigation, the courts should, consistent with both the language of the rule and their treatment of agents under other rules, hold that patent agents are See generally, Lee A. Pizzimenti, Screen Verite: Do Rules About Ethical Screens Reflect the Truth About Real-Life Law Firm Practice?, 52 U. Miami L. Rev. 305 (1997 (discussing reality and efficacies of screening and screening rules). There are certain exceptions that permit screening of former judges, similar officials, and certain government lawyers. E.g., Model Rules 1.11 & 1.12.
American Roller, supra note 35 (treating patent agent as a lawyer for purposes of disqualification without analyzing whether that was correct or not).
Model Rule 1.10(a).
nonlawyers. Therefore, conflicts of interest facing patent agents should not be imputed if the jurisdiction does not impute conflicts of interest of nonlawyers, but, instead, permits screening.40
The result is consistent. In the Patent Office, patent agents should be treated as lawyers for disciplinary purposes, and for nonlawyers in disqualification matters, because in the former case the applicable rules – the PTO Code -- treats patent agents and patent lawyers as the same.
In disqualification and disciplinary matters outside of the Patent Office, patent agents should be treated as nonlawyers because the rules apply to lawyers, and patent agents are not lawyers in terms of those rules. The Patent Office should not treat patent agents as lawyers for purposes of disqualification to be consistent with the way states treat them: the rules that the Patent Office would otherwise look to – state ethics rules – do not treat patent agents as lawyers. It would be incongruous if the Patent Office were to rely on rules that the states uniformly hold do not apply to patent agents in deciding ethical matters involving patent agents in the Patent Office.
4. For Purposes of Partnership and Sharing Fees, the States, but not the Patent Office, treat Patent Agents as Nonlawyers Under the PTO Code, it is not unethical for patent lawyers to share fees with patent agents, or to become partners with them. Specific federal law allows for the sharing of fees and the forming of partnerships between patent lawyers and patent agents.41 That is consistent with the approach of the PTO Code as treating patent agents and patent lawyers as the same.
However, under state ethical rules, lawyers may not form partnerships with or sharing fees with Not all states permit screening of nonlawyers. E.g., Matluck v. Matluck, 825 So.2d 1071 (Fla. Ct. App.
2002) (discussing split in Florida on nonlawyer screening).
37 C.F.R. 10.49; 37 C.F.R. 10.37
nonlawyers, and patent agents, of course, are by definition not “lawyers.”42 The fact that state law ostensibly prohibits what federal law permits obviously raises preemption questions.
The PTO Code expressly preempts state law only "to the extent necessary for the Patent and Trademark Office to accomplish its Federal objectives."43 The Federal Circuit has held that, unless preempted, state legal ethical rules continue to govern the conduct of patent lawyers even with respect to conduct occurring during patent prosecution.44 Consequently, a patent lawyer must engage in a “preemption” analysis to determine whether it is necessary for the PTO to achieve its federal objectives for the PTO Code’s approach – sharing fees with patent agents is permissible -- to preempt state law, under which such sharing is unethical. If it is necessary, then the PTO Code preempts state law.45 If not, then a practitioner may be disciplined by a state, in accordance with its rules, even for conduct authorized by the PTO Code.46 This section applies See, e.g., ABA Model Rule of Prof. Conduct 5.4(a) (prohibiting sharing of legal fees with a nonlawyer, with certain inapplicable exceptions).
37 C.F.R. § 10.1.
Kroll v. Finnerty, 242 F.3d 1359 (Fed. Cir. 2001).
See Buechel v. Bain, 713 N.Y.S.2d 332 (N.Y. 2000) (reasoning that PTO Code precluded enforcement of directly contrary state law, but did not preclude enforcement of more restrictive state law); David Hricik, Aerial Boundaries: The Duty of Candor as a Limitation on the Duty of Patent Practitioners to Advocate for Maximum Patent Coverage, 44 So. Tex. L. Rev. 205, 213-15 (2002) (describing how PTO Code only preempts state law to the extent it interferes with the PTO’s federal objectives). Others likewise recognize that conflicts of interest during prosecution must be analyzed under the PTO Code. E.g., Lisa B. Kole, Conflicts of Interest in Technology Law, 616 PLI/Pat 513 (Sept. 2000) (“If a patent practitioner represents a client in patent prosecution, and then is asked to represent a new client in prosecution of related subject matter, there is no per se conflict of interest for the practitioner, even if the established and potential clients are economic competitors. However, the attorney should review the situation in terms of the PTO Code.”) See Kroll v. Finnerty, 242 F.3d 1359 (Fed. Cir. 2001) (rejecting argument that PTO regulations preempt state regulation of patent lawyers, though not addressing which rules would apply, if any, to grievance or malpractice claims); Schindler v. Finnerty, 74 F.Supp.2d 253 (E.D.N.Y. 1999) (rejecting argument that attorneys could not be disciplined for violation of state ethics rules, even though they were registered before the PTO, holding that PTO Code preempted state law only to the extent that state law "frustrate[s] the necessary scope of practice before the PTO.").
those principles to the obvious arrangements that might be made between patent agents and patent practitioners.47 B. States Cannot Prohibit Partnerships Limited to Patent Prosecution Courts should hold that a patent agent and patent lawyer who limit their practice to that conduct which the patent agent is authorized by federal law to perform cannot be precluded by state law from forming a partnership. Because both the patent lawyer and patent agent are both authorized by the PTO Code to prosecute patents, to form partnerships, and to share fees, a state cannot prohibit the formation of a partnership, or the sharing of fees between them, so long as they do not engage in conduct that is not authorized by the PTO Code. The reason for that should be apparent: application of state law would eviscerate the section in the PTO Code which permits these relationships to exist.
Although there is scant authority, the ABA long ago took the position that such arrangements did not violate the then-applicable Canons of Ethics and so permitted “a partnership between a member of the Bar and a layman licensed as a patent agent by the Patent Office when the practice of the partnership is confined to activities permitted laymen under the Patent Office Rules.”48 Putting aside the practical difficulties that such limitations on the scope of representations might create, partnerships between patent agents and patent lawyers that are limited to the practice authorized by federal patent law are permitted by federal law, and should be recognized as ethical under state law.
Obviously, a lawyer can form a partnership with a patent lawyer and share fees with him. See 49 Fed. Reg.
10012, 10016 (“An attorney who practices before the PTO and another attorney who does not practice before the PTO could form a partnership to practice law in a state….”) ABA Formal Op. 257 (1944)
attorney could not form a partnership to prosecute patents with a patent agent.49 In addition, the ABA in an earlier opinion took that view.50 These opinions do not address the question of preemption or the PTO Code’s position on this issue (one because it was issued prior to the promulgation of the PTO Code). They should be rejected, as they directly conflict with and would eviscerate the PTO Code’s express rule permitting these partnerships to exist. If state law applies, then it will never be appropriate to form the partnership that the PTO Code permits. Clearly, the fact that the Patent Office adopted this specific rule is a strong indication that they were necessary to meet its federal objectives.51 Thus, courts should hold that state law to the contrary is preempted.
Nassau County B. Op. No. 44/88 (Aug. 5, 1988).
In ABA Formal Op. 257 (1944) it described its earlier conclusion:
In Opinion 201… the question was presented as to whether or not it is proper for a lawyer to enter into a partnership with a layman enrolled on the register of attorneys of the United States Patent Office as entitled to represent applicants in the presentation and prosecution of applications for patents, provided clear indication is given in connection with the use of the firm name of the respective professional qualifications of the partners and provided the business of the partnership was limited to the prosecution of patent applications, the rendering of opinions on patentability, preparation of patent assignments and license agreements and giving opinions on infringement.