The Ethical Patent Lawyer – A Primer on the Ethics and Regulation of Patent Prosecutors
This 60 minute CLE is geared towards registered patent practitioners and their support staff in understanding the obligations of patent lawyers. This IP Ethics CLE will cover topics including conflicts of interest, candor requirements, unauthorized practice of law, working with foreign associates, export control issues, and more.
Hello, and welcome to The Ethical Patent Lawyer: A Primer on the Ethics and Regulation of Patent Prosecutors. My name is Emil Ali, and I'm a partner at McCabe & Ali LLP, where I focus my practice on helping lawyers understand their obligations under state and federal law. As a registered patent attorney, a significant focus of my practice involves advising lawyers and law firms on all aspects of the intersection of IP and ethics matters. My work includes counseling clients on lateral transitions, malpractice avoidance, providing expert opinion work, and testimony as well as respondents defense work, i.e., representing lawyers before various bars and courts, including the USPTO's Office of Enrollment and Discipline. You can view my musings online on our blog, which is ipethicslaw.com. So today's CLE is geared towards registered patent practitioners, both agents and attorneys, as well as their support staff. I hope that this CLE will help you understand the obligations you have and include topics such as conflicts of interest, your candor requirements, the unauthorized practice of law, working with foreign associates, export control issues, and more. I want to begin by talking a little bit about the USPTO's regulatory powers. So just like many of you are members of various state bars, many of you are likely also members of the patent bar. So how did the patent bar come to be? Well, the USPTO has specific statutory authority to establish regulations, governing the recognition and conduct of persons representing applicants or other parties before the USPTO. And that's under 35 USC 2b 2D. Another statute 35 USC 32, allows the USPTO director to suspend or exclude any person, agent, or attorney who does not comply with the regulations established under 2b 2D. So who is regulated and for what? In order to understand that, it's helpful to know the practitioner concept. Under 37 CFR, part 11, practitioner is defined as basically anyone who practices before the USPTO, whether it's a patent matter, a trademark matter, or any other matter, and that would include something like a foyer request. This definition of practitioner also includes patent agents, as well as those who have been granted limited recognition. So those would be non-immigrant aliens as well as law students. But who else is regulated? Well, under the definition of 37 CFR 11.5, practice before the office includes basically anyone who offers legal service. Under 11.5, this would include giving advice in contemplation of filing a patent or trademark application, or, of course, holding yourself as authorized to do so. So I wanna pause for a moment here. Theoretically, under the USPTO's belief of their own regulation, a non-registered patent attorney. So basically a person not recognized to offer patent legal services. Theoretically, if they offer to explain the difference between a design patent and a utility patent application, that could, in fact, be giving advice in contemplation of filing a patent application. So what's the main question though? Do the USPTO rules trump state ethics rules? And this is an often confusing analysis. If we were to look at the Model Rules of Professional Conduct for guidance, and again, model rules are what they are, they're model rules, they form the basis of the ethics rules in all 50 states, as well as the District of Columbia and, actually, at the USPTO as well. So if we look at those rules, most jurisdictions have adopted rule 8.5, which is a choice of law provision. Unfortunately, the USPTO was not one of those jurisdictions. So when we're trying to understand what law applies or what set of ethics rules applies, we don't have the benefit of 8.5. Instead, we look to the preamble of 37 CFR 11.1. That provision states that nothing in this part, so 37 CFR, part 11, shall be construed to preempt the authority of each state to regulate the practice of law, except to the extent necessary for the United States Patent and Trademark Office to accomplish its federal objectives. So, in other words, there is no field preemption. And this issue was, in fact, brought up all the way to the Federal Circuit and was heard in a matter called Kroll v. Finnerty back in 2001. So, to recap on the understanding of the USPTO's regulatory powers, as well as whether or not the USPTO rules trump state rules, the answer is maybe. And specifically, the idea comes to mind in today's time when we look at, for example, the abrogation of Rule 5.4, which is the fee sharing rule, among other things, in states like Arizona. The question is what would the USPTO say about that? Well, right now, the USPTO has its own rule that prohibits fee sharing. However, Arizona has a different rule. While that question has not been answered, in other respects, the question has been answered. So, for example, under the Supreme Court case law in Sperry v. Florida, the USPTO is allowed to create a special federal license for patent agents, and no state can abrogate that right or prevent an attorney or a patent agent from exercising their right under federal law to prosecute patent applications before the USPTO, again, subject to some conditions. So, for example, theoretically, a state could require you to maintain malpractice insurance that would still be potentially required, regardless of your ability to practice before the USPTO without it. So next, I wanna talk about conflicts of interest. So I wanna be very, very basic from the get go. Conflicts of interests are everywhere, right? That's the number one overarching theme that I want you to walk away with. But clients will usually sign waivers, right? That's the next most important step. When I teach my ethics class at the law school, that's always something that my students fail to understand. They're always afraid of asking for a waiver. And one of the jokes that some of us ethics nerds have is we can't cite to a single case where a lawyer was disciplined for having a proactive, or let's say it's an unneeded conflict waiver. On the other side, we can cite to a plethora of a cases where attorneys have gotten into trouble for not having conflict waivers or not disclosing the conflict to a client. But finally, on my introduction slide to conflicts of interest, I have to tell you that a waiver requires informed consent. And I'll explain this a little bit further on the future slides. But informed consent is not just telling them you have a conflict, it's explaining that conflict to them. Diving into the nitty gritty of conflicts, let's begin with current client conflicts. So the rules say that a practitioner may not represent a client in a matter directly adverse to another client. They also say a practitioner may not represent a client in a matter when there is a significant risk that representation will be materially limited by duties to others or the attorney's own self-interest. So this is under 37 CFR 11.107 a1 and a2. So this is also, by the way, very similar to ABA Model Rule 1.7. So when you have a conflict of interest between current clients, first, let's examine why that happens and why it may happen more often than you think. So, one of the most important things that we look at is if you are representing people directly adverse to each other, as most of you are patent prosecutors, that's unlikely to happen. You are not likely litigating against another party. Obviously, most patent prosecution is ex parte, right? You may get involved yourself in an IPR or something. Those are interparties matters, but that's not really distinct patent prosecution. But what about the other issue, right? a2, a practitioner can't represent a client where there's a significant risk that the representation will be materially limited by the duties to another party, whether that's a third party, whether it's another client, or your own self-interest. That's probably more likely to happen. But where? Likely, in the field of subject matter conflicts, right? Subject matter conflicts are right in between direct adversity and material limitation. And the reason I say that is because you're not really one client against another per se. So let's give an example of how subject matter conflicts come to a head. So as an attorney, you build experience in a specific area of the law, right? Even within patent law. Maybe it's some sort of biotech, maybe on the electrical or mechanical side, you come up with some expertise in some area. Let's call it battery technology. Now, many companies in the same industry want to use you, right? Because you have this expertise. So first of all, is it a conflict just because your clients or potential clients are purely economic competitors? Well, the answer to that is somewhat simple. According to comment six of ABA Model Rule 1.7, simultaneous representation in unrelated matters of clients whose interests are only economically adverse, such as representation of competing economic enterprises in unrelated litigation does not ordinarily constitute a conflict of interest, and thus, may not require consent of the respective clients. But is that what we're talking about here, right? So if you are in the middle of a subject matter conflict, for example, you have two applicants in the same technology area. They may be potential or actual economic competitors, but are you involved in unrelated litigation or unrelated matters? And the answer is likely not. And that's one area where you have to be very careful of, right? One of the main things to consider when two applicants are applying for patent protection in the same area is one, will one application be cited against the other? Or two, will you actually engage in or be considered to have, by a neutral third party, engage in any sort of claim shaving? And that would be the understanding that, for example, in order to allow both of your clients to get patent protection, would you narrow the claims in one or both of the applications so that again, both parties could get patent protection? Well, there's a problem with that, right? Because are you doing that at the expense of the client that could have had broader patent protection? So those are important things to consider when dealing with conflicts between current clients and specifically, the ever so common and unique subject matter conflicts in patent prosecution. The next, the less common issues would be things like business transactions with clients. That would be, for example, buying and selling items, whether it's a piece of land or buying a collectible, maybe even buying and selling cryptocurrency from a client, getting stock options, right? This is very important. This could be because you deal with in-house teams that are startups, or it could be because you, yourself, are an in-house lawyer or part-time in-house type of general counsel. So those are important things to consider, right? These fall under 37 CFR 11.108. They are not, by themselves, prohibited per se, but they can be overcome with a proper waiver and informed consent. But what about being a co-inventor? Well, this might be required under the USPTO rules, right? If you are an actual inventor because you've helped with some sort of claim or improvement outside the natural realm of attorneys, well, you may have a duty to assign. But in some cases you may not have a duty to assign, just depending on the situation. Of course, the other issue is third party payment of legal fees, right? Your client is responsible for paying your fees. But in some instances, their parent, or spouse, or employer, or somebody else may pay those legal fees. But if that person is not the client, you need the consent of the client to do so. And all this is spelled out in 37 CFR 11.108. Of course, there's other probably less likely issues that you may involve yourselves in. And that includes things like a prospective limitation of liability, right? Did a client tell you, "Hey, would you be willing to give me a lower legal fee if I agree not to sue you?" Right? That's an odd statement, and you might wanna reconsider getting that client onboard. But regardless, if you are interested in that, there are special rules to consider, including the fact that informed consent may be required. And finally, this is, again, a less common issue these days, but still an important one to consider because a lot of attorneys contact me, asking me how to do this? And my response is I'm happy to show you, but why? So acquiring an interest in a cause of action or specifically a patent application or granted patent, while it's allowed, is likely not advisable in most situations. And here's why. Well, first who's paying the expenses? Second, what sort of control will you, as the attorney, exercise on the success of the, let's call it the monetization of the patent? So you'll do your job as an attorney. You'll procure the patent through the application process, right? But will you be making decisions as to how to proceed, right? Will you try to get the best claims possible, or will you try to get the quickest application granted into a patent? How will you determine whose job it is to monetize? Those are all considerations that you wanna think of and why, without further thought, it may not be the best solution to the financial woes of a client to have the attorney get an interest in all or part of the patent application. So now, on to former clients. The rule about former clients seems simple, yet also complicated. It says under 37 CFR 11.109, a practitioner may not represent a client in a matter directly adverse to a former client if the subject matter of the new and previous matters is the same or substantially related. Well, what does it mean to be same or substantially related? Unfortunately, the problem is very fact-dependent because same or substantially related could include large patent families, right? It could be an understanding of the strategy, the overall patent strategy of a company. So it's important to really look at 37 CFR 11.110 to also understand the imputation of the conflict of interest, as well as potential screening procedures involved. And we'll talk about this a little later when we get into some examples. But before we get into the examples, I wanna take a moment to just talk about the waiver and consent requirement. So, first off, when I talked about waiver earlier, there is no form to fill out, there's not a specific word that you necessarily need to use. I mean, I think there's common things that people use, but there is no requirement to have magic key words to get informed consent. So rather, first, you need to understand what informed consent is. So informed consent is defined by the USPTO as the agreement by a person, ostensibly a client, to a proposed course of conduct after the practitioner has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct. So again, when I talk about the importance of informed in informed consent, what I'm talking about is making sure that the client understands what the conflict means, how you're working through it and how they may actually, in some ways, benefit from continued representation. And there are some other issues. For example, you may want to provide them with the opportunity to consult with independent counsel, depending on the situation. Those are all really important. But you also have to read the rules to see if a writing requirement applies. So confirmed in writing is defined by the USPTO when used in conjunction with informed consent to mean that it's given in writing by the person or a writing that a practitioner promptly transmits to the person, confirming an oral informed consent. If it is not feasible to obtain or transmit the writing at the time the person gives informed consent, then the practitioner must obtain or transmit it within a reasonable time thereafter. And I know that's a lot to package in right now. But the best way to think about it would be how would I prove to a state bar or OED that I provided my client with informed consent. And the best way is to first have a conversation with them, and second, send a confirmatory letter, or have them sign a letter. And this is a big misnomer. Everyone thinks that a waiver must be signed by a client. And, in general, in at least all jurisdictions that I'm aware of, there is no requirement for the client to sign off on it. It may be a good practice, but all you need to do is provide it in writing to the client. So let's move on to an example dealing with a former client. So a law firm represented Company A in a patent licensing agreement with Company C. And bear with me, I know there's a lot of letters here. So this was for a low legal fee. So they were trying to help build a relationship with the client, and the matter went well, which is great. So Company A, after getting a great deal with law firm, keeps promising to send more work in the open engagement but has yet to do so in the past two years. Now, Company B, who's totally unrelated, wants law firm to Sue Company A for patent infringement. So first off, can law firm represent Company B with respect to a potential lawsuit against Company A? So this is a very, very tough set of facts to work through. And I think it's very important for us to walk step by step and have some assumptions here, right? So let's start with questions that I would ask. If a lawyer contacts me with this hypothetical and asks me that question, here's the questions that I would ask of them. So one, is Company A a former client? Well, here's the hard part, if you look above, I say the open engagement, but there has been no work done for the past two years. Can we say that Company A is a former client? Well, it's hard to say. And I know this is a struggle that people often have. I often tell lawyers, please close client files, especially if you do a lot of work over a period of time, and then the work stops. But lawyers are often reticent to do so because they don't wanna shut the door on a client. But then you're also shutting the door on future clients. So if Company A is a former client, then we use 11.109, and we just need to make sure it's not the same or substantially related matter. If Company A is a current client, we cannot be directly adverse to a current client without informed consent. So that's the first issue. Well, second, is there a waiver, right? Well, at this stage, there probably is a waiver, or is not a waiver. So that's something we probably need to consider, right? That's a very important consideration, but there likely is not a waiver right now. And then assuming that Company A is a former client, which I'm not convinced yet, are the licensing agreement and infringement actions the same or substantially related matter? That's a very, very important question, right? If they are the same or substantially related matter, that is likely something that needs informed consent, but it also may be something that may not be proper, nonetheless, even with informed consent to do so, right? Because you don't want, your former lawyers, if you're Company A, you don't want your former lawyers or potentially current lawyers who know the playbook suing you on a substantially related matter, even if it's separate teams. And then related to the above, are the patents the same or similar, right? So even if you could say that the licensing agreement and t infringement action are different, do they relate to the same set of patents or patent family? And then, of course, this goes back to my original issue, right? Other than what I call the optical issue, right? Like no one wants their former lawyers suing them, but does the law firm have some sort of inside knowledge from their work for Company A? Are there any trade secrets or confidential information risks? But most importantly, optics, right? Optics are often forgotten, but they're very important issues. If you are representing a client, whether it's a very large client or a independent inventor, no one wants their lawyer or their former lawyer suing them. So that is definitely something to consider in understanding how things might be perceived and whether or not you should consider the representation. So I know I still haven't answered the question. And I think the answer is it still depends. But one of the most important issues here is determining whether Company A is a former client. And at this point, I would say Company A, based on the facts that I see them, is not a former client, and, therefore, is a current client. And Company B should not be using law firm to sue Company A without clear informed consent, regardless of whether it's the same or substantially related matter, whether it's totally different issues, we still want to consider getting a waiver here. Switching over, I now wanna give you an example of conflicts for an in-house patent counsel. There's a very interesting case called Dynamic 3D Geosolutions LLC v. Schlumberger, and that's 837 F.3d 1280, and it's a Federal Circuit case from 2016. Whether you're an in-house counsel or you work with in-house counsel, this is a case that you want to read to understand the special risks involved when IP lawyers potentially switch sides. So, in this case, the Dynamic 3D Geosolutions case, the Federal Circuit affirmed the dismissal of a patent infringement case after the district court had dismissed the action due to a purported conflict of interest. So what happened was there was an attorney named Charlotte Rutherford. She was a very experienced IP attorney. She had positions at Schlumberger, including, quote, being responsible for the company's worldwide program for enforcing intellectual property, including litigation, and, of course, directing and supervising outside counsel on intellectual property, legal matters. And while at that company, she analyzed a specific patent application, and we'll call that the '319 patent. And it said that she was involved in evaluating further patentable aspects of petrol and assess the risk of lawsuits against it, meaning Schlumberger. Well, at some point, she decided to leave Schlumberger and work for the plaintiff, Dynamic 3D Geosolutions. The trial court granted Schlumberger her old employer's motion to disqualify, not only her, but also the entire in-house team. But beyond that, their outside counsel as well. But why you ask? This is the really important piece of information that you need to know. So, as we said, she worked on this '319 patent, right? She analyzed the potential litigation risk. So what happens when she leaves Schlumberger and joins Dynamic 3D Geosolutions or related company? Well, what they found was that knowledge that she had was imputed to the entire in-house team, and they were persuaded by one, her involvement in potentially acquiring the '319 patent since it was actually owned by somebody else, a decision supposedly to sue her former client, Schlumberger, and, of course, three retaining outside counsel. The court really said that there was a high likelihood that she had access to confidential information in crafting the pleadings, and, therefore, they dismissed it without prejudice. Of course, interestingly enough, this is somewhat of a dilatory tactic because at the end of the day, Dynamic 3D Geosolutions probably had the ability to refile the case, they were just, had to use different counsel. But it is an important lesson for in-house patent counsel that want to leave. I often get called by in-house teams that say, "Hey, I want to hire a patent attorney from this company." And I say, "Okay, well, I believe that that company may be one of your direct competitors. So wouldn't there be a potential conflict?" And they're saying, "Oh, of course, of course. We'll screen them." The problem with screening them is, well, there's multiple steps involved, but two, the reason that you're hiring them, because they have this special knowledge, you cannot use that knowledge without, of course, going through certain aspects of screening and making sure things are done appropriately. So it is a very slippery slope, and it's something that you should very well think of, again, whether you're actually in-house counsel now, and you're thinking about switching careers, whether you're a law firm, attorney and hiring in-house counsel, or something of that nature where you're kinda going back and forth, and you're having people leave one job and the other. Like we all think of conflicts as only being when one person goes from one law firm to another and does a regular lateral transition, or when we're involved in some sort of generic side switching. But in-house lawyers are susceptible to this as well. I now wanna touch on a corporate family conflict. And I'm only gonna spend a few moments on this because the answer is always it depends, right? A lot of this starts with your engagement letter. Who do you represent and who don't you represent? If any of you have heard me speak before, you know those are some of the crucial aspects I have in your engagement letter. But there's one more small issue that you should really think of, right? Outside counsel guidelines. And I'll get to that in a second. But first, the question. Your firm represents Company A, can you be directly adverse to a sister company, i.e., one with the same parent, that you have no interaction with? So Dr. Falk Pharma v. GeneriCo, which is a Federal Circuit case from 2019 is really instructive on how these corporate affiliates. So, again, the sister company can morph into unintentional clients, right? Because they could, in fact, become conflicts of interest. And you taking a position adverse to a different entity within that same family could, in fact, be a violation of the rules. So again, I talked about the text of the engagement. That's gonna be first and foremost, one of the areas that you really want to make sure you understand. What does it say? Who is the client in the relationship, right? We talked about scope, we talked about how much you're gonna charge, but do we talk about who is the client? We also maybe talk about who is not the client, right? That sounds simple enough. But what about these outside counsel guidelines? Those are very, very, very tricky. I can tell you that I've seen many clients suffer the wrath of these outside counsel guidelines. They're usually guidelines that say, okay, well, you're working with a big company, we automatically want a 10% haircut on your rates or a 20% haircut on your rates. That's all fine and good, right? We understand that that's how we do business. But what if it tells you a policy regarding conflicts? Maybe they'll say, we don't sign conflict waivers without going through the VP of so and so, right? That's one thing. But what if it says, by virtue of you representing, one subsidiary of this conglomerate, you represent all of them for purposes of conflicts, and to go through the waiver process, you have to do X, Y, and Z, right? That's a tricky situation. Is it a restriction on your right to practice? Or is it simply a client telling you in advance, we don't consent to you representing people adverse to other affiliates, or things of that nature, or getting involved in litigation against our sister or parent company or other subsidiaries. So that's a very, very important situation to think of. So next, I wanna talk about subject matter conflicts. We talked about that a little bit earlier, but I wanna go into a quick hypothetical. So let's walk through it. You represent client T, maybe ends in A, for a wide variety of automotive battery related technology. new client R, maybe ending in an N, asks you to prepare and prosecute automotive battery technology patents because of your firm's great experience and the number of PhDs you have on your team. So first, is there a subject matter conflict? Right? Well, let's walk through that. Is there direct adversity? Is client T suing client R? Maybe not, right? We don't see that yet. At least they're not using you. You're just doing prosecution work. But is there a material limitation? So that's a very important question. Right now, you're working on client team matters for a variety of automotive battery-related technology. And the new client is just asking you to potentially prepare and prosecute it, certain automotive battery technology patents. They haven't specifically given you information about what kind, right? Do you know if it's the same technology, right? You don't know any of that information yet, but it's a potential material limitation. So let's walk through that. So client T, let's talk about they're using a specific battery technology using some sort of lithium and nickel. And new client R, let's suppose that they're gonna ask you to do the same types of patent applications, lithium and nickel. Could there be a material limitation, right? The answer is yes, there could be one. We don't yet know if there is one because you haven't been presented with the disclosures, but there's a possibility. But before we really answer that question, because I don't think it's an easy question to answer, let's talk about Maling v. Finnegan. This is a very, very important case that I suggest everyone interested in subject matter conflicts look at. So unlike most of the cases that I cite to you, this does not come out of a patent court. It does not come from the Federal Circuit. Instead, it comes from the Supreme Judicial Court in Massachusetts. And it's Maling v. Finnegan, Henderson, which is the big patent law firm. That case is very interesting because it stands for the proposition, and I'm paraphrasing here, that similarity is measured by claims and ultimately, having a conflict checking system is very important, a robust conflict checking system. But in this case, an inventor who sued his former patent lawyers for, among other things, not writing an opinion, was not correct in showing that he suffered any cognizable harm because both he and another client of Finnegan, Henderson were both able to get patent protection for their screwless eyeglass hinge. In fact, they were each able to get multiple applications. Hindsight is 20/20. Those applications or the granted patents look very similar, right? In an opinion, maybe you would say they read on each other. But what does that mean for you as a patent lawyer when dealing with a potential new client, or dealing with two clients in the same technology area? But one, it's easy for me to say on my armchair, you shouldn't take on that second client. But in reality, most of my clients who are patent lawyers are going to take that risk, right? But how do you walk through that? So, first, first and foremost, the Office of Enrollment and Discipline expects that you have a subject matter conflict checking system for IP work, right? Patents and trademarks because when you get an office action, and it cites another application that your firm is of record in or drafted, you should know that, right? We're not talking about client T and client R and knowing at the outset because yes, you know at the outset, you can deal with it through proactive conflict waivers. But what about when it comes up in the middle of prosecution? So what is a good conflict checking system? Well, you need one that's reasonable. And according to OED and other sources, reasonableness is fact-dependent, but not checking for conflicts, that's probably not good enough. So really, you need to make sure that you continuously check for conflicts. So here's one thing to consider. I'm working on a prosecuting a patent application. We've already put in the information from the disclosure into our conflict checking system. But as I'm drafting that patent application, maybe there's some clarification. It's different than it was originally formed to be or described to be when we did our conflict check. Are we putting that new understanding that we have into our conflict checking system? What happens when an office action comes in? Are we checking against those citations to our conflict checking system, right? I know that's a lot of work, but that's something that maybe you should consider, depending on the size of your firm. Again, as you go through prosecution, the claims morph, right? Some drop off, some change, and the subject matter is probably clarified. I think that's a good way of putting it, right? It's not necessarily expanded, but it's clarified. We better understand one or two years into prosecution what the granted patent might look like versus at the beginning before we file. Now, let's talk about cross-border work. As patent attorneys, it's hard for us to imagine that our work involves international law. But that's not what I'm talking about here. What I'm talking about, first, is foreign associates. Sometimes, a client may ask us to hire a foreign associate in a different country, that is to help us prosecute a patent application or trademark application on behalf of our client in a country or jurisdiction where we're not admitted. And that's one issue. But there's another issue when working with foreign associates, and that's where a client in another country needs representation before the USPTO. So what I like to think of when working with foreign associates is it's kind of like allowing doctors to speak to each other and cutting out the middle man, even though in reality, we are the middle man, right? So when a foreign attorney or foreign agent, and sometimes, even a non-attorney or non-agent, somebody that's otherwise authorized to practice in patent matters in their home country might contact you and say, "I have a client that's looking to prosecute an application. Can you help me? Is that allowed?" So foreign associates agents and other intermediaries often serve as a conduit or local contact and interface between you and your mutual client. And, of course, some of them may not be lawyers. When I think of these people, I think of them as folks that can help translate and that can understand cultural and technical issues. On the trademark side, the USPTO implemented the US Counsel rule for trademark practice, and they said it's an effective tool for combating the growing problem of foreign individuals, entities, and applicants failing to comply with us law. So the US Counsel rule requires on the trademark side, that applicants not be pro se if they're domiciled outside the United States. Instead, applicants need to get US Counsel. So does becoming, working with foreign associates, does that solve the issue? Well, we're not really here to focus too much on trademark law, but that is a very unique question. And if you read our blog, ipethicslaw.com, you'll find a lot of commentary on that. But on the patent side, this practice has been long held to be appropriate, common, and probably much needed under two "Official Gazette" notices, one from 1987 and one from 1988. And I leave the citations on the screen for you in case you need to look it over. But essentially, the USPTO says that a practitioner, so somebody authorized to practice for the USPTO, may rely upon instructions of and accept compensation from a corporate liaison or foreign agent if the attorney knows the actual client has consented after full disclosure to be represented by, let's call them the liaison. So what's the problem then, right? when we get a liaison or foreign associate contacting us, do we know that the client has consented to be represented by you in America? So let's talk about the really important issues. So there's a lot of problems that could come about, but the common way to think about it would be who is the one signing the document? So forget about the engagement letter, right? Maybe there isn't necessarily a requirement to have an engagement letter in most circumstances, but let's talk about the actual documents. Who's signing the oath? Who's signing the different documents that you may have to do, whether it's on the trademark side or the patent side? On the patent side, how do you explain the duty of disclosures, Rule 56 and other duties? And we're gonna talk about candor pretty soon. But who signs those things? And even before they sign off on things, how do you explain what the issues are? What does material to patentability mean? What does inequitable conduct? To whom and how do you explain those things? And that's just the tip of the iceberg. So before you go working with foreign associates who may be able to be a boon to your business, or may be able to help bring great clients to your firm, think of what problems could arise and how you can improve your practice. So we've come in and changed practices for firms that focus on foreign associates, right? Making sure that if a problem happens, do you have the paperwork to back it up, right? Do you have full disclosure from the client, right? Or full disclosure to the client and then a proof that they have consented to that representation. Those are all things to consider. But another issue with cross-border work is export control. So let's say that you focus your practice on only representing US applicants before the USPTO. Could you have an export control issue? Well, the answer is yes. So, export control issues come in many shapes and sizes. So I think we already know that the preparation of a patent application in a foreign country is definitely one, right? So whether you're preparing it to file in a foreign country or preparing it abroad because you wanna maybe save some money or outsource, and this goes for in-house counsel too. So in-house counsel may have a subsidiary in a foreign country where there's a large number of high-level, high-functioning folks with great degrees that have the talent to help you analyze and draft applications or do searches. But is that violative of export control issues? And the answer is potentially yes. Another way is sharing technology with a foreigner related to the prep and pros. This, again, could include drafting, searching, et cetera, but a foreigner doesn't necessarily have to be in a foreign country. That foreigner could be one in the United States. And that goes to another issue, transferring technology to a foreigner. So think of somebody that works with you on your team. Maybe somebody that's granted limited recognition or somebody that's simply a non-immigrant alien. Maybe they're here on some sort of a blanket L-1 visa or an H-1, are you allowed to share with them information? That's a very, very important issue. And then, of course, there's just general transfer of technology outside the United States. That's a common one. These are all healthy export control issues that you need to be aware of, whether you're in-house counsel or you work at a law firm and you might be considering outsourcing things. Now, let's talk about candor obligations to the USPTO. So, I know this sounds funny, but candor obligations are omnipresent in the practice of patent law, especially before the USPTO. So when you're working in patent law, on your screen, you'll see a number of various obligations that you may have. And these are just a snapshot of them. There is a few more. So there's rule 56. The duty to disclose information material to patentability. There's 1.555, the duty to disclose information material patentability in ex parte and interparties reexam proceedings. There's 1118b, right? You may have a duty when you're certifying any filing made in the USPTO. Then there's 11.303, a through e. That's very similar to ABA Model Rule 3.3. That's candor to the tribunal, just like we wouldn't want a witness to lie on the witness stand, and we wouldn't wanna submit false statements, and maybe we wanna correct a statement if it's misleading. And then of course, before the PTAB, you have a duty of candor when you're signing papers and things of that nature because some of the other issues don't necessarily apply from the patent prosecution one year before the PTAB. So what happens if you violate your candor obligations to the USPTO? Well, the end result could be ineluctable conduct at the district court with extremely harmful allegations. And trust me, I know all of you are thinking, ineluctable conduct, there's always an allegation of ineluctable conduct because it's an affirmative defense that you have to just throw out there so you can get some discovery. But it's really important to consider what problems come up and how. And candor should be thought of, not only as an afterthought, but really a way of life. And I know it sounds nerdy or dorky to think about it from that way, but we really want to show, right? We're always doing things as patent prosecutors in a way that shows that we're paying attention to the issues. And if you've heard me speak before, it's all about papering the file, right? We wanna do a good job and we do a good job, but sometimes, we miss out on taking notes or proving that we've done a certain task. So one important case is a case involving a law firm, Cantor Colburn, where the district court judge said that the attorneys participated in the inequitable conduct by choosing advocacy over candor with respect to an on sale bar issue. I'm not gonna go into that case very in depth. But I wanna say the reason that's important is because the judge there said that the attorneys put their head in the sand. They didn't ask the right questions during prosecution. And I think that's a telling point that not only was the patent invalidated and have problems, but the attorneys were the ones that were called out by the district court. And that's, I think an important consideration that you should think of, that do you want your name to be out there? Is there an extra step we can take? Because at the end of the day, we don't wanna be called out in the district court or Federal Circuit for not having done something. So what can we do? So another issue with candor or adjacent to candor involves a case called Belcher Pharmaceuticals v. Hospira. And that's a Federal Circuit case from 2021 where the court basically said that the attorneys needed to pay attention to the whole macro picture. And in reality, though, we were actually talking about the applicant, but I think it's a good lesson for the attorney. In this case, the court found that the most reasonable inference was that Mr. Rubin, he was not a patent attorney or inventor. In fact, he was a chief science officer. They said he possessed the specific intent to deceive the USPTO by not only will holding three disclosures, but by giving implausible testimony at trial, having a posture that lacked credibility, having detailed knowledge about an NDA and patent prosecution, and making statements during prosecution regarding the criticality of the pH range to overcome obviousness that were contrary to the data in the NDA. So why is this important? While there was no patent attorney or patent practitioner listed as having been involved in the inequitable conduct, I think there's a few lessons to think of. So first though, I wanna just go back and clarify a little bit from the recitation of the facts that I gave. The important thing here was this chief science officer was involved in both the patent prosecution. So he was covered under Rule 56, but also involving the regulatory structure before, I think, it was the FDA. So why is that important? Well, when it came to things like the pH range, right? We talked about how that it's critical to overcoming the obviousness. But what do you tell the FDA? Oh, well, that's normal. So you may want to tell the regulator of a product, right? Whether it's you're creating a battery system, or you're creating a driving technology, or you're creating a medicine, or a medical device, you may have multiple regulators that you're working with. And you may wanna tell the regulator, oh, this is simple. This is something that we've done for so many years. It's common in the industry. But when you're at the USPTO, you have obviousness to overcome. So what's really important here is where regulatory process requires disclosure to, let's say, another regulator, the patent counsel needs to be informed so that appropriate disclosures can be made to the USPTO around the same time, right? That's really important. So if you're gonna tell, let's say, the FDA that this pH range is normal, make sure the USPTO is not thinking that that's a different pH range than what would normally be used in the industry. So how do we do this? Well, as a patent applicant or their counsel, you should make sure that their scientific product regulatory and legal teams coordinate, right? Coordinate because it's good for the prosecution, but also to avoid inconsistencies in things that are said to multiple government regulators or a government regulator, as well as the USPTO. So I wanna circle back with some best practices to be an ethical patent lawyer. So one, let's start with the basics. Use engagement agreements. As I mentioned to you, there is no necessary requirement, especially under the USPTO rules to use engagement agreements, but there may be some requirements based on state law, based upon how many hours or how much money you're using or whether you have malpractice insurance or not. But it is important, even if it's not required under your state bar rules or the USPTO rules to consider setting the stage of an engagement, right? Don't you want your client to know what the scope is? How much they're gonna pay? Is there a conflict waiver maybe in there? Well, we haven't really gotten into advanced waivers, and there's some potential issues with that. But what about who the client is? We talked about that. Maybe there's some other issues. What happens if there's a problem? Do we talk about choice of law? Do we talk about venue or arbitration? All those things can be very, very important to set the stage of a relationship. And I know, we wanna be on the best foot, and the best foot sometimes involves putting forth a binding legal document to the client to review. And, of course, if there is something that requires some sort of informed consent, make sure you explain that to the client. Make sure if needed, you allow them the opportunity to consult with independent counsel. But while we're talking about engagement agreements, what about disengagement agreements? When you're done representing a client, have you told them that? Do they know that you're no longer their attorney? And this goes back to the statement that we talked about earlier. When do we know that the representation is over, so we can treat somebody as a former client? If somebody comes to you and asks you to potentially pay for a trademark or to file a trademark renewal, or to simply help them with maintenance for a granted patent, that may be a very small project. You won't might not even charge an hour for that. But is it clear to them that either that engagement was limited scope or that you would disengage them shortly thereafter? You maybe you invite them to come back to you, but that's something to consider. And then conflicts of interest. I'm not saying that we need to go and get proactive advanced waivers, but what about just simply proactive conflict waivers when we see similar technology? That might be something to consider. That's an area where we can provide informed consent by virtue of simply having that conversation, explaining the situation that we're in and where we could be, and potentially how we'll get around that. I know we talked about the example where we can't really just say, hey, we're just gonna have separate teams, but we have separate teams and get consent at the client. And, of course, it goes without saying, supervision is important. The USPTO has been quite strict about this. And supervising your staff is very important, whether it comes to signature issues or just making sure that they're appropriately communicating with your clients and potential clients. And this, I know it sounds a little bit strange, but there are attorneys out there that, for example, don't properly supervise the intake process. Sometimes, it's the paralegal or even a commission-based person that's essentially talking to clients and then getting paid based upon how many clients sign up. I know most of you in the audience are probably saying, well, we don't do that. And that's great. But there is a new age of attorneys that are involved in situations like that. But it's important that supervision happens, both at the intake level, at the prosecution level. And, of course, just in all interactions, like, especially when a paralegal or administrative assistant is dealing with client funds. And this goes without saying, we already talked about it, but we need to identify who is and is not the client. This has usually done the engagement letter, but sometimes, things come up. Maybe somebody has their friend or their spouse on the phone. Do we explain to them that privilege could be waived by virtue of having somebody else on the line when you're having communications or emails or things of that nature. And then, of course, again, we talked about the engagement, limiting the scope of representation. That is very key. It's key to have that in the engagement letter, but key to continuously think about that process. And this goes to the next point as well, clarify what your duties do not entail, right? So we wanna limit the scope of representation and continuously make sure that the client and you are both aware what you're doing and what you're not doing. So let's talk about independent inventors. Those are folks that I often see problems with, not because they're bad clients, but sometimes, they don't have an understanding of what the patent attorney is going to be doing for them. They're thinking, I'm spending $10,000 on a patent application, and my attorneys told me that it's great, and I'm gonna get a patent. Well, first of all, have you colored their expectations? But have you talked to them about how you cannot help them monetize the patent, right? Most patent attorneys are not experts in monetization. They're not gonna help you sell a patent or patent application. So what have you told that applicant about getting through that process? About, hey, once I get your... So first of all, I can't guarantee a granted patent, right? Because that's the USPTO that does it. I could try my darnest to get you through that process. But once I go through the process, if we're able to get you a patent granted, here are steps you need to consider to monetize, right? You need to make sure you can get manufacturing if it's a physical item. Make sure that you get sales and marketing help and things of that nature. Maybe you can guide them to avoid certain types of companies, but those are really, really important best practices to consider when you're dealing with various types of clients. So thank you all for watching. But before I conclude, I wanna send a quick reminder out there. So I like to, when I do CLEs, I like to talk about a topic of wellness. And I know many of you are like, "Oh, I'm good. I don't need to hear this." But whether it's you or somebody you know, I think it's just helpful to take a step back and think about wellness. Wellness includes a focus on improving your work life balance, managing stress, fostering a positive mindset, promoting self-care, self-reflection or, of course, getting professional help when you need it, or when somebody else needs it without stigma. And the way I like to think about it is if I had the opportunity to help someone, I would, right? If you, if you saw somebody on the street going into cardiac arrest, let's forget about COVID, would you help? I hope so. Likewise, if there was someone in your law firm, or your company, or a friend of yours from law school that had issues regarding wellness, mental health, or something else, would you help them? Right? Some of us will say, "Oh, well, I don't wanna get them in trouble with a bar. I don't wanna do this. I don't wanna do that." But putting all that aside, if you could help them get through something, would you? And the answer is I hope so because if you yourself felt that you were going through a tough time, would you help yourself? Again, no shame. I truly hope so. So with that, thank you so much for watching and listening to The Ethical Patent Lawyer.