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Patent Office Disciplinary Actions and the Lack Thereof


Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog, Inc.
Principal Lecturer, PLI Patent Bar Review Course
Posted: September 15, 2010 @ 4:07 pm

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Two years ago today the United States Patent and Trademark Office made effective a rule change that should have once and for all put an end to those who engage in the unauthorized practice of law in the patent and trademark field.  Unfortunately, to date the Office of Enrollment and Discipline done nothing whatsoever to enforce Rule 11.5, and in fact I have been repeatedly told by sources that the USPTO is of the belief that they cannot prevent someone who is not registered from practicing either on the patent or the trademark side of the building.  This is practically unbelievable.  Rule 11.5 (b) was specifically intended to force initial contact between an applicant and an attorney and prevent a middleman or entity from collecting the work, interfacing with an inventor and then handing off to a registered practitioner.  It also prevents those who are not registered from preparing any documents in contemplation of filing, but that is exactly what is happening.  All one has to do is a basic Internet search or turn on XM radio or cable TV to see the many advertisements from non-registered individuals and entities.  Something needs to be done.

Why have a rule that defines unauthorized practice of law if that rule can only be enforced against those who are authorized to practice law?  The fact that the Patent Office is not stepping up to do something is particularly sad given that some, including one of the biggest actors — LegalZoom — openly advertises that they will prepare legal documents, review them and then file them with the appropriate agencies for the customer.  Sure sounds like the practice of law to me, and flaunting the Rule in a flagrant manner.

But surely LegalZoom can’t be saying those things, right?  Here is the relevant text of a LegalZoom commercial on XM radio from August 19, 2010, with emphasis added:

With LegalZoom it is easy to file copyrights, trademarks and even provisional patent applications.  You’ll save a bundle of money and hours of tedious work.  Just go online and answer a simple questionnaire and LegalZoom will file the required legal documents.

A LegalZoom page that explains the provisional patent application process says: “We carefully review your answers for consistency.”  Another LegalZoom page says: “We create your Provisional Application for Patent and file it electronically with the U.S. Patent Office.”  With respect to trademark applications the LegalZoom website says: “We generate your trademark application. We electronically file your application with your approval.”  So they will carefully review what information you give them, prepare a provisional patent application of trademark application and then file it on your behalf.  How is that not the practice of law?  Incidentally, the aforementioned links are screenshots because in the past when I have written about LegalZoom they change their website, at least for a time.  All screenshots were taken today, September 15, 2010.

It is disheartening to watch the Office of Enrollment and Discipline sit by and seemingly do nothing to police the industry and eradicate what in my opinion seems to be the unauthorized practice of law.  I think it is absurd to argue that they do not have the authority to act, but assuming for a moment that the USPTO is correct and they do not have the authority to act, isn’t it far past the time that such authority should be obtained, or at least sought?  At the very least the USPTO could coordinate with the Federal Trade Commission or with the Congress to open up an investigation into what appears to be the unauthorized practice of law.

Notwithstanding, I thought it might be interesting to take a look at what the Office of Enrollment & Discipline has been up to since the start of 2010.  To be perfectly honest, I was quite surprised by what I found.  Not only is there not a single case involving Rule 11.5, but the overwhelming majority are related to reciprocal proceedings where discipline was already taken by a State and the USPTO is taking appropriate matching action with respect to the practitioner.  In fact, out of the 37 disciplinary proceedings this year 24 have been reciprocal proceedings, where the USPTO seems to hand out justice largely or solely based on justice being handed out by some State Bar authority.

The take home lessons from reviewing OED proceedings so far this year are these:

  1. Don’t get in trouble with your State Bar;
  2. Definitely have a separate client trust account if you collect a retainer.  Commingling funds is a sure way to get in trouble.
  3. Don’t bounce checks to the USPTO, but if you do quickly make good on the payment.  It seems that bouncing checks is a red flag and leads OED to make inquiries, which lead in a few cases to the OED discovering commingling of funds.
  4. Keep your clients in the loop and follow their instructions.  If you don’t it seems  you are likely to get suspended, but have it stayed, which is curious.
  5. Don’t let cases go abandoned through your own actions, and if they do rectify the problem.
  6. Keep a clean record.  If you make a mistake that would otherwise get you in trouble but have a clean record, believable explanation and take remedial measures on your own you might be able to get away with a public reprimand.

After reviewing these cases I must admit that I am left scratching my head with respect to several matters; wondering whether the punishments when compared to one another are appropriate.  For example, how is it possible that someone who didn’t communicate with clients, is a repeat offender and filed applications outside the United States after nonpublication requests were filed and thereby resulted in US abandonments receives a 60 month suspension that is stayed (see Kroll, Michael I.),while at the same time someone who lied to her employer about her state bar status was suspended for 3 months.  (see Ngo, Jasmyne B.)  I am not condoning misrepresenting things to your employer, particularly when swearing into the Bar is concerned, but it would seem to me that the greater disciplinary violation is the former, not the later, but the penalty suggests otherwise.  I also don’t understand how a patent examiner who was representing clients while a patent examiner escaped exclusion from practice (i.e., disbarment); he was also found to be engaged in unauthorized practice of law.  (see Seto, Jeffrey K.).  What could be worse than a patent examiner representing clients and also violating State UPL laws?

In any event, here is a summary of OED disciplinary proceedings so far in calendar year 2010.

  1. Smith, Stephen L. (January 8, 2010) – Reciprocal proceeding relating to State of Nebraska discipline. OUTCOME: Excluded from practice.
  2. Lever, Steven J. (January 22, 2010) – Reciprocal proceeding relating to State of New York discipline.  OUTCOME: Suspended for 3 years.
  3. Soliz, Chad C. (January 22, 2010) – Reciprocal proceeding relating to State of Colorado discipline.  OUTCOME: Suspended for 6 months.
  4. Sefrna, Ronald B. (January 22, 2010) – Reciprocal proceeding relating to State of Texas discipline.  OUTCOME: Excluded from practice.
  5. Jung, Hume J. (February 4, 2010) – Reciprocal proceeding relating to State of California discipline.  OUTCOME: Suspended for 1 year.
  6. Paulding, Theodore R. (February 4, 2010) – Bounced checks to USPTO. Did not maintain a client trust account, but also only billed after work was completed. OUTCOME: Public reprimand.
  7. Jensen, Erik B. (February 18, 2010) – Trademark practitioner assigned work to non-licensed attorney and did not supervise; allowed non-attorney to sign papers.  OUTCOME: Public reprimand.
  8. Boegemann, Les A. (February 18, 2010) – Reciprocal proceeding relating to State of Arizona discipline. OUTCOME: Public reprimand.
  9. Prendergast, William F. (February 18, 2010) – Reciprocal proceeding relating to State of Illinois discipline. OUTCOME: Excluded from practice.
  10. Hedges, James K. (February 19, 2010) – Reciprocal proceeding relating to State of California discipline.  OUTCOME: Suspended for 60 days.
  11. Silverman, Samuel B. (February 19, 2010) – Reciprocal proceeding relating to State of Texas discipline.  OUTCOME: Public reprimand.
  12. Gibney, Lawrence J. (March 4, 2010) – Worked with an invention promotion firm and accepted referrals.  Found to have accepted payment for legal services from invention promotion firm without first receiving consent of the client.  Found to have taken action on behalf of client without client’s knowledge or being informed of such actions, and commingling client funds with law firm operating funds.  OUTCOME: Suspended for 6 months (STAYED) and 24 months probation.
  13. Rowe, Jasper C. (March 8, 2010) – Reciprocal proceeding relating to State of Texas discipline. OUTCOME: Excluded from practice.
  14. Gonzales, John F. (March 31, 2010) – Reciprocal proceeding relating to State of Virginia discipline. OUTCOME: Suspended for 6 months.
  15. Ngo, Jasmyne B. (April 9, 2010) – Knowingly mislead employer into believing she would be sworn into State of Illinois Bar on a date certain when she knew that not to be the case. OUTCOME: Suspended for 3 months.
  16. Kroll, Michael I. (May 25, 2010) – Failed to communicate with clients and filed nonpublication requests and then subsequently filed in foreign jurisdictions without notifying the USPTO, thus the applications went abandoned in the US.  OUTCOME: Suspended for 60 months (STAYED) and 60 months probation.
  17. Peacock, Gregg A. (May 25, 2010) – Prepared two applications but never filed them.  Client requested additional applications be filed, which were never filed.  OUTCOME: Suspended for 24 months.
  18. Martin, Timothy J. ( June 3, 2010) – Reciprocal proceeding relating to State of Colorado discipline.  OUTCOME: Excluded from practice.
  19. Watson, Paul Granville IV (June 3, 2010) – Reciprocal proceeding relating to State of Virginia discipline.  OUTCOME: Public reprimand.
  20. Lindon, James Lee (June 3, 2010) – Reciprocal proceeding relating to State of Michigan discipline.  OUTCOME: Public reprimand.
  21. Santarlas, Brien P. (June 3, 2010) – Plead guilty to federal criminal complaint charging securities fraud and conspiracy to commit securities fraud.  OUTCOME: Voluntarily resigned, excluded from practice.
  22. Mitrano, Peter Paul (June 10, 2010) – Reciprocal proceeding relating to District of Columbia discipline.  OUTCOME: Excluded from practice.
  23. Manghera, Peter J. (June 10, 2010) – Engaged in conduct involving dishonesty, fraud, deceit or misrepresentation to clients by billing for work not performed and knowingly misleading clients by telling them applications had been filed when he knew that was untrue.  OUTCOME: Suspended for 24 months.
  24. Wechsler, Lawrence Ira (June 10, 2010) – Reciprocal proceeding relating to State of New  York discipline.  OUTCOME: Public reprimand.
  25. Warren, William Z. (June 11, 2010) – Reciprocal proceeding relating to State of Pennsylvania discipline. OUTCOME: Suspended for 5 years.
  26. Siddiqui, Uzair M. (June 14, 2010) – Reciprocal proceeding relating to State of Virginia discipline. OUTCOME: Excluded from practice.
  27. Storwick, Robert M. (June 17, 2010) – Reciprocal proceeding relating to State of Washington. OUTCOME: Excluded from practice.
  28. Black, Edward P. (June 17, 2010) – Reciprocal proceeding relating to State of Texas discipline.  OUTCOME: Suspended for 36 months.
  29. Robinson, James T. (July 1, 2010) – This is an initial decision.  Robinson did not respond to the Complaint filed, which among other things charged him with bouncing a series of checks to the USPTO and never making good on the payments owed, resulting in patent applications going abandoned.  OUTCOME: Excluded from practice.
  30. Weseman, James C. (July 6, 2010) – This is an initial decision.  Weseman did not respond to the Complaint filed, which charged him with bouncing three checks to the USPTO and failing to make good on the fees owed after being informed by the USPTO of the returned checks.  OUTCOME: Suspended for 120 days.
  31. Webb, Glenn L. (July 7, 2010) – Respondent did not maintain a separate client trust fund for holding unearned fees; bounced five checks, but upon being informed did make sufficient and appropriate payment to the USPTO.  OUTCOME: Suspended for 24 months (STAYED) and probation for 24 months.
  32. Brown, Glenn C. (July 8, 2010) – Reciprocal proceeding relating to State of Oregon discipline.  OUTCOME: Excluded from practice.
  33. Hamilton, Zachary ( July 21, 2010) – Respondent did not keep formal accounting records for his client trust account; paid PTO fees out of client trust account; checks bounced, but fees were paid.  OUTCOME: Suspended 24 months (STAYED) and 24 months probation.
  34. Snyder, Jackson W. II (July 21, 2010) – Reciprocal proceeding relating to State of Florida and State of Virginia discipline.  OUTCOME: Suspended for 36 months.
  35. Seto, Jeffrey K. (August 2, 2010) – Respondent was a patent examiner, left the Patent Office and was rehired back to the Patent Office.  Patent examiners are not allowed to represent clients, but he continued to represent clients on the side, preparing for their signature required documents.  He was also engaging in the unauthorized practice of law in Virginia because he was not an attorney.  OUTCOME: Suspended for 60 months.
  36. Horowitz, Steven (August 2, 2010) – Respondent did not keep accurate records of disbursements from client trust account, and transferred some funds prior to being earned.  He bounced several checks to the USPTO, but made sufficient payment.  No harm to clients was found.  Family medical problems were blamed for insufficient attention to bookkeeping; OED recognized he has been registered for 25 years without any history of disciplinary action and he has since hired a part-time bookkeeper.  OUTCOME: Public reprimand.
  37. Galasso, Raymond M. (August 20, 2010) – Habitual and repeated disciplinary violations were charged, leading the Respondent to voluntarily resign.  OUTCOME: Voluntary resignation; excluded from practice.

So it seems OED is keeping busy, and bouncing checks and commingling of funds are certainly not to be condoned.  I personally feel that OED is missing the forest for the trees.  If the point is to police the industry to protect clients then offenses where clients are injured should be treated more severely, including those cases where clients are injured as a result of the unauthorized practice of law.  There are reasons States police the practice of law, and that is because people get hurt when they are represented by non-attorneys.  The Patent and Trademark Office is in the best position to stop a lot of this unauthorized practice of law and I sure hope they start doing that.

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Posted in: Attorneys, Gene Quinn, IP News, IPWatchdog.com Articles, Patents, USPTO

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

10 comments
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  1. The fact that the Patent Office is not stepping up to do something is particularly sad given that some, including one of the biggest actors — LegalZoom — openly advertises that they will prepare legal documents, review them and then file them with the appropriate agencies for the customer.

    Surely the PTO has at least the authority to refuse legal documents filed by a non-inventor non-agent.

    But supposing that LegalZoom has at least one registered patent agent on staff who is doing the preparing, reviewing, signing and filing, and accepting professional liability for it, what are they doing wrong and why should the OED care?

  2. “But supposing that LegalZoom has at least one registered patent agent on staff who is doing the preparing, reviewing, signing and filing, and accepting professional liability for it, what are they doing wrong and why should the OED care?”

    That would then violate the rules against splitting fees with a non-practitioner. No company could employ an attorney or agent and then offer them for hire to others, take the money in, pay a salary and then keep a portion of the fees. It would also raise the question of whether the agent or attorney was really working for the client or was working for, and following the demands of, a non-practitioner.

    Companies can hire an attorney or agent to work only when the work is for that company itself and not for those who are unrelated to the company.

    -Gene

  3. Perhaps it’s a monetary issue… e.g. they don’t have the money to go after people. However, I know of one case dealing with hundreds of patent applications filed for different individuals from abroad where they did send a letter of inquiry… they’re doing something.

    On another note, all I ever get with the OED is an answering machine. I spent three months calling them about a bar exam issue and more recently, called them about something yesterday. No calls back. Does the OED have an OED overseeing it? :)

  4. It looks like Legalzoom either has or is planning to have registered attorneys on staff – they have a job posting on LinkedIn for an IP attorney. From the description:

    Position: Intellectual Property Attorney

    LegalZoom’s mission is to create innovative and affordable legal solutions that allow individuals to easily obtain the legal protection they need and small business owners to fulfill their dreams. LegalZoom is actively seeking an experienced Intellectual Property Attorney to join our team who will use his or her legal knowledge and experience to make a positive impact. At LegalZoom, you can help promote access to the law and develop new ways of delivering legal services in an efficient and affordable manner. This Attorney will be in charge of enhancing our Intellectual Property product portfolio so that they deliver even greater quality and value to our customers, as well as updating our products to reflect changes in the law. Furthermore, the Intellectual Property Attorney will be responsible for assisting management in developing new products and services and assisting operations staff with customer inquiries.

  5. Gene – You can find examples of patent attorney positions currently posted by Legalzoom in the local Craigslist.org help wanted ads as well as others. Legal Zoom’s openings include an “Intellectual Property Attorney” position that will be “in charge of enhancing our Intellectual Property product portfolio so that they deliver even greater quality and value to our customers, as well as updating our products to reflect changes in the law. Furthermore, the Intellectual Property Attorney will be responsible for assisting management in developing new products and services and assisting operations staff with customer inquiries.” I wonder how mush developing of in house IP vs. assisting operations staff with customer inquiries is involved?

    The position’s requirements are 5-8+ years of experience as a practicing Intellectual Property Attorney, Extensive experience across a broad range of trademark and patent services (conflict search, application drafting & prosecution, responding to office actions, licensing, assignment, etc.) and experience with entrepreneurs and small business clients a plus.

    Would you consider patent attorney’s working at Japanese or other foreign patent firms which are made up of and controlled by non attorney foreign patent agents the same? These U.S. patent attorneys are used to file volumes of new patent applications which have been prepared by foreign based patent agents and other non practitioners such as technical writers so that their local patent clients don’t need to bother themselves with paying fees to U.S. patent practitioners.

  6. …which have been prepared by foreign based patent agents and other non practitioners such as technical writers so that their local patent clients don’t need to bother themselves with paying fees to U.S. patent practitioners.

    This gives me great pause, considering the BIS regulations on “foreign based patent agents”.

    Specifically, new patent applications will not have received the Foreign Filing License which would allow the export of the basic material that these “foreign based patent agents” would use to draft the new patent applications. Export is a broad term. Penalties can be severe and can include all loss to patent rights for the applicant.

    Further, anyone engaged in this practice – or even knowlegable of someone else engaged in this practice, would have an ethical obligation to report the practice to the Office OED.

    Mike, this would include you.

  7. This is a real public service, in several respects. Keep it up.

    BTW, whatever happended to the new PTO disciplinary rules package, and their proposed MCLE?

  8. I agree with Will that if anyone knows of any potentially unethical conduct they should notify OED. It seems OED goes after the low hanging fruit, so that shouldn’t be you (at least that is my opinion).

    What I can say is that I notified OED of a situation where I stumbled across information relating to an agent who would almost certainly violating the export laws. I explained that I was writing to fulfill any ethical obligations I had to notify OED. I received a letter back stating that they were not going to open a file and had no intention of pursuing the agent, but I could notify the Department of Commerce if I wanted to. I merely wanted to satisfy my ethical obligations, which I did. The fact that OED decided to do nothing struck me as odd, yet sadly predictable.

    Notwithstanding, if you have any first hand, or even second hand, knowledge I would write OED. Tell them what you know to protect yourself. Likely OED will not pursue the matter, but at least you are safe yourself. I would recommend those who have seen the LegalZoom ads on Craigslist and LinkedIn to do the same. It seems that would violate 37 CFR 10.37, see:

    http://www.uspto.gov/web/offices/pac/mpep/documents/appxr_10_37.htm#cfr37s10.37

    -Gene

  9. Paul-

    The MCLE thing seems to have slipped off the table completely. I have heard nothing about it at all. What I have heard through second and third hand sources is that there was such an out-cry in the patent bar that it was tabled. Now with Kappos in charge I don’t know whether there is any plan on bringing it back. I’ll keep my ears open.

    I’m glad you found the article useful. It is certainly helpful to know what OED is looking for and goes after.

    -Gene

  10. Gene,

    Regarding:

    “That would then violate the rules against splitting fees with a non-practitioner. No company could employ an attorney or agent and then offer them for hire to others, take the money in, pay a salary and then keep a portion of the fees. It would also raise the question of whether the agent or attorney was really working for the client or was working for, and following the demands of, a non-practitioner.

    Companies can hire an attorney or agent to work only when the work is for that company itself and not for those who are unrelated to the company.”

    Then how is it that general practice law firms (companies) can hire a patent attorneys/agents to do work for its clients but then split fees with non-practictioner attorneys (i.e. not patent attorneys) in the law firm??