I will be speaking at the 7th Annual Patent Law Institute sponsored by the Practising Law Institute live from New York City on February 4-5, 2013, and live from San Francisco, CA on March 18-19, 2013, with the San Francisco location also being webcast. My topic this year is ethics, which will give me at least several CLE credits for teaching this ethics component and give those who attend live or via webcast 1 CLE credit hour of ethics.
I will be discussing some ethical issues raised by the America Invents Act, but when giving an ethics lecture I also like to take a look at some of the things that the Office of Enrollment & Discipline has been doing with respect to practitioner discipline. I did this several years ago, see Patent Office Disciplinary Actions and Lack Thereof, and more recently I looked at a handful of cases from January 2012, see, Ethics and OED 2012.
Over the coming weeks I will be publish more summaries of some of the more interesting disciplinary matters before the Office of Enrollment and Discipline during 2012. What follows are cases from November 2012 and December 2012. My goal is to work my way backwards and summarize as many decisions from 2012 prior to my PLI ethics presentation as I can.
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In the Matter of David P. Gaudio (December 12, 2012)
David Gaudio was not a registered patent practitioner, but this was not a case where OED went after someone who was only engaged in trademark representation via a reciprocal discipline proceeding. The Law Office of David P. Gaudio, P.C. formed The Inventors Network, Inc., a corporation licensed by the Pennsylvania Department of State. Gaudio was alleged to have engaged in the unauthorized practice of patent law. Gaudio knew that the representation of inventors without being a registered patent practitioner violated USPTO regulations.
The complaint alleged that Gaudio knowingly permitted The Inventors Network to file over 150 patent applications with the Office that were not prepared or reviewed and signed by a registered patent practitioner. The complaint also alleged that Gaudio knowingly permitted The Inventors Network to prosecute over 150 patent applications before the USPTO without the requisite involvement of a registered patent practitioner; knowingly permitted the Inventors Network to charge and collect fees for patent legal services from patent applicants based on the representation that a registered patent practitioner would prepare and prosecute their patent applications before the Office; and knowingly permitted The Inventors Network to fail to disburse fully to a registered patent practitioner all fees for patent legal services collected from patent applicants. The complaint further alleged specific scenarios where Gaudio specifically engaged in representation that must be done only by a registered patent practitioner.
The rules Gaudio was alleged to have violated were: 37 C.F.R. §§ 10.23(a), 10.23(b)(4), 10.23(b)(5), 10.31 (a), 10.23(b)(3) by engaging in acts and omissions constituting violations of 35 U.S.C. §33, 10.23(b)(6), and 10.89(c)(6).
Gaudio did not admit to violating Disciplinary Rules of the USPTO Code of Professional Responsibility, but he did file an Affidavit of Resignation, which formally and finally ended the OED inquiry. Resigning from practice while under investigation does, however, mean that if/when Gaudio ever seeks reinstatement the USPTO will conclusively presume that the allegations set forth in the disciplinary complaint were true, and that he could not have successfully defended himself against such allegations.
For years I have wondered privately and publicly why the USPTO was not doing more to shut down the practice of patent law by non-practitioners. This is definitely a step in the right direction. It isn’t exactly shutting down the non-practitioners who are not lawyers, but this step does seem quite significant and could well signal new USPTO interest in preventing those who are not registered practitioners from preying on unsuspecting inventors.
In the Matter of Bambi Walters (November 15, 2012)
Bambi Walters was disbarred from practice at the USPTO on November 15, 2012. This was a case of reciprocal discipline and ultimately was the result of Walters’ failure to respond to formal investigation inquiries of the USPTO. The USPTO was unable to serve Walters at her last known address, which required publication in the Official Gazette on October 23, 2012 and again on October 30, 2012.
Walters was disbarred in the State of North Carolina on April 30, 2012, as a result of misappropriating funds from her client trust account. The North Carolina State Bar filed a formal complaint against Walters on January 26, 2012, and Walters consented to disbarment by filing an affidavit with the Chair of the Disciplinary Hearing Commission.
Walters was also disbarred in Louisiana on September 12, 2012. The decision of the Supreme Court of Louisiana sheds more light on the situation. This matter seems to have started when Walters was suspended in Virginia for two years as the result of practicing law in Virginia without being licensed to do so. There were also allegations of converting client funds in Virginia. The Virginia action is what triggered the North Carolina disciplinary proceedings for the same act of misappropriation of client funds considered in Virginia.
So how did the Virginia matter unfold? On December 20, 2009, Virginia attorney LInda Quigley filed a complaint with the Virginia Bar alleging that Walters was practicing law in Virginia without a license. Quigley explained to Virginia disciplinary authorities that Walters had lied to her and her clients about being licensed in Virginia. Upon investigation the Virginia State Bar learned that Walters was practicing law in Virginia State Courts and before the Virginia State Corporation Commission without being admitted to practice in Virginia. Walters also falsely represented that she was a Virginia lawyer in printed brochures on her law firm website.
With respect to the misappropriation of client funds, the Virginia State Bar found that Walters had misappropriated $6,000 of client money by making two withdrawals of $3,000 each from her client trust account and into her firms’ operating account. Although it is not said specifically in the documents, those funds would have had to have been unearned in order for this to be a violation. Walters also failed to keep appropriate trust account records and otherwise commingled funds from the client trust account and the firms operating account.
This case gives us several reminders. First, patent practitioners are allowed to practice patent law anywhere in the United States thanks to Sperry v. Florida. Sperry does not mean patent attorneys can practice other areas of law. In order to do anything other than patent practice before the United States Patent and Trademark Office attorneys must be admitted to practice where they offer services. Second, for goodness sakes don’t commingle funds, keep clean and separate trust account records and only transfer funds from the client trust account once the work has been completed and the funds have been fairly earned.
In the Matter of Richart J. Tholstrup (November 15, 2012)
This is the second discipline case against Tholstrup (Registration No. 40,838) in as many years, but he continues to be able to practice at the USPTO.
In this latest case, which is brought as the result of reciprocal discipline due to actions of the Texas State Bar. Tholstrup stipulated to Texas authorities that he violated ethical rules relative to two separate clients. First, he failed to keep a client reasonably informed about the status of her case and failed to explain to a client a matter to the extent necessary to permit the client to make an informed decision regarding her representation. Second, he neglected a matter entrusted to him for another client, and failed to explain to this second client a matter to the extent necessary to permit the client to make an informed decision regarding representation.
As a result of a negotiated settlement agreement with the OED Director, the USPTO suspended Mr. Tholstrup for 36 months with the entirety of the suspension stayed and placed him on probation for 36 months. Mr. Tholstrup is, therefore, permitted to practice before the USPTO during his probationary period unless he is subsequently suspended by order of the USPTO Director.
While still violations of ethical rules, perhaps the charges here do not seem so terrible and one can understand a suspended sentence. What makes this case more interesting, however, is that on March 1, 2011, Tholstrup was likewise suspended for twenty-four months, with the suspension stayed and him placed on probation. That stayed suspension was due to the Texas State Bar finding that Tholstrup knowingly offered or used evidence that he knew to be false and that he otherwise engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation.
Perhaps I just don’t understand what it means to be on probation. Realistically, it is probably that I am not that familiar with what it means to be an attorney in Texas. Over the years as I have periodically looked at what the USPTO does in terms of discipline it has been clear to me that the USPTO will hand out discipline commensurate with the discipline a practitioner receives from the State or States where they are admitted. In this case for one reason or another Texas has now twice in two years has suspended Tholstrup from practice but stayed the suspension and put him on probation. The USPTO has followed in kind. Thus, the take away from this has to be that if you ever find yourself in a jam in a State where you are admitted you must do everything you possibly can to resolve that in the best way possible. Whatever punishment you receive from a State will almost without exception be what you receive from the USPTO. Out of an abundance of caution I say “almost without exception,” not because I have ever seen differing discipline, but because you never really know when the ethics police get involved. Still, I have not personally seen a case where discipline in a reciprocal proceeding resulting in anything more severe than handed out by the State.
The rules Tholstrup violated were 37 C.F.R. §§ 10.23(a) and (b) via 37 C.F.R. § 10.23(c)(5), as the result of being suspended from practice as an attorney on ethical grounds by any duly constituted authority of a State.