Ethics & OED: Practitioner Discipline at PTO July/August 2013

The Ethics & OED series continues, today looking at three more orders in reciprocal disciplinary proceedings at the United States Patent and Trademark Office. The totality of this series will make up the backbone of my ethics presentation at the 8th Annual Patent Law Institute sponsored by the Practising Law Institute, which will take place in New York at the beginning of February 2014, and which will be reprised live in San Francisco in mid-March 2014.

These three proceedings, like every other reciprocal disciplinary proceeding, demonstrate the overwhelming importance of obtaining the best resolution possible when the State ethics authorities come knocking. Because there is a presumption that reciprocal discipline is appropriate, to prevail at the USPTO you would need to demonstrate that there was a lack of due process, complete lack of evidence or that there is some manifest injustice that would occur if discipline were to be handed out by the USPTO.

Whether we like it or not, you are going to be disciplined by the USPTO to the same extent you were disciplined by the State ethics panel, or a Federal Court (see KRG below). However, this sometimes seems to lead to unequal treatment of practitioners who are similarly situated but for the State in which they are admitted. Eventually someone will raise an equal protection argument, but you don’t want that to be  you. It would have a significant uphill battle no doubt like all such arguments, but it would be very nice for OED to take a step back and consider whether it is fair to simply defer its own disciplinary authority to the States.

In the Matter of KRG (July 17, 2013)

KRG is a patent attorney admitted to practice in the State of California. On August 3, 2010, Judge Randall Newsome of the United States Bankruptcy Court for the Northern District of California (Oakland Division) issued a Show Cause Order requiring KRG to appear and explain why he should not be disciplined as the result of his practice before the Bankruptcy Court. KRG was charged with violating numerous local court rules and California law by charging excessive fees, use of “cram down” loan modifications and the unauthorized use of cash collateral. As a result, he was disbarred from practice before the Bankruptcy Court in the Northern District of California.

KRG appealed, there was a mediation and ultimately an agreement that resulted in an Order Approving Stipulated Settlement of Disciplinary Matter and Related Appeal, dated January 10, 2013. The stipulated agreement prohibited KRG from practicing before the Bankruptcy Court for the Northern District of California for two (2) years and prohibits him from being the attorney of record in a Chapter 11 bankruptcy proceeding for a period of ten (10) years.

KRG had not engaged in representation of any clients before the USPTO for a period of five (5) years. Nevertheless, he notified the USPTO of the Settlement on February 11, 2013, in compliance with 37 CFR §11.24(a), which states:

Within thirty days of being publicly censured, publicly reprimanded, subjected to probation, disbarred or suspended by another jurisdiction, or being disciplinarily disqualified from participating in or appearing before any Federal program or agency, a practitioner subject to the disciplinary jurisdiction of the Office shall notify the OED Director in writing of the same.

KRG was suspended from practice before the USPTO in patent, trademark and non-patent matters for a period of two (2) years commencing January 10, 2013, which was the date of the Settlement of the California Bankruptcy Court investigation. The rules that KRG was charged with violating by his activities in the Bankruptcy Court were:

1. 37 C.F.R. § 10.23(b)(6) (prohibiting engaging in any other conduct that adversely reflects on a practitioner’s fitness to practice before the Office) as the result of being suspended from the practice of law by the United States Bankruptcy Court for the Northern District of California. See 37 C.F.R. § 10.23(c)(5).
2. 37 C.F.R. § 10.77(a) (prohibiting handling a matter which the practitioner is not competent to handle) as a result of filing bankruptcy cases under Chapter 11 without possessing the requisite skill to do so. Indeed, KRG admitted that the Bankruptcy Court had on two occasions twice denied his employment in two bankruptcy cases finding that he was not competent to file cases under Chapter 11.

In the Matter of MLS (July 29, 2013)

This is another reciprocal discipline matter. On October 2, 2012, the Supreme Judicial Court of Massachusetts issued an Order suspending Stretch for six months from the practice of law in the Commonwealth of Massachusetts. MLS was disciplined in Massachusetts for: (1) holding herself out verbally and in writing as an attorney with an office in Massachusetts even though those was not authorized to practice law in Massachusetts; (2) failing to adequately respond to client inquiries; (3) misrepresenting to clients that she possessed a Massachusetts license to practice law; (4) failing to notify clients that she had been administratively suspended; (4) failing to monitor the status of a client’s patent application; (6) failing to inform a client of a mistake made that resulted in the patent application going abandoned; and (7) failing to turn over a client’s file upon discharge.

As a result of this disciplinary proceeding in Massachusetts, On May 31, 2013, OED served MLS with a Notice and Order Pursuant to §11.24, indicating that reciprocal discipline was being sought. She was also served with an Amended Complaint.

MLS was given forty (40) days to respond, but no response was made, nor extension requested. Thus, all of the facts were taken as true as stated in the Complaint. She was ultimately suspended for six (6) months from the practice before the USPTO in patent, trademark and other non-patent law related maters as the result of violating 27 CFR 10.23(a) and (b) by and through 37 CFR 10.23(c)(5).

§10.23(a) states: “A practitioner shall not engage in disreputable or gross misconduct.”

The section of §10.23(b) relied upon is not specifically stated, but in these reciprocal discipline cases it is usually (b)(4), (b)(5) or (b)(6), with (b)(6) being the most common. These provisions say:

A practitioner shall not:

(4) Engage in conduct involving dishonesty, fraud, deceit, or misrepresentation.

(5) Engage in conduct that is prejudicial to the administration of justice.

(6) Engage in any other conduct that adversely reflects on the practitioner’s fitness to practice before the Office.

Please note that Part 10 of Title 37 is no longer the controlling section for ethics at the USPTO, and is now a reserved section. Ethics rules have been moved to Part 11 of Title 37. Proceedings are conducted under the procedures within Part 11, but the rules governing practice at the time of infraction will dictate the substantive ethical rules that will be applied. For Part 10 of Title 37 please see MPEP 8th Edition Revision 8.

In the Matter of MWS (August 26, 2013)

MWS is an attorney registered to practice law in the State of Wisconsin, and is also a registered to practice before the USPTO. This reciprocal discipline case started when Starkweather was reprimanded by the Supreme Court of Wisconsin for: (1) engaging in the unauthorized practice of law; (2) for having an IOLTA account in a jurisdiction other than the State of Wisconsin; (3) failing to refund unearned fees after termination; (4) depositing credit card payments into his trust account; and (5) failure to provide written notice to the client at least five business days before the date when a disbursement was made from his trust account to his business account.

MWS’s major problems stem from the fact that his office is located in Utah, but he is not admitted in Utah. The unauthorized practice of law issue related to him appearing as lead counsel in two bankruptcy cases in Utah even though he was neither admitted to the Utah Bankruptcy Court, nor admitted to the United States Federal Court for the District of Utah, nor admitted in the State of Utah.

MWS was reprimanded by the USPTO for violating 37 CFR 10.23(b)(6), which prohibits practitioners from engaging in conduct that adversely reflects on their fitness to practice law before the USPTO.