Termination of an OED Disciplinary Proceeding: How A SOL Defense May Be Properly Construed

By Steve Lipman
June 10, 2016

Prior to the AIA’s 2012 amendment to 35 U.S.C.§32, disciplinary investigations from the Office of Enrollment and Discipline (OED) of the USPTO fell under the 5-year Statute Of Limitations (SOL) provision in 28 U.S.C.§2462. In enacting the AIA, Congress inserted the following language into 35 U.S.C.§32, i.e., the statute:

A proceeding under this section shall be commenced not later than the earlier of either the date that is 10 years after the date on which the misconduct forming the basis for the proceeding occurred, or 1 year after the date on which the misconduct forming the basis for the proceeding is made known to an officer or employee of the Office as prescribed in the regulations established under the section 2(b)(2)(D).

(All emphases added unless indicated otherwise). Thus, the USPTO through its OED could bring a Complaint against an attorney or practitioner within (a) 10-years after an alleged misconduct occurred, or (b) 1-year after an alleged misconduct was “made known to an officer or employee of the Office,” whichever of the above SOL sub-phrases (a) and (b) occurs earlier.

scales-justice-businessmanEleven months after the AIA’s amended statute became effective, the USPTO then promulgated its own limiting regulation requiring that the 1-year SOL in sub-phrase (b) does not start counting the 1-year until the OED Director “receives a grievance forming the basis of the [C]omplaint.” Fed.Reg. Vol. 77, No. 147, July 31, 2012, at p. 45247 (effective Aug. 30, 2012); see also 37 C.F.R.§11.1 “Filing a Grievance”. The plain language of the amended statute is broad: notice is accomplished when an alleged misconduct is made known to an “officer or employee” of the Office, i.e., a disjunctive construction. As such, the implication is clear that either an officer or an employee can satisfy the statute. The USPTO contended that this statutory language somehow encompassed only the OED Director as per the regulation. In other words, the USPTO read the statute that allows notice to an officer or employee to really mean only one officer, i.e., the OED Director himself. This is almost exactly the opposite of the statute’s actual wording, and would render the statute subservient to the regulation. Thus, the USPTO regulation cannot limit the statutory provisions of the amended §32.

As explained in the following brief summary of a SOL Opinion from a Hearing Judge reached at the Hearing stage of an actual OED Disciplinary Investigation (a more detailed version of the Opinion and other evidence enlighten how the USPTO already understood the statute prior to the regulation and the already-existing MPEP provisions that required particular practitioner “conduct” to be reported to OED by Office officers or employees), it is the statute and not the regulation that can significantly strengthen a SOL Defense when supported by clear and convincing evidence applied properly by the determinative legal arguments and conclusions discussed in the more detailed version of the SOL Opinion. And certainly, any referral evidence to OED by an officer or employee prior to the OED Director himself becomes aware of an alleged misconduct meet the four corners of the statute.

The Determinative Legal Arguments and Conclusions from the SOL Opinion

The OED Director served a Complaint on the accused respondent who Answered in-part with the following “Special Matter[] of Defense” (§11.36(c)):

The OED Director is barred by the applicable Statute of Limitations set forth in 35 U.S.C.§32 (amended) to institute, conduct, or enforce this disciplinary proceeding against Respondent, or to have prepared and served the Complaint on and against Respondent because more than one year passed since Respondent’s alleged misconduct forming the basis for the proceeding [was] made known to an officer or employee of the Office as prescribed in regulations established under section 2(b)(2)(D).

As the Hearing stage of the OED disciplinary investigation had begun, the respondent filed a Motion to Dismiss based on the SOL “Special Matter of Defense” for the “Hearing Officer” (the “Judge”), appointed by the USPTO Director, which the Judge considered the Dismissal Motion as a Motion for Summary Judgment (“SJM”) (§§11.39(b),(c)). The Judge denied the SJM and, three days later, the respondent requested for a reconsideration of the denial to which the Judge then responded with an “Order on Respondent’s Motion for Reconsideration” (the “Hearing Order”). In between the timing of the SJM and the Hearing Order, the respondent also filed a Motion to (1) Compel the OED Director to comply with the Judge’s previous Discovery Order, and (2) Request an Order to the OED Director to have a substitute OED witness prepared and available to testify at the Hearing regarding respondent’s SOL Defense Discovery Requests.

The Hearing Order recognized the AIA’s amendment to §32 to be of a significant concern and, prior to the amendment, that OED disciplinary cases fell under the general SOL provision stated in 28 U.S.C.§2462. In enacting the AIA, the Hearing Order also recognized that Congress inserted into §32 the previously-cited language. Therefore, the Hearing Order stated that it considered the AIA amendment to be a dual Statute of Limitations as the USPTO may bring a Complaint within 10-years after a misconduct occurs, or 1-year after the misconduct is made known to the Office, whichever is earlier.

Ultimately, the Hearing Order stated that the Judge must weigh the parties’ varied positions against the language of the statute itself which wins that contest easily. The Judge therefore was understood to have found that, prior to the enactment of the regulations, i.e., §§11.1 and 11.34(d), the only operative SOL was the one expressed in the statute. Accordingly, the one-year statutory clock began when the misconduct was made known to an officer or employee of the Office. The Judge stated in the Hearing Order that this did not, however, automatically hand victory to the respondent as the respondent was believed to must still show that the misconduct was made known. [Emphasis in the original].

The respondent argued that a USPTO employee was aware of the circumstances giving rise to the original Complaint against the respondent. Moreover, the respondent claimed various Office personnel, including the OED Director, were believed to have been made aware of the basis for disciplinary action due to ongoing public media coverage, a case involving the same family of patents at the heart of the disciplinary proceeding. (The public media coverage included two commercially-based periodicals from Portfolio Media’s “Law360,” published on the Internet at the relevant time period beyond the 1-year SOL period, “suggesting possible grounds for discipline” for the Hearing Order (see “At Trial, HTC Says Intellect Wireless Patents Unenforceable” and “Favoring HTC, Judge Finds Wireless Patents Unenforceable”)).

The Hearing Order concluded that the parties raised sufficient issues of material fact to warrant the ready-to-go Hearing to determine when respondent’s alleged misconduct was actually “made known” to an officer or employee of the USPTO pursuant to §32. Thus, the Hearing would be able to afford the fact-finder the opportunity to assess the credibility of the witnesses and draw inferences from the facts. Further, as the parties were already prepared for the Hearing on the merits of the case, the Judge believed that he would entertain testimony on both the SOL issue and the disciplinary sanction sought by the OED Director. Thus, the Hearing Order determined that the Judge found issues of material fact existed as to when the misconduct forming the basis for the disciplinary proceeding was “made known” to an officer or employee of the Office.

On the same day the Judge entered and signed the Hearing Order, both the OED Director and the respondent signed-off on a “Proposed Settlement of Disciplinary Matter Pursuant to 37 C.F.R. §11.26” (the “Proposed Settlement Agreement”) to terminate the Hearing and the OED disciplinary proceeding. And, on the very next day the Proposed Settlement Agreement was presented to the USPTO Director who immediately signed the “Final Order” that same day terminating and settling the entire disciplinary proceeding, i.e., it took only two consecutive days from the entire submission of the sign-off of the Hearing Order, the Proposed Settlement Agreement, and the Final Order, which led shortly thereafter of the Final Order to the public on the OED’s electronic FOIA Reading Room designated as “Disciplinary Proceeding No. D2013-17”.

Thus, the Final Order jammed on the brakes of the respondent, the USPTO, and the OED within only two consecutive days after the Judge signed the Hearing Order. However, the “overnight” termination of the Hearing and the disciplinary proceeding left open whether and how the more detailed version of the Opinion per se could be applied to a SOL Defense of another disciplinary proceeding even though the Hearing Order derived from a settled proceeding.


The regulation cannot limit the statutory provisions of the AIA’s amended 35 U.S.C. §32 and would render the statute subservient to the regulation. It is the statute that controls which can and should significantly strengthen a SOL Defense from “an officer or employee of the Office” who was “made known” of an alleged misconduct more than one-year prior to the OED’s filing of a Complaint when supported by clear and convincing evidence applied properly by the determinative legal arguments and conclusions of the Hearing Order.

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The original full length of this post first appeared on www.patentattorney.com.

The Author

Steve Lipman

Steve Lipman is Of Counsel for Maier and Maier. Steve practiced more than 40 years in intellectual property litigation and served many times as a legal expert witness, and as a prosecution and defense counsel for more than 40 patent and trademark attorneys and practitioners in ethics, disbarment / disciplinary investigations and hearings, and registrations before the USPTO’s OED.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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There are currently 2 Comments comments.

  1. Prizzi's Honor June 10, 2016 9:35 am

    I am curious about the rest of the statute.

    The Director may, after notice and opportunity for a hearing, suspend or exclude, either generally or in any particular case, from further practice before the Patent and Trademark Office, any person, agent, or attorney shown to be incompetent or disreputable, or guilty of gross misconduct, or who does not comply with the regulations established under section 2(b)(2)(D), or who shall, by word, circular, letter, or advertising, with intent to defraud in any manner, deceive, mislead, or threaten any applicant or prospective applicant, or other person having immediate or prospective business before the Office. The reasons for any such suspension or exclusion shall be duly recorded. The Director shall have the discretion to designate any attorney who is an officer or employee of the United States Patent and Trademark Office to conduct the hearing required by this section.

    Does it apply to Examiners and PTAB Judges that lie in official US government documents in the course of examinations or hearings related to patent applications?

  2. Steve Lipman June 13, 2016 8:52 am

    Prizzi’s Honor: No, but it is believed that Examiners and PTAB Judges are reviewed within internal USPTO practices that are not usually public.