21Jul 2016

Mistakes happenAs long as the world is turning and spinning, we’re gonna be dizzy and we’re gonna make mistakes” — Mel Brooks

In bar disciplinary proceedings, the word “mistake” is often used either to explain, describe, or defend against, a charge of alleged unethical behavior. But is it unethical for an attorney to make an “honest mistake”?  Ethical guidance on what seems to be a straightforward question is mixed. The New Jersey Office of Attorney Ethics, for example, states:

A mistake does not necessarily constitute unethical conduct. If a mistake causes a loss, the client may be able to recover the loss in a civil suit against the lawyer for money damages. But a simple mistake or error in judgment by itself is not unethical conduct.

Unfortunately, this statement raises more questions than answers.  Indeed, that a “mistake” is not “necessarily” unethical implies that a “mistake” could, in fact, be unethical.  The further attempt to classify a mistake as “simple” begs the question – what is a “simple”  ethical mistake?  And from whose vantage point.  See our post “To err is Human–But is it Unethical” (here).

The word “mistake” and common variations (“simple mistake”, “honest mistake” or “stupid mistake”) arise with some degree of frequency in matters of attorney ethics and discipline.  In the ethics and discipline context, the word “mistake” is typically used as a euphemism for more legally charged terms of art, such as negligence or incompetence.

No matter how one wants to characterize a lawyer’s error, the fact of the matter is that characterizing conduct as a “mistake”does not mean the conduct is free from the reach of disciplinary authorities.  At least several ethics rules may be implicated by counsel’s “mistake.”

learn from mistakesMistakes and Duty of Competence

The very first rule of ethics is the duty of a lawyer to “provide competent representation to a client.”  See ABA Model Rule 1.1; USPTO Ethics Rule 37 C.F.R. Section 11.101.  The rules provide that “Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”   While it is not necessarily obvious from the plain language of the rule itself, one could see that a “mistake” could fall within the scope of Model Rule 1.1 if the “mistake” was caused by an attorney’s lack of preparation, training, thoroughness or experience.  As one ethics authority has noted, “Reasonable lawyers can make reasonable mistakes.  The lawyer is not competent when the mistake is not reasonable, and she is competent if the mistake is reasonable.”  R. Rotunda and J. Dzienkowski, Legal Ethics The Lawyer’s Deskbook on Professional Responsibility at 90(ABA Ctr. Prof. Resp. 2013).

One example of a “mistake” that can arise in the course of patent or trademark prosecution is the docketing error.  As we reported in our post (here), an IP lawyer was suspended from the USPTO for five year in part because of his use of an antiquated docketing system.  The result was that between 2005 and 2010, maintenance fees were not paid, leading to Continue reading

15Jul 2016

Jailcell barsA former senior in-house intellectual property counsel for Hunter Douglas was sentenced Wednesday to nearly six years in federal prison for his role in a fraudulent billing scheme involving fake patent searches. The former patent attorney pleaded guilty in April to federal felony charges of tax evasion and mail fraud arising from his theft of about $5 million from his employer.

As we first reported in our post (here), Jason Throne worked for Hunter Douglas since 2001 as “Intellectual Property General Counsel.”  As its sole in-house dedicated patent counsel, Mr. Throne was an important and high-ranking member of the company’s legal department. Part of his responsibilities included overseeing routine patent searches, including “state of the art” patent searches, patent infringement searches, and patent validity searches.

In 1999, Throne and his wife created a company called Patent Services Group Inc. (PSG), a purported patent search firm allegedly based in Maine. PSG was a ruse; it did no work and performed no services. Nevertheless, using his position within Hunter Douglas, Mr. Throne had PSG bill Hunter Douglas for monthly patent search services that were never performed.

Between 2000 and 2014, PSG billed Hunter Douglas on average between $30,000 and $40,000 per month. The Thrones would fax invoices addressed to Mr. Throne at Hunter Douglas purporting to be from PSG. After Mr. Throne received the PSG invoices, he would approve the invoices and submit them to accounting for payment. Continue reading

13Jul 2016

sanctionsOn July 1, 2016, the Patent Trial and Appeal Board in RPX Corp. v. Applications in Internet Time LLC, IPR2015-01750, 01751 & 01752, ordered patent owner Applications in Internet Time (AIT) to pay petitioner RPX Corp. $13,500 in attorney’s fees as a sanction for violating the Board’s protective order.  The Board found sanctions were warranted because AIT  disclosed the confidential information of patent aggregator RPX to an IP attorney and the CFO of a non-practicing entity (NPE) patent licensing company.  RPX is in the business of representing companies who have been sued by NPEs.

By way of background, in a May 6, 2016, Order ruling on RPX’s motion for sanctions, the Board explained that it “may impose a sanction against a party for misconduct.” 37 C.F.R. § 42.12(a); see 35 U.S.C. § 316(a)(6). The Rules of Trial Practice provide for various sanctions, as set forth in 37 C.F.R. § 42.12(b).

In general, a motion for sanctions should address three factors: (i) whether a party has performed conduct that warrants sanctions; (ii) whether the moving party has suffered harm from that conduct; and (iii) whether the sanctions requested are proportionate to the harm suffered by the moving party. See Square, Inc. v. Think Comput. Corp., Case CBM2014-00159, slip op. at 2 (PTAB Nov. 27, 2015) (Paper 48) (citations omitted).  The Board found that each factor warranted an award of sanctions against AIT.

Violation of Protective Order

Under the first factor, the Board found that AIT repeatedly breached the Standing Default Protective Order when it shared RPX’s designated confidential information with Messrs. Surgeon (AIT’s President), Boebel (AIT’s litigation counsel in a co-pending district court litigation), and Knuettel (the CFO of an NPE and “advisor to AIT regarding the IPRs”).  None of these individuals was authorized to review RPX’s confidential information.  In its Order granting RPX’s motion for sanctions, the Board referenced a prior panel decision noting:

[t]he need to promote respect for, and meticulous observance of protective orders, and to deter others from similar conduct remains an important objective.

The Board further found AIT’s counsel engaged in “a pattern of conduct . . . surrounding the improper disclosure of RPX’s confidential information.”

Harm to RPX

The Board found the second factor further favored sanctions because RPX’s “core business” deals with assisting its clients in defending themselves against NPE litigation.  Continue reading

12Jul 2016

Johnny Manziel football picturePart 1 of a 3-Part Series

Ex-Cleveland Browns quarterback Johnny Manziel has been in the news a lot lately. And none of it has been good. The former Heisman Trophy winner and 2014 first round NFL draft pick was “much watch” sports TV for his prowess on the gridiron. His professional career, which began with such optimism just two seasons ago, appears finished.  Now, football seems to be the last thing going on in Manziel’s life, which has taken a perilous turn for the worst.

Manziel’s off-field exploits, which began while he was still in college and have only gathered steam over the past year, have with incredible speed surpassed his athletic accomplishments.  His personal misconduct, including multiple arrests and general bad boy behavior, have knocked him from the pedestal he once occupied as “Johnny Football” (TM pending).

In the past year alone, Manziel’s agent dropped him.  His marketing firm dropped him.  Nike dropped him.  The Browns dropped him.  His father told ESPN his son is a “druggie” who “needs help” and thinks that jail would be the best place for him.  Manziel has literally been kicked off of the front of the sports page and into the tabloids.  For Manziel, these are the bad times–and they could get worse as he faces criminal exposure arising from a domestic violence incident.

The point of this series is not to bash Johnny Manziel but to reflect on what his story means for lawyers.  Johnny Manziel’s off-field troubles can provide valuable ethics insights to all members of the legal profession–from first year law students to the most veteran members of the bar.  Here are some important ethics takeaways ripped from the pages of the Johnny Manziel playbook. Continue reading

20Jun 2016

canstockphoto15202912Last week, the Supreme Court issued an opinion that significantly altered the legal landscape for proving willful infringement in patent cases. In Halo Electronics, Inc. v. Pulse Electronics, Inc., the Supreme Court rejected the Federal Circuit’s two-part Seagate test for awarding enhanced damages under 35 USC § 284, finding that both the substantive requirement for “objective recklessness” and the “clear and convincing” burden of proof were inconsistent with the intent of the statute.

Notably, the Court in Halo held the Seagate test for willful infringement “is unduly rigid, and it impermissibly encumbers the statutory grant of discretion to district courts.”  The Court criticized the Seagate test in part because it requires a finding of objective recklessness in every case before district courts may award enhanced damages. Such a threshold requirement excludes “from discretionary punishment many of the most culpable offenders, such as the ‘wanton and malicious pirate’ who intentionally infringes another’s patent—with no doubts about its validity or any notion of a defense—for no purpose other than to steal the patentee’s business.”

The Court further criticized the Seagate test because it made “dispositive the ability of the infringer to muster a reasonable (even though unsuccessful) defense at the infringement trial. The existence of such a defense insulates the infringer from enhanced damages, even if he did not act on the basis of the defense or was even aware of it.” The Supreme Court rejected the ability of an accused infringer to escape enhanced damages “on the strength of his attorney’s ingenuity” and noted that culpability for willful infringement “is generally measured against the knowledge of the actor at the time of the challenged conduct.”

Ethical Issues Raised By Halo

There is no doubt that Court’s opinion in Halo may be a game-changer for parties involved in patent litigation.  While most commentators have to date focused on the substantive and procedural issues raised by Halo. it is important to note that the Supreme Court’s decision also imposes several significant ethical duties on attorneys who are presently litigating a patent case in which willfulness is an issue.  Whether representing the patent owner or the accused infringer, litigators must be mindful of the ethical issues raised by Halo as they proceed in ongoing and future patent infringement cases.

First, an attorney in litigation has an ethical duty to not  Continue reading

01Jun 2016

canstockphoto14357946A federal district judge has dismissed a trademark lawyer’s complaint alleging that the USPTO’s Office of Enrollment and Discipline’s (“OED’s) investigation of him violated his rights under the Fourth and Fifth Amendments of the U.S. Constitution.  The Court held that dismissal of his federal complaint was appropriate because the matters raised in the complaint are currently being adjudicated by the USPTO and the practitioner may raise his constitutional claims in federal court only after the Agency’s administrative process is concluded.  A copy of the Court Swyers Decision (1) is here.

By way of background, as we previously reported (here), trademark attorney Matthew H. Swyers filed suit in January 2016 seeking to enjoin the OED from investigating him for alleged ethics violations because the process employed in conducting the ethics investigation violates his rights under the Fourth and Fifth Amendments.  Matthew H. Swyers v. United States Patent and Trademark Office, et al., No. 16-cv-00015-LO-IDD (E.D. Va. Jan. 6, 2016).

Mr. Swyers’ complaint (here) challenged the OED’s process for obtaining information that it uses in determining whether a USPTO practitioner may have engaged in unethical conduct.  Pursuant to 37 CFR Section 11.22(f), the OED Director is authorized to “request information and evidence regarding possible grounds for discipline of a practitioner” by issuing what it refers to as “Requests for Information” (or “RFIs”). The USPTO’s regulations impose no numerical, temporal, or subject matter restriction on the RFIs themselves.

The complaint alleged that the OED overwhelmed Mr. Swyers by issuing multiple RFIs seeking information on as many as 15,000 trademark applications.  The complaint further alleged that “no avenue exists” in the USPTO to challenge OED’s RFIs based on breadth, privilege, vagueness, harassment, or relevance.

The USPTO moved to dismiss Mr. Swyers’ complaint for failure to pursue and exhaust administrative remedies.  The USPTO argued that its regulations afforded two levels of internal agency review–specifically, a petition to the OED Director followed by a petition to the USPTO Director–for any practitioner who seeks to challenge the propriety of an OED ethics investigation.  See 37 CFR Section 11.2(e).  According to the USPTO, Mr. Swyers failed to pursue the agency’s available remedies during the course of the investigation.

In addition, the USPTO argued the case was not ripe for judicial review because shortly after Mr. Swyers’ complaint was filed in federal court, the OED ended its ethics investigation and filed an administrative disciplinary complaint against him pursuant to 37 CFR Section 11.34.  The administrative complaint, which alleges violations of various USPTO rules of ethics arising from Mr. Swyers’ trademark practice, has since been assigned to an ALJ for an administrative hearing.  Any party that is unhappy with the outcome of that hearing may seek review by filing an appeal with the USPTO Director.  Finally, once the USPTO Director issues a final Agency decision, an aggrieved practitioner may file a petition for review in the U.S. District Court for the Eastern District of Virginia.

The Agency argued that in light of its filing of the administrative disciplinary complaint, Mr. Swyers’ federal court complaint was premature because he could still raise his constitutional challenges during the course of the proceedings before the ALJ.

On May 27, the district court (Judge Liam O’Grady) issued a memorandum opinion granting the motion to dismiss.  The Court’s decision essentially agreed with the Government’s arguments.

The Court held that Continue reading