The USPTO has ordered a registered patent agent who allowed a patent application to go abandoned, failed to communicate with his client, and failed to cooperate with the Office of Enrollment and Discipline’s ethics investigation to serve a six-month license suspension and one-year probation. This case presents a cautionary tale for IP practitioners and teaches that even the most straightforward of representations, if not handled ethically, can lead to significant sanctions. See In the Matter of Greg L. Martinez, Proc. No. D2019-37 (ALJ Mahoney Feb. 15, 2022).
The Design Application Representation
In 2015, a client engaged Respondent to file a design patent application for his “Pet Food Bowl” design for $800 plus filing fees. Over the next year, Respondent had still not filed the application and failed to respond to his client’s inquiries.
In February 2017, the client asked Respondent for their money back. Instead of doing that, Respondent filed a design application for the client. But the filing was incomplete as Respondent failed to file an inventor’s declaration and oath or $450 in fees and surcharges.
The USPTO issued a missing parts notice, which Respondent failed to report. However, Respondent did send his client a declaration and oath, which the client signed and returned that same day.
In response to the client’s emails for a status report, Respondent simply forwarded the filing receipt and stated, “everything is good” and the application “is all filed.” But all was not good–Respondent inexplicably failed to file the inventor’s declaration and oath or the missing fees.
In due course, the USPTO issued a notice of abandonment. The client learned about the abandonment on his own.
In November 2017, the client gave Respondent a week to find a solution to the problem of the (now abandoned) design application. Respondent provided the client with a draft of a petition to revive the application, which the client approved. But Respondent inexplicably failed to file the petition to revive.
That was the last the client heard from Respondent.
The OED Investigation – Request for Information and Evidence Under 37 CFR 11.22
In August 2018, the Office of Enrollment and Discipline mailed Respondent a Request for Information and Evidence (RFI), seeking documents and answers to written questions concerning Respondent’s representation of the design application client. After several months of delay, in November 2018, Respondent wrote to an OED staff attorney to explain he needed time to locate and access files in order to respond, including files from his former law firm.
In December 2018, OED issued a Lack of Response Letter reminding Respondent of his duty to cooperate. Respondent failed to provide any responses or documents in response to the OED’s investigation.
OED Disciplinary Complaint and Summary Judgment
In June 2019, the OED Director filed a two-count Complaint. In Count I, the Complaint alleged Respondent: (i) failed to act with reasonable diligence in representing his client (37 CFR 11.103); (ii) failed to communicate with his client (37 CFR 11.104); and (iii) engaged in conducting involving dishonesty, fraud, deceit or misrepresentation (37 CFR 11.804(c)). Count II alleged that by failing to respond to the USPTO’s requests for information, Respondent violated 37 CFR 11.801 (the duty to cooperate with OED) and engaged in conduct “prejudicial to the administration of justice (11.804(d)).
As is typical in USPTO disciplinary matters, the case was assigned to an administrative law judge (ALJ) working for the Department of Housing and Urban Development (HUD) to conduct an evidentiary hearing and make proposed findings of facts and conclusions of law, and to issue an initial decision. Two ALJs work for HUD on USPTO disciplinary matters. This case proceeded before ALJ Jeremiah Mahoney, who is one of the longest-serving ALJs in the United States.
The OED Director moved for summary judgment of liability and sought a sanction of an 8-month license suspension and 18-month period of probation. In September 2020, ALJ Mahoney issued an Order Granting Partial Summary Judgment. The ALJ found that the OED Director had proven the violations alleged in Counts I and II by clear and convincing evidence. ALJ Mahoney rejected the Respondent’s argument that he was not a registered patent agent since Respondent in fact had a registration number. Moreover, the ALJ found that even without a registration number, Respondent had engaged in “practice before the Office in patent matters” as defined in 37 CFR 11.5(b) and noted that “a person not registered or recognized before the USPTO is, nevertheless, subject to the Office’s disciplinary authority “if the person provides or offers to provide any legal services before the Office.” 37 CFR 11.19.
While finding that the conduct in question violated multiple USPTO Rules of Professional Conduct, the ALJ was unable to decide based on undisputed facts as a matter of law the sanction to be imposed.
Sanctions Hearing and Decision
In November 2020, ALJ Mahoney heard evidence on sanctions. In determining the appropriate sanction, the ALJ considered four factors spelled out in 37 CFR 11.54(b):
- Whether the practitioner violated a duty owed to a client, the public, the legal system, or the profession;
- Whether the practitioner acted intentionally, knowingly, or negligently;
- The amount of actual or potential injury caused by the practitioner’s misconduct; and
- The existence of any aggravating or mitigating factors.
As for the first factor, the ALJ determined Respondent’s conduct violated his duties of diligence and candor, gave false information to his client and showed a lack of good faith. Such conduct, it was found, undermines the integrity of the disciplinary system and weakens public confidence. The ALJ found, therefore, Respondent’s misconduct violated duties to all–the client, the public, the legal system AND the profession.
As for the second factor, the ALJ found that Respondent’s mental state was intentional with regard to his communications with his client, which was the gist of Count I. With regard to the claim of failing to cooperate with the OED, the ALJ found that Respondent’s mental state was merely negligent.
As for harm, the ALJ rejected the OED Director’s assertion that the client “may lose valuable intellectual property rights in the form of a shortened patent life” and “may also have delays in the marketing and selling of his invention as a consequence.” The ALJ found that the OED Director failed to put on evidence that the client was likely to obtain a patent and that there “is no evidence suggesting how the invention would have been received by an examiner or whether the patent would have been issued.” Nevertheless, the ALJ found there was some injury to the client, in the form of “frustration, loss [of client funds], and distress.”
Finally, in considering aggravating and mitigating circumstances, the ALJ found that the Respondent had acted with a selfish motive–an aggravating factor. In mitigation, the ALJ found that Respondent had no disciplinary record in 18 years as a registered patent agent. In addition, Respondent expressed contrition and also provided evidence of “personal problems” which contributed to at least some of the misconduct.
Balancing these factors, the ALJ concluded that a six-month period of suspension was warranted. Following reinstatement to the register, Respondent must also serve a 12-month period of probation.
Of note, the OED Director originally sought an 8-month license suspension and 18-month period of probation, including aggravation for Respondent’s 18 years’ of experience. The ALJ chided the OED Director for that assertion, noting that Respondent had only ever prepared ten to fifteen design patent applications.
This case presents some valuable lessons for patent and trademark practitioners alike.
- Do Not Ignore Your Clients – The failure to communicate with clients is the number 1 reason why clients file bar complaints against their lawyers. The root cause of Respondent’s problems was an utter failure to communicate. Clients do not like to be ignored. Many clients are understanding if extra time is needed or if their lawyer or agent is experiencing unexpected delays. But what clients do not tolerate is silence. Thus, keeping your clients reasonably informed about your progress on their matter may be the Number 1 Rule for avoiding discipline.
- Mess Up, Fess Up – Lawyers make mistakes. Those mistakes, particularly in IP matters before the USPTO, are usually curable. If you make a mistake, such as not filing an application, not paying a required fee, or allowing an application to go abandoned without the client’s permission, a practitioner should communicate with their clients. What they should not do is simply ignore the problem or unilaterally try to fix the problem without telling the client what happened and why. As is often stated in other contexts, the cover up is worse than the crime. So, let the client know what happened in a timely manner. Obfuscation and ignoring client requests for information will only make matters worse.
- Try to Mitigate – This matter may never have reached the attention of the OED if the practitioner had simply tried to do right by his client and mitigate the harm caused by his delay. The client had asked for his money back–a reasonable request under the circumstances. This practitioner could have bent over backwards to make the client happy, such as by returning the client the fees they had spent and paying to have the application revived. There are often opportunities to make the client whole or at least reduce any possible harm caused when a practitioner drops the ball and fails to provide adequate representation.
- Cooperate with Bar Counsel – Patent and trademark practitioners have an affirmative obligation to cooperate with an OED investigation. Failing to provide timely information can lead to additional sanctions above and beyond the penalty for the underlying misconduct. Although the ALJ found the Respondent was negligent in failing to respond, that was still an independent ground for discipline and presumably the failure to cooperate contributed to the six-month license suspension.
- To Settle or Not to Settle – There is usually an opportunity to settle a disciplinary proceeding with OED either before or after a disciplinary complaint is filed. Whether a settlement offer is worth taking is highly fact specific. Sometimes, a practitioner can receive a better result by settling than if they had their hearing. Other times, the practitioner can get a better result by taking their case to a hearing. We have seen cases where ALJs have imposed far greater punishment than what the OED Director would have accepted in settlement. See In the Matter of Kevin P. Correll, Proc. No. D2018-12 (Init. Dec. Oct. 3, 2019) (OED offered 18-month suspension; ALJ imposed exclusion). We do not know what the OED Director offered in settlement, but typically the OED offers more favorable terms in settlement than it demands from the ALJ.
- Do Not Take a Default Judgment – We see many decisions posted in the OED’s FOIA Reading Room of practitioners who fail to respond to a disciplinary complaint, in which case, the OED Director moves for a default judgment. In all, or practically all, of those matters, the resulting penalty is the harshest possible–an order of exclusion from practice before the USPTO. See, e.g., In the Matter of Jeffrey A. Glazer, Proc. No. D2018-34 (Init. Dec. Mar. 4, 2020) (exclusion from default judgment). A PTO exclusion order is akin to a five-year period of suspension. In this case, while Respondent did not participate in the OED investigation, he did not take a default judgment in the disciplinary proceeding. That was a good thing for if he had failed to answer, he probably would have received an order of exclusion. By taking the matter to a hearing (even though he had lost on summary judgment of liability), Respondent was able to litigate for a more favorable resolution. While a six-month suspension is certainly a significant one, it is a much better result than a five-year suspension that would have likely been imposed if the Respondent received a default judgment.
Whether you are engaging in patent or trademark representation, a practitioner must be mindful of their duty to communicate with their clients as well as Bar Counsel. The USPTO’s Office of Enrollment and Discipline takes matters of ethical misconduct very seriously. Ignoring their rules and procedures is a surefire way of getting caught in the crosshairs of a USPTO disciplinary proceeding.