Obviously Not! Navigating Subject Matter Conflicts of Interest in Patent Law

For any attorney, navigating conflicts of interest is a cornerstone of a solid legal practice. The fundamental rules are simple: you cannot represent one client if their interests are directly adverse to another client, or if your duties to a client would be materially limited by your duties to another current or former client, third party, or yourself. However, for patent practitioners registered to practice before the United States Patent and Trademark Office (USPTO), the ethical duties are significantly more complex and nuanced.

The USPTO Rules of Professional Conduct, which are based upon the ABA Model Rules and similar to state rules, impose similar standards.  However, patent law as a whole, including the special duty of disclosure provisions at the USPTO, create unique requirements that go beyond the typical “direct adversity” and “material limitation” tests. This special duty centers on the concept of subject matter conflicts, a critical distinction that all patent practitioners must understand.

As noted above, the foundation of a patent practitioner’s conflict duties is found in 37 C.F.R. § 11.107. It states that a practitioner cannot represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict exists if:

1. The representation of one client will be directly adverse to another client; or
2. There is a significant risk that the representation of one client will be materially limited by the practitioner’s responsibilities to another client, a former client, or a third person.

While the first point is straightforward, the second point is where the patent-specific duties arise. For patent prosecutors, the “materially limited” clause is interpreted broadly to prevent a practitioner from representing two clients with competing interests in the same or “substantially related” subject matter.

What is a “Subject Matter Conflict”?

Unlike litigation, where conflicts often involve two parties in a dispute, patent prosecution conflicts can arise even when two clients are not competitors and may not even be aware of each other.

The key question is whether the two clients’ inventions are substantially related. This means a practitioner may encounter a conflict if they attempt represent Client A to file a patent application in a specific technology are while simultaneously representing Client B for a patent on a substantially related technology area.

Consider this example:

A patent attorney represents InnovateCorp on a new chemical composition for a smartphone battery that improves charging speed. A few months later, a new startup, PowerUp Inc., approaches the same attorney to file a patent for their slightly different battery chemistry that improves battery longevity.

Even though these inventions may be considered novel by the patent attorney, they are in the same narrow technological field, which creates the potential for a subject matter conflict. The attorney’s duty to get the broadest possible claims for InnovateCorp could be “materially limited” by their knowledge of PowerUp’s confidential technology, and vice versa. Moreover, the duty of disclosure, or even an Office Action citing one application over another, may require the practitioner to respond to the USPTO—pinning on client against the other.  The answer than many practitioners incorrectly believe is appropriate is to engage in claim shaving—narrowing the claims to allow both clients to obtain patent protection.  However, the practitioner cannot ethically engage in such conduct, absent informed consent.

Correctly Representing Two or More Clients

To be clear, simply representing two clients in the same field is not an automatic conflict.  However, the stringent subject matter conflict analysis is designed to protect the integrity of the patent system and the practitioner’s core duties of confidentiality and zealous representation.

1. Duty of Confidentiality (37 C.F.R. § 11.106): A practitioner representing two clients in a similar technology  space will possess confidential information from both companies. It becomes nearly impossible to ensure that knowledge of one client’s unpublished invention and patenting strategy doesn’t subconsciously influence the advice and claim drafting strategy for the other.
2. Duty of Competent and Diligent Representation (37 C.F.R. §§ 11.101 and 11.103): To zealously represent a client, a practitioner must strive to obtain the broadest patent protection possible. This might involve drafting claims that could foreseeably limit the patentable territory available to another client working in a related area.

Can These Conflicts Be Waived?

Yes, but with significant caveats. A practitioner can proceed despite a conflict if they reasonably believe they can provide competent and diligent representation to both clients, and if each affected client gives informed consent, confirmed in writing.

The practitioner must clearly explain the existence, nature, implications, and potential risks of the conflict. The client must fully understand how their attorney’s representation of another party could potentially impact their own patent strategy and the scope of their intellectual property rights before they can validly consent.

One point of concern is whether a solo practitioner can appropriately ensure that the best interests of each of the clients is protected.  Conversely, practitioners in larger firms can explain to their clients that the other matter may be handled by a separate team, and include an ethical screen.  Moreover, the division of labor between teams also prevents the imputation of the duty of disclosure.  That is, while conflicts are imputed to others within the firm under 37 C.F.R. § 11.110, the duty of disclosure is personal to those substantively involved in the preparation or prosecution of that application.

In sum, practitioners should be mindful of creating procedures to identify, minimize, and mitigate subject matter conflicts, and obtain proactive waivers, when needed.