Updates from the USPTO and OED: Patent Issues (Part III): Communication and Foreign Agents

Part III of this series will address the USPTO Rules of Professional Conduct related to communication, and discuss how third-party interactions with Invention Assistance Companies (“IAC”) are relevant to relationships with foreign agents/liaisons.

Parts I and II of this series have focused on updates at the USPTO and OED relating to issues that arise when the practitioner is being paid by someone other than the client. As a quick recap, in recent years the USPTO and OED have been stepping up enforcement of the USPTO’s Rules of Professional Conduct, particularly with regard to rules involving interactions between practitioners, clients and third parties. To assist in highlighting these rules I (as well as the OED) have focused on interactions involving IAC’s, particularly where the IAC directly pays the practitioner on behalf of an inventor/applicant. If you missed Part I it can be read here, and Part II can be read here.

One of the critical rules of practitioner ethical responsibility is to always provide informed, prompt, and understandable communications to the client. As discussed in Parts I and II of this series, the lapse of this ethical responsibility in In Re Mikhailova (D2017-18) was not only a problem in and of itself, it also exacerbated other existing problems (for a reminder on the facts presented in In Re Mikhailova, see Part I here)

USPTO RPC § 11.104 (Communication), recites as follows:

(a) A practitioner shall:
     (1) Promptly inform the client of any decision or circumstance with respect to which
       the client's informed consent is required by the USPTO Rules of Professional Conduct;
     (2) Reasonably consult with the client about the means by which the client's objectives         are to be accomplished;
     (3) Keep the client reasonably informed about the status of the matter;
     (4) Promptly comply with reasonable requests for information from the client; and
     (5) Consult with the client about any relevant limitation on the practitioner's conduct             when the practitioner knows that the client expects assistance not permitted by the               USPTO Rules of Professional Conduct or other law.
(b) A practitioner shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

As discussed previously, because Dr. Mikhailova was following instructions from WPM (the IAC) to not speak to or have any direct contact with her clients, she was unable to: keep her clients informed about actions that needed to be taken on their cases; discuss what actions should or should not be taken; discuss what types of patents should be filed (utility v. design); directly receive requests from the clients for assistance. Most importantly Dr. Mikhailova never had discussions with the clients to discuss what the clients ultimately wanted out of the representation. Without consistent, direct, and informed communications between the client and the practitioner the relationship is doomed to failure. Practitioners should be keenly aware of their duty to provide prompt informed communications to their client on all USPTO matters. Relying on an intermediary, while not per se wrong, can quickly become problematic for the practitioner’s ethical responsibilities, particularly where the intermediary has a commercial interest in the representation.

A silver lining to this story was that WPM was ultimately shut down by the Federal Trade Commission to protect the public. Factual allegations and the FTC’s extensive list of violations are detailed in the preliminary injunction, which can be found here.

Hopefully most practitioner will not find themselves in the position of the agents or attorneys that have fallen prey to companies like WPM, nevertheless the USPTO rules and ethical obligations should be considered in every client relationship. Particularly when working with foreign counsel on U.S. filed foreign originated cases. Notably towards the end of In Re Mikhailova the OED stated:

Regarding communications with clients, the USPTO Director is aware that a practitioner may communicate with someone other than the client in cases where there is a bona fide corporate liaison or a foreign agent who conveys instructions to the practitioner. In such an arrangement, the practitioner may rely upon instructions of the corporate liaison or the foreign agent as to the action to be taken in a proceeding before the Office so long as the practitioner is aware that the client has consented to have instructions conveyed through the liaison or agent. Accordingly, nothing in this notice should be construed as contradictory to the discussion entitled “Practitioner's Responsibility to Avoid Prejudice to the Rights of a Client/Patent Applicant” set forth in Official Gazette Notice published at 1086 OG 457 (Jan. 12,1988) or the discussion entitled “Responsibilities of Practitioners Representing and Clients in Proceeding Before The Patent and Trademark Office” set forth in Official Gazette Consolidated Notice published at 1421 OG 2690 (Dec. 29, 2015). Nevertheless, this notice is to be read as providing additional, specific guidance to practitioners under circumstances where a non-practitioner third party refers inventors to registered practitioners to provide the patent legal services purchased by inventors from the third party.

(See In Re Mikhailova, at 10-11 (emphasis added)).

While the OED has not revoked any of the 1988 or 2015 guidance providing instructions to practitioners with regard to interactions with third party non-practitioners, it did state that the guidance in In Re Mikhailova should be read “as providing additional, specific guidance to practitioners under circumstances where a non-practitioner third party refers inventors to registered practitioners to provide the patent legal services purchased by inventors from the third party.”

The 1988 guidance provides language that can be inserted in a declaration, oath or power of attorney to allow the U.S. practitioner to accept instructions from a foreign agent or liaison, the language is provided below:

The undersigned hereby authorizes the U.S. attorney or agent named herein to accept and follow instructions from as to any action to be taken in the Patent and Trademark Office regarding this application without direct communication between the U.S. attorney or agent and the undersigned. In the event of a change in the persons from whom instructions may be taken, the U.S. attorney or agent named herein will be so notified by  the undersigned.

It has been common in U.S. practice to rely on language similar to the above. Often, this language, and the oath/declaration or power of attorney is the only written agreement between the practitioner and the foreign client, and all other agreements are directly with the foreign agent/liaison. The instructions from In Re Mikhailova suggest that while the above language may be helpful towards defining the client-practitioner relationship, it likely is not sufficient.

With the above lessons in mind the practitioner should always be aware that the client is the inventor or applicant, not the foreign agent/liaison. The practitioner should have an engagement letter (or at least some form of written agreement) directly with the inventor/applicant that spells out the duties and obligations the practitioner would have with a U.S. client (who the client is, scope of work, fees and costs, termination of representation, etc..). If the foreign agent/liaison is going to be relaying instructions to U.S. counsel this should be explicitly stated in the engagement letter. Additionally, while the foreign agent/liaison may charge the client for their services, it must be a separate charge and not part of, or a percentage of the U.S. legal fees, otherwise this would be sharing fees with a non-practitioner. As with the IAC, the foreign agent/liaison can directly pay the U.S. practitioner, but this arrangement must be detailed in the engagement letter and there can be no fee-splitting (see Part II for a more detailed explanation on what constitutes fee-splitting).

Care and attention should be paid to all third-party relationships be they with Invention Assistance Companies, foreign associate, foreign liaisons, or even domestic referrals (more on this in Part IV). Your client is always the inventor/applicant and you should be aware of your ethical duties and obligations to the client.

Part IV of this series will address additional aspects of USPTO Rules of Professional Conduct related to referrals and reciprocal discipline.

If you have any questions about patents, trademarks, or professional responsibility, please contact me at [email protected] or visit my website at www.chiaraiplaw.com