IP Attorney Challenging Constitutionality Of USPTO OED’s “Abusive” Ethics Investigation

Michael E. McCabe, Jr.OED, Office of Enrollment and Discipline, USPTO Ethics Investigation, USPTO OED1 Comment

rock and hard placeAn IP attorney has filed a lawsuit against the United States Patent and Trademark Office seeking to prohibit the Agency’s Office of Enrollment and Discipline (OED) from continuing to investigate him for alleged ethics violations because the process employed in conducting the ethics investigation is abusive and violates due process. The complaint, which was filed on January 6, 2016 by trademark attorney Matthew H. Swyers in the U.S. District Court for the Eastern District of Virginia, charges the OED and several of its staff investigators with conducting an “unwarranted, oppressive, and unconstitutional” ethics investigation that was “designed to harass, overburden, invade, injure and damage” the attorney and his business, The Trademark Company, PLLC.  The complaint seeks an order enjoining the OED from continuing its ethics inquiry as well as monetary damages and attorney’s fees.

The complaint alleges Mr. Swyers opened The Trademark Company in 2003 with the goal of offering trademark protection for more affordable rates than the “standard law firm.” Since 2003, the firm has represented over 20,000 clients. Notably, according to the complaint, none of his firm’s 20,000 clients has filed any grievance against him with the USPTO.

At the heart of the complaint is the OED’s process for obtaining information that it uses in determining whether an individual attorney or other 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” from, among others, the attorney whose conduct is being investigated.   The so-called “RFI” (or “Request for Information”) is the only formal mechanism by which the OED may conduct an investigation of possible ethical misconduct.

Notably absent from the USPTO’s regulations, however, is any standard defining the scope or limits of the RFI process.  While the format of the typical RFI is a combination of interrogatories, document requests, and requests for admission, the regulations impose no numerical, temporal, or subject matter restriction on the OED, whose staff attorneys are charged with conducting disciplinary investigations.  Furthermore, there is no limit on the number of RFIs the OED can issue in any given investigation.

This regulatory gap may be particularly troublesome because attorneys and patent agents who are subject to the USPTO’s disciplinary jurisdiction have an ethical duty to cooperate in an OED ethics investigation.  Indeed, a practitioner’s failure to cooperate in an OED ethics investigation is itself possible grounds for discipline, placing the practitioner between the proverbial “rock and hard place.”

The complaint alleges:

[S]ince August 2014, the Defendants have made it increasingly difficult for Swyers to practice as a trademark attorney before the USPTO by use of obtrusive and overly burdensome investigatory tactics, through the use of RFIs seeking information on as many as 15,000 trademark applications filed by Swyers, as to which no avenue exists for challenges based on breadth, privilege, vagueness, harassment, relevance, or invasion of attorney-client privilege, and through direct contacts and issuance of mountains of requests for information to Swyers’ current and former employees. Each RFI that is not answered to the OED’s satisfaction- and none ever are, despite the expenditure of hundreds of thousands of dollars in legal fees and untold lost hours spent by Swyers himself to answer them, and then answer them again in an effort to address the OED’s endless list of asserted deficiencies and demands for legal analysis- becomes the basis for an additional “failure to cooperate” charge against Swyers, meaning that not only is there no way to challenge abusive, overreaching, or privilege-invading requests, but the requests are accompanied by a threat that anything but acquiescence could result in a loss of the right to continue in business, with no avenue to seek protection from their use as a bludgeon against Swyers, his employees, and his clients

The complaint asserts the OED served Mr. Swyers with a total of five RFIs relating to nearly all of the firm’s trademark and employment matters, at times requesting a response within an “exceedingly short time frame.” The complaint alleges Swyers submitted responses for each RFI, including supplemental responses when requested.

fishing expeditionThe complaint mentions in one RFI, the OED requested Swyers to review and confirm approximately 48,000 of his own signatures. In all but one RFI, the OED explicitly threatened disciplinary action for failure to comply with the requests. However, Swyers alleges the OED was never fully satisfied with the degree or substance of the responses, and “regardless of Swyers’ repeated attempts to answer the RFIs in full, the OED would continue to label Swyers’ responses deficient no matter the response.” As a result, the OED concluded Swyers may have violated 37 C.F.R. § 11.801(b)–the ethics rule requiring a practitioner to cooperate with an OED ethics investigation.

The OED’s conduct apparently was not limited to Swyers. According to the complaint, the OED personally contacted Swyers’ clients without fully disclosing the nature of the investigation. The complaint states the OED requested assistance with their trademark “review” and implied the clients’ trademark applications may contain false statements.  The complaint alleges because the OED contacted clients absent his consent, provided legal advice, failed to advise the clients of their rights, and failed to recommend the clients confer with counsel, the OED personnel themselves violated the rules of ethics by engaging in improper client communication and allegedly violating the attorney-client privilege.

The complaint maintains unlike state or federal civil cases equipped with protective order remedies, attorneys practicing before the USPTO have no procedure for limiting or contesting information requests from the OED. This is, of course, “notwithstanding that the penalty for non-compliance with the OED RFIs encompasses attorney suspension or disbarment.” Thus, according to the complaint, the OED’s violations place him and other similarly situated practitioners in a procedural no-win situation; the practitioner must either comply with unreasonable and repetitive RFIs, or risk sanctions for failure to answer the RFIs.  According to the complaint, the “practical effect of the constitutional violations is to force practitioners to agree to any proposed sanctions or leave the practice of trademark law altogether.”

The complaint explains:

An attorney should not be compelled to subject himself to disciplinary charges, and the adverse consequences that may flow therefrom, in order to protect his client’s confidences or to challenge unduly burdensome discovery. Instead, the routinely abusive nature of the requests, the denial of any avenue for challenge, and the threats of disciplinary action for non-compliance, are hallmarks of a system lacking those procedural safeguards to which Swyers, or anyone, is entitled to under the Constitution.

The complaint asserts that despite a year and a half long investigation, the OED has failed to charge Mr. Swyers with violating any disciplinary rules and he has been unable to pinpoint what violation(s), if any, actually prompted the OED’s investigation. Instead, the complaint alleges, the OED targeted Mr. Swyers’ practice due to the volume of trademark cases he oversees, which has allegedly led to a caseload burden for the USPTO.

The complaint claims violation of Due Process under the Fifth Amendment and Unreasonable Search under the Fourth Amendment.  In addition to injunctive relief, the complaint seeks reimbursement of Mr. Swyers’ legal fees, damages over $300,000 due to lost time, and damage to Mr. Swyers’ professional reputation.

The case is Matthew H. Swyers v. United States Patent and Trademark Office, et al., No. 16-cv-00015-LO-IDD (E.D. Va.).  Stay tuned for further updates as the district court awaits the defendants’ response.

One Comment on “IP Attorney Challenging Constitutionality Of USPTO OED’s “Abusive” Ethics Investigation”

  1. Pingback: TM Lawyer’s Attack on Constitutionality of OED Investigation Dismissed–For Now | IPethics & INsights

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