State Bar Discipline Can Be Hazardous To IP Attorneys’ Right To Practice Before The USPTO (Part 1 of 2)

Michael E. McCabe, Jr.IP Ethics, Reciprocal Discipline, USPTO Director DecisionsLeave a Comment

Beware of everything photoConsider the following – a patent attorney is investigated and charged by her state bar for violating the state’s code of ethics.  The patent attorney believes her state law license is not particularly relevant or necessary because 100% of her practice is dedicated to patent prosecution.  Therefore, to make the state bar matter “go away” with as little pain as possible, she accepts state bar counsel’s offer of a two-year suspension.

Before the ink is dry on the settlement papers, the attorney has already updated her letterhead and profile on her law firm website and social media to indicate that she is a patent agent, not a patent attorney.  She also notifies all of her patent prosecution clients that her change in status will not affect her ability to continue representing them in patent prosecution matters before the USPTO.

Life is good, and the attorney believes she has beaten the system.  Then comes the real trouble.

Surprise envelopeThe attorney receives a certified letter, return receipt requested, from the USPTO’s Office of Enrollment and Discipline (“OED”).  This is never a good sign.

The OED letter includes a notice to show cause within 40 days why the USPTO should not ban the attorney for two years from practicing before the Office in patent matters predicated on the two year suspension imposed by her state bar.  “Two year suspension?  What gives?  I thought this was already finished!”

Not so soon.  Much to her dismay, the attorney has just learned, the hard way, about what the bar refers to as “reciprocal discipline.”

“Reciprocal discipline” is a process for disciplining an attorney in a second jurisdiction after the attorney has been ethically disciplined by a first jurisdiction.  Pursuant to 37 C.F.R. § 11.24, a patent or trademark attorney who is publicly disciplined in another jurisdiction is subject to reciprocal discipline by the USPTO, even if the attorney’s conduct has nothing to do with their practice before the Office. And while it is theoretically possible for an IP practitioner to avoid imposition in the USPTO of the same discipline that was imposed by a state bar, history is not on their side.  On the contrary, in the six-plus years since the USPTO first adopted its rule on reciprocal discipline, not a single practitioner has ever succeeded in defeating the Office in a reciprocal disciplinary proceeding.  The practitioner success rate: 0%.

While the USPTO’s unblemished record in proceedings under Section 11.24 might seem obnoxiously lopsided, the numbers are not that surprising once consideration is given to the nature of reciprocal discipline and the standard applicable in such matters. Two questions commonly arise when a USPTO practitioner has first been publicly disciplined by another jurisdiction.

First, can the practitioner or OED Director re-litigate the disciplinary action before the USPTO?

Second, regardless of whether they can re-litigate, can either party (the practitioner or the OED Director) challenge, before the USPTO, the disciplinary sanction imposed in the other jurisdiction.

Answers to these questions are set forth in 37 C.F.R. § 11.24. Before delving into the weeds of Title 37, however, some higher level background may aid understanding of the analysis codified in Section 11.24. The starting point is the decision of the Supreme Court of the United States in Selling v. Radford, 243 U.S. 46 (1917), which is the seminal case on reciprocal discipline. See In re Portner, No. D2011-44, at 4 (USPTO Dir. June 22, 2012) (acknowledging reciprocal discipline under 37 C.F.R. § 11.24 based on Selling).

Selling involved an attorney admitted to the Michigan and United States Supreme Court bars, who was disbarred in Michigan. Id. at 47. The Solicitor General of the United States subsequently sought the attorney’s disbarment from the Supreme Court based on the Michigan disbarment. Id.

The Supreme Court observed the loss of an attorney’s right to practice in one jurisdiction “must in the nature of things furnish adequate reason in every jurisdiction for taking away the right to continue to be a member of the Bar in good standing.” Id. at 49. The Court explained “we have no authority to re-examine or reverse as a reviewing court the action of the Supreme Court of Michigan.” Id. at 50. The Court further found “the necessary effect of the action of the Supreme Court of Michigan . . . unless for some reason it is found that it ought not to be accepted or given effect to” is to “absolutely destroy” the attorney’s “right to continue to be a member of this Bar.” Id.

The Supreme Court held it “should recognize the condition created by the judgment of the state court” unless “one or all of the following conditions appear”:

1.That the state procedure from want of notice or opportunity to be heard was wanting in due process; 2. that there was such an infirmity of proof as to facts found to have established the want of fair private and professional character as to give rise to a clear conviction on our part that we could not consistently with our duty accept as final the conclusion on that subject; or 3. that some other grave reason existed which should convince us that to allow the natural consequences of the judgment to have their effect would conflict with the duty which rests upon us not to disbar except upon the conviction that, under the principles of right and justice, we were constrained so to do.

Id. at 51.

The Selling case planted the seeds for a process that is today uniformly referred to as reciprocal discipline. Since Selling was decided, “every state in the country has [adopted] a ‘reciprocal’ discipline rule.” See Attorney Grievance Comm’n of Maryland v. Whitehead, 390 Md. 663, 680 n.12 (2006) (surveying the reciprocal discipline rules in every state). As noted in Whitehead, many jurisdiction have adopted, either verbatim or in substance, the ABA’s Model Rules for Lawyer Disciplinary Enforcement  DR 22 (2001) (“ABA Model Rules”). The Model Rules state “a judicial determination of misconduct . . . by the respondent in another jurisdiction is conclusive, and not subject to re-litigation in the forum state.” 390 Md. at 680 n.12 (citing ABA Model Rule DR 22).

Pursuant to the ABA Model Rules, the court “shall impose the identical discipline . . . unless disciplinary counsel or the lawyer demonstrates” that any of the enumerated exceptions set forth in Selling exist. 390 Md. at 680 n.12 (quoting ABA Model Rules DR 22 cmt.). The court in Whitehead further recognized some states require reciprocal discipline by their use of the words “shall” or “will,” while in other jurisdictions reciprocal discipline is permissive, not mandatory. See e.g., D.C. Rule of Discipl. Enforc. Rule XI, Section 11(c) (stating reciprocal discipline “shall be imposed” in the District of Columbia “unless the attorney demonstrates” one of the Selling exceptions applies).

USPTO logoThe USPTO Rule on reciprocal discipline, 37 C.F.R. § 11.24, was promulgated “to provide procedures for reciprocal discipline of a practitioner” before the USPTO.  73 Fed. Reg. 47650, at 47655 (Final Rule Aug. 14, 2008). The rule applies whenever “a practitioner who is subject to the disciplinary jurisdiction of the Office [] has been publicly censured, publicly reprimanded, subjected to probation, disbarred or suspended in another jurisdiction.” Id.; see also 72 Fed. Reg. 9196, 9201 (Supp. Not. of Prop. Rule Making Feb. 28, 2007) (explaining under section 11.24 that, “If an attorney has been disbarred or suspended in another jurisdiction, reciprocal discipline before the Office applies regardless of whether the practitioner remains registered as an attorney or agent.”).

Section 11.24 sets forth a step-by-step procedure that applies whenever a “practitioner” (i.e., an individual subject to the disciplinary jurisdiction of the USPTO) has been ethically disciplined by another jurisdiction.

As a threshold matter, the procedure in Section 11.24 is a significant departure from how the Office normally initiates and prosecutes practitioners for violating the USPTO’s ethical rules. In the context of the “usual” (non-reciprocal discipline) action, the OED Director convenes a panel of the Committee on Discipline, which serves as a kind of grand jury.

In a non-reciprocal discipline case, the Committee on Discipline decides whether the OED Director has shown that probable cause exists to file disciplinary charges. The burden of proving probable cause is not particularly onerous, especially since the practitioner is not permitted to appear and it is the OED Director’s “show.”

If (more likely when) probable cause is found, the OED Director in a non-reciprocal discipline case files a disciplinary complaint with an administrative law judge. 37 C.F.R. §§ 11.32, 11.34. The matter then proceeds like a typical administrative agency adjudication, including pleadings, motions practice, discovery, and a trial before the ALJ. 37 C.F.R. §§ 11.34-11.54. In such proceedings, the OED Director bears the burden of proving, by clear and convincing evidence, the practitioner violated one or more of the Office’s ethics rules. The initial decision of the ALJ becomes final in thirty (30) days unless one of the parties seeks review by the USPTO Director, in which case the Director makes the final decision. 37 C.F.R. §§ 11.55-11.56.

A reciprocal discipline proceeding, in contrast, follows a completely different set of rules, before a different tribunal, applying a different standard of proof, imposed on a different party, based on different—and much more limited—issues than in the “usual” non-reciprocal disciplinary case. Title 37, Section 11.24(a) requires the OED Director to file with the USPTO Director (not an ALJ) a complaint for reciprocal discipline predicated on the discipline imposed in the other jurisdiction. The complaint is filed without Committee on Discipline involvement. The USPTO Director is then required to provide the practitioner with:

  • A copy of the record or order regarding the public censure, public reprimand, probation, disbarment, suspension or disciplinary disqualification from the other jurisdiction;
  • A copy of the USPTO’s reciprocal discipline complaint; and
  • An order directing the practitioner to file a response with the USPTO Director and the OED Director, within forty days of the date of the notice establishing a genuine issue of material fact showing why the imposition of the identical public discipline is unwarranted.

37 C.F.R. § 11.24(b)(1)-(3).

Coming up tomorrow – What happens next?

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