USPTO Disbars Attorney For Engaging In Pattern Of Client Neglect, Deceit, And Misappropriation

Michael E. McCabe, Jr.Discipline, Patent Attorney Disciplinary Matters, PTO Ethics DecisionsLeave a Comment

Never lie, never cheat, never steal. – John Wooden

canstockphoto8466147Patent attorney Rodney K. Worrel should have listened to the sage advice of UCLA’s legendary basketball coach. The California-based attorney has been excluded from practice before the USPTO for engaging in a pattern of misconduct that involved multiple acts of neglect, deceit, and conversion of client funds. Administrative Law Judge Alexander Fernandez determined that Worrel, who had been a member of the patent bar since 1974, engaged in seven separate acts of misconduct and that his conduct warranted imposing the maximum discipline.  See In re Worrel, D2014-06 (ALJ Order 2014).

Misconduct No. 1 – Failure to File Patent Application And Lying To Client

In one matter, Worrel was engaged by an individual to prepare, file, and prosecute a patent application. The client paid $12,795.00 in advance for legal services, government filing fees, and expenses, relating to the patent application. Although the client reviewed and approved a copy of the patent application, Worrel never filed the application and never remitted the filing fees to the USPTO.

For over two years, Worrel deceived his client by regularly providing status updates on the supposedly filed patent application. After dodging repeated attempts by his client to contact him, the client finally reached Worrel by telephone at his home and requested a copy of the patent application he purportedly had filed. Worrel promised he would. Worrel thereafter failed to deliver any documentation to the client regarding his supposed filing of the patent application.

Misconduct No. 2 – Failure to File Patent Application or Return Advanced Fees

In a separate matter, two individuals hired Worrel to prepare, file, and prosecute a patent application for their invention. The clients paid $6,000.00 in advance for legal services, government filing fees, and expenses.

The clients telephoned Worrel multiple times, leaving messages asking that Worrel return their phone calls.  After failing to respond to the clients’ telephone calls, the clients wrote to Worrel and demanded a refund of their $6,000. Worrel failed to respond, never prepared or filed a patent application on behalf of the clients, and never refunded any of the clients’ funds.

Misconduct No. 3 – Failure to File Amendment And Allowing Abandonment Without Client Notice

In another matter, Worrel filed a utility patent application on behalf of two individual clients. The Office later issued a Notice of Non-Compliant Amendment that required a response within one month. Worrel failed to inform the clients about the Notice and failed to respond to the Notice.

Because no response was filed, the Office issued a Notice of Abandonment. Worrel failed to inform his clients of the abandonment or refund any unearned fees.

Misconduct No. 4 – Failure To Respond to Office Action And Allowing Abandonment Without Client Notice

In still another matter, Worrel filed a utility patent application on behalf of a client. The Office issued an Office Action that required a response within three months. Worrel failed to inform the client of the Office Action and failed to file a response.

Consequently, the Office issued a Notice of Abandonment. Worrel never informed the client about the abandonment of the application. After independently learning of the abandonment, the client hired another attorney, who was able to revive the application, albeit costing the client additional fees and expenses. Worrel failed to refund any unearned fees paid by the client.

Misconduct No. 5 – Allowing Abandonment Without Client Notice

In yet another matter, Worrel filed a patent application on behalf of an individual inventor. The USPTO issued an Office Action. Worrel filed a response to the Office Action and included a $555.00 check for a three-month extension of time. The check, however, was returned for insufficient funds, and the Office notified Worrel the application was considered abandoned.

Worrel filed a Petition to Revive the application, stating that the delay was unintentional due to the return of the check for insufficient funds. The Office of Petitions dismissed the petition, however, because Worrel failed to pay the proper petition fee. Worrel failed to inform his client of the Decision on Petition and failed to file a request for reconsideration.

The Office subsequently issued a Notice of Abandonment. Worrel failed to inform the client of the Notice of Abandonment or tell him that the application became classified as abandoned.

Notwithstanding the abandonment, Worrel sent a cover letter and an invoice to the client requesting payment for legal fees and expenses associated with the (abandoned) patent application. Unaware that his application had become abandoned, the client paid the invoice. Worrel never refunded any unearned fees paid by this client.

Misconduct No. 6 – Failure To File Corrected Application And Allowing Abandonment Without Client Notice

Another client paid Worrel $6,000.00 to prepare, file, and prosecute a patent application. Worrel filed the application. The Office subsequently mailed a Notice to File Corrected Application Papers that required a response within two months. Worrel never informed the client of the Notice and never filed corrected application papers.

The Office issued a Notice of Abandonment. Worrel never informed the client of the Notice of Abandonment and never refunded any part of the unearned fees paid by the client.

Misconduct No. 7 – Failure to Cooperate In Disciplinary Investigation

As discussed below, it appears the USPTO learned about some or all of the above-referenced misconduct by virtue of a disciplinary complaint filed against Worrel by the California State Bar Court.

In February, 2013, the OED sent an initial request for information (“RFI”) via certified mail to Worrel’s address on record with OED. When no response was received by the due date, the OED re-sent the initial RFI via certified mail to Worrel’s same address on file with OED. Both RFIs were returned to OED as undelivered and marked “unable to forward.”

Thereafter, the OED located another address for Worrel and sent all previously sent copies of the RFI via certified mail and regular mail to his new address. Someone at Worrel’s new address signed for the RFls.

Worrel failed to respond to the RFls or otherwise contact OED.

iu - Marvin Baxter - Ming Chin - Kathryn Werdegar - Joyce Kennard - Carol Corrigan - Tani Cantil-Sakauye - Sacramento Superior Court - 3rd District - CopyThe California State Bar Disciplinary Complaints

Just prior to the OED’s RFI, on December 10, 2012, the California State Bar filed a four-count complaint against Worrell arising from a matter not included in the matters set forth above but involving substantially similar conduct.  See In re Worrel, 12-O-16562 (Cal. Bar Court Dec. 2012).  The California State Bar complaint alleged Worrell accepted an $8,000 advanced fee to file a patent application, failed to do any work on the application, and failed to return the client’s funds despite repeated requests. In addition, Worrel failed to cooperate with California bar counsel’s investigation.  In his Response to the complaint, Worrel has denied the California Bar’s allegations.

In February 2013, the California State Bar filed a second disciplinary complaint against Worrel.  See In re Worrel, 12-O-17036 (Cal. Bar Court Feb. 2013).  The second California Bar complaint included some of the same client matters discussed above in addition to other matters, all of which involved generally the same allegations – Worrel received an advanced payment to prepare and file a patent application, provided no services, failed to return the advanced payment, and failed to cooperate with bar counsel’s investigation.  Worrel’s Response to the second complaint denies the California Bar’s additional allegations.

The OED Director’s Disciplinary Complaint

USPTO logoIn November 2013, the OED Director filed a Complaint and Notice of Proceedings Under 35 U.S.C. § 32 against Worrel. The complaint sought Worrel’s exclusion or suspension for violations of the USPTO Code of Professional Responsibility (for pre-May 3, 2013 misconduct) and the USPTO Rules of Professional Conduct (for post-May 2, 2013 misconduct).

Although he was represented by counsel in both California State Bar proceedings, curiously Worrel failed to file a response to the OED Director’s complaint.  In April 2014, the OED Director filed a motion for entry of default judgment and imposition of disciplinary sanctions. ALJ Fernandez granted the motion.

In his order granting the OED Director’s motion, ALJ Fernandez explained that, pursuant to 37 C.F.R. § 11.36(e), a failure to respond constitutes an admission of the allegations in the complaint and “may result in entry of default judgment.” Accordingly, the ALJ determined the misconduct alleged in the complaint, as described above, was deemed admitted. Based on the admissions, ALJ Fernandez concluded Worrel had violated a number of the USPTO’s ethical rules.

First, the ALJ found that Worrell violated 37 C.F.R. § 10.112(c)(4), which states that a practitioner shall “promptly pay or deliver to the client as requested by a client the funds, securities, or other properties in possession of the practitioner which the client is entitled to receive.” The rule was violated based on Worrel’s failure to return to his clients government filing fees, unearned legal fees, or patent application materials.

Second, ALJ Fernandez found that Worrel violated 37 C.F.R. § 10.77(c), which states that a practitioner shall not “[n)eglect a legal matter entrusted to the practitioner.” This ethical rule was violated by Worrel’s failure to prepare, file, or prosecute patent applications and by allowing clients’ patent applications to go abandoned without their knowledge or consent.

Third, the ALJ found that Worrel violated 37 C.F.R. § 10.23(c)(3), which prohibits a practitioner from “misappropriate[ing] or fail[ing] to properly or timely remit funds received by a practitioner or the practitioner’s firm from a client to pay a fee which the client is required by law to pay to the Office.” The basis for this violation was Worrel’s acceptance of government filing fees but failing to remit those fees to the USPTO.

In addition, 37 C.F.R. § 10.23(c)(5) states that a practitioner shall not “fail to inform a client . . . . of correspondence received from the Office . . . when the correspondence (i) could have a significant effect on a matter pending before the Office, (ii) is received by the practitioner on behalf of a client or former client, and (iii) is correspondence of which a reasonable practitioner would believe under the circumstances the client or former client should be notified.” ALJ Fernandez found Worrel violated Section 10.23(c)(5) by failing to inform his clients of the various notices, office actions, and decisions in six separate matters.

Still further, 37 C.F.R. § 10.54(a)(1) states that a practitioner shall not “fail to seek the lawful objectives of a client through reasonably available means permitted by law and the Disciplinary Rules, except as provided by paragraph (b) of this section.” The ALJ found that Worrel violated 37 C.F.R. § 10.54(a)(1) by neglecting his clients’ patent applications and allowing those applications to become abandoned without the clients’ knowledge or consent, and by failing to prepare, file, and prosecute the clients’ patent applications.

37 C.F.R. § 10.23(b)(4) states that a practitioner shall not “engage in conduct involving dishonesty, fraud, deceit, and misrepresentation.” The ALJ found that Worrel violated 37 C.F.R. § 10.23(b)(4) by providing false or misleading information to his clients about the status of their patent applications.

37 C.F.R. § 10.89(c)(6) proscribes intentionally or habitually violating the USPTO Code of Professional Responsibility. The ALJ found Worrel violated 37 C.F.R. § 10.89(c)(6) by repeatedly allowing his clients’ patent applications to become abandoned without their knowledge or consent.

Finally, the ALJ found that Worrel’s failure to cooperate in the OED’s investigation violated 37 C.F.R. § 11.801(b), which states that a practitioner shall not “fail to cooperate with the Office of Enrollment and Discipline in an investigation of any matter before it, or knowingly fail to respond to a lawful demand or request for information from an admissions or disciplinary authority . . . .”

USPTO SANCTIONS ANALYSIS

ALJ Fernandez next determined what would be the appropriate sanction for Worrel’s misconduct. In determining whether to sanction a practitioner for violations of the USPTO disciplinary rules, under 37 C.F.R. § 11.54(b), the agency generally considers four factors:  (1) whether the practitioner has violated a duty owed to a client, to the public, to the legal system, or to the profession; (2) whether the practitioner acted intentionally, knowingly, or negligently; (3) the amount of the actual or potential injury caused by the practitioner’s misconduct; and (4) the existence of any aggravating or mitigating factors.  The ALJ determined that consideration of each of these factors weighed heavily in favor of disbarment.

As for the first factor, the ALJ found Worrel violated his duties to his clients and the profession by accepting payment from his clients and allowing applications to become abandoned due to his neglect. Moreover, Worrel ignored his clients’ inquiries, misled his clients when responding to other inquiries, and did not return their payments. Additionally, by failing to honor his contractual agreements with his clients, Worrel “has tarnished the image of patent practitioners and the legal profession as a whole.”

As for the second factor, the ALJ found Worrel’s failure to explain his actions or participate in the disciplinary proceeding constituted a waiver of the opportunity to contest the USPTO’s assertions as to his state of mind.  Accordingly, the ALJ concluded that Worrel’s actions and inactions were deliberate.

Considering the third factor, the ALJ found Worrel’s clients suffered monetary losses by paying Worrel for fees and services that were never incurred or earned. Additionally, their patent applications were abandoned, and thus their intellectual property rights in their inventions were never secured.

Finally, in considering the fourth factor (aggravating and mitigating factors), ALJ Fernandez applied the American Bar Association Standards for Imposing Lawyer Sanctions (“ABA Standards”) when assessing attorney disciplinary sanctions.

ALJ Fernandez found as an aggravating factor Worrel’s substantial experience in the area of practice. In particular, Worrel “has been practicing patent law for thirty-nine years, and thus is fully aware of his legal and ethical obligations to his clients and the possible adverse consequences for their intellectual property rights in their inventions. Nevertheless, he allowed his clients’ patent applications to become abandoned, purposely misled them with regards to the status of their applications, and failed to return payments made to him for fees that were never incurred or earned.”

In addition, the ALJ found as an aggravating factor Worrel’s “pattern of misconduct and multiple offenses” including accepting clients’ money, allowing their applications to become abandoned without consent, failing to file applications, misleading clients about the status of their patent applications, and charging his clients for fees that were either never incurred or unearned.

The ALJ found no evidence of any mitigating factors. In disciplinary proceedings, the burden is on the respondent to raise any affirmative defenses or mitigating circumstances and specify their nexus to the misconduct, and any reason they may provide a defense or mitigation. 37 C.F.R. § 11.36(c) and 11.49. The ALJ stated that by failing to appear and defend this matter, Worrel failed to meet his burden of proving mitigation.

Based on the admitted facts and conclusions of law, the ALJ determined the appropriate sanction was the exclusion of Worrel from practice before the USPTO in all patent, trademark, and non-patent matters.  Worrel may apply for reinstatement five years after the effective date of his exclusion.

 

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