USPTO Reprimands Patent Attorney for Misusing Confidential Client Information

Michael E. McCabe, Jr.Confidentiality, Discipline0 Comments

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The USPTO publicly reprimanded a patent attorney who used information he learned while representing a former client to file, as named plaintiff, a false patent marking lawsuit for his own benefit.  In re Cipriani, No. D2012

This disciplinary action arose from attorney Glen Cipriani’s work as an associate on a patent litigation on behalf of his former law firm’s client, Lowe’s Home Centers (“Lowe’s), against Stringliner Company. During the course of this representation, Mr. Cipriani researched the possibility of filing a false marking counterclaim under 35 U.S.C. § 292 on behalf of Lowe’s. Under the version of the false marking statute in effect at that time, a party found liable for false patent marking was subject to a fine of $500 for each offense, with half of the recovery going to the plaintiff and half going to the United States.

Mr. Cipriani subsequently left the law firm and joined a new firm. Several months later, Mr. Cipriani and a partner in his new law firm filed a qui tam lawsuit, as co-plaintiffs, for false patent marking against Stringliner and two other entities.

After learning of the lawsuit, a partner in Mr. Cipriani’s former law firm filed a grievance with the North Carolina Bar. The grievance alleged the attorney learned of the factual predicate for the false marking lawsuit while representing Lowe’s and that Lowe’s confidential information was used without consent and to Lowe’s disadvantage.

A disciplinary proceeding was initiated against Mr. Cipriani by the North Carolina Bar. The State Bar concluded Mr. Cipriani violated his duty of confidentiality to his former client Lowe’s because: (1) but for his prior representation, Mr. Cipriani would not have known the information upon which the lawsuit was based; (2) the information relied on in filing the false marking suit was not generally known; (3) Mr. Cipriani used the information for his personal benefit; and (4) his use of the information was detrimental to the interests of Lowe’s. As a result of this misconduct, Mr. Cirpiani was sanctioned with a public censure.

The State Bar found that Mr. Cipriani’s conduct warranted public censure because he failed to acknowledge his wrongdoing, breached his former client’s confidences, potentially foreclosed Lowe’s from later filing a false marking suit, and potentially compromised its settlement position in the patent litigation.  The State Bar stated maintaining client confidentiality is “a fundamental responsibility of attorneys” and respect of that duty is “of the utmost importance to the legal profession.”

After receiving information about the discipline imposed in North Carolina, the OED Director filed a complaint against Mr. Cipriani for reciprocal discipline with the USPTO Director pursuant to 37 C.F.R. § 11.24. The USPTO Director issued a notice to Mr. Cipriani to show cause why the USPTO should not impose the same discipline imposed in North Carolina. Significantly, unlike non-reciprocal discipline cases in which the USPTO bears the burden of proof, in a reciprocal disciplinary proceeding, the practitioner bears the burden of generating a genuine issue of material fact why the same public discipline imposed in another jurisdiction should not be imposed in the USPTO. 37 C.F.R. § 11.24(b)(1)-(3).

In a reciprocal discipline matter, the practitioner is not permitted to re-adjudicate the  disciplinary proceeding from the other jurisdiction. Section 11.24(d) provides four limited grounds for challenging imposition of reciprocal discipline: (1) the procedure elsewhere was so lacking in notice or opportunity to be heard as to constitute a deprivation of due process; (2) there was an “infirmity of proof” in the other proceeding; (3) imposing the same discipline would result in “grave injustice;” or (4) the practitioner was not, in fact, disciplined.

In this matter, Mr. Cipriani tried to challenge the imposition of reciprocal discipline.  He asserted reciprocal discipline was unwarranted for three reasons: (1) the state bar lacked jurisdiction; (2) he was denied due process in the state bar proceedings; and (3) an infirmity of proof existed in the state bar proceedings. These arguments failed.

The USPTO treated the jurisdictional challenge as raising a “grave injustice” argument under 37 C.F.R. § 11.24(d)(3). Applying the seminal decision in Sperry v. Florida, 373 U.S. 379, 402 (1963), the USPTO stated, “the State maintains control over the practice of law within its borders except to the limited extent necessary for the accomplishment of federal objectives.” Accordingly, federal patent law does not preempt a state disciplinary proceeding even when the state discipline is predicated on an attorney’s conduct while working on a patent litigation or prosecution. Since no substantial question of federal patent law existed, the jurisdictional argument was rejected.

The USPTO likewise rejected Mr. Cipriani’s due process argument. The USPTO stated “[i]n disciplinary proceedings, an attorney is entitled to due process, such as reasonable notice of the charges before the proceedings commence.” See In re Ruffalo, 390 U.S. 544, 551 (1968). The USPTO concluded due process was not denied because Mr. Cipriani received notice of all claims, participated in discovery, testified in his own defense, presented evidence, cross-examined witnesses, made objections, and filed motions in support of his positions.

Finally, the USPTO rejected Mr. Cipriani’s allegation that the state bar proceedings suffered from an infirmity of proof. In particular, the attorney argued: (1) Lowe’s was not harmed by his filing of the lawsuit; (2) the information used to file the lawsuit was not confidential; (3) one of the witnesses in the state bar proceeding was not credible; and (4) the false marking lawsuit was not against the former client. The USPTO rejected these assertions as an improper collateral attack on the state bar’s weighing of the evidence.

The USPTO concluded Mr. Cipriani failed to raise a genuine issue of material fact as to why imposition of the same public reprimand was not warranted.  Accordingly, the USPTO issued a public reprimand predicated on the censure issued by the North Carolina bar.

This action demonstrates the difficulty respondents face when trying to challenge the imposition of reciprocal discipline in the USPTO. The standard for raising a genuine issue of fact is nearly impossible to meet.  Indeed, in the six years since Section 11.24 was promulgated, no one has ever succeeded in challenging the imposition of reciprocal discipline by the USPTO.

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