In re Carl J. Schwedler, Proc. No. D2015-38 (USPTO Dir. Mar. 21, 2016)

Michael E. McCabe, Jr.Neglect, USPTO

Disposition: ALJ’s initial decision recommending entry of default judgment and practitioner’s exclusion from practice before the USPTO became final Agency decision as a matter of law.  Final decision here.

Summary: A patent attorney was charged with multiple counts of ethical misconduct arising from the abandonment of a client’s patent application and failure to cooperate with the OED’s investigation. After failing to respond to the complaint, an administrative law judge entered an initial decision recommending entry of judgment by default in favor of the OED proposing that the practitioner be excluded from practice before the USPTO. Because the practitioner failed to appeal, the ALJ’s initial decision became the USPTO’s final decision as a matter of law, and thus the practitioner was excluded.

Related to USPTO Practice?  Yes

Facts: On October 6, 2015, the OED Director filed a Complaint alleging that Mr. Schwedler, having agreed to take over representation of a client’s patent application and having received prepaid attorney’s fees, failed to file a response to a Final Office Action resulting in the abandonment of the application. In addition, the Complaint alleged that Mr. Schwedler failed to cooperate with the OED’s investigation into the matter.

Mr. Schwedler was registered to practice in patent matters by the USPTO in 1993 and became admitted to practice law in California in 2006. In 2011, a client requested another practitioner represent him in the preparation, filing, and prosecution of a patent application. In June 2013, the USPTO issued a Final Office Action rejecting the application. In September 2013, Mr. Schwedler agreed to take over the representation and he stated that he had prepared a draft response to the Final Office Action and would file the response on or before September 10, 2013. The Client paid $1,500 in advance for the promised patent legal services to be rendered.

Mr. Schwedler did not take any further action on the Client’s behalf in the ’058 application. The USPTO mailed a Notice of Abandonment to prior counsel because Mr. Schwedler had failed to file a revocation of power of attorney with a new power of attorney or change of address.

During the week of January 20, 2014, Mr. Schwedler’s employment was terminated by the law firm where he was employed. On January 30, 2014, a partner in Mr. Schwedler’s prior law firm sent the Client a letter advising the Client that Mr. Schwedler’s employment had been terminated the previous week. The attorney, a Mr. Parker, stated that when cleaning out Mr. Schwedler’s former office, the firm discovered the retention letter entered into by the Client with Mr. Schwedler. Mr. Parker also indicated that Mr. Schwedler had confirmed to Mr. Parker on January 28, 2014, that the Client had “hired [Respondent] in September and that [the Client] intended him to . . . . act as, [the Client’s] patent attorney.” Mr. Parker stated that “we quickly looked on the USPTO website and discovered a notation stating that your patent application was apparently “abandoned-failure to respond to an office action’ as of January 1. 2014.” Mr. Parker concluded his letter by encouraging the Client to contact Mr. Schwedler, and he stated that Mr. Schwedler had advised the firm that “his new contact information should be available through the California State Bar Association.”

On January 31, 2014, and again on February I, 2014, the Client’s son, on behalf and at the direction of the Client, sent an email to Mr. Schwedler inquiring as to the status of the ’058 application. On February 5, 2014, the Client’s son contacted Radoslovich Krogh, P.C. In 2014, the Client was 83 years old, hard of hearing, handicapped, and unfamiliar with computers. As a result, his son, George Yagi, Jr., often acted as the Client’s intermediary. On February 5, 2014, Mr. Schwedler called the Client’s son three times and left two voice mail messages, and sent three successive emails. In his February 5, 2014, email sent at 11:15 A.M., Mr. Schwedler stated that “I have everything in order for filing the response.” On February 5, 2014 at 6:50 P.M., the Client’s son sent an email to Mr. Schwedler informing him that he had viewed the USPTO website, had seen the status of the ’058 application, and requested an explanation as to why the ’058 application had been abandoned.

On February 6, 2014, Mr. Schwedler sent the Client’s son an email stating that “‘[i]n the transfer of [his] files in and out of another firm, the docketing was not entered.’” Mr. Schwedler further stated that “everything is back to normal here, and we are ready to move forward aggressively on your father’s case.” Mr .Schwedler further stated that he had “the response ready to go, it is very good, and I can say that you are in a better position than I initially thought.” Mr. Schwedler advised the Client’s son that “a simple filing of the response and a request for revival will put us back in the game.”

On February 13, 2014, Mr. Schwedler sent the Client’s son an email stating that he was “anxious to file the prepared response and get the [’058] application ‘up and running.” However, at no time did he take any further action on the ’058 application.

In March of 2014, the Client terminated Mr. Schwedler’s representation of him in the ’058 application and secured the services of another registered practitioner, David Millers. On or about March 18, 2014, the Client sent a letter to Mr. Schwedler notifying him that responsibility for the prosecution of the ’058 application had been transferred to Mr. Millers, requesting that he send all files to Mr. Millers, and requesting that the prototype for the invention be returned to the Client. At no time did Mr. Schwedler forward the files relating to the ’058 application to Mr. Millers, or return the prototype to the Client. He did not perform sufficient services to justify his retention of the $1,500 fee paid in advance. He also failed to return any portion of the unearned advanced fees to the Client.

On November 26, 2015, the OED sent, via certified mail, a Request for Information and Evidence Under 37 C.F.R. § l1.22(f) (“First RFI”) to Mr. Schwedler’s address of record with the USPTO regarding his representation of the Client as referenced above. He never responded.

On February 18, 2015, the State Bar of California entered an order of default and transferred Mr. Schwedler to “inactive enrollment” for his failure to timely file a response to certain pending disciplinary charges.

On March 18, 2015, Mr. Schwedler was administratively suspended from practice before the USPTO. On August 13, 2015, the OED sent, via certified mail, a letter to Mr. Schwedler at his address of record with the OED stating that it had not received a response from him to either the First RFI or the Lack of Response letter. Mr. Schwedler did not respond to the August 13, 2015, letter.

As of the date the Complaint was filed, Mr. Schwedler had not responded to any of the OED’s correspondence to him nor has he otherwise communicated with OED during its investigation of his alleged misconduct.

The ALJ found that Mr. Schwendler violated the USPTO Rules of Professional Conduct.

  • 37 C.F.R. § 11.103 proscribes failing to act with reasonable diligence and promptness in representing a client;
  • 37 C.F.R. § 11.104(a)(3) proscribes failing to keep the client reasonably informed about the status of a matter;
  • 37 C.F.R. § 11.104(a)(4) proscribes failing to promptly comply with reasonable requests for information;
  • 37 C.F.R. § 11.115(d) proscribes failing to promptly deliver to a client any funds or property that the client is entitled to receive;
  • 37 C.F.R. § l1.116(d) proscribes failing to surrender papers and property to which the client is entitled and to refund any advance payment of fee or expense that has not been earned or incurred upon termination of the practitioner-client relationship;
  • 37 C.F.R. § 11.804(c) proscribes conduct involving dishonesty, fraud, deceit, or misrepresentation;
  • 37 C.F.R. § l1.801(b) proscribes knowingly failing to respond to lawful demands for information from a disciplinary authority; and
  • 37 C.F.R. § 1l .804(d) proscribes conduct that is prejudicial to the administration of justice.

Because the practitioner failed to appeal, the ALJ’s initial decision became the USPTO’s final decision as a matter of law, and thus the practitioner was excluded.