In re Joseph Stecewycz, Proc. No. D2014-15 (USPTO Dir. May 5, 2016)

Michael E. McCabe, Jr.Misrepresentation, Neglect, Recordkeeping, USPTO

Disposition: ALJ’s initial decision recommending patent practitioner’s two-year suspension was affirmed by the USPTO Director.  The practitioner’s subsequent request for reconsideration of the USPTO Director’s final decision was denied.  Final decision here, and Order denying reconsideration request here.

Summary: The OED Director charged a patent practitioner for violating four ethics rules in connection with his representation of a client.  The patent attorney was accused of submitting a debit card to the USPTO that was declined, allowing his client’s application to go abandoned, and not advising his client of either fact: 3 7 C.F.R. § 10.23(c)(3) (proscribing failing to properly or timely remit funds from a client to the Office); 37 C.F.R. § 10.23(b)(4) (proscribing engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation); 37 C.F.R. § 10.23(b)(5) (proscribing engaging in conduct that is prejudicial to the administration of justice); and 37 C.F.R. § 10.77(c) (proscribing neglect of a legal matter entrusted to the practitioner).  An ALJ issued an initial decision in favor of the OED Director on all counts and recommending a two year suspension and order of restitution of $405.  On appeal, the USPTO Director affirmed the ALJ in all respects with the exception of the amount of restitution owed, which the USPTO Director ordered increased to $1,110.  The patent attorney’s subsequent request for reconsideration was denied.

Related Matter:  Request for reconsideration denied, In re Joseph Stecewycz, Proc. No. D2015-15 (USPTO Dir. Jan. 17, 2017)

Related to USPTO Practice?  Yes

Facts:  In 2010, Randal S. Turner retained Mr. Stecewycz to review and continue the prosecution of previously-filed U.S. Patent Application No. 12/102,912.  Mr. Turner agreed with the attorney’s advice to file a CIP application.  Mr. Stecewycz advised the client that he would not charge him with any fees for the filing, but only requested the client to pay the USPTO filing fees.   Mr. Turner sent a check in the amount of $560 for the USPTO filing fees.

The attorney authorized payment of $462 for the filing fees associated with the CIP application via a charge to his debit card.  The payment was declined.  The USPTO issued a Notice to File Missing Parts giving the applicant two months to pay the filing fees, plus a surcharge of$65 for late submission of the filing fees to avoid abandonment. The total fees owed, according to the Notice, were $527

The attorney filed a Response to the Notice to File Missing Parts, which stated that a payment of$527 was being submitted under separate cover.  He authorized payment of $527 for the filing fee plus the surcharge for late submission of filing fees via a charge to his debit card.  The payment was again declined.

The Office sent a Notice of Incomplete Reply, giving the applicant two months to pay the filing fees owed to avoid abandonment. The attorney again submitted his debit card, which was declined yet again.  As a result Appellant’s failure to pay the filing fees, the CIP went abandoned.  The attorney failed to advise Mr. Turner of the abandonment of his patent application when he received notice in 2011. On September 17, 2012, Mr. Turner contacted the attorney about the status of his patent application, but the attorney did not at that time advise Mr. Turner that his application had become abandoned and stated that his application was “still on track.”  Mr. Turner only found out his application was abandoned when he contacted the USPTO in January 2013.

In February 2013, Mr. Turner filed a Petition for Revival of his patent and paid an additional $945 in filing fees to revive his application that his (now former) attorney caused to be abandoned and a $65 surcharge.  In May 2013, the attorney returned $540 in filing fees Mr. Turner prepaid to Appellant and promised he would send money to cover the additional fees paid to revive the application.  He never did.

The Office of Enrollment and Discipline investigated the client’s grievance.  The attorney failed to timely submit responses, and when he did respond, his responses were incomplete.  At no time during the OED investigation did the attorney produce requested financial records.

The OED filed a disciplinary complaint.  During discovery, the OED requested bank records and answers to interrogatories relating to the attorney’s financial accounts.  Again, incomplete responses were provided, requiring a motion to compel.  The attorney subsequently failed to appear at the disciplinary hearing before the ALJ.

The ALJ concluded that the attorney engaged in four types of misconduct: (1) repeatedly submitting a debit card to the USPTO that was repeatedly declined for payment, despite having received the required filing fees from his client; (2) repeatedly failing to submit proper payment of required filing fees to the USPTO and/or properly reply to Office Actions, which ultimately resulted in the abandonment of his client’s patent application; (3) failing to advise his client that filing fees had not been timely paid; and (4) failing to inform his client that his patent application went abandoned.

The ALJ rejected the attorneys’ argument that he simply “did not know” why his debit card was rejected.  Bank records obtained during discovery, however, established that the attorney had insufficient funds to cover the filing fees.  The ALJ further found that the attorney not only “failed to communicate to his client the critical fact that the application had been abandoned, Appellant affirmatively misrepresented the status of the application in communications with Mr. Turner.”

The USPTO Director affirmed all of the ALJ’s findings of fact and conclusions of law.  With respect to the failure to pay the pre-paid fees to the USPTO, the Director found that this conduct violated 37 C.F.R. § 10.23(a), wjhich prohibits practitioners from engaging in “disreputable or gross misconduct.” 37 C.F.R. § 10.23(a).  The USPTO Director explained that:

USPTO regulations do not define what constitutes disreputable or gross misconduct, but case law has provided guidance on what kind of conduct qualifies. “[D]isreputablc conduct has generally included unprofessional conduct. .. understood to include any conduct violative of the ordinary standard of professional obligation and honor.”  In re Lane, Proceeding No. D2013-07, at 12 (USPTO Mar. 11, 2014) (quoting Poole v. United States, CIV. A. 84-0300, 1984 WL 742 (D.D.C. June 29, 1984))6; see also 50 Fed. Reg. 5158 (Feb. 6, 1985) (Practice before the Patent and Trademark Office) (citing Poole). The disciplinary rules establish a standard of professional conduct “below which no practitioner can fall without being subject to disciplinary action.” See 3 7 C.F.R. § 10.20(b ). Therefore, conduct that violates a disciplinary rule necessarily involves disreputable conduct and constitutes a violation of§ 10.23(a). In re Lane, Proceeding No. D2013-07, at 12.

The USPTO Director also found that the attorney’s conduct violated the rule prohibiting a USPTO practitioner from engaging in “conduct involving dishonesty, fraud, deceit, or misrepresentation.” 37 C.F.R. § 10.23(b)(4). The USPTO Director found that the attorney violated this rule by his misrepresentations to his client as well as by presenting payments that could not be processed.  In finding the latter to fall within the scope of Section 10.23(b)(4), the USPTO Director relied upon dictionary definitions for the meaning of  “deceit,” “dishonesty,” and “misrepresentation.”  The Director stated that “depositing checks drawn on insufficient funds has been found to constitute dishonest behavior.”  In support, the Director cited In re King, Proceeding No. 02015-29 (USPTO May 26, 2016) (authorizing payments to the USPTO drawn on accounts containing insufficient funds and thus resulting in the payments being dishonored violates §10.23(b)(4) which proscribes engaging in conduct involving dishonesty, fraud, deceit or misrepresentation) and In re Diaz, Proceeding No. D2008-10 (USPTO Mar. 13, 2009) (presenting checks drawn on a bank account with insufficient funds is a violation of §10.23(b)(4) which proscribes engaging in conduct involving dishonesty, fraud, deceit or misrepresentation).

The USPTO Director further found that the attorney’s conduct was “prejudicial to the administration of justice”  in violation of 37 C.F.R. § 10.23(b)(5) and 37 C.F.R. § 11.804(d).  The Director stated that:

“an attorney engages in such conduct “when his or her conduct impacts negatively the public’s perception or efficacy of the courts or legal profession.” Attorney Grievance Comm ‘n v. Rand, 981 A.2d 1234, 1242 (Md. 2009). An attorney’s inaction can be prejudicial to the administration of justice. See, e.g., In re Ivey, Proceeding No. D2013-22 (AL.I March 7, 2014), at 10 (finding that respondent violated§ 10.23(b), which proscribes conduct that is prejudicial to the administration of justice, by failing to inform his clients of Notices to File Missing Parts, non-final Office actions, and Notices of Abandonment).

The USPTO Director agreed with the ALJ that the attorney’s repeated failure to timely submit the filing fees, which led to the abandonment of the client’s patent application, as well as his failure to inform his client of the Notice to File Missing Parts and the subsequent abandonment, were “prejudicial to the administration of justice.”

The USPTO further found that the attorney’s conduct during the OED Director’s investigation was prejudicial to the administration of justice.  “Appellant failed to provide timely responses lo OED’s RF!s, provided evasive answers to the RF!s, and did not provide the requested information to the OED during the investigation”, citing Attorney Grievance Comm ‘n v. Rose, 892 A.2d 469, 475 (2006) (an attorney’s failure to among other things, respond ‘”promptly, completely and truthfully respond to Bar Counsel’s requests for information, to keep his client advised of the status of the representation and to diligently represent the complainant constitutes conduct which tends to bring the legal profession into disrepute and is therefore prejudicial to the administration of justice.”‘)

Furthermore, the USPTO Director affirmed the ALJ’s finding that the attorney neglected his client.  This was the fourth rule violated by the attorney.  37 C.F.R. § 10.77(c) (proscribing neglect of a legal matter entrusted to the practitioner)

Finally, the USPTO Director confirmed that a two-year suspension was appropriate.  The Director was particularly persuaded by the fact that the attorney’s conduct was intention, the attorney failed to cooperate in the OED investigation, the attorney failed to participate in the disciplinary hearing, and the attorney failed to demonstrate any remorse for his misconduct.

In May 2016, the attorney moved for reconsideration.  In January 2017, the USPTO Director denied the request.  The USPTO Director found that the sole grounds for such “extraordinary” relief is newly-discovered evidence, errors in law, or errors of fact.  Since the attorney failed to present any such evidence or to identify any errors of fact or law, his request for reconsideration was denied.