It is commonplace for IP law firms in the United States to receive referrals for patent and trademark application filing, prosecution, and related services from sources other than the actual client. In one of the most common scenarios, patent and trademark services are directed to a U.S. IP law firm through an intermediary, such as a non-U.S. law firm or client “liaison.” Whatever label is applied to the intermediary, the significant point in this relationship (as far as ethical regulators are concerned) is that someone or something stands in between the USPTO practitioner and the client.
Thirty years ago, the USPTO published in the Official Gazette (OG) ethics “guidance” for patent and trademark practitioners who provide IP services to clients working through non-practitioner intermediaries, including as foreign associates and client liaisons. The OG “guidance”—which has never been abandoned or reversed—addressed certain aspects of the practitioner-intermediary relationship.
In June 2017, the USPTO published a disciplinary decision in In re Mikhailova, Proc. No. D2017-18 (USPTO Dir. June 6, 2017). That decision included some very broad statements of OED/USPTO ethics policy–specifically regarding exactly what ethics rules are implicated by the client-intermediary-practitioner relationship and how the Office expects practitioners to comply with those rules when they provide IP legal services through intermediaries. Notably, the Mikhailova decision stated it was not intended to “contradict” the OG guidance from three decades ago. Instead, the USPTO advised that it was providing notice of “additional, specific guidance” for practitioners who provide IP legal services to clients through non-practitioner intermediaries.
This post is presented in three parts. This part provides a historical perspective, including the OG guidance regarding ethics issues and duties when a practitioner works through an intermediary. Part 2 (to be posted tomorrow) discusses the USPTO’s “additional” guidance provided in the Mikhailova decision. Part 3 (to be posted Wednesday) puts together the old and new directives and addresses how they implicate specific practices of U.S. practitioners and how the ethics rules apply when delivering patent or trademark services working through a foreign associate.
A Historical Perspective
In 1985, the USPTO promulgated its first ethics code: the USPTO Code of Professional Responsibility. 37 C.F.R. 10.20 – 10.112. The USPTO Code was modeled after the ABA Model Code of Professional Responsibility. 50 Fed. Reg. 5158 (Feb. 6, 1985). By the mid-1980s, a number of IP law firms in the United States had already established inbound USPTO patent and trademark business from foreign sources. While that work sometimes came directly from the foreign client, more often than not, the source of the engagement was a referral from a foreign associate—typically a law firm or patent agency located in the home country of the foreign client.
Adoption of the USPTO Code raised concerns among members of the Patent Bar regarding what, exactly, were their ethical duties when dealing with these foreign associate intermediaries. The big question seemed to be whether it was ethical for firms to follow the “instructions” of such intermediaries in light of the PTO Code provisions that prohibited third-parties from interfering with the practitioner’s professional judgment and independence.
To address these concerns, the Commissioner for Patents and Trademarks published in the Official Gazette two “notices”: Practitioner’s Responsibility to Avoid Prejudice to the Rights of a Client/Patent Applicant, 1086 O.G. 457 (Dec. 10, 1987) (the 1987 Notice) and Responsibilities of Practitioners Representing Clients in Proceedings Before the Patent and Trademark Office, 1091 O.G. 26 (May 25, 1988) (the 1988 Notice).
The 1987 Notice
The 1987 Notice stated that its purpose was to “clarify the appropriate course of action for a practitioner to follow when the practitioner is operating through  a corporate liaison or foreign agent.” The 1987 Notice stated that in the foreign associate arrangement,
the registered practitioner may rely upon the advice of the corporate liaison or the client/patent applicant’s foreign agent as to the action to be taken so long as the practitioner is aware that the client/patent applicant has consented after full disclosure to be represented by the liaison or agent.
1086 O.G. at 457 (emphasis added).
The 1987 Notice also explained that when a practitioner is “aware that there is an agreement between the client/patent applicant and the liaison or agent” the practitioner “may fully rely upon the advice of the liaison or agent as to the wishes of the client/patent applicant.”
Finally, the 1987 Notice stated that “if there is, in fact, no such agreement” between the intermediary and the client, then the practitioner only was authorized to communicate with the client: “The registered practitioner must communicate to the client/patent applicant.”
The 1987 Notice failed to cite to any particular ethics rules from the USPTO Code. The 1987 Notice also left many questions unanswered.
For example, the 1987 Notice failed to explain how a patent practitioner was supposed to obtain “awareness” of the “agreement” between the client and the intermediary. The 1987 Notice stated that the practitioner “may” get a copy of the client-intermediary agreement “if they wish.” By its use of this language of discretion, the 1987 Notice apparently meant that “awareness of the agreement” did not mean necessarily that U.S. practitioners were obligated to ask for a copy of the supposed intermediary-client agreement.
The 1987 Notice also provided no indication of what type of “information” must be “disclosed” to the client for the client to be able to provide “consent after full disclosure” to be “represented by the liaison or agent.” Nor did it explain who was required to provide the client with “full disclosure.” In context, the 1987 Notice appears to require the “full disclosure” and client consent to be a part of the “agreement” between the foreign associate and the client, meaning that the “full disclosure” presumably would be written by the foreign associate. But how would a foreign associate know what to say that would satisfy the USPTO’s “consent after full disclosure” standard–or that even such a requirement existed?
On the other hand, if the 1987 Notice meant that the U.S. practitioner was required to receive the “consent after full disclosure” from the client, then that presumably imposed a duty on U.S. counsel to draft appropriate language (“full disclosure”) sufficient to obtain the consent of the client, and then to communicate that “full disclosure” language to the client–either directly or through the foreign associate.
What also was troubling about the 1987 Notice was the absence of any attempt to explain the rationale behind the statement that an unlicensed individual (“corporate liaison” or “foreign agent” who is not a U.S. attorney or registered PTO practitioner) could give legal advice to a client about a U.S. legal matter. The giving of legal advice on “actions to be taken” in proceedings before the USPTO is the sine qua non of practicing U.S. patent or trademark law. The PTO Code only authorizes “registered practitioners” (U.S. attorneys and agents registered to practice before the Office) to give advice on matters relating to the practice of patent law before the USPTO. 37 C.F.R. 11.6 (defining who is authorized to practice in patent matters before the USPTO).
Persons who practice patent law without a license are engaged in the unauthorized practice of law (or “UPL”). And USPTO practitioners who aided a non-practitioner in the unauthorized practice of law before the Office were themselves violating the PTO Code. See 37 C.F.R. 10.47.
The absence of any discussion in the 1987 Notice about how this “guidance” worked in light of the specific rules prohibiting aiding the unauthorized practice of law was made worse by that Notice’s statement that a USPTO practitioner could “fully rely on the advice of” the unlicensed intermediary. The very first canon in the USPTO Ethics Code is the practitioner’s duty to provide competent representation. 37 C.F.R. 10.22(a). How can a U.S. practitioner provide “competent” representation to a client before the USPTO when they are relying on the legal advice from someone who is not authorized to practice U.S. patent or trademark law? And isn’t the U.S. practitioner’s reliance on the unlicensed person’s “advice” the aiding of the unauthorized practice of law?
Unfortunately, the 1987 Notice failed to consider, discuss, or address any of these questions.
The 1988 Notice
In 1988, the USPTO published another Official Gazette notice. The 1988 Notice was “intended to remind practitioners of certain aspects of their responsibilities in representing clients” before the USPTO.
One of the “certain aspects” is the duty to know who is the “client.” The Office explained that “practitioners are expected to know the identities of their clients” and the PTO “will presume that practitioners know” who are their clients.
The 1988 Notice answered the question of who is “the client” when a USPTO practitioner is working through an intermediary. The Notice explained the intermediary was not the “client” even if the intermediary is providing the practitioner with “instructions.” According to the 1988 Notice, “[t]he fact that a U.S. practitioner receives instructions from the inventor or trademark owner through a foreign attorney or agent does not change the fact that the client is still the inventor or trademark owner rather than the foreign attorney or agent.”
The 1988 Notice again addressed the practice of receiving “instructions” from a client intermediary. And this time, the USPTO actually discussed this practice in the context of two specific ethics rules:
37 C.F.R. 10.68(a), which prohibits practitioners from accepting payment “from one other than the practitioner’s client for the practitioner’s legal services to or for the client” unless “the practitioner’s client provides consent after full disclosure”; and
37 C.F.R. 10.68(b), which prohibits a practitioner from permitting anyone who recommends or pays the practitioner to render legal services for another to “direct or regulate the practitioner’s professional judgment in rendering such legal services.”
With respect to these two specific “aspects” of the practitioner’s “responsibilities” in representing a client through an intermediary, the 1988 Notice had this to say:
In practice, it is common for instructions relating to the application of an inventor or trademark owner, who is the client of the U.S. practitioner, to be passed to the U.S. practitioner through intermediaries, such as corporate liaisons or foreign agents. Clearly, a client may choose to use a corporate liaison or a foreign agent to convey instructions, etc., to a practitioner. In such an arrangement, the practitioner may rely upon instructions of, and accept compensation from, the corporate liaison or the foreign agent as to the action to be taken in a proceeding before the Office so long as the practitioner is aware that the client has consented to have instructions conveyed through the liaison or agent. See 37 CFR 10.68(a) and (b). An agreement between the client and the liaison or agent establishes an agency relationship between the liaison or agent and the client such that the U.S. practitioner can rely upon the liaison or agent as the representative of the client for the purpose of communicating the client’s instructions about the proceeding to the U.S. practitioner.
The 1988 Notice also addressed the intermediary-client “agreement.” It explained that “A practitioner could secure evidence that such an agreement exists by having a patent or trademark applicant sign a statement to that effect at the same time that the power of attorney is executed.” The 1988 Notice provided sample language that “could be inserted in an oath, declaration, or power of attorney form” to provide evidence of the “agreement”:
The undersigned hereby authorizes the U.S. attorney or agent named herein to accept and follow instructions from ___________ as to any action to be taken in the Patent and Trademark Office regarding this application without direct communication between the U.S. attorney or agent and the undersigned. In the event of a change in the persons from whom instructions may be taken, the U.S. attorney or agent named herein will be so notified by the undersigned.
Finally, the 1988 Notice explained that without the existence of an agency relationship between the liaison or agent and the client, a practitioner was bound by 37 CFR 10.68(b) to “not permit a person who recommends, employs, or pays the practitioner to render legal services for another, to direct or regulate the practitioner’s professional judgment in rendering such legal services.”
Other than addressing the two ethics rules regarding third-party payment of legal fees and the duty to exercise independent professional judgment, the 1988 Notice failed to address any other ethics rules.
Although it clarified some of the “guidance” from the 1987 Notice, the 1988 Notice still left many questions unanswered.
First, the 1988 Notice failed to explain what type of “information” must be “disclosed” to the client for the client to be able to provide “consent after full disclosure” to be “represented by the liaison or agent.”
Second, the 1988 Notice failed to explain who was required to provide the client with the requisite “full disclosure”–the practitioner or the intermediary.
Third, the 1988 Notice failed to address the practice of law by an unlicensed intermediary, or how the “common practice” of allowing unlicensed persons serving in a representative capacity to give client’s legal advice relating to USPTO legal matters, and the following of such instructions, does not constitute aiding the unauthorized practice of law.
Fourth, the 1988 Notice failed to address how this “common practice” of relying upon the legal advice of an unlicensed person regarding a U.S. legal matter could possibly comport with the practitioner’s duty to provide the client with competent legal services.
Thirty years after the two OG Notices, the USPTO has finally provided additional guidance on the ethics of dealing with intermediaries.
Part 2 tomorrow: The USPTO’s 2017 “updated guidance” on ethics issues when working through non-practitioner intermediaries.