On December 31, 2014, the USPTO Director issued an Order of Reciprocal Discipline excluding a Bellevue, Washington patent attorney from practicing before the Office. Former patent attorney Jeffrey T. Haley’s exclusion followed his voluntary resignation from the State Bar of Washington, where he had been charged with attempted extortion from his former law firm.
The Compensation Dispute
In 1979, Mr. Haley became a member of the State of Washington bar. From approximately 1990 until 2006, he was a member of the intellectual property law firm formerly known as Graybeal Jackson Haley LLP (“Graybeal”). He also was a member of the USPTO bar.
Upon Mr. Haley’s departure from Graybeal, Mr. Haley and Graybeal disputed how much compensation Mr. Haley was owed under the firm’s partnership agreement. The compensation dispute was submitted to arbitration, and in 2012, the arbitrator issued a final award that fully resolved all claims concerning the compensation dispute. The arbitrator awarded Mr. Haley a sum of money, which the firm paid. The arbitrator ruled that Mr. Haley would not receive his attorney fees or costs for the arbitration.
Dissatisfied with the arbitrator’s denial of his request for attorney’s fees and arbitration costs, Mr. Haley began sending email messages to members of his former law firm demanding that they pay him for his attorney fees and arbitration costs, with interest. No good faith basis existed for the award of such fees or costs. Nevertheless, Mr. Haley repeatedly threatened to post publicly a negative review of the Graybeal firm on the internet unless the firm paid him the arbitration attorney fees and costs. The Graybeal firm dissolved in 2014 for reasons unrelated to this matter.
Washington State Discipline
In August 2013, the Washington State Bar filed an ethics complaint against Mr. Haley. The state bar complaint alleged Mr. Haley “had no plausible claim of right” to his attorney fees and arbitration costs. As a result, his threats to post publicly a negative review were “wrongful threats” that constituted the crime of extortion under Washington law. The Washington bar complaint further alleged that “[b)y committing the crime of extortion in the second degree, Respondent violated RPC 8.4(b) and/or RPC 8.4(i).” Washington Rule of Professional Conduct 8.4(b) prohibits a lawyer from committing a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer. Rule 8.4(i) prohibits a lawyer from committing any act involving moral turpitude, corruption, or any illegal act which reflects disregard for the rule of law, regardless of whether the lawyer was criminally convicted for such act.
Mr. Haley failed to contest the Washington bar complaint and instead, in January 2014, he filed a “Resignation in Lieu of Discipline.” In re Jeffrey T. Haley, Proceeding No. 1300055 (Wash. State Bar Ass’n Disciplinary Bd.) Under Washington ethics rules, a lawyer who desires not to contest or defend against allegations of ethical misconduct may resign in lieu of facing further disciplinary proceedings.
Mr. Haley’s resignation from the Washington state bar acknowledged that he was permanently disbarred and that he will not challenge the charges filed in the state bar disciplinary complaint. Furthermore, the resignation provided that Mr. Haley must resign from “all other jurisdictions” and “all other professional licenses” involving the practice of law and that his resignation could be treated as a disbarment by all other jurisdictions in which he was a member.
USPTO Regulations Mandate Identical Discipline
Effective September 15, 2008, the USPTO promulgated rules governing the disciplinary process that must be followed whenever a USPTO practitioner has been publicly disciplined by any other jurisdiction. The USPTO rule on reciprocal discipline, 37 C.F.R. § 11.24, was promulgated “to provide procedures for reciprocal discipline of a practitioner” before the USPTO. 73 Fed. Reg. 47650, at 47655 (Final Rule Aug. 14, 2008). The rule applies whenever “a practitioner who is subject to the disciplinary jurisdiction of the Office  has been publicly censured, publicly reprimanded, subjected to probation, disbarred or suspended in another jurisdiction.” Id.; see also 72 Fed. Reg. 9196, at 9201 (Supp. Not. of Prop. Rule Making Feb. 28, 2007) (explaining under section 11.24 that, “If an attorney has been disbarred or suspended in another jurisdiction, reciprocal discipline before the Office applies regardless of whether the practitioner remains registered as an attorney or agent.”).
The USPTO Director has explained that, “[w]hen a practitioner subject to the disciplinary jurisdiction of the Office is disciplined by another jurisdiction, the USPTO Director is required to impose reciprocal discipline that is identical to the discipline imposed by the other jurisdiction” pursuant to 37 C.F.R. § 11.24. In re Conners, No. D2011-55, at 3 (USPTO Dir. May 30, 2012) (emphasis added); see also In re Shippey, No. D2012-02, at 7 (USPTO Dir. June 11, 2012) (“§ 11.24 requires reciprocal discipline when a practitioner before the office is censured, publicly reprimanded, subject to probation, disbarred or suspended by another jurisdiction.”). The only time the USPTO may not impose the identical discipline is if the attorney or agent, “clearly and convincingly demonstrates, and the USPTO Director finds there is a genuine issue of material fact, as to the standards identified in 37 C.F.R. § 11.24(d).” In re Shippey, No. D2012-02, at 6.
Although the USPTO has only had a reciprocal discipline rule since 2008, the standards codified in 37 C.F.R. § 11.24 “were set forth early in the last century for imposing professional discipline based on a state’s disciplinary adjudication.” In re Haigh, No. D2009-05 (USPTO Dir. Aug. 3, 2009). The legal rationale underlying reciprocal discipline was explained by the Supreme Court of the United States in Selling v. Radford, 243 U.S. 46 (1917). In Selling, the Supreme Court held it “should recognize the condition created by the judgment of the state court” unless “one or all of the following conditions appear”:
That the state procedure from want of notice or opportunity to be heard was wanting in due process; 2. that there was such an infirmity of proof as to facts found to have established the want of fair private and professional character as to give rise to a clear conviction on our part that we could not consistently with our duty accept as final the conclusion on that subject; or 3. that some other grave reason existed which should convince us that to allow the natural consequences of the judgment to have their effect would conflict with the duty which rests upon us not to disbar except upon the conviction that, under the principles of right and justice, we were constrained so to do.
Id. at 51.
Since Selling, “every state in the country has [adopted] a ‘reciprocal’ discipline rule.” See Attorney Grievance Comm’n of Maryland v. Whitehead, 390 Md. 663, 680 n.12 (2006) (surveying the reciprocal discipline rules in every state). As noted in Whitehead, many states have adopted the American Bar Association’s Model Rules for Lawyer Disciplinary Enforcement DR 22 (2001) (“ABA Model Rules”), which states “a judicial determination of misconduct . . . by the respondent in another jurisdiction is conclusive, and not subject to relitigation in the forum state.” 390 Md. at 680 n.12 (citing ABA Model Rule DR 22). Pursuant to the ABA Model Rules, the court “shall impose the identical discipline . . . unless disciplinary counsel or the lawyer demonstrates” that any of the enumerated exceptions set forth in Selling exist. 390 Md. at 680 n.12 (quoting ABA Model Rules DR 22 cmt.). The court in Whitehead further recognized some states require reciprocal discipline with the words “shall” or “will,” while other jurisdictions permit reciprocal discipline based on the word “may.” See id.; see e.g., D.C. Rule of Discipl. Enforc. IV(c) (stating “this Court shall impose the identical discipline” imposed by the other court “unless the attorney demonstrates” one of the Selling exceptions applies).
The USPTO reciprocal discipline rule, 37 C.F.R. § 11.24, is consistent with the ABA Model Rules, which instruct that the reciprocal forum “shall impose the identical discipline” unless one of the Selling exceptions applies and “judicial determination of misconduct by the respondent in another jurisdiction is conclusive, and not subject to re-litigation in the forum state.” Compare ABA Model Rule 22(4) & cmt. with 37 C.F.R. § 11.24(d) & (e) (“a final adjudication in another jurisdiction . . . that a practitioner . . . has been guilty of misconduct shall establish a prima facie case by clear and convincing evidence that the practitioner has engaged in misconduct under § 11.804”). The USPTO Director has interpreted 37 C.F.R. § 11.24 consistent with the plain and unambiguous language, explaining, “[u]nder Selling, state disbarment creates a federal-level presumption that imposition of reciprocal discipline is proper” unless one of the Selling factors applies. In re La Mondue, No. D2011-08, at 4 (USPTO Dir. Nov. 17, 2011). Consequently, “In reciprocal discipline proceedings, it has been held that the first forum’s determination of guilty misconduct is conclusive and not subject to re-litigation in the subsequent forum” absent evidence of the Selling factors. Moatz v. Burmeister, No. D1999-10 (USPTO Dir. Mar. 16, 2004). The USPTO Director, therefore, uniformly interprets 37 C.F.R. § 11.24 as both prohibiting de novo proceedings and providing for “narrow” review of limited issues. See In re Brufsky, No. D2013-12, at 3 (USPTO Dir. Feb. 4, 2014) (holding the standard under Selling is “narrow” and that “[‘a Federal court, or here, the USPTO Director] is not sitting as a court of review to discover errors in the [hearing judge’s] or the [state] court’s proceedings.’”); In re Shippey, No. D2012-02, at 6 (USPTO Dir. June 11, 2012) (explaining 37 C.F.R. § 11.24 provides “no entitlement to a de novo review” of the state disciplinary proceeding and the USPTO’s review is “‘extremely limited’”).
Consistent with prior USPTO decisions, the USPTO was required to impose the same discipline as that imposed by the Washington bar unless Mr. Haley met his burden of proving one of the four Selling factors applies. See In re Conners, No. D2011-55, at 3 (USPTO Dir. May 30, 2012) (ordering reciprocal jurisdiction pursuant to section 11.24 and holding “when a practitioner subject to the disciplinary jurisdiction of the Office is disciplined by another jurisdiction, the USPTO Director is required to impose reciprocal discipline that is identical to the discipline imposed by the other jurisdiction”); In re Portner, No. D2011-44, at 5 (USPTO Dir. June 22, 2012) (ordering reciprocal discipline pursuant to section 11.24 and holding “The Office reiterates that, to prevent the imposition of reciprocal discipline, Respondent is required to demonstrate that he meets one of these [section 11.24(d)] factors – a task that is particularly difficult for Respondent because he stipulated to the facts” in the prior proceeding).
The USPTO Rejects Attempt To Avoid Reciprocal Discipline
In July 2014, the USPTO Director issued Mr. Haley a “Notice and Order Pursuant to 37 C.F.R. § 11.24” informing him that the Director of the Office of Enrollment and Discipline (“OED Director”) had filed a “Complaint for Reciprocal Discipline Pursuant to 37 C.F.R. § 11.24” (“Complaint”). The Complaint requested that the Director of the USPTO exclude Mr. Haley as reciprocal discipline identical to the discipline imposed by the Washington bar. In accordance with 37 C.F.R. § 11.24(b), the Notice and Order provided Mr. Haley with an opportunity to show cause why he should not be excluded from the USPTO bar.
Pursuant to Section 11.24(d), Mr. Haley had forty (40) days to submit a response to the USPTO Director establishing a genuine issue of material fact as to one of four limited factors: (1) denial of due process in the prior proceeding; (2) imposition of the same discipline would impose a grave injustice; (3) there was an infirmity of proof in the state proceeding; and/or (4) the practitioner was not, in fact, disciplined by the other jurisdiction.
In September 2014, Mr. Haley filed a response to the Notice and Order contesting imposition of reciprocal discipline of exclusion before the USPTO. In his response, Mr. Haley raised four arguments. None of his arguments had merit. See In re Haley, D2014-27 (USPTO Dir. Dec. 31, 2014).
First, Mr. Haley asserted the state disciplinary matter was resolved with a resignation, not a disbarment. The USPTO Director found that Mr. Haley submitted a Resignation in Lieu of Discipline and his resignation “could be treated as a disbarment by all other jurisdictions” and he agreed to be bound by the restrictions and duties applicable to a disbarred attorney. The USPTO further found Mr. Haley was registered with the USPTO as a member of the patent bar and thus engages in the practice of patent law before USPTO. Furthermore, a voluntary resignation in lieu of contesting disciplinary charges in other jurisdictions is routinely treated as the equivalent of a disbarment for purposes of reciprocal discipline. See e.g., In re Jaffe, 585 F.3d 118, 124 (2d. Cir. 2009) (“[t]he rules of all of New York’s judicial departments permit reciprocal discipline to be imposed on a New York attorney who resigns from another jurisdiction’s bar while under investigation for possible professional misconduct in that other jurisdiction.”); In re Day, 717 A.2d 883, 886 (D.C. 1998) (attorney’s permanent resignation in the face of a pending disciplinary proceeding was discipline upon which reciprocal discipline may be imposed).
Second, Mr. Haley argued that his threats of negative publicity for non-payment of arbitration attorney’s fees and costs were not extortionate “wrongful threats” but rather was a lawful exercise of his free speech rights. The USPTO rejected this argument as well, noting that Mr. Haley had been charged by the Washington bar with committing criminal extortion, he unsuccessfully presented his free speech argument in Washington, and ultimately decided to voluntarily submit his Resignation in Lieu of Discipline “rather than defend against [the disciplinary] allegations.”
Third, he argued that there was an “infirmity of proof” because he resigned before the state disciplinary proceeding had gone to an evidentiary hearing and adjudicated findings. The USPTO stated that to successfully invoke infirmity of proof as a defense to reciprocal discipline, Mr. Haley must demonstrate that there was “such an infirmity of proof” establishing the charges against him “as to give rise to the clear conviction” that accepting the state discipline would be “inconsistent with [our] duty.” This showing, the USPTO Director confirmed, was particularly difficult because Mr. Haley voluntarily resigned in the face of pending disciplinary charges, and with the explicit knowledge that his resignation could be treated as a disbarment in other jurisdictions. Moreover, it was undisputed that the arbitrator’s Final Award provided no right to recover attorney fees or arbitration costs from the Graybeal firm and Mr. Haley threatened negative publicity against the Graybeal firm if they did not pay these fees and costs to him. Still further, the USPTO Director noted the reason why no final record of evidence in Washington existed was because Mr. Haley chose to voluntarily resign, which ended the need for any further investigation or disciplinary proceedings in that state. See also In re Lebowitz, 944 A.2d 444, 453 (D.C. 2008) (finding that there is no infirmity of proof where reciprocal discipline resulted from attorney’s own voluntary resignation in California).
Fourth, Mr. Haley argued that the USPTO’s disciplinary jurisdiction applies only to registered patent attorneys not registered patent agents, and thus imposition of a reciprocal disbarment would be a “grave injustice.” The USPTO easily rejected this argument because the same ethical standards apply to all “practitioners” before USPTO, regardless of whether the individual is a registered patent attorney or a registered patent agent.
In some cases where a registered patent attorney faces public discipline by a state bar, the attorney may be operating under the misapprehension that state discipline is unimportant because it will only affect their state law license. Not true. On the contrary, public discipline by a state bar – including a public reprimand, suspension, or disbarment – can have significant ramifications on a suspended or disbarred practitioner’s ability to practice before the USPTO. Indeed, since 2008, the USPTO has uniformly and consistently imposed reciprocal discipline in over eighty (80) cases. In each of those reciprocal discipline cases, the USPTO Director imposed the identical discipline that was imposed by the other jurisdiction.
Consequently, while it is theoretically possible to avoid reciprocal treatment before the USPTO, registered patent attorneys and others who practice before the Office in non-patent matters must be very careful about how they litigate state and federal court disciplinary matters. The results of any state or federal court discipline can, and often will, affect the disciplined practitioner’s ability to practice before the USPTO. While no outcome can ever be predicted with certainty, based on six years of USPTO precedent, a practitioner seeking to avoid identical reciprocal discipline before the Patent Office faces an uphill battle.