Patent Prosecution Conflicts

I've had the privilege of traveling the country speaking on conflicts in patent prosecution.  Some things are pretty clear to me and those I spoke to, other things people disagreed on.  I've been pretty silent here (note to others: do not agree to write 2 books in one year, do 2 new preps, and give 10 lectures), and hope to start a thread on this topic generally, and with respect to specific examples.

First example:  Lawyer in prosecuting application for Client A receives an office action rejecting a claim over a prior art reference.  Lawyer looks, and that reference is owned by another Client, Client B. 

Is this a conflict at all?  Some people say that any response by the lawyer constitutes an adverse representation, even if the firm had nothing to do with obtaining the prior patent, and even if the firm's representation of the client who owns that patent are completely unrelated to the subject matter in prosecution.  Others say that, in the abstract it's not a conflict, but can become one where, for example, the lawyer would be arguing that the client's patent is invalid (say, e.g., that it lacks support for the breadth argued by the PTO).  Others say that that even that isn't an adverse representation.

In the background (and subject to another post, below) are two ethics opinions which both say it's per se unethical to offer invalidity (or non-infringement) opinions to one client about another client's patent.  Wrongly, they view this as "helping to invalidate" a patent.  (What an opinion does is, if it's done right, help one client to establish a good faith believe that it is not infringing a valid patent; it is a shield against damages, not a sword against validity.)  If you take those opinions at face value, then arguably this office action is "as adverse" as an opinion.

What sayeth you?

Comments

[J]

If you can never respond to a reference prosecuted by your firm, you will not be able to take on more than one client. I receive prior art references from unrelated technologies on a regular basis. If I cannot guarantee to my client that I will be able to respond (I would have to forward prosecution to a different firm?) that's going to create a competent representation problem.

However writing an adverse opinion about a prior art reference that belongs to a client is a problem. Any statement regarding the validity of a client's patent is an issue. Of course, you also cannot provoke an interference. But arguing that a feature in your patent appliation is not in the prior art patent should be legitimate.

[David Hricik]

Do you, or should you, be required to get consent from a client? E.g., put in the engagement letter: "Welcome aboard. I prosecute patents for clients in closely related areas of technology, and so in prosecuting for another client, the office may cite a patent that you own. You recognize that I may, as a result, argue that an examiner is reading a patent you own too broadly, or otherwise argue with the PTO about its characterization. I will not do so, howevever, if I obtained the patent for you..."?

With respect to your comment about invalidity, what if in response to an office action, I write: "I traverse your reliance on the '123 patent. If that patent is interpreted as broadly as the examiner contends, it lacks support" etc.

[Peter Haas]

I believe that the ethical rules imposed by the state bar, the patent bar, or both would create a conflict in this first scenario. I must disagree, therefore, with this comment:
"If you can never respond to a reference prosecuted by your firm, you will not be able to take on more than one client. I receive prior art references from unrelated technologies on a regular basis. If I cannot guarantee to my client that I will be able to respond (I would have to forward prosecution to a different firm?) that's going to create a competent representation problem."

This comment, however, raises an good point, what about clients with non-analogous art. I think under certain circumstances a waivable conflict may arise when there is non-analagous art.

[Isaac]

I offer the following thoughts for feedback:
As long as the claims which you helped secure for your new client (A) do not overlap with "claimable" subject matter for the other client(B), it seems ok IP-wise. Business considerations (i.e. same competitive arena) may be altogether a different issue. Any thoughts?

[J]

Absolutely you should get consent from the client. The engagement letter should clarify that you do represent multiple clients in related fields.

I have received references from the amateur radio technology area for patents that were in the semiconductor processor area. So I can't quite see how I can make sure that I don't get references from other clients, unless I only have one client in each space, computer-related, bio, and chem. And realistically, that's not possible for most of us. I represent a lot of start-ups in the software area, and yes, I do periodically get patents I prosecuted as references.

With respect to the proposed argument: "I traverse your reliance on the '123 patent. If that patent is interpreted as broadly as the examiner contends, it lacks support," I would be comfortable making that argumentn *only* if the Examiner's interpretation was truly ridiculously broad. I don't think I want to make comments limiting the scope or validity of patents I have prosecuted.

[Milind Sathe]

There is no conflict. If the invention happens to be shadowed by prior art, it is. An agent or attorney is not supposed to invent. He is supposed to prosecute on the instructions from his client. Novelty, non-obviousness are for the allged invention. Agent/Attonrney at best can distinguish between the prior art and alleged invention. In doing so he is not putting clients' interests at jeopardy at all. Reason being if there is a patentable difference, it will remain.

[drm]

I don't see a problem unless there are intefering claims issues, or you are denigrating the the prior art client's patent. Usually it is a case of explaining how the prior art fails to disclose a limitation, or there is no suggestion to combine.

Any other rule would be the death knell of patent prosecution in large firms, particularly large general firms.

[Alun Palmer]

The first scenario is almost a daily occurrence, and I don't perceive it as a conflict. Prosecution is theoretically non-adversarial, which is at least true between the two clients, if not entirely so between you and the PTO! OTOH, if you are likely to get citations that you have prosecuted, that is more of a problem.

The second scenario I do see as a conflict, but I would say that the client ought to prefer to get an opinion from someone with no axe to grind, hemce it should be relatively easy to decline. I am a patent agent, and I don't provide this type of opinion anyway.

[Robert Groover]

This can happen, particularly with mischievious Examiners. (I had one who took GREAT pleasure in citing a Groover et al. patent of my former employer against my current clients' cases.)

My general comment would be that caution is required. Elements of the problem are:

1) Some well-known patent firms have taken the line that there are no conflicts in ex parte representation. I think that's a ridiculous overstatement, but the ex parte context does simplify things somewhat. (However, as others have noted, any whiff of potential interference should ring alarm bells.)

2) The CLAIMS of a reference patent are almost never discussed in ex parte prosecution, which further simplifies matters.

3) A clear practical problem is when a relied-on reference is arguably non-enabling.

4) A vaguer problem is that references must very often be explained, and such explanations very often lead to discussions of what the reference does NOT teach. Any such discussion, if made by the reference owner, might be an estoppel.

5) I see no problem if a reference is of record but not relied on. The same reasoning might arguably extend to secondary references which are cited merely for industry context.

6) If we make a statement for client A which would create estoppel if made on behalf of client B, we have a large potential problem.

7) Conversely, if we later make statements on behalf of Client B (during enforcement) which appear to contradict previous statements made to the PTO for Client A, we have another large potential problem.

Suggestions:

A) Alert all attorneys to flag any instance where a relied-on reference is owned by another client.

B) I like to be pretty cautious about avoiding multiple representations in similar technologies, and this question is just one good reason why.

C) I just don't see any very safe general technique for making statements about another client's patent - disclaimers are going to be ineffective, and there's a lot of risk of annoying your clients anyway.

D) Discussing published PCT applications is maybe a little safer, but not totally safe.

==================

[Rakesh Prabhu]

Hi David,

I consider the situation to be conflicting. If not for anything else, but to hold the trust, wich the client has bestowed upon you. In such situation, I would return the brief and suggest my leaving client with an attorney reference (if requested for).

Rakesh Prabhu,
Patent Attorney

[Dennis Crouch]

One thing that we are worried about here is the potential that the attorney's remarks regarding the prior art patent will serve as some sort of file-wrapper estoppel if that prior art is ever asserted. Is there any statute or precedent that would support this type of estoppel?

[Andrew Sutter]

Aside from ethical issues, isn't there is also a business/customer relations risk if Client A who owns a prior art patent ever pulls up the file wrapper on Client B's patent, and sees how you've argued against the Client A reference? The fact that you probably weren't discussing Client A's claims could be a subtlety easily missed in the resulting umbrage, to your detriment. I'd concur with Robt. Groover's suggestions above, esp. B), and doubly especially if you have a huge client in a particular field.

[David Hricik]

Wow - thanks. I will come back to visit this again, but let me see:
(1) I don't think there would be an estoppel if a lawyer, while represnting another client, makes a statement in prosecution about another client's reference. I can't see that working: the lawyer when making the statement isn't acting as an agent of the client who owns that reference.
(2) How can you take the position that no conflicts can arise in ex parte prosecution? We've got various suits that always establish otherwise. Granted the ex parte issue may -- may -- make some confidentiality problems lessened, but I don't see it obviating the conflict.
(3) Enormous business issues, and lots of problems. Suppose, e.g., while represnting A the examiner cites client B's patent against A's application. I go ahead and try to distinguish A's claims from B's disclosure, but fail. We amend the claims and get a patent. A could still sue me, claiming I "pulled my punches" because of my obligations to B.
(4) Enormous business problems, too, as several point out. I wonder what clients think about, e.g., commenting on their patents while prosectuign for another.
(5) Good point about the claims not being the focus. Bad hypo on my part. Arguing lack of enabling disclosure, though would create the same issue.

MANY THANKS. I'll post some more as I go.

[J]

Wow, very interesting discussion.

I cannot see how someone can do patent prosecution in a firm setting (i.e. not in-house or captive to a particular client) and truly believe that receiving such a reference creates a conflict. It really is a daily occurence.

There also should not be an estoppel issue, as it is not the patent owner making an interpretation of the claims. It could potentially be cited (if found) but I doubt it.

With respect to client relationship effects, if your client A is looking at the patents of client B, you have bigger problems to worry about than prosecution history.

[Andrew Sutter]

As for client A looking at patents of client B, if client A is, say, a large Japanese company it's almost inevtiable that their patent group is looking at B's and many others' patents. Good luck trying to convince them not to do so. It's not quite so often that they'll pull up file wrappers, but they know how to do it.

[Robert Groover]

David Hricik said:

>>>(1) I don't think there would be an estoppel if a lawyer, while represnting another client, makes a statement in prosecution about another client's reference. I can't see that working: the lawyer when making the statement isn't acting as an agent of the client who owns that reference.

The lawyer has apparent authority to do so, and is making a statement to induce reliance (by the Examiner). Maybe if that issue were litigated you would be right - that time - IF the lawyer does well on the stand - but I wouldn't want to bet my livelihood on it.

>>>(2) How can you take the position that no conflicts can arise in ex parte prosecution?

I cross-examined my ears, and they insist that a partner in a very famous patent boutique said precisely that!
Seems absurd to me too, but that's what he said.

[Ramaswami Natarajan]

This is a good discussion for a Patent Attorney in India like me trying to understand the complexities of the system in other countries. I think there is great conflict of interest here and I just can not act against the interest of one of my existing clients B and make representations against his interests especially when the representation is to made on a matter in which I represented the client B to promote the interests of another competing client A.

I do not see how a patent application would be drafted by me when I would know by doing patent search that the second application would be against the interest of one of my existing clients. I will excuse myself immediately. Patent drafting goes prior to patent prosecution and any one would know immediately that this is against the interests of an existing client and we are barred from acting against our clients especially when we have ourselves represented the particular patent at issue.

On the business point, I have seen that what matters to a client is trust that his Lawyer is just that. His Lawyer and will reprsent his interests in a trustwothty way. This is the root of the legal profession. If this trust goes, the business and reputation will disappear in no time and I do not understand the business points posted earlier. It is against our business interests also to act against an existing client aside from legal ethics issues.

Regards,

N. Ramaswami

[R]

When one client's patent reference against another client's patent application, both clients could assert a conflict existed.

The "application" client may later assert that the alleged conflict materially affected the patent practitioner’s ability to advocate for the application client -- or in the words of Mr. Hricik in his April 13th comment, the patent practitioner "pulled [his] punches." For example, the application client may assert that the patent practitioner should not have amended the claims and should have argued lack of enablement, lack of claimed features, non-analogous art, etc. While there’s always a risk of malpractice assertions relating to unnecessarily amending the claims, the asserted conflict compounds the problem by allowing the application client to cast the patent practitioner as being disloyal (putting one client above another) and greedy (trying to keep business that should have been transferred out). After hearing this story disloyalty and greed, do you think a judge or a jury would be sympathetic to big, rich law firm that argues that the citation of other clients’ references should not give rise to a conflict because the law firm would lose too much business otherwise? Remember, these issues are always viewed in hindsight -- which almost always make patent practitioners look bad. In any event, the primary point to remember is that, even if citation of another client’s reference is not a conflict *per se*, there is a risk that the application client will conjure up some argument that (1) could have been made and (2) would have been adverse to the reference client -- paving the way for the argument that the attorney was disloyal and greedy.

If the patent practitioner *does* argue lack of enablement, lack of claimed features, non-analogous art, or characterizes the reference, the “reference” client may later assert that the patent practitioner harmed the reference client. However, the harm is not based upon estoppel. When making arguments for allowing the application, the patent practitioner is representing the application client -- not the reference client, who doesn’t have any interest in the application client’s application. Thus, no actual authority exists. In addition, since the reference client would not appear to have any particular interest in the application client’s application, the patent practitioner would not appear to be representing the reference client. Thus, there isn’t any apparent authority with respect to the reference client either. Without that authority, there isn’t any estoppel (or admissions) for the reference client. But while there is no estoppel for the reference client, the patent practitioner may make several harmful statements, which could be used in litigation if the cited reference is ever litigated. For example, a litigation defendant could use the patent practitioner’s statements to impeach testimony at trial if the patent practitioner prosecuted both applications and was called as a witness. Worse, these statements could flag issues that the litigation defendant had not previously considered.

It seems like a catch-22: either you (1) make the arguments and risk being sued by the reference holder or (2) don’t make the arguments and risk being sued by the application client. The best approach would be to try to get a waiver of such conflicts upfront in a retainer agreement, or obtain a waiver from both clients when the situation arises.

[Alun Palmer]

I'd like to add that non-enablement in the cited reference seems to be something of a red herring. A reference is good for whatever it discloses. Enablement refers to whether the claims are enabled, which is of no concern in a reference cited by the Examiner, so there is never any reason to be arguing non-enablement in Ex parte prosecution (unless you are the Examiner!).

[R]

Alun,

Cited references are presumed to be operable/enabled, but Applicants are free to argue that they are not operable/enabled to rebut the prima facie case. See MPEP § 2121 at 2100-64 to 2100-67 (8th ed. rev. 3, August 2005).

But it's probably not going to be a winner of an argument in most cases.

[David Hricik]

Interesting stuff, to. One point -- I don't think you can have an estoppel arise simply by apparent authority, but I don't know. I wouldn't think the doctrine would go that far.

Cool stuff.

[drm]

R:

The operability/non-enablement issue relates to the prior art relationship to the application claims, not the claims of the prior art patent. That is a big difference.

However, how much you denigrate the prior art could be an issue if those comments come back to haunt you.

[R]

drm:

"However, how much you denigrate the prior art could be an issue if those comments come back to haunt you."

I agree. I just wanted to point out that it was an appropriate argument to make in practice -- even if it's probably not going to be a winner and (as you point out) it might even backfire.

"The operability/non-enablement issue relates to the prior art relationship to the application claims, not the claims of the prior art patent. That is a big difference."

Good point. Certainly the argument must refer to what the claims of the application say, so perhaps there wouldn't always be a conflict. But I think a conflict could occur where, for example, the claims in the application and the reference share the disputed terms. Again, the argument probably isn't a winner, but the application client may want a zealous advocate that doesn't pull any punches (regardless of how weak those punches might be).

In any event, I don't know whether commenting on another client's patent's disclosure is a per se ethical violation--I wouldn't think so.

But given the Federal Circuit's renewed emphasis of interpreting the claims in light of the specification, characterizing another client's reference could implicate the reference's claims--which seems risky.

[Rob]

Definitely a conflict under the Model Rules. Probably consentable, though.

[lorac]

In scenario 1, the prior art is a "reference owned by" the other client. Isn't the determination of a conflict going to depend in part on whether the reference is a patent or some other disclosure? Most all the responders assume that it is a patent. I would think that a non-patent reference would not raise an issue of conflict as the extent of disclosure in a non-patent reference does not (should not?) reflect on the claims of a patent owned by the client.