uspto | Hill Wallack Intellectual Property & Technology Law Resource Center

February 27, 2018February 28, 2018

Communications Between Patent Agent and Client Covered Under Attorney-Client Privilege

Texas Supreme Court Rules Representation of Clients Before the USPTO by Patent Agents Equivalent to Legal Representation

The United States Patent and Trademark Office (“USPTO”), the federal agency responsible for granting and issuing patents, 35 U.S.C. §§1(a), 2(a)(1), is a unique animal among administrative bodies.

Given the complex subject matter and procedural intricacies of patent prosecution practice before the USPTO, private parties seeking to patent inventions and designs typically must rely upon legal representatives admitted before the USPTO for the prosecution of their applications. In order to represent a party in a patent prosecution matter – the proceeding in which the inventor(s) or the inventor(s) assignee seeks to patent the invention or design – the legal representative must be admitted to practice before the USPTO, which has authority to regulate the persons who represent patent applicants. 35 U.S.C. §2(b)(2)(D).

Among those the USPTO allows to provide such representation are patent attorneys. 37 C.F.R. §11.6(a). Patent attorneys are individuals who are in good standing with the bar of the highest court in any state and meet all the requirements for registration before the USPTO, which includes an examination. 37 C.F.R. §§11.1, 11.6(a), 11.7. Upon successfully passing the patent bar exam, the attorney is registered to practice before the USPTO as a “patent attorney.” Patent prosecution practice is the only legal practice area of which I am aware that requires the attorney to pass a second bar exam.

Somewhat ironic is that the USPTO also allows for the legal representation of parties in patent prosecution matters by non-attorneys, provided that they, too, pass the patent bar exam. When a non-attorney possess the necessary technical expertise – as is also required of attorneys – and successfully passes the same patent bar exam administered to attorneys, the non-attorney is registered to practice before the USPTO as a “patent agent.” 37 C.F.R. §§11.6(b), 11.7(b)(1)(ii). Patent attorneys and patent agents are on equal footing before the USPTO and may provide identical services. 37 C.F.R. §§11.5(b), 11.6(a)-(b). The only difference is that when it comes to legal matters outside of the USPTO – for example, the licensing of a patent by a client to third party – the patent agent may not perform such services as that would constitute the unauthorized practice of law.

As such, patent prosecution is not only a legal practice area requiring attorneys to successfully pass a second bar exam in order to represent clients, it is, as far as I am aware, the only legal practice that specifically allows for non-attorneys to represent clients in the same forum and proceedings, provided that they, too, successfully pass the patent bar exam.

Which leads to an interesting question – are communications between a client and a patent agent protected under the attorney-client privilege? On February 23, 2018, the Supreme Court of Texas answered that question in the affirmative in the matter In re Andrew Silver, No. 16-0682.

The underlying litigation in Silver concerned a patented invention known as the “Ziosk,” a stand-alone tablet designed to allow customers at restaurants to order food and pay their check without having to interact with a waiter or waitress. The Ziosk was sold by Tabletop Media, LLC (“Tabletop”), which partnered with restaurant chains such as Abuelo’s, Chili’s, and Red Robin to place the device in their restaurants. Andrew Silver claimed he invented the technology that became the Ziosk and sold the patent to Tabletop. Silver brought a breach-of-contract action against Tabletop, alleging it failed to pay him for his patent. Tabletop answered, generally denying Silver’s allegations.

During discovery in the litigation, Tabletop sought production of emails between Silver and Raffi Gostanian, the patent agent who represented Silver before the USPTO. Silver refused to produce the emails, claiming them to be covered by the attorney-client privilege. Although Gostanian is a registered patent agent, he is not a licensed attorney. The issue of whether the email communications between Silver and his patent agent are covered under the attorney-client privilege was eventually appealed to the Texas Supreme Court.

As part of its analysis, the Texas Supreme Court was required to construe the nature and scope of the attorney-client privilege, codified at Texas Rule of Evidence 503. Since New Jersey and Pennsylvania codify a substantially similar evidence rule – as do the Federal Rules of Evidence and most states – the Court’s decision in Silver, while certainly not binding on other states or the federal judiciary, carries some persuasive authority.

After noting non-binding precedent that “patent agents are not simply engaging in law-like activity, they are engaging in the practice of law itself,” thereby justifying the recognition of a privilege similar to that of the traditional attorney-client privilege, In re Queen’s Univ., 820 F.3d 1287, 1296 (Fed. Cir. 2016), the Court in Silver examined Tex. R. Evid. 503, stating that:

With these principles in mind, we turn to Rule 503’s language to determine whether a registered patent agent is a “lawyer” for purposes of the lawyer-client privilege . . . As previously noted, the rule defines “lawyer” as “a person authorized . . . to practice law in any state or nation.” TEX. R. EVID. 503(a)(3). The definition states two requirements for a person to qualify as a lawyer. First, the person must be engaged in a particular activity—the “practice [of] law.” Id. Second, the person must be “authorized” to perform the activity in a state or nation. Id. Thus, understanding what it means to be a “lawyer” for purposes of the rule requires determining (1) what it means to “practice law” and (2) how one is “authorized” to do so. [Slip opinion at 6-7].

As to this two-prong analysis, the Court in Silver ultimately held that: 1) within the scope of their practice before the USPTO, patent agents practice law, slip opinion at 9, and 2) because “patent agents are authorized to practice law before the USPTO, they fall within Rule 503’s definition of ‘lawyer,’ and, as such, their clients may invoke the lawyer-client privilege to protect communications that fall within the privilege’s scope.” Slip opinion at 13.

New Jersey Rule of Evidence 504(3)(b) similarly defines “lawyer” as “a person authorized, or reasonably believed by the client to be authorized to practice law in any State or nation the law of which recognizes a privilege against disclosure of confidential communications between client and lawyer.” Similarly, Pennsylvania Rule of Evidence 502(a)(1) provides that: “‘Attorney’ means a person authorized, or reasonably believed by the client to be authorized, to engage in the practice of law in any State or country.” Both codifications are similar to that of Texas, which, at Tex. R. Evid. 503(a)(3) defines “lawyer” as “a person authorized, or who the client reasonably believes is authorized, to practice law in any state or nation.” Most states employ similar evidence rules, which are based upon federal Rule of Evidence 503(a)(2), which states that: “A ‘lawyer’ is a person authorized, or reasonably believed by the client to be authorized, to practice law in any state or nation.”

As to whether New Jersey, Pennsylvania or any other state follows the Texas Supreme Court’s holding in Silver remains to be seen. However, given that patent agents engage in the same legal representation of clients as do patent attorneys before the USPTO, it is likely that Silver’s rationale would apply in similar fashion.

Lastly, a word of caution: Silver does not stand for the proposition that all communications between the applicant and the patent agent are protected under the attorney-client privilege. Rather, only those communications within the scope of the patent agent’s representation of the client before the USPTO are protected. As a patent agent is only acting as a lawyer within the confines of representing the client before the USPTO in a prosecution proceeding, communications falling outside the scope of that narrow representation would not enjoy the benefits of the privilege. As noted by the Court in Silver: “The client’s communications with a registered patent agent regarding matters outside the agent’s authorized practice area might not be protected because these communications are not necessarily made to facilitate the rendition of professional legal services.” Slip opinion at 14. Where there are questions as to whether communications are within the scope of the representation, the trial court can review documents in camera if necessary to determine whether the privilege applies.

Post Materials:

In re Silver, NO. 16-0682 Texas Supreme Court (February 23, 2018)

In re Queens University, No. 2015-145 CAFC (March 7, 2016)

January 10, 2018February 1, 2018

Federal Circuit: Judicial Review Available for Timeliness Challenges to IPR Proceedings

The CAFC Overrules Prior Ruling in Achates

An en banc decision issued on January 8, 2018 by the Federal Circuit Court of Appeals (the “CAFC”) overruled that court’s prior ruling in Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) (“Achates”) concerning the appealability of whether a petition for an inter partes review was timely filed under the Leahy-Smith America Invents Act (the “AIA”). Specifically, in Wi-Fi One, LLC v. Broadcom Corp., No. 2015-1944 (“Wi-Fi One”), the CAFC held that judicial review is indeed available for a patent owner to challenge a determination by the United States Patent and Trademark Office (the “USPTO”) as to whether a petitioner satisfied the timeliness requirement of 35 U.S.C. §315(b) governing the filing of petitions for inter partes review.

Under the AIA, Congress prohibited the USPTO from instituting inter partes review if the petition requesting that review is filed more than one year after the petitioner, real party in interest, or privy of the petitioner is served with a complaint for patent infringement. 35 U.S.C. §315(b). However, in another section of the AIA, Congress further provided that the USPTO’s determination “whether to institute an inter partes review under this section shall be final and nonappealable.” Id. §314(d) (emphasis suppled). Thus, the question presented to the CAFC in Wi-Fi One was whether the bar on judicial review of institution decisions in §314(d) applies to time-bar determinations made under §315(b). In Achates, the CAFC answered the question in the affirmative. In Wi-Fi One, the CAFC overruled itself, answering the question in the negative.

The question presented to the CAFC in Wi-Fi One was whether the bar on judicial review of institution decisions in §314(d) applies to time-bar determinations made under §315(b). In Achates, the CAFC answered the question in the affirmative. In Wi-Fi One, the CAFC overruled itself, answering the question in the negative.

By way of historical background, in 2011 Congress passed the AIA, which created inter partes review or “IPR” proceedings. See 35 U.S.C. §§311–319. IPR and other post-grant proceedings are intended to be quick and cost-effective alternatives to litigation for third parties to challenge the patentability of issued claims. Under 35 U.S.C. §311, a person who is not the owner of a patent may petition the USPTO to institute IPR of one or more patent claims on permitted grounds, alleging unpatentability on certain prior art bases. Section 312 provides that the petition must, among other things, identify, “in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim.” 35 U.S.C. §312(a)(3). Section 314, subsection (a) prescribes the threshold determination required for the USPTO to institute: a “reasonable likelihood” that the petitioner will succeed in its patentability challenge to at least one of the challenged patent claims. Subsections (b) and (c) prescribe the timing of and notice requirements for the institution decision. And, §314(d) addresses judicial review of the USPTO’s IPR institution determination under §314. Specifically, §314(d) provides that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” (emphasis added).

Section 315, on the other hand, governs the relationship between IPRs and other proceedings conducted outside of the IPR process and sets forth an additional condition for maintaining an IPR proceeding upon petition by a third party. Specifically, §315(b), provides that “[a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”

The underlying facts of Wi-Fi One show that in 2010, Telefonaktiebolaget LM Ericsson (“Ericsson”) filed a complaint for infringement of U.S. Patent Nos. 6,772,215 (“215 patent”), 6,466,568 (“568 patent”), and 6,424,625 (“625 patent”) in the United States District Court for the Eastern District of Texas against multiple defendants. The case progressed to a jury trial, where the jury found that the defendants infringed the asserted claims. Broadcom Corporation (“Broadcom”), the appellee in Wi-Fi One, was not a defendant in that litigation. Subsequently, in 2013, Broadcom filed three separate petitions for IPR of the 215, 568, and 625 patents. When Broadcom filed the IPR petitions, Ericsson still owned the patents, but during the pendency of the IPRs, Ericsson transferred ownership of the three patents to Wi-Fi One, LLC (“Wi-Fi”).

In response to Broadcom’s petitions, Wi-Fi argued that the USPTO was prohibited from instituting review on any of the three petitions. Specifically, Wi-Fi argued that the USPTO lacked authority to institute IPR under §315(b) because Broadcom was in privity with defendants that were served with a complaint in the Eastern District of Texas litigation. Wi-Fi alleged that the IPR petitions were therefore time-barred under §315(b) because Ericsson, the patents’ previous owner, had already asserted infringement in district court against defendants that were in privity with petitioner Broadcom more than a year prior to the filing of the petitions.

Analyzing the two competing sections of the AIA, the CAFC in Wi-Fi One found no clear and convincing indication in the specific statutory language in the AIA, the specific legislative history of the AIA, or the statutory scheme as a whole demonstrated Congress’s intent to bar judicial review of § 315(b) time-bar determinations. Citing the U.S. Supreme Court in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131, 2140 (2016), the CAFC noted that the parties had not cited, nor was the Court aware of, any specific legislative history that “clearly and convincingly” indicates congressional intent to bar judicial review of §315(b) time-bar determinations. The Supreme Court in Cuozzo instructed that the “strong presumption” favoring judicial review “may be overcome by ‘“clear and convincing”’ indications, drawn from ‘specific language,’ ‘specific legislative history,’ and ‘inferences of intent drawn from the statutory scheme as a whole,’ that Congress intended to bar review.” 136 S. Ct. at 2140. Finding no such clear and convincing indications, the CAFC in Wi-Fi One held that the USPTO’s time-bar determinations under §315(b) are not exempt from judicial review, thereby overruling Achates’s contrary conclusion. Notably, the CAFC did not decide whether all disputes arising from §§311–14 are final and nonappealable; rather, the court’s holding applies only to the appealability of §315(b) time-bar determinations.

While determinations by the USPTO as to whether to grant IPR are final and nonappealable under Section 314 and constitutionally sound under Cuozzo, the CAFC in Wi-Fi One has carved out an exception as to timeliness under §315(b). Given the legal standard favoring judicial review of agency actions, and the “clearly and convincingly” burden under Cuozzo and Wi-Fi One, one may expect that future judicial pronouncements will similarly find that other provisions of the AIA concerning IPR proceedings may likewise be appealable.

December 21, 2017February 1, 2018

The Benefits of Federal Trademark Registration

Trademarks Are Valuable Intangible Assets Requiring Protection

A trademark is any recognizable sign, design, expression or other “device” (or any combination of the forgoing) that identifies products or services of a particular source from those of others. Since the essential function of a trademark is to exclusively identify the commercial source or origin of products or services, a trademark serves as a “badge of origin.” Trademarks, and the goodwill they represent, are intangible assets and can be enormously valuable to the companies that own them.

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Generally, trademark rights accrue with use of the actual mark; as such, they are rightfully owned by the party first using it for the respective goods and/or services. This principle has long been recognized at common law and is often referred to as “superior rights.”

Since trademark rights accrue with use as a matter of common law and are statutorily recognized under the federal Lanham Trademark Act, see, e.g., 15 U.S.C. §1125 (civil liability for false designations of origin, importation, false descriptions, and dilution of marks), one may question why time and expense should be expended towards registering a mark with the United States Patent and Trademark Office (the “USPTO”). In short, registration of a trademark with the USPTO confers substantial benefits and legal presumptions under the law, as specifically set forth in the Lanham Act.

While there are differences between the Principal and Supplemental Registers of the USPTO – a topic that I will address in at least one future post – registration of trademarks and service marks with the USPTO generally confers the following benefits (among others) to the registrant of the mark:

Use of the ® symbol to denote federal registration (the ™ symbol is to be used for marks not registered). 15 U.S.C. §1111.
The registration is prima facie evidence of the validity of the registered mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the registered mark. 15 U.S.C. §1115.
The registration is constructive notice of a claim of ownership, eliminating any justification or defense of good faith adoption and use made after the Registration date. 15 U.S.C. §1072.
Original jurisdiction in the federal District Courts for trademark infringement actions. 15 U.S.C. §1121.
Original jurisdiction in the federal District Courts for claims under state common law for unfair competition when they are joined with a substantial and related claim under the Lanham Act. 15 U.S.C. §1121.
Monetary remedies as provided by the Lanham Act, including infringer’s profits, damages, and costs, and in appropriate cases, treble damages and attorney’s fees. 15 U.S.C. §1114 and 15 U.S.C. §1117.
The registrant may seek to have the registration made incontestable after five (5) years of registration on the Principal Register by filing of the appropriate affidavit or declaration of continuous use. 15 U.S.C. §1065. Incontestability status is conclusive evidence of the registrant’s exclusive right to use the mark, subject to certain statutory defenses. 15 U.S.C. §1115. Incontestability is not available to Supplemental Register registrations. 15 U.S.C. §1094.
The registration may be used as a basis to obtain registration in foreign countries. 15 U.S.C. §1141a.
The registration may be filed with U.S. Customs Service to prevent importation of infringing foreign goods. 15 U.S. Code § 1124; see also 15 U.S. Code § 1096 (Registration on supplemental register not used to stop importations).

While registration is not required to maintain ownership in a trademark, the benefits conferred by federal registration are numerous and significant – so much so that registration alone increases the value of the trademark, in addition to the goodwill it represents, thereby increasing its value as an asset of the business. If and when it comes time to sell the business, registered trademarks will noticeably increase the value of the company and comprise significant assets in the business’s intellectual property portfolio.

December 11, 2017January 31, 2018

Supreme Court to Decide Constitutionality of USPTO Inter Partes Proceedings

SCOTUS Hears Oral Argument in Oil States

The U.S. Supreme Court heard oral argument on November 27, 2017 in the significant patent matter, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al, No. 16-7212. The issue before the Court in Oil States is whether inter partes review – an adversarial process used by the U.S. Patent and Trademark Office (the “USPTO”) to analyze the validity of existing patents – violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

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With the passage of the Leahy-Smith America Invents Act (the “AIA”) in 2011, Congress established inter partes review, an administrative proceeding which effectively allows private third parties to remove patent infringement and validity cases from Article III federal courts and transfer them to the USPTO’s Patent Trial and Appeal Board (the “PTAB”), an administrative agency within the executive branch. Inter partes reviews are essentially “trial proceedings” presided over by PTAB “judges,” who serve for no particular term, who depend on superior executive officers for raises and promotions, and who ultimately answer to a political appointee of the President, the Director of the USPTO.

Does inter partes review – an adversarial process used by the U.S. Patent and Trademark Office (the “USPTO”) to analyze the validity of existing patents – violate the Constitution by extinguishing private property rights through a non-Article III forum without a jury? That is the issue before the Supreme Court in Oil States.

Like litigation, inter partes review begins with the filing of a petition – almost always by an alleged patent infringer – that asks the PTAB to invalidate a patent on the ground that it was anticipated by or rendered obvious in view of identified prior art. 35 U.S.C. §311(b). The petitioner and patent owner then participate in an adversarial proceeding before the PTAB expressly referred to as a “trial.” See Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,758 (Aug. 14, 2012) (codified at 37 C.F.R. §42). As with patent infringement litigation in federal court, the parties take discovery, engage in motion practice regarding evidence, and cross-examine fact and expert witnesses via depositions. See id. at 48,757-48,768. Indeed, many of the procedural rules that govern the inter partes proceedings are based expressly on the Federal Rules of Civil Procedure. As such, through the patent review authority inherent in inter partes proceedings, Congress vested in the PTAB – for the first time – the authority to extinguish patent rights after adjudicating a litigation-like adversarial proceeding between the patent owner and a third party. See 35 U.S.C. §§ 311(a) & 318(a).

Over the last several years, the PTAB has more than tripled in size in large part due to the establishment of inter partes reviews. In fact, the PTAB has received thousands of petitions since passage of the AIA. Currently, more than 200 judges serve on the Board and the vast majority – more than 80 percent – is comprised of former patent attorneys with extensive experience in patent litigation.

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The underlying facts in Oil States clearly demonstrate the need for the Supreme Court to address the question on review.

Petitioner Oil States Energy Services, LLC (“Oil States”), an industry leader in providing support and service equipment to the global oil and gas industry, owns U.S. Pat. No. 6,179,053 (the ’053 Patent), which is directed towards apparatuses and methods of protecting wellhead equipment from the pressures and abrasion involved in the hydraulic fracturing of oil wells. In 2012, Oil States filed an infringement suit against Greene’s Energy Group, LLC (“Greene’s”). In response, Greene’s filed an answer, asserting the affirmative defense and counterclaim of invalidity. Almost a year into the infringement litigation, as the case neared the close of discovery, Greene’s petitioned the PTAB to institute inter partes review of the ‘053 Patent, arguing – as it was arguing in the district court litigation – that the ’053 Patent was anticipated by prior art, i.e., a previous patent application filed by the same inventor of the ’053 Patent, an employee of Oil States. Over Oil States’ opposition, the PTAB granted Greene’s petition, thereby instituting inter partes review of the ’053 Patent.

After the PTAB granted Greene’s petition, the district court issued its claim construction decision in the underlying civil infringement litigation, construing the terms of the ’053 Patent in a way that (as Greene’s conceded) conclusively resolved against Greene’s position that the prior application anticipated the ’053 Patent – the same argument advanced by Greene’s in its inter partes review petition.

As the inter partes review proceeding continued in parallel with the federal court litigation, Oil States argued that the Board should adopt the same claim constructions as the district court, but the PTAB refused to do so. While acknowledging that the district court came to a different conclusion, the PTAB nevertheless held that the ‘053 Patent was anticipated by the previous patent application. As a result, the PTAB concluded that the claims were “unpatentable,” denied Oil States’ application to amend its claims, and instead invalidated the claims of the ‘053 Patent.

Oil States appealed the Board’s final judgment to the Federal Circuit, challenging both the merits of the Board’s decision and the constitutionality of inter partes review under Article III and the Seventh Amendment. Before briefing closed, however, the Federal Circuit issued its decision in MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284 (Fed. Cir. 2015), which rejected the same challenges to the constitutionality of inter partes review, and thereby foreclosed Oil States’ Article III and Seventh Amendment arguments.

After Oil States filed a petition for writ of certiorari, the Supreme Court agreed to hear the matter. The case has been fully briefed and oral argument was held on November 27, 2017. Oil States’ argument is summarized as follows:

Congress may not remove cases from the federal courts because it does not like their judgments. As this Court has long held, “Congress may not ‘withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.’” Stern v. Marshall, 564 U.S. 462, 484 (2011) (quoting Murray’s Lessee v. Hoboken Land & Improvement Co., 18 How. 272, 284 (1855)). That is just what Congress has done with inter partes review, which wrests patent-validity cases from federal courts and entrusts them to administrative-agency employees, who decide questions of law that Article III reserves to judges and questions of fact that the Seventh Amendment reserves to juries. Neither Article III nor the Seventh Amendment tolerates this circumvention.

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Oil States presents the Supreme Court with a critical issue requiring resolution. The number of patents invalidated by the PTAB is staggering – for example, one report states that at least 84 percent of patents reaching a final written decision in a PTAB validity challenge are adjudicated to have at least one invalid claim (usually many more than one claim), with 69 percent having all claims invalid. These rates of invalidity are far greater than those adjudicated in the federal courts. More importantly, if patents are a private property right – long held as such under our nation’s jurisprudence – then the constitutionality of inter partes proceedings in which third parties may extinguish those rights before an executive branch administrative body comprised of political appointments is troublesome.

The use of PTAB inter partes proceedings as a means of circumventing the judicial process to invalidate patents is controversial and has divided corporate America and individual inventors. See, e.g., Wall Street Journal article “Supreme Court Debates a Patent Case That Is Splitting Corporate America,” November 27, 2017. While the intent of the AIA’s inter partes provision was to allow patents of questionable quality challenged in a faster, more efficient manner, the process has opened to abuse – a victory for a patent holder in the PTAB may be immediately followed by yet another petition from another third party seeking to invalidate the same patent. Ask Josh Malone, inventor of “Bunch of Balloons,” who has spent more than $17 million in legal fees fighting invalidity challenges before the USPTO from several alleged infringers.

As intellectual property rights continue to increase in importance as technology advances, guidance is needed from the highest court in the land.