By Sandra P. Thompson, PhD of Buchalter NemerDr. Thompson may be reached by phone at (949) 224-6282 or by email at sthompson@buchalter.com
Clearly client-driven litigation and malpractice complaints against patent
practitioners are not decreasing any time soon. During the investigation surrounding the suit or
complaint, the actions or inactions of the patent practitioner are reviewed in detail and the practitioner
subject to scrutiny. One area that appears ripe for concern is the review and addressing of
conflicts of interest.
A conflict of interest is a situation where someone in a position of trust, such as a
lawyer, has competing professional or personal interests. Such competing interests can make it
difficult to fulfill his or her duties impartially. A conflict of interest exists even if no unethical or
improper act results from it. A conflict of interest can create an appearance of impropriety that
can undermine confidence in the person, profession or court system.
Attorneys who have been practicing for more than a day are familiar with the
process of conflicts of interest searches. A new client comes into the office or firm, the attorney
or conflicts team searches a client database for the name of the person or entity. If a potential
conflict surfaces, the conflict must be cleared, waived or the client sent elsewhere. As law firms
merge and attorneys move from firm to firm, conflict of interest searches become important
considerations. But for patent practitioners, are these searches being handled correctly?
The issue is not only ensuring that the prospective clients don’t present
conflicts, but also ensuring that their patent applications don’t present conflicts. During
my legal career, I’ve spent time at every size law firm – from a three attorney patent
boutique to a 1000 attorney super law firm and those in between. At each of these law firms, the
“subject matter” conflict search presented problems. There are several reasons for
this situation, but I attribute it mostly to the “garbage in, garbage out” philosophy
followed by the drive to simplify conflicts searches.
I contend that for ethical reasons, a subject matter conflict search is equally as
important as an entity/individual conflict search. This type of additional search is not related to
the inventors, assignee or research team, but is directly related to the patent application
disclosure. Ignoring these searches can create mountains of problems down the road ranging
from allegations of inequitable conduct to patent invalidity. As an example, you represent a large
company (“Large Client”) and handle all of their patent applications related to
semiconductor materials. A current or prospective client sends a patent disclosure to the firm
that includes a novel semiconductor material. Do you review the disclosure to determine
whether it overlaps with Large Client’s patent applications? If another attorney at the firm
gets the new disclosure, do you have a review process in place to make sure that the new disclosure is
checked against current patent applications being handled by the firm?
Garbage In, Garbage Out
Traditional conflict of interest searches for patent practitioners may include
searching the entity or assignee name, inventors names, in-house counsel names and in some cases
research team member names. The extent to which a patent practitioner includes as many entity
and individual names as possible (and as available) can significantly improve the conflicts search.
One method to further improve the conflicts search process is to add competitor
names and entities to the conflict form. Your clients are a wealth of information as to their
competitors and the innovation in their field. Many clients attend trade shows where a list of
exhibitors are provided to attendees. As a matter of fact, some larger companies require that
their outside counsel do not represent their top competitors and will provide a list of those competitors
to you. It is important to provide as much of this information as possible to the conflicts
process. If you are representing Microsoft in their patent matters and another attorney at the
firm wants to represent Apple with respect to corporate matters, this potential conflict would be flagged
if you listed Microsoft’s top competitors. How you deal with this conflict becomes the
issue, as opposed to missing it altogether.
In addition, information related to key patents of interest can also be added to
conflicts forms, such as the inventors, the primary examiner, the examiner supervisor and the attorney
or law firm handling that patent. This information is very valuable in a world where inventors
move from company to company (or start their own company) and continue to innovate in that
field. For example, Large Client identifies a patent of interest from a competitor to you for an
information disclosure statement. You update the conflict of interest information for that matter
to not only include the assignee name, but also the names of the inventors. One of those
inventors starts his/her own company and continues innovating in a field related to Large
Client’s business. That inventor comes to your firm and speaks with another attorney
about handling his new company’s corporate and patent matters. A conflict of interest
search catches this inventor’s name as being associated with Large Client’s competitor,
and you are able to effectively deal with this potential landmine.
Therefore, even on the most simple conflicts of interest forms, there are spaces to
list as many entity and individual names as appropriate. It is important to fully utilize these
forms to improve the internal conflict of interest search process. In addition, its imperative to
update that information with your firm, as new information to the client surfaces.
Simplifying Conflicts of Interest Forms
Many law firms are trying to simplify the conflicts of interest process by simplifying
and streamlining the forms or input software. While this simplification may be needed for some
fields of law, I believe that the field of patent prosecution needs to add a level of complexity to conflicts
of interest forms, which can actually be accomplished with a minimal amount of planning.
A “business field” or “key word” section can be added to
the patent conflict of interest form to increase the chances of identifying potential conflicts. The
obvious problem with implementing this type of additional check is the basic problem with the patent
world – we all use different words to describe the same thing. I might describe something
as a porous material and you might call it a dielectric material. To help focus the process, the
patent group can develop a master list of business field codes or key words that individual patent
practitioners can use when filling out conflict of interest forms. A conflict of interest process that
not only includes individual and competitor names, but also business codes and/or key words, will
dramatically improve the information provided to attorneys as new clients or new matters are brought
in to the firm.
The “Firewall”
Larger firms or patent boutiques with several patent practitioners may decide to
handle these types of conflicts of interests by setting up a firewall between attorneys. The
firewall is announced to the firm and work handled by one attorney is not disclosed or shown to the
other attorney (and vice versa). The problem surfaces if one of the attorneys leaves the firm
and doesn’t take that client with him/her or takes an extended leave of absence, leaving the
firm to fill the void with another patent attorney. A firewall may break down completely and
expose the firm to liability in either of these situations.
“Diligent Prosecution”
A better question to ask in this type of situation is whether a firm representing
competitors in patent or other types of matters can diligently prosecute patents for each. The
firm may jump through every hoop and keep everything above board when handling both clients, but
there will always be “the appearance of impropriety” when looking back on the
matters. If you didn’t submit a reference through an information disclosure statement for
one client, did you honestly believe that the reference wasn’t relevant or did you fail to submit it
based on an attempt to protect the patent of the other client? If your client asks you to seek
reexamination of a competitor’s patent, are you able to do so or do you have to explain to your
client that you or your firm is handling the other patent? Regardless of your belief at the time
that everything was handled correctly, a former client can certainly make a case for inequitable conduct
or malpractice, based on the mere appearance of impropriety.
You Can’t Turn Off Knowledge
When I work with clients who have recently lost inventors to other
companies/competitors, the question always comes up – what can we do about the fact that
he/she is using our trade secret information to help our competitor? The answer to that question
is not simple. A chemist doesn’t know where he/she first learned how to maximize the
yield of a particular compound during synthesis – it just becomes part of the bulk of his/her
knowledge. The same can be said for patent practitioners. If you spend a great deal of
time preparing semiconductor material patent applications for Large Client – do you turn that
knowledge off when you draft a semiconductor material patent application for a new client? Do
you pull your punches and not include language used to describe those materials in general when
drafting the second application? Do you include references to Large Client’s
patents and patent applications in the background of the new application? If you do that, how do
you walk the tightrope of distinguishing the subject matter of the new application over Large
Client’s patents without disparaging Large Client’s patents? If the new client is a
solo inventor, do you work harder to get Large Client’s patent applications allowed? I
contend that although you believe you can effectively represent both entities – you
shouldn’t.
Conclusion
In a rapidly changing economy, where patent work ebbs and flows, an
attorney’s or firm’s first instinct may be to bring in as much patent work as possible from
as many sources. Given the increase in malpractice judgments, the interdependency of attorneys at law
firms and partnerships, and the stakes that surround key innovations in certain fields, patent
prosecutors must be diligent in identifying and addressing subject matter conflicts of interest.
