Intellectual property is the United States’ second largest export (second only to agriculture). We have come a long way since the manufacturing glory days of Henry Ford. In the twenty-first century we still make tangible products but it is the intangible trademarks, copyrights, patents, and trade secrets that help make the bottom line count. The following introduction to intellectual property provides a brief overview of the intangible property protections that can help businesses and non-profit organizations.

Web Site Issues

A variety of legal issues can arise in developing and operating a web site. As the development of e-commerce unfolds, an organization’s web site presents valuable potential benefits to the organization. A web site, however, also exposes an organization to potential liabilities and violations of state and federal legislation and international laws. This is one of the fastest growing areas of the law. It is impossible to address every conceivable legal issue that might arise in the operation of the successful business. Organizations must, at least, consider a basic range of legal issues when developing and operating a web site.

Trade Secret Infringement

Trademark infringement is another common area of dispute. Trademark infringement actions can cover everything from domain name disputes and improper use of a company’s name, mark or symbol to infringement of the distinctive elements used to distinguish one’s web site on the Internet. Some trademarks are registered with the federal government. Some trademarks are registered on a state-by-state basis. Still other trademarks are protected without any registration at all under state common law. In comparative advertising it is usually acceptable to use another’s trademark so long as the advertisement does not cause consumer confusion as to the source or sponsorship of goods.

Copyright Infringement

Copyright protects creativity. The efforts of writers, artists, designers, software programmers and other talents need to be protected so that hard work can be rewarded. Copyrights, like patents and trademarks, are an effective tool against unauthorized manufacture, use, sales, or imports of one’s creative expression, including package design and in some cases product configuration.

Copyright registrations can be enforced at the United States border, creating a cost-effective way of stopping unlawful competing products from entering your key markets.

Trade Secret Infringement

A trade secret is any valuable or technical information used in business to gain competitive advantage that is also kept secret. Examples include the formula for Coca Cola and your customer or client lists. In order to qualify for trade secret protection, reasonable efforts must be made to maintain the secrecy of the business information. Trade secrets are protected under both state and federal law.

Licensing Intellectual Property

Licensing intellectual property to third parties allows a company or a non-profit corporation to exploit and capitalize on its assets. A company should appreciate that licensing empowers businesses to overcome constraints (e.g., capital, manufacturing capacity, research and development capacity, market knowledge, distribution, or trademark and patent protection, or limited employees) sooner and faster than they could otherwise, making them more competitive. Before licensing intellectual property, a company should fully understand its intellectual property rights and applicable laws.

Patent Infringement

Patent protection is helpful in stopping unauthorized manufacturing, use, sales, or imports of one’s invention in the countries where the patent has issued. Patents can be very expensive but are sometimes worth the cost. It is important to think about what can be patented and if the cost of procuring the patent is worth the benefit.

Patents provide their owners with a monopoly of a particular invention/idea for a limited period of time. Patented inventions can range from the “turtle” bumps that separate our roadways to business methods and software for managing multi-tiered hub and spoke mutual funds. In many cases, patented inventions will be marked as “patented.” In some cases, however, patented inventions may not be properly marked. Interpreting what a patent covers or does not cover requires expert legal knowledge and sometimes expert technical knowledge. If patent infringement becomes an issue, the best advice is to seek expert advice.

The Right of Privacy and the Right of Publicity

The common law of many states protects individuals against intrusions into their personal privacy. There are four basic types of common law privacy intrusions. The four basic common law privacy intrusions are:
(1) unauthorized appropriation of a person’s name or likeness;[1]
(2) placing another person in a false light;[2]
(3) disclosure of private facts which are highly offensive and not newsworthy;[3]and
(4) unreasonable intrusion into an individual’s seclusion.[4] The right of publicity is similarly defined as the appropriation of the commercial value of a person’s identity, name or likeness without the person’s consent.[5]

As one can imagine, the posting of pictures or other information to one’s web site or bulletin board by customers can raise issues of: (1) copyright infringement; (2) violations of the right of privacy; and (3) violations of the right of publicity.

Defamation

The law of defamation, i.e., liable and/or slander, varies slightly from state to state, although the same basic principles apply everywhere. Defamation occurs when something false is spoken or written about a particular person and when that person is damaged by the defamation.[6] Ordinarily, one who repeats or republishes defamatory material is liable as if he or she had originally published it.[7] Entities such as news vendors and/or other distributors of defamatory material are sometimes not liable for defamation if they did not know of or have reason to know of the defamatory material.[8]

The Communications Decency Act, 47 U.S.C. § 230, provides some liability limitations to on-line service providers for defamation actions even when they know their services are being used to disseminate defamatory materials.[9] Specifically, the law says, “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Both “interactive computer service” and “information content provider” are defined broadly and would appear to encompass most on-line service providers, including entities operating entirely on the World Wide Web. [10]

The plain language of the statute and some case law dicta suggest that the Communications Decency Act might provide on-line service providers with a liability limitation that reaches far beyond simple defamation cases, reaching into other areas such as violations of privacy and publicity rights.

First Amendment Issues

In an age of “information” the First Amendment of the United States Constitution takes on new importance. Among other unique applications of the First Amendment, one court actually held that a United States export restriction on computer source code violated the First Amendment.

There are two legal tracts that are usually followed by courts when determining First Amendment protections in the United States. An analysis proceeding from the first tract offers greater protection and judicial scrutiny of regulations limiting the content of speech. The underlying idea is that any regulation limiting the content or “goods” found within the marketplace of ideas is unconstitutional, under any pretext (with a few notable exceptions).

The second tract allows the government, within the context of, “least restrictive means,” to put time, place, and manner restrictions on speech. The idea is that so long as the government is not regulating the content of the speech flowing into the market place it can say how and when the ideas may flow– if it has a legitimate reason.
The O’Brian case is a good example of a case from the second tract. The O’Brian court held that because the act of burning a draft card was not–itself—pure expression (but a combination of speech and non-speech acts), the government could regulate the time, place and manner of such expression because a “legitimate reason” was articulated. Because the Court found that the act of burning a draft card in public was not pure expression the stricter scrutiny of a first tract analysis was escaped.

The primary tension that runs through the “second tract” cases dealing with information dissemination is whether a given piece of information (book or aeronautical chart) is a product or expression. When courts find that information is a product, as opposed to pure expression, then product liability is imposed.

The legal trend in these cases seems to reason that useful products like the navigational charts are products and books and magazine articles are not products, even if the information in the books is useful. One exception to the First Amendment’s protection of expression is found in Brandenburg v. Ohio. Brandenburg holds that speech inciting imminent lawless activity is unprotected.

Brocklesby v. United States[11] holds that a graphical instrument approach chart is a product, subject to strict liability law even though the charts are based on governmental data.[12] As a general proposition the Brocklesby case represents the idea that under product liability law information can be considered a product if the information is manifested in a tangible medium like aeronautical charts.

The court in Winter v. G.P. Putnam’s Sons held that an encyclopedia containing misleading information about harvesting the most deadly kind of mushrooms was not a product for the purpose of product liability under the Restatement of Torts s 402(A).[13] The court reasoned that product liability is “geared to the tangible world.”[14] But, the court recognized that books have a material part and an expressive part and held that a “How to Use” book is “pure thought and expression.”[15] The legal distinction between the ideas in a book and the book itself can be found in a variety of cases. These cases generally hold that the information contained in books should not be considered a product for products liability purposes, whether the information is useful or dangerous.

In McKown v. Illinois Publishing and Printing the court refused to hold a newspaper liable for injuries to one of its readers resulting from the use of a dandruff remedy contained in one of the paper’s articles.[16] The court agreed with the statement that, “negligent words are not actionable unless they are uttered directly, with knowledge or notice that they will be acted on, to one to whom the speaker is bound by some relation of duty.”[17] This case was later held to stand for the proposition that ideas hold a privileged position in our society and are therefore not equivalent to commercial products. [18]

In Walter v. Bauer the court denied a strict tort liability claim that information contained in a chemistry book was unreasonably dangerous. [19] The court held that the chemistry book was not a product.[20] Further, the court noted that the plaintiffs proposed theory would put a chilling effect on the First Amendment Freedoms of Speech and Press because authors might become liable for writing on any topic that is potentially dangerous, such as beekeeping or timbering.[21]

In Cardozo v. True the plaintiff was poisoned while cooking when she tasted a bit of the ingredients mentioned in a recipe book. The ingredient she tasted was poisonous until cooked.[22] Her claim was premised on a theory of breach of warranty because the cook book contained inadequate instructions. In denying the claim the court drew a distinction between the physical book and the ideas contained within the book.[23] The court also recognized that it is unthinkable to require a merchant bookseller to evaluate the thought processes of the many authors and publishers who supply books for sale.[24] Another similar case is Brimingham v. Fodor’s Travel Publications where the court held that a travel book was not a product under products liability law.[25] The case involved a person who bought the travel guide and subsequently was injured on a dangerous beach.

In Herceg v. Hustler Magazine, Inc. the court holds, as a matter of law, an article explaining how to engage in the practice of autoerotic asphyxia cannot be considered incitement under the First Amendment and is thus protected speech. [26] Further the court found that imposition of civil liability damages on Hustler Magazine for publishing the article “Orgasm of Death” violated the First Amendment. [27] The court also identified four elements that must be established for a court to find that the Hustler publication was insightful under Brandenburg:

1) autoerotic asphyxiation is a lawless act;
2) Hustler advocated this act;
3) Hustler’s publication went even beyond “mere advocacy” and amounted to incitement; and 4) the incitement was directed to imminent action.[28]

The Rice v. Paladin Enterprises, Inc. case involved a hit man who followed instructions on how to become an assassin for hire found in a book about the practices and procedures of killers for hire. [29] The court reasoned that, “the only category of unprotected speech which the book “Hit Man” could conceivably be placed is incitement to imminent, lawless activity under Brandenburg.”[30]

The court, however, did not find that the book would incite, even if it did advocate lawless activity.

Liability Issues

Fundamentally, one of three basic theories of liability must be shown in order for a business or non-profit business to be liable for damages in most typical intellectual property cases. Understanding these theories of liability can help to avoid getting slammed with a needless and costly lawsuit. Also, understandably, these liability theories help one to understand how the different intellectual property laws will apply to various factual situations. The three basic theories of liability are:
(1) direct infringement;
(2) contributory infringement; and
(3) vicarious liability.[31]

Direct Infringement

A direct infringement theory of liability is used when the person who infringed the copyright or violated the right of privacy, etc. is asked to pay for the alleged damage (e.g, “you damaged me and therefore you should pay for my damages”).

By way of example, individual on-line users typically engage in direct infringements, such as posting copyrighted or private works on a bulletin board system or unlawfully copying material from a web site.

Contributory Infringement / Liability

Equally typical, the direct infringers noted above may have few financial resources or are difficult to track down, making a claim for contributory or vicarious liability against an on-line service provider more attractive. The Supreme Court has recognized that vicarious liability is a broad third-party liability theory, of which contributory infringement is a species.[32]

As a general rule, “one who, with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing activity of another, may be held liable as a contributory” infringer.”[33] The “knowledge” element of contributory copyright infringement is objective; that is, the alleged contributory infringer must know or have reason to know of the work in question that constitutes an infringement. [34]

Ordinarily, one who repeats or republishes defamatory material is liable as if he or she had originally published it. [35] Entities such as newspaper vendors or other information distributors are generally not liable for defamation if they did not know of or have reason to know of the defamatory material being distributed by them. [36]

There are two categories of actions that typically give rise to contributory liability. The first is when the defendant acts in concert with the direct infringer by contributing labor to the infringing activity. Newspaper vendors and/or other distributors of defamatory material, for example, are sometimes liable for contributory infringement when they know or have reason to know they are distributing defamatory material. The second kind of action that typically gives rise to contributory liability is when the defendant acts in concert with the direct infringer by contributing materials or equipment necessary for the infringement to occur.[37]

Vicarious Liability

Under a more general theory of vicarious liability, two elements must be established. First, the (vicariously liable) third party has the right and ability to supervise infringing activities by the direct infringer (but not necessarily knowledge of the same).[38] Second, the (vicariously liable) third party must have a direct financial interest in the direct infringement.[39]

Considering the different theories of liability is also helpful when considering strategies for reducing Internet related liability issues. The three basic theories of liability that should be considered are:
(1) direct infringement;
(2) contributory infringement; and
(3) vicarious liability.

Limiting Direct Infringement Actions

Direct copyright infringement occurs when a particular business or one of its employees, agents, etc. violates someone else’s copyright while acting on behalf or for the profit of the particular business. Third party liability, on the other hand, as explained above, is when a particular business is liable for the infringing activities of unrelated third parties. Limiting claims of direct infringement can sometimes be as easy as avoiding activities that infringe other people’s legal rights. The following is a list of activities to avoid or approach with caution.

Avoid using other people’s trademarks

Avoid use of other people’s trademarks, package configurations, distinctive elements of a competitor’s web site, etc., without their permission. Use of a competitor’s trademark is often acceptable in comparative advertising or when discussing a competitor.

Avoid using other people’s patented inventions

Avoid using or emulating any invention that is marked as “patented” or “patent pending” without the advice of counsel. Patent infringement can be very expensive; approach with caution.

Avoid using or copying material that is presumably copyrighted

Avoiding the use of material that is presumably copyrighted will reduce the likelihood of a copyright infringement action. Material that is presumably copyrighted includes: (1) email, (2) Usenet and news group posting, (3) bulletin board system (BBS) posting, (4) mailing list posting, (5) postings to Internet Service Providers (such as America Online and Microsoft Network), (6) interactive chat communications (IRC), (7) recordings of communications via Internet telephone and Internet video conferencing, (8) web page contents, (9) computer graphics, (10) sound, and (11) video.

Avoid violating other people’s privacy and publicity rights

As mentioned above, liability for posting someone else’s picture can violate the copyrights and also the privacy or publicity rights of the person appearing in the picture. Do not assume that insulation from copyright liability will protect you from liability for other actions based on privacy and publicity rights. When in doubt, get permission from the people whose image appears in a particular photograph, etc.

Avoid saying things that can be construed as false or untrue

Defamation of a person’s character and/or casting someone’s reputation in a false light can cause litigation woes if the person being defamed decides to take legal action. Imprudent
E-mail, or postings to a computer bulletin board can give rise to these types of actions. While truth is always an absolute defense, it is best to consider what proof you have before saying things about other people and companies that might not be true.

Direct infringement defamation actions against businesses are relatively rare. Actions based on an employee’s false statements, however, can give rise to a defamation suit based on vicarious liability with greater frequency.

Limiting Contributory Infringement Actions

Contributory infringement is when one acts with knowledge of an infringing activity or induces, causes, or materially contributes to an infringing activity of another.

If a business becomes aware that it, or its employees, agents, etc., are engaged in an infringing activity, then the business must take corrective steps.

So long as corrective steps are taken, the “knowledge” element of the contributory infringement cannot be met.

In addition to having knowledge of an infringing activity, a business must also be involved, e.g., contribute to the alleged infringement in some way, for a contributory infringement action to stand.

In some cases a business might unwittingly contribute labor or equipment or provide a forum that contributes to an infringing activity. To help avoid unwitting contributory infringement computer bulletin boards and/or web sites, that accept material from third parties, one should follow the “passive conduit” model. That is to say, on-line forums should be self-regulated and contain disclaimers to the same effect. An example disclaimer might read:

Company XYZ exercises no control over the content of the information passing through our on-line service or posted to our web site. The forum provided is self-regulated. Any unlawful acts are the sole responsibility of the individuals committing such acts.

Please be sensitive to the rights of ownership and assure compliance with the law. To the extent that an unlawful activity occurs, our registered copyright agent is available to receive reports of such. Even though the forum is self-regulated, we will cooperate with the parties involved in helping to prevent and correct unlawful activity occurring though the use of our on-line services.

Active control or management of a computer-related forum, on the other hand, can give rise to contributory infringement because both knowledge infringing activities and participation/facilitation of the infringing activities is potentially present.

As mentioned above, certain provisions of the Communications Decency Act provide on-line service providers with an extra layer of liability protection for defamation actions. Under the protective provisions of the Communications Decency Act, an on-line service provider can take a more active role asserting “editorial control”/self-regulation of their sponsored systems with less fear of being liable as a “publisher” of defamatory material. In some cases, the same provisions of the Communications Decency Act might provide liability insulation for other alleged wrongful acts such as violations of publicity and privacy rights. The same is also true of the Digital Millennium Copyright Act, discussed later in this book.

Limiting Vicarious Liability Actions

Vicarious liability has two elements: (1) the right and ability to supervise infringing activities (but not necessarily knowledge of the same); and (2) direct financial interest in the direct infringement. Minimizing claims of vicarious liability can be accomplished by reducing the likelihood that either of the two elements mentioned above will exist.

The right and ability to supervise infringing activities

Following a “passive conduit” model for web services, as mentioned above, should reduce the chances of being vicariously liable for infringing activities occurring on one’s web site or Internet service. If one’s web site or Internet service is simply a conduit for information, the “right and ability to supervise infringing activities” will not exist to any significant extent. As mentioned above, the Communications Decency Act and the Digital Millennium Copyright Act provide safe harbors for on-line service providers wishing to exercise some editorial control of their on-line services.

Direct financial interest in the direct infringement

In order to be vicariously liable for a third party’s infringing activity one must have a “direct financial interest in the direct infringement.” The best line of defense against this element of a vicarious liability claim is that there is no direct financial benefit attributable to the direct infringement. In situations where a fee is charged for an on-line service, the safest approach is to charge a flat fee. A flat fee, like the rent charged by a landlord, is constant, having no fluctuation in relation to any infringing activities. [40]
Thus, in most cases, a flat fee is not directly related to any particular infringing activity.

RECAP: Intellectual Property Liability Issues

Fundamentally, one of three basic theories of liability must be shown in order for a business or non-profit business to be liable for damages. The three basic theories of liability are: (1) direct infringement; (2) contributory infringement; and (3) vicarious liability. Limiting claims of direct infringement can sometimes be as easy as avoiding activities that infringe other’s people’s legal rights.

Avoid: (1) using or copying copyrighted material; (2) using other people’s trademarks; (3) using other people’s patented inventions; (4) violating other people’s privacy and publicity rights; (5) saying things that can be construed as false or untrue.

Contributory infringement is when one acts with knowledge of an infringing activity or induces, causes, or materially contributes to an infringing activity of another. To help avoid unwitting contributory infringement, computer bulletin boards and/or web sites, that accept material from third parties, should follow the “passive conduit” model. That is to say, on-line forums should be self-regulated and contain disclaimers to the same effect.

Information service providers should limit and diminish any “editorial” control over user provided content. Vicarious liability has two elements: (1) the right and ability to supervise infringing activities (but not necessarily knowledge of the same); and (2) direct financial interest in the direct infringement.

Minimizing claims of vicarious liability can be accomplished by reducing the likelihood that either of the two elements mentioned above will exist.

[1] George B. Delta, et al., Law of the Internet 6-4 (1998) (quoting Restatement (Second) of Torts § 652 C (1977)).
[2] Id. (quoting Restatement (Second) of Torts § 652 E ).
[3] Id. (quoting Restatement (Second) of Torts § 652 D).
[4] Id. (quoting Restatement (Second) of Torts § 652 B).
[5] Restatement (Third) of Unfair Competition § 46 (1993).
[6] See, e.g., Cubby, Inc. v. CompuServe, Inc., 776 F. Supp. 135 (S.D.N.Y. 1991).
[7] Id. at 139.
[8] Id.
[9] See Zeran v. America Online, Inc., 958 F. Supp. 1124 (E.D. Va 1997) and Blumenthal v. Drudge, 992 F. Supp. 44 (D.D.C. 1998).
[10] An “interactive computer service” is defined as “any information service . . . that provides or enables computer access by multiple users to a computer server . . . .” 47 U.S. C. § 230 (f)(2). An “information content provider” is defined as “any person or entity that is responsible . . . for the creation or development of information provided through the Internet.” 47 U.S. C. § 230 (f)(3).
[11] See Brocklesby v. United States, 767 F.2d 1288, 1294-95 (9th Cir. 1985) (applying Restatement for the purpose of California law), cert. denied, 474 U.S. 1101, (1986); Saloomey v. Jeppesen & Co., 707 F.2d 671, 676 -77 (2d Cir. 1983) (applying Restatement for purpose of Colorado Law); Aetna Casualty & Surety Co. v. Jeppesen & Co., 642 F.2d 339, 342 – 43 (9th Cir. 1981) (applying Nevada law); Fluor Corp. v. Jeppesen & Co., 170 Cal. App. 3d 468, 475, 216 Cal rptr. 68, 71 (1985)(applying California law).
[12] Brocklesby v. United States, 767 F.2d 1288, 1294-95 (9th Cir. 1985) (applying Restatement for the purpose of California law), cert. denied, 474 U.S. 1101, (1986).
[13] Winter v. G.P. Putnam’s Sons, 938 F.2d 1033, 1034 (9th Cir. 1991).
[14] Id.
[15] Id.
[16] McKown v. Illinois Publishing and Printing, 289 Ill. App. 59, 6 N.E. 2d 526 (1937) (O’Connor, J.).
[17] 6 N.E. 2d 526 at 530.
[18] Sears Roebuck and Co. v. Employers Insurance of Wausau, 585 F.Supp. 739 (N.D. Ill., 1983) (explaining the holding in McKown v. Illinois Publishing and Printing, 289 Ill. App. 59, 6 N.E. 2d 526 (1937) (dandruff case)).
[19] Walter v. Bauer, 439 N.Y.S2d 821, 451 N.Y.S2d 533 (App. Div. 1982), 88 A.D.2d 787 (chemistry book case).
[20] 439 N.Y.S2d at 822-823.
[21] Id.
[22] Cardozo v. True, 342 So.2d 1053 (Fla. App. 1977) (recipe case).
[23] Id. at 1056.
[24] Id.
[25] Brimingham v. Fodor’s Travel Publications, 833 P.2d 70.
[26] Herceg v. Hustler Magazine, Inc., 814 F.2d 1017, 1024 (5th Cir. 1987).
[27] Id. at 1030 (Edith Jones, J., concurring and dissenting that the majority is grating almost complete protection from tort liability under the First Amendment).
[28] 814 F.2d 1017, 1022.
[29] Rice v. Paladin Enterprises, Inc., 1996 WL 515786 (D.Md. 1996).
[30] Id. at 5.
[31] See generally, On-line Copyright Issues: Recent Case Law and Legislative Changes Affecting Internet and Other On-line Publishers, J. Pat. and Trademark Off. Soc’y, January-February 1997)
[32] Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 435 (1984).
[33] Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971).
[34] Cable/Home Communication Corp. v. Network Prod. Inc., 902 F.2d 829, 844 (11th Cir. 1990).
[35] Id. at 139.
[36] Id.
[37] 2 P. Goldstein, Copyright § 1.1 (2d ed. 1996); see also Boz Scaggs Music v. KND Corp., 491 F. Supp. 908, 913 (D. Conn. 1980); Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d 354, 366 (9th Cir. 1947); Cable/Home Communication Corp. v. Network Prods., Inc., 902 F.2d 829, 845-47 (11th Cir. 1990).
[38] See Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963).
[39] See generally, On-line Copyright Issues: Recent Case Law and Legislative Changes Affecting Internet and Other On-line Publishers, J. Pat. and Trademark Off. Soc’y, January-February 1997) (winner of the prestigious Rossman Award for Outstanding Publication of 1997).
[40] See generally, et al., On-line Copyright Issues: Recent Case Law and Legislative Changes Affecting Internet and Other On-line Publishers, J. Pat. and Trademark Off. Soc’y, January-February 1997) (winner of the prestigious Rossman Award for Outstanding Publication of 1997).

II. ATTORNEY-CLIENT PRIVILEGE AND ELECTRONIC COMMUNICATIONS
A. Technology
B. Ethics and Professional Responsibility
C. Criminal Law
D. Practical Advice About E-Mail

III. CONFLICTS OF INTEREST ARISING FROM THE INTERNET
A. Evaluating Formation Of Attorney-Client Relationship
B. Practice Tips

VI. ADVERTISING FIELDS OF PRACTICE AND FIRM NAMES

V. NETIQUETTE AND ETHICS ON THE INTERNET

VI. ISSUES SPECIFIC TO INTELLECTUAL PROPERTY PRACTICE

A. Overview: A Comparison of ABA Model Rules of Professional Conduct and the Rules of Professional Conduct In the United States Patent and Trademark Office
B. Outline of the PTO Code of Professional Responsibility
C. Attorney-Client Privilege in Intellectual Property Litigation and Before the PTO
D. Unauthorized Practice of Law
E. Conflicts of Interest in Intellectual Property Practice
F. Duty of Candor to the PTO
G. Inequitable Conduct
H. Citing Information From One Client’s Application in Another Client’s Application

CLIENT RELATIONS: The Context Of Legal Ethics

A 1996 Consumer Report Survey indicated that the number one complaint from clients was that the attorney did not promptly return the client’s phone call. The second most frequent complaint was that the attorney did not pay adequate attention to the client’s case. Interestingly, a Lou Harris poll found that the least relevant reason clients leave a professional was that fees were unreasonable.

Why promptly return phone calls and have good communications with your clients?

Almost 80% of all malpractice claims result from poor client relations. Additionally, greater than 75% of disciplinary complaints are based on issues related to client relations. Thus, it’s important to maintain open channels of communication with a client. If there is a breakdown, have another member in the firm assist.

Also, keep clients advised as to the status of their cases and well informed of deadlines in advance. Why keep clients advised” Because Washington’s Rule of Professional Conduct 1.4 states that: A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with a reasonable request for information.

A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

Additionally, RPC 1.3 states that: “A lawyer shall act with reasonable diligence and promptness in representing a client.”

To help realize the mandates of RPC 1.3 and 1.4, technology has come to the aid of many busy attorneys by way of cordless telephones, cell phones, facsimile machines and electronic mail or “e-mail”

ATTORNEY-CLIENT PRIVILEGE AND ELECTRONIC COMMUNICATIONS

Rule RPC 1.6 on confidentiality states, “A lawyer shall not reveal confidences or secrets . . . . “A confidence is information received by the attorney that is protected by the evidentiary attorney-client privilege.”

Secrets include other information that the attorney receives under his or her relationship with a client, where the client requests such information to be kept confidential or where disclosure of such information would be embarrassing or detrimental to the client.

The attorney-client privilege applies to all confidential communications made by an attorney and client.  “[P]rivilege remains an exception to the general duty to disclose” Garner v. Wolfinbarger, 430 F. 2d 1093 (5th Cir. 1970).

Four elements are required to establish privilege. See United States v. Shoe Mach. Corp., 89 F. Supp. 357, 358-59 (D. Mass. 1950). The four elements are:
(1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made is a member of the bar of a court; (3) the communication relates to a fact of which the attorney is informed by his client in confidence in connection to legal services; and (4) the privilege has been claimed and not waived by the client, i.e., the communication must be made in confidence and not made in the presence of third parties.

The professional duty to preserve secrets is broader than the attorney-client privilege. An attorney’s obligation to keep secrets extends before and after the attorney-client relationship exists. Unlike the attorney-client privilege, the ethical duty to maintain secrets applies to information communicated by
the client even in the presence of others.

Technology

Understanding the technology that is giving rise to the many new ethical questions is important. In fact, one state bar ethics opinion points out that because technology is developing so rapidly, “any analysis and advice in this area is subject to change as the technology changes.” Pennsylvania Opinion 97-130, http://www.legalethics.com/states/97_130.htm.

Cordless Phones

Definition:
“In one sense, the cordless telephone is just what the name implies, a telephone. It looks and sounds like a normal land-line telephone. When you use a cordless phone, you dial a telephone number and talk to the party on the other end of the line. In actual operation, however, the cordless phone uses a radio signal. The typical cordless phone consists of a base unit, attached to the land-based telephone line, and a mobile unit which transmits and receives the radio signals that carry the actual conversation to and from the base unit.” U.S. v. Smith, 978 F.2d 171, 178 (5th Cir. 1992). Interception of Cordless Phones “As a factual matter, the broadcast of a cordless telephone can far more readily be intentionally intercepted or inadvertently overheard than a land-based call.”

David Hricik, Confidentiality and Privilege in High-Tech Communications, 8 No. 2 Prof. Law. 1, 18 (1997). “[C]ordless telephone calls can be intercepted by someone who is nearby and is using a device no more exotic than a police scanner, baby monitor, or radio.”

Peter R. Jarvis et al., Competence and Confidentiality in the Context of Cellular Telephone, Cordless Telephone, and E-Mail Communications, 33 Willamette L. Rev. 467, 476 (1997). “A cordless telephone uses AM or FM radio signals to transmit communications from the handset to the base unit. This signal can be easily intercepted by a standard AM radio.” Modern Communications Technology and the Duty of Confidentiality, http://barlinc.org/ethics/ethp215.html.[1]

At least on State Bar Ethics Opinion has stated that, “a lawyer conversing with a client over a cordless or mobile telephone should advise the client of the risk of loss of confidentially.” Illinois State Bar Association Advisory Opinion on Professional Conduct No. 96-10, http://www.illinoisbar.org/CourtsBull/EthicsOpinions/96-10.html; see also Kentucky Bar Association Opinion E-403, http://www.uky.edu/Law/kyethics/kba403.htm (finding that “a lawyer should not use cordless or other mobile telephones that were easily susceptible to interception when discussing confidential client matters. The Committee also opined that a lawyer conversing with a client over a cordless or mobile telephone should advise the client of the risk of the loss of confidentiality.”); Washington State Informal Opinion 91-1 (undated) (a lawyer may not discuss client business over a cordless telephone without first advising the client that the connection may not be confidential).

Cell Phones
Definition
There are two general varieties of cellular telephones on the market (digital and analog). From a lay perspective, the two varieties of phones work in the same way, i.e., the phones “broadcast conversations over the airwaves to receiving stations, which them transmit the calls over land-based phone lines.”  David Hricik, Confidentiality and Privilege in High-Tech Communications, 8 No.2 Prof. Law. 1, 18 (1997) (describing a analog cellular telephone). Currently, several state bar associations find digital cellular phones to be equivalent to land-line phones (Illinois, Kentucky).

Interception of Cellular Communications
Digital cell phones are newer on the market and are thought by some to be “more secure” than the traditional analog cellular telephone. From a technical point of view, the older analog cellular telephones should be regarded as insecure.

Since 1993, the type of scanner “used to intercept cellular communications may not be marketed in the United States.” David Hricik, Confidentiality and Privilege in High-Tech Communications, 8 No.2 Prof. Law. 1, 18 (1997) (citing Jose L. Nunez, Regulating the Airwaves: The Governmental Alternative to Avoid Cellular Uncertainty on Privacy and the Attorney-Client Privilege, 6 St. Thomas L. Rev. 479, 486 (discussing the Telephone Disclosure and Dispute Resolution Act of 1993, Pub. L. 102-556, 106 Stat. 4181)). It is interesting to note that many scanners sold prior to 1993 are capable of intercepting cellular phone calls and are still lawful to own. Further, many scanners still sold today can be modified (illegally) to intercept cellular telephone calls.

Facsimiles
Generally speaking, most people consider traditional phone lines to be secure (this would include fax machines, for the most part). While interception of traditional telephone signals is not impossible, it requires more than the interception of other modes of communication such as cordless phones. One common situation that gives rise to liability for practicing lawyers is the “misdirected fax.” Because there is usually not another
person on the other end of the phone line when sending a fax and facsimile numbers can get “mixed up”, it is easy to imagine how a sensitive fax might find its way into the office of opposing counsel. This is why almost
all fax cover sheets originating in legal offices contain a statement like the one below. Such confidentiality legends have been held to maintain the attorney-client privilege when the facsimile was inadvertently transmitted to a third party. A similar statement should be used on e-mail.

FACSIMILE TRANSMITTAL

CONFIDENTIALITY NOTICE: The information contained in this facsimile message is legally privileged and/or confidential information intended only for the use of the individual or entity named below. If you are not the intended recipient, you are hereby notified that any use, dissemination, distribution, or copying of this facsimile or its content is strictly prohibited. If you have received this facsimile in error, please immediately notify us by telephone and return the original facsimile message to us by mail or destroy it without making a
copy. Thank you.

ELECTRONIC MAIL TRANSMITTAL

=================================================
Confidential/Privileged Communication -Attorney Work Product

This Internet electronic mail (e-mail) message contains confidential, privileged information intended only for the above addressee(s). Do not read, store, copy or disseminate it unless you are an addressee.

If you have received this e-mail in error, please advise us immediately by return e-mail and then delete all copies from your system. If you have questions, please call us collect at (206) 622-4900 and ask to speak to
the message sender or Office Administrator. Thank you.
==================================================

Electronic Mail (“E-Mail”)
Private Networks
Private networks such as those found in most major law firms are generally secure. Likewise, direct computer to computer communications with clients can be thought of as secure (such a transmission is similar to a sending a facsimile because the information is transmitted directly from point “A” to point “B” across conventional telephone lines). The possibility of inadvertent communications such as the “misdirected e-mail” are virtually non-existent on private networks. The extent to which private networks are connected to other networks raises issues such as those described below.

Public Networks

Networks, such as America Online and the Microsoft Network can be considered “public” or “semi-public” networks because anyone who pays to use them can do so. This makes any risk and liability for “misdirected e-mails” greater. However, “public access to a network does not equate to public access to the information stored in private places on that network.” David Hricik, Confidentiality and Privilege in High-Tech Communications, 8 No.2 Prof. Law. 1 (1997). Following a similar vein the court in U.S. v. Maxwell, 43 Fed. R. Serv. 24 (U.S.A.F. Ct. App. 1995) held that e-mail stored on America Online and protected by a password was subject to a reasonable expectation of privacy.

Internet

The “Internet” describes “a collection of more than 50,000 networks linking some nine million host computers in ninety counties. . . ” American Reporter v. Reno, 930 F. Supp. 916, 925 (S.D.N.Y. 1996). When sending an e-mail from one computer to another using the Internet, the communication travels through several intermediate computers that essentially compose parts of the “network.”  In addition, e-mail is sometimes “replicated and split into separate ‘packets’ of information as it is being transmitted: thus, multiple copies can exist at any given time, but they may each be but a portion of the whole.” David Hricik, Confidentiality and Privilege in High-Tech Communications, 8 No. 2 Prof. Law. 1 (1997).

Accordingly, the “distinction between an e-mail message sent over the Internet and a land-based phone call boils down to this: Internet e-mail messages are temporarily stored in, and so can be accessed through, the [intermediate computers through which the e-mail travels]. An employee of the entity that owns the [intermediate computer] could lawfully be monitoring the[ir computer] and could read a confidential transmission.”  Id. Interception of E-Mail “All technologists agree . . . that obtaining information illegally from
the Internet is much easier than tapping regular phone or fax lines. Moreover, those who traffic in contraband information are drawn to the Internet . . . . “  ABA/BNA Lawyers’ Manual on Professional Conduct (1996), http://www.bna.com/prodhome/bus/mopc_adnew2.html. Esther Dyson, a well-known commentator on issues relating to the Internet states in her book, Release 2.0 that sending an e-mail is like sending a post card, meaning that there is really nothing to keep anyone who is interested from reading it from doing so. Esther Dyson, Release 2.0 at 260-61.

On the other hand, a Pennsylvania ethics opinion notes that there “do not appear to be any publicly reported instances of [e-mail] interception taking place.” Pennsylvania Opinion 97-130, http://www.legalethics.com/states/97_130.htm.
Modes of E-Mail Interception Tools of “SATAN”. Recently, a tool for probing a remote computer for security vulnerabilities became available. This [tool] is known as Security Administrator Tool for Analyzing
Networks (SATAN). SATAN not only analyzes the remote computer’s weak points, but it also provides extensive documentation on the vulnerabilities identified and how to repair them. SATAN . . . is widely available for both legitimate use by system administrators and diabolical use by people interested
in breaking into computer systems owned by others. Robert L. Jones, Client Confidentiality: A Lawyer’s Duties with Regard to Internet E-Mail (1995), http://www.kuesterlaw.com/netethics/bjones.htm (footnotes omitted).

E-mail “Sniffers”
Sniffer software can be programmed to select and store data being transmitted across the Internet based on who sends the data, where the data is coming from, or where the data is intended to go, including specific machines. See generally Robert L. Jones, Client Confidentiality: A Lawyer’s Duties with Regard to Internet
E-Mail (1995), http://www.kuesterlaw.com/netethics/bjones.htm. The really subtle thing about sniffer software is that it "does not require knowledge of your password to steal your client’s secrets, your litigation strategy, your analysis of potential jurors, your credit card number, or the Christmas shopping list you just sent to your relatives across the country. “Id. Computer Spoofers” “Spoofing” is where one uses an intermediate computer to intercept
e-mail data packets intended for another by configuring the intermediate machine to emulate the recipient’s machine.

When data comes along the network intended for the actual recipient, the spoof[ing] computer receives it instead and automatically sends a packet to the sender which makes the sender believe that the message was properly received. In fact, the “spoofer” can read the e-mail, and concoct a reply and send it back to the unsuspecting person who is unaware that he is communicating with an impostor. More subtly, the spoofer can alter the original e-mail and then relay it on to the intended recipient. [2] Robert L. Jones, Client Confidentiality: A Lawyer’s Duties with Regard to Internet E-Mail (1995), http://www.kuesterlaw.com/netethics/bjones.htm.

E-Mail Encryption
The Attorneys’ Liability Assurance Society (ALAS) (an insurance company that insures large firms for malpractice) maintains “it is not necessary – for either ethics, privilege, or liability purposes – to encrypt communications on the Internet, except for matters so important that any threat of interception must be avoided.” The ALAS, however, urges its members to “use” ‘great caution’ because of the lack of case law and the possibility that courts and ethics committees “will be tempted to bypass a careful analysis.” ABA/BNA Lawyers’ Manual on Professional Conduct (1996), http://www.bna.com/prodhome/bus/mopc_adnew2.html (quoting views of the ALAS). Some legal commentators have suggested that under a developing standard of care, attorneys who use e-mail might be required to use encryption technology even before it becomes more widely used.

Ethics and Professional Responsibility
Standard of Care For High-Tech Communications
The case of The T.J. Hooper, 60 F.2d 737 (2d Cir. 1932), might be instructive by analogy in arguing for an evolving higher standard of care applicable to lawyers in the realm of high-tech communications with clients. In The T.J. Hooper, the defendant was held to a standard of care that was higher than the prevailing standard at the time and subsequently found liable for not installing radio receivers on their tug boats. Most other tug boats at the time had not installed the radio receivers. See ABA/BNA Lawyers’ Manual on Professional Conduct (1996), http://www.bna.com/prodhome/bus/mopc_adnew2.html (noting that the “standard of care for lawyers using e-mail may require encryption at some point before [encryption] becomes more widely used.”); Robert L. Jones, Client Confidentiality: A Lawyer’s Duties with Regard to Internet E-Mail (1995), http://www.kuesterlaw.com/netethics/bjones.htm (noting that an “attorney holding herself out to be a ‘netlawyer’ or a technology lawyer
could be found to be on notice of the risks associated with communication on the Internet and thus have a higher standard of care with respect to protection of sensitive information that she chooses to transmit in that fashion despite her specialized knowledge.”); see also ABA Formal Opinion No. 99-413 (March
1999), Protecting Confidentiality of Unencrypted E-Mail, http://www.abanet.org/cpr/fo99-413.html.

Duty of Competent Representation
RPC 1.1 states that: “A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” As if you did not have enough to worry about, now you may have to monitor technological advances in electronic communication interception technology. Attorneys holding themselves out as concentrating in Internet law, electronic commerce or otherwise a “net lawyer” may be subject to a higher standard of care with respect to protecting sensitive information than a general attorney.

One legal commentator has suggested that a lawyer’s duty of competent representation necessarily intersects with a lawyer’s duty to maintain confidentiality. See Peter R. Jarvis et al., Competence and Confidentiality in the Context of Cellular Telephone, Cordless Telephone, and E-Mail Communications, 33 Willamette L. Rev. 467, 476 (1997). As noted above, an evolving standard of care for the use of certain means of communication might indeed redefine the duty of competent representation to include keeping a client reasonably informed of waiver issues related to communications made across the Internet and other related means of communication.

Waiver of Attorney-Client Privilege
“No case in any jurisdiction has addressed the specific question of whether transmission of unencrypted confidential messages over the Internet is an intentional divulgence of that information so as to form a waiver of any claim to a privilege. Robert L. Jones, Client Confidentiality: A Lawyer’s Duties with Regard to Internet E-Mail (1995), http://www.kuesterlaw.com/netethics/ bjones.htm. As noted above, in order to qualify for the attorney-client privilege, communications must be made in confidence; the privilege may be waived in some cases where there is no reasonable expectation of privacy (such as in a crowded restaurant).
Future litigation might find that communicating sensitive and confidential information across the Internet affects the existence of the attorney-client privilege because of the “open” nature of such communications.

At least one state bar ethics opinion has noted that the Electronic Communications Privacy Act (as amended) “provides that ‘[n]o otherwise privileged wire, oral or electronic communication intercepted in accordance with, or in violation of, the provisions of this chapter shall lose its privileged character.’ 18 U.S.C. sect; 2517(4). Accordingly, interception will not, in most cases, result in a waiver of the attorney-client privilege.” Alaska Bar Association Opinion 98-2, Communication By Electronic Mail, http://wwwlegalethics.com/states/98-02.htm (noting that their opinion is “in accord with the prevailing view, though the answer in each specific case may depend, at least in part, on the circumstances of whether the disclosure is viewed as ‘intentional’ or ‘inadvertent.’ ” See Shubert v. Metrophone, Inc., 898 F.2d 401 (3d Cir. 1990).” ).

State Bar Ethics Opinions
At least 13 different state bar organizations have issued advisory opinions on the topic of e-mail communication over the Internet and the professional responsibility/legal ethics ramifications regarding the same. See generally http://www.legalethics.com/opins.htm. By far the majority of ethics opinions issued by state bar organizations hold that communication with clients across the Internet is acceptable and that e-mail encryption is not required under the Rules of Professional Conduct.

An Alaskan Bar Association Ethics Opinion, in expressing its own view, summarized the views of several other bar organizations as follows:
*Arizona Advisory Op. 97-04 (lawyers may want to have e-mail encrypted with a password known only to the lawyer and the client, but lawyers may still communicate with existing clients via e-mail about confidential matters);
*South Carolina Advisory Bar Op. 97-08 (finding a reasonable expectation of privacy when sending confidential information through electronic mail; the use of electronic mail will not affect the confidentiality of client communications under South Carolina Rule of Professional Conduct 1.6);
* Vermont Op. 97-5 (a lawyer may communicate with a client by e-mail, including the Internet, without encryption);
* Illinois State Bar Assoc. Op. 93-12 (lawyer does not violate Rule 1.6 by communicating with a client using electronic mail services, including the Internet, without encryption);
* Iowa Advisory Op. 95-30. (the only dissonant view has been expressed by the Iowa Bar, which suggests that, without encryption, confidential communications should not be sent by e-mail absent an express waiver by the client).
*Alaska Bar Association Opinion 98-2, Communication By Electronic Mail, http://www.legalethics.com/states/98-02.htm.

Choice of Law and Jurisdiction For Internet Communications – Ethical and Legal Considerations
One state ethics opinion warns:  “[a]s more lawyers and law firms race to create a presence on the World Wide Web, they should be aware that doing so brings with it the risk that they may be hailed into a foreign jurisdiction to answer charges of improper advertising or solicitation or unauthorized practice
of law. For the exercise of personal jurisdiction over an out-of-state lawyer, the lawyer’s physical presence in the forum state is not required. Contacts created solely through an Internet Web site may be sufficient. Lawyers should not, however, be subject to disciplinary proceedings in states where they, or members of their firm, are not licensed to practice.” Pennsylvania Inquiry 98-85, http://www.legalethics.com/states/98_85.html.

Criminal Law
One local commentator feels that the criminal sanctions of the Electronic Communications Privacy Act is, “[t]he correct starting point for analyzing privilege and confidentiality on the Internet is the criminal law, not ethics rules or the technology itself." ABA/BNA Lawyers’ Manual on Professional Conduct
(1996), http://www.bna.com/prodhome/bus/mopc_adnew2.html (quoting views of Albert Gidari, of Seattle’s Perkins Coie set out in the article Privilege and Confidentiality in Cyberspace, http://www.perkinscoie.com/pracarea/intnet/priv.htm).[3] The Electronic Communications Privacy Act (the “ECPA”) (as amended) makes it a felony to intercept communications made over phone lines, wireless communications (including cordless phones), and e-mail sent through the Internet (including while the e-mail is in transit or after it is received). See 18 U.S.C. 2510 et seq. In many cases the ECPA may prevent information that is illegally obtained from being used as evidence.

See also Alaska Bar Association Opinion 98-2, Communication By Electronic Mail, http://wwwlegalethics.com/states/98-02.htm (noting that, [t]he Electronic Communications Privacy Act (as amended) makes
it a crime to intercept communications made over phone lines, wireless communications, or the Internet, including e-mail, while in transit, when stored, or after receipt.).

Practical Advice About E-Mail
One state bar ethics opinion concludes that a lawyer may do the following:
* A lawyer may use e-mail to communicate with or about a client without encryption; the lawyer should advise a client concerning the risks associated with the use of e-mail and obtain the client’s consent either orally or in writing;
* A lawyer should not use unencrypted e-mail to communicate information concerning the representation, the interception of which would be damaging to the client, absent the client’s consent after consultation;
* A lawyer may, but is not required to, place a notice on client e-mail warning that it is a privileged and confidential communication[4]; and,
* A lawyer should consider that e-mail records are discoverable, and include the time and date of transmission, and all recipients. Lawyers should advise their clients of this fact since clients often regard e-mail transmissions as harmless oral conversations.
* If the e-mail is about the lawyer or the lawyer’s services and is intended to solicit new clients, it is lawyer advertising similar to targeted, direct mail and is subject to the same restrictions under the Rules of Professional Conduct.

Pennsylvania Opinion 97-130, http://www.legalethics.com/states/97_130.htm.

One author writing on the subject suggests three rules for avoiding disciplinary actions or civil liability for failing to exercise reasonable care in protecting sensitive client information. First, lawyers need to be well advised of how differing means of communication have varying levels of “security.” Second, lawyers should discuss such matters with their clients. Third, lawyers must be ready to upgrade their practices when technology changes. Peter R. Jarvis et al., Competence and Confidentiality in the Context of Cellular Telephone, Cordless Telephone, and E-Mail Communications, 33 Willamette L. Rev. 467,
476 (1997).

Still another view is that, “lawyers should grade the security risks for various e-mail communications just as they do for other methods of communication.” A local commentator on Internet and on-line issues, said “he avoids using the Internet for material that he does not want to be discoverable–and he says so to clients.”  ABA/BNA Lawyers’ Manual on Professional Conduct (1996), http://www.bna.com/prodhome/bus/mopc_adnew2.html (quoting views of
Keith Cochran, of Heller, Erhman, White & McAuliffe in Seattle).

Conflicts of Interest Arising from the Internet Evaluating Formation Of Attorney-Client Relationship

In re McGlothlen, 99 Wn. 2d 515 (1983), the Washington State Supreme Court held that the reasonable understanding of the putative client determines whether an attorney-client relationship was established. This subjective believe must be based on realistic objective facts. See, e.g., Sherman v. State, 128 Wn.
2d 164 (1965). While being fact specific, only a minimum number of contacts are effectively needed to establish an attorney-client relationship. See, e.g., Teja v. Saran, 68 Wn. App. 793 (1993).

A client’s intention to seek legal advise and / or a client’s belief that he or she is consulting an attorney will determine whether the attorney-client privilege is invoked. 3 Joesph M. McLaughlin, Weinstein’s Federal Evidence § 503.11 (1998); see, e.g., United States v. Dennis, 843 F.2d 652, 656-57 (2d Cir. 1988)
(“initial statements” made when client “intended to employ [attorney] would be privileged “even though the employment was not accepted”).

Practice Tips
* Do not give legal advice to unknown third parties over the Internet;
*  Do not post personal opinions on publicly-accessible “bulletin boards” or “User-groups” that could harm or embarrass a client;
* Be careful about the creation of attorney-client relationships in Internet “chat rooms.”

Advertising Fields of Practice and Firm Names On advertising, RPC 7.1 states:
A lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services. A communication is false or misleading if it:
(a) contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading;
(b) is likely to create an unjustified expectation about results the lawyer can achieve, or states or implies that the lawyer can achieve results by means that violate the rules of professional conduct or other law; or
(c) compares the lawyer’s services with other lawyer’s services, unless the comparison can be factually substantiated.

There is no formal guidance for Washington lawyers on how the RPCs apply to the use of the Internet. You should keep a copy of your Internet website, together with the dates, and all updates made thereafter, for two years. Other states have enacted certain restrictions. In Arizona,[5] for example, a lawyer may
place on-line intake forms for prospective clients on their websites for clients to download and complete off-line, since there is no unethical solicitation involved and there is no communication of confidential information via the Internet. Prospective clients should be cautioned to avoid possible inadvertent
disclosures of confidential information and should not be able to send the completed form back electronically. Likewise, the New York Bar permits similar on-line intake forms.

The Illinois Bar finds attorney websites to be the functional equivalent of Yellow Page entries or firm brochures. The Iowa Bar found a lawyer referral program set up by a county bar association
and administered as a “community bulletin board/web page” on a non-profit community bulletin board did not quality as a referral program, but simply another form of direct advertising and thus was required to apply with all applicable rules.

The Iowa Bar also found lawyers may not participate in a computerized communications service that, upon request, provides to other subscribers the names of lawyers and law firms who subscribe to the service. This communication service constituted a referral service to which lawyers would give something of value, which would be improper. Likewise, a lawyer may not participate in “Attorney Find Inc.” an Internet advertising program that charges annual listing fees for listing under as many category headings as the lawyer wants.
The Massachusetts Bar has stated that the bar association may establish an Internet membership directory containing hypertext links to the home pages of individual members and that such a directory did not constitute a lawyer referral service. Interestingly, however, if an attorney’s website recorded
the e-mail addresses of visitors to the site for purposes of target solicitation (e.g., responding e-mails), then the web pages must be clearly labeled “advertising.”

The Pennsylvania Bar found a lawyer may not participate in a real estate lead and referral program marketed through the Internet in which the lawyer would pay a fee in exchange for exclusive marketing rights within a certain area of the state.

A lawyer shall not directly or through a third person solicit, in person or by telephone, professional employment from a prospective client with whom the lawyer has no family or prior professional relationship, when a significant motive for the lawyer’s doing so is the lawyer’s pecuniary gain. A lawyer shall not send a written communication to a prospective client for the purpose of obtaining professional employment if the person has made known to the lawyer a desire not to receive communications from the lawyer. Washington has not adopted the ABA’s 1989 amendments to the model rules that permit pre-recorded telephone solicitations. Such pre-recorded communications to individual potential clients would likely violate RPC 7.3 as a ban on direct telephone solicitation.

Lawyers may make presentations to groups, but lawyers may not follow up such group presentations with in-person or telephone solicitations. Barrie Althoff, the Washington State Bar Association’s chief disciplinary counsel, notes in an article he wrote that follow-up e-mail solicitations are likely also prohibited.
Washington State Bar News, May 1997.

The Tennessee Bar Association is one of the only state bar organizations prohibiting on-line transmissions with potential clients unless the attorney complies with certain enumerated requirements (Spamming effectively prohibited).

A lawyer’s participation in an electronic bulletin board, chat group, or similar service may implicate the rules governing solicitation, to the extent that the lawyer seeks to initiate unrequested contact through a specific person or group through the use of such services.

The Arizona Bar found communication with a potential client via cyberspace to be permissible since there is not the same degree of confrontation and immediacy as with in person or telephone communications.

The Illinois Bar found that a lawyer’s participation in an electronic bulletin board, chat group, or similar service may implicate the rules governing solicitation.

Likewise, the Michigan, Utah and Massachusetts Bar Associations are more strict regarding solicitation and chat rooms.

When a lawyer participates in a chat group or other on-line service that may involve offering personalized legal advice to anyone who happens to be connected to the service, the recipients of the advice may become the lawyer’s client.

Consider whether a “potential client” would believe that you were their attorney, and thus whether an attorney-client relationship has been established.

The Arizona Bar requires attorneys to answer only general legal questions since the lawyer cannot screen for potential conflicts and may run the risk of disclosing confidential information during a chat room session. A lawyer may communicate the fact that he or she does or does not practice in particular
fields of law.

Iowa Bar: A law firm may not place an advertisement on a homepage/website that refers to “governmental relations,” “lobbying,” “administrative/regulatory matters,” “governmental litigation,” and “governmental
procurement”, notwithstanding the inclusion of a requisite disclaimer. Only lawyers, not law firms, may advertise areas of practice, and only after filing a compliance report with the Iowa Bar. The name of a lawyer holding a public office shall not be used in the name of a law firm, or in communications on its behalf, during any substantial period which the lawyer is not actively and regularly practicing with the firm.

Lawyers may state or imply that they practice in a partnership or other organization only when that is the fact, and not simply practicing out of the same office.

Lawyers in private practice may not use a trade name. The Arizona Bar prohibits lawyers from using a trade name in their websites, but domain names are not firm names and therefore not subject to this limitation.
Kansas Bar: A lawyer employed by a corporation may not give customers of the corporation legal advice with technical computer advice when the advice is designed to sell a company’s computer software package that purports to remedy legal problems. The Kansas Bar found this would intrude on the professional
independent judgment on the lawyer regardless of whether there is fee splitting with a non-lawyer. The Kansas Bar further noted that a corporate lawyer who gives legal advice to corporate customers is not engaged in unethical fee splitting unless there was a direct or indirect charge by the corporation for that advice; if the cost of the legal service is recouped by the corporation through the sale of the company’s product, this pass through is only an indirect rule violation.

The New York Bar allows lawyers to accept payment by credit card, including credit card transactions over the Internet, provided that the client’s credit card information is kept confidential.

Netiquette AND Ethics on the Internet
Netiquette has been defined to mean proper behavior on the Internet, which has become increasingly more important because text-only messages fail to communicate other important information including facial expressions and tone. Thus, authors of electronic mail messages (“e-mail”) typically use textual techniques to convey tone, such as: ”emoticons,” which are emotional icons represented as punctuation abbreviations for grin and big grin respectively; and all caps to connote shouting. One commentator and grammarian
believes that all e-mail is written correspondence and thus should not include any “cute” or nonstandard English and grammatical usage. P. O’Conner, Woe is I, The Grammarphobe’s Guide to Better English in Plain English, G.T. Putnam’s Sons, New York, p. 126 (1996). Ms. O’Conner also dissuades against nonstandard abbreviations and contractions, such as “IMHO” (in my humble opinion), “CLU”; (see you later), “BTW” (by
the way), and “pls”; for please, “yr” for your and “thnx” for thanks.

To help you communicate effectively and avoid unintentionally offending the recipient of your e-mail, Virginia Shea has created ten rules of “netiquette,” which are summarized below. Her ten “rules” of netiquette can be found, for example, at http://www.albion.com/netiquette/corerules.html.

First, “remember the human" – don’t forget that the recipient of your message sees only the text, and not your tone, gestures, facial expressions, and other ways of communicating your message. Don’t say anything that you would not say to the recipient face to face. Additionally, don’t forget that e-mail
is written communication, and as Microsoft has found, it can and will be used against you.

Second, “adhere to the same standards of behavior online that you follow in real life” – while the chances of “getting caught” are slim on the Internet, the same standards in real space apply to cyberspace. Breaking the law is not only illegal, but poor etiquette. Assume that everything you see or read on the Internet is copyrighted and should not be copied without the author’s prior permission.

Third, “know where you are in cyberspace” – passing on gossip in a chat group with friends may be acceptable, but forwarding unsubstantiated rumors in a news group is unacceptable.

Fourth, “respect other people’s time and bandwidth” – don’t waste people’s time on wordy messages you post for others, waste storage space in databases storing such messages, and clog telecommunication lines sending your message around. Provide important information at the beginning of your message or in a subject line so that others reading the message can quickly determine whether to read it. Avoid copying your message to multiple recipients who do not need, or do not care, about what you have to say.

Fifth, “make yourself look good on line” – make your spelling and grammar count and write articulately. Being clear, concise and intelligent will help you win friends and influence people in cyberspace. Also, don’t swear or post messages for the sole sake provoking confrontation.

Sixth, “share expert knowledge” – don’t be afraid to share your expert knowledge on a topic with someone who may have posted a question or raised an issue during a chat discussion. If you post a question, it’s often polite to share answers you get with others who may find the answer relevant.

Seventh, “keep flame wars under control” – “flaming” (very emotionally expounding a position) has a tradition is cyberspace, but you should not perpetuate long strings of angry messages exchanged between parties.

Eighth, “respect other people’s privacy” – you should not read another’s e-mail, or otherwise hack into people’s computers.

Ninth, “don’t abuse your power” – even though you may know more than another in cyberspace, such as a system administrator, you should not abuse your authority, such as by reading private e-mail.

Finally, “be forgiving of other people’s mistakes” – while you may be a cyberspace veteran, you should forgive novices and politely correct any violations of the above rules.

ISSUES SPECIFIC TO INTELLECTUAL PROPERTY PRACTICE

Overview: A Comparison of ABA Model Rules of Professional Conduct and the Rules of Professional Conduct In the United States Patent and Trademark Office

Canons of Professional Responsibility

“The Canons are statements of axiomatic norms, expressing in general terms the standards of professional conduct expected of practitioners in their relationships with the public, with the legal system, and with the legal profession.” 37
C.F.R. * 10.20 (a)
Language of ABA Canons Compared to Language of PTO Canons
The language of the PTO Canons of Professional Responsibility and the American
Bar Association Canons of Professional Responsibility are textually identical
except that the PTO Canons use the term “Practitioner” in the place
of “lawyer.”
Canons Disciplinary Rules Before the PTO
Disciplinary Rules (different from the Canons) are mandatory in character and
state the minimum level of conduct below which no practitioner can fall without
being subject to disciplinary action. 37 C.F.R. * 10.20(b).
Outline of the PTO Code of Professional Responsibility

* 10.20 Canons and Disciplinary Rules.
* 10.21 Canon 1: A practitioner should assist in maintaining the integrity
and
competence of the legal profession.
* 10.22 Maintaining integrity and competence of the legal profession.
* 10.23 Misconduct.
* 10.24 Disclosure of information to authorities.
* 10.30 Canon 2: A practitioner should assist the legal profession in
fulfilling its
duty to make legal counsel available.
* 10.31 Communications concerning a practitioner’s services.
* 10.32 Advertising.
* 10.33 Direct contact with prospective clients.
* 10.34 Communications of fields of practice.
* 10.35 Firm names and letterheads.
* 10.36 Fees for legal services.
* 10.37 Division of fees among practitioners.
* 10.38 Agreements restricting the practice of a practitioner.
* 10.39 Acceptance of employment.
* 10.40 Withdrawal from employment.
* 10.46 Canon 3: A practitioner should assist in preventing the unauthorized
practice of law.
* 10.47 Aiding unauthorized practice of law.
* 10.48 Sharing legal fees.
* 10.49 Forming a partnership with a non – practitioner.
* 10.56 Canon 4: A practitioner should preserve the confidences and secrets
of
a client.
* 10.57 Preservation of confidences and secrets of a client.
* 10.61 Canon 5: A practitioner should exercise independent professional
judgment on behalf of a client.
* 10.62 Refusing employment when the interest of the practitioner may
impair
the practitioner’s independent professional judgment.
* 10.63 Withdrawal when the practitioner becomes a witness.
* 10.64 Avoiding acquisition of interest in litigation or proceeding before
the Office.
* 10.65 Limiting business relations with a client.
* 10.66 Refusing to accept or continue employment if the interests of
another
client may impair the independent professional judgment of the
practitioner.
* 10.67 Settling similar claims of clients.
* 10.68 Avoiding influence by others than the client.
* 10.76 Canon 6: A practitioner should represent a client competently.
* 10.77 Failing to act competently.
* 10.78 Limiting liability to client.
* 10.83 Canon 7: A practitioner should represent a client zealously within
the bounds of the law.
* 10.84 Representing a client zealously.
* 10.85 Representing a client within the bounds of the law.
* 10.87 Communicating with one of adverse interest.
* 10.88 Threatening criminal prosecution.
* 10.89 Conduct in proceedings.
* 10.92 Contact with witnesses.
* 10.93 Contact with officials.
* 10.100 Canon 8: A practitioner should assist in improving the legal
system.
* 10.101 Action as a public official.
* 10.102 Statements concerning officials.
* 10.103 Practitioner candidate for judicial office.
* 10.110 Canon 9: A practitioner should avoid even the appearance
of professional impropriety.
* 10.111 Avoiding even the appearance of impropriety.
* 10.112 Preserving identity of funds and property of client.
Attorney-Client Privilege in Intellectual Property Litigation and Before the
PTO
Two Basic Kinds of Privilege
Attorney-Client
“[P]rivilege remains an exception to the general duty to disclose” Garner
v. Wolfinbarger, 430 F. 2d 1093 (5th Cir. 1970). Four elements are required
to establish privilege. See United States v. Shoe Mach. Corp., 89 F. Supp.
357, 358-59 (D. Mass. 1950). The four elements are: (1) the asserted holder
of the privilege is or sought to become a client; (2) the person to whom the
communication was made is a member of the bar of a court; (3) the communication
relates to a fact of which the attorney is informed by his client in confidence
in connection to legal services; and (4) the privilege has been claimed and
not waived by the client, i.e., the communication must be made in confidence
and not made in the presence of third parties.
Work-Product
Attorneys’ mental impressions, conclusions, opinions or legal theories prepared
in anticipation of litigation are generally protected as “work product.” See
Fed. R. Civ. P. 26(b)(3).
Work product immunity is different than the attorney-client privilege; it
is a qualified immunity that can be overcome in some cases. An attorneys’ mental
impressions, conclusions, opinions or legal theories prepared in anticipation
of litigation are generally protected. The work product privilege does not
apply to the preparation and prosecution of patent applications. See Golden
Valley Microwave Foods v. Weaver Popcorn Co., 132 F.R.D. 204, 212 (N.D. Ind.
1990). Likewise, the identification of patents uncovered in patent searches
conducted in anticipation of litigation are not protected from discovery. 5
Lester Horwitz et al., Intellectual Property Counseling and Litigation * 75.08[1][a]
citing EZ Loader Boat Trailers, Inc. v. Shoreline Trailer Sales, 207 U.S.P.Q. ** 1002,
1004 (N.D. Tex. 1979).
Patent and Trademark Searches and Investigation
“Opinions based on these search results conducted in anticipation of litigation
are subject to the attorney-client privilege” Id. (citing EZ Loader Boat
Trailers, Inc. v. Shoreline Trailer Sales, Inc., 207 U.S.P.Q. 1002, 1004 (N.D.
Tex. 1979).
Attorney-client privilege will apply to “communications concerned with
preparation of application, the scope of the claims to be made, patent prosecution
procedures, and advice as to the merits of appealing an examiner’s rejection.” 5
Lester Horwitz et al., Intellectual Property Counseling & Litigation * 75.02[1],
p. 75-11 (1998) (citing Hercules Inc. v. Exxon Corp., 434 F. Supp. 136 (D.
Del. 1977); Burlington Indus. v. Exxon Corp., 65 F.R.D. 26, 34 (D. Md. 1974);
In re Natta, 48 F.R.D. 319, 321 (D. Del. 1969); Chore-Time Equip., Inc. v.
Big Dutchman, Inc., 255 F. Supp. 1020 (D. Mich. 1966)).
Technical Data / Communications
There is a split of authority as to what extent technical communications between
patent attorneys and the inventors is protected. As a result, the extent
of protection afforded communications of a technical nature may vary from
jurisdiction to jurisdiction.
The “Jack Winter” line of cases establishes the “conduit of
information” view of the patent attorney (so named for two early decisions,
Jack Winter, Inc. v. Koratron Co., 50 F.R.D. 225, 166 U.S.P.Q. 295 (N.D. Cal.
1970) (“Jack Winter I”) and Jack Winter, Inc. v. Koratron Co., 54
F.R.D. 44, 46, 172 U.S.P.Q. 201 (N.D. Cal. 1971) (“Jack Winter II”)).
As the court stated in Jack Winter I,
Much of the information passing from client to attorney for purposes of preparation
of patent application is technical material relating to descriptions of the
products and/or processes sought to be patented, explanations of prior art,
public use and sale, and samples of the product. So also in connection with
the examination there is no room for game playing or withholding. As we view
it, the attorney exercises no discretion as to what portion of this information
must be relayed to the Patent Office. He must turn all such factual information
over in full to the patent office pursuant to 35 U.S.C. * 112, and hence
with respect to such material he acts as a conduit between his client and the
Patent Office. As to all such matters it is concluded that a basic element
required for the assertion of an attorney-client privilege is absent — that
is, a communication not for relay but for the attorney’s ears alone.
Jack Winter I, 166 U.S.P.Q. at 297, 298. The Jack Winter line was recently
followed by the United States District Court in Colorado. In McNeil-PPC v.
The Proctor & Gamble Co., 136 F.R.D. 666 (D. Colo. 1991), the defendant
sought to depose the plaintiff’s attorney, who had prosecuted a patent for
the plaintiff. Plaintiff’s attorney attempted to invoke client attorney privilege
and the work product doctrine to avoid disclosure. The McNeil-PPC court stated
that:
Because the patent attorney had a duty of disclosure at the time of the patent
application, to that limited extent, this Court holds that the communications
involved in processing the patent application are discoverable and that the
attorney-client privilege is not a bar to discovery of this evidence. 136 F.R.D.
666 at 670.
A second line of cases has granted greater protection to attorney client communications.
The Court of Claims in Kongo Corp. v. United States, 213 U.S.P.Q. 936 (Ct.
Cl. 1980), stated that:
The attorney is not a mere conduit for either the client’s communications
containing the technical information or the technical information itself .
. . the reality of the cooperative effort put forth by the inventor and the
attorney is far different from the Jack Winter portrayal. . . . The signed,
sworn, and filed application might be considered a communication for relay
and not for the attorney’s ears alone, but the same cannot be said about the
technical communications which preceded the signed, sworn, and filed patent
application.
Id. at 940-41.[6] This Kongo line of cases was recently followed by the United
States District Court for the Northern District of California in Advanced Cardiovascular
Systems Inc. v. C.R. Bard Inc., 25 U.S.P.Q.2d 1354 (N.D. Cal. 1992).[7] The
Advanced Cardiovascular court, in denying disclosure of communications between
inventor and attorney, stated that the position espoused by the McNeil-PPC
court has “clearly been rejected.” 25 U.S.P.Q.2d 1354 at 1356. The
court stated that it was not comfortable with the suggested distinction between
patent attorneys and other types of attorneys. Id. at 1356 n.2. The court instead
went on to hold that:
The communications from inventor to patent lawyer, even those that are entirely
technical, remain presumptively protected by the attorney-client privilege.
We
would consider ordering these communications disclosed only on a very compelling
showing, e.g., that despite the presumption of confidentiality, the inventor
in fact
expected specific communications he or she made to patent counsel to be
disclosed, without editing, to the PTO.
25 U.S.P.Q.2d 1354 at 1359. It is important to note, however, that the Advanced
Cardiovascular court also stated:
As significant for present purposes, we believe that the nature of the dynamic
between inventor and patent lawyer as an application is prepared supports
an inference that the inventors assume that their private communications with
counsel will remain confidential. Again we emphasize that what we are focusing
on is expectations about communications, not expectations about
substantive technical data itself.
25 U.S.P.Q.2d 1354 at 1358 (emphasis in the original).
Draft Patent Applications
“Draft patent applications are not protected by the attorney-Client privilege.” 5
Lester Horwitz et al., Intellectual Property Counseling & Litigation * 75.02[3],
p. 75-14.
The courts reason that the application is prepared for filing with the PTO
and is therefore a communication containing technical information, as opposed
to legal advice. Id. (citing Stryker Corp. Intermedics Orthopedics Inc., 24
U.S.P.Q.2d 1676, 1678 (E.D.N.Y. 1992)); see also Quantum Corp v Western Digital
Corp., 15 U.S.P.Q.2d 1062 (N.D. Cal. 1990) (ordering production of draft applications
and transmittal letters); Howes v. Medical Components, Inc., 7 U.S.P.Q.2d 1511
(E.D. Pa. 1988) (ordering production of draft applications and cover letters).
Other Non-Privileged Communications Relating to the PTO
The following have been held to be non-privileged:
· authorization by client to file application;
· business advice relating to the product;
· transmittal letters;
· the prosecution history and its papers;
· filing fee calculations;
· technical information communicated to counsel where a legal
opinion was not called for or given; and
· documents to or from third parties.
5 Lester Horwitz et al., Intellectual Property Counseling & Litigation * 75.02[4],
p. 75-15 (citing Burroughs Wellcome Co. v. Barr Lab., Inc., 143 F.R.D. 611,
615 (E.D.N.C. 1992); Westvaco Corp. v. International Paper Co., 23 U.S.P.Q.
1401, 1406-1407 (E.D. Va. 1991); Bulk Lift Int’l, Inc. v. Flexcon & Sys.,
Inc., 122 F.R.D. 482, 492 (W.D. La. 1988); Detection Sys., Inc. v. Pittway
Corp., 96 F.R.D. 152, 155 (W.D.N.Y. 1982); Ashland Oil, Inc. v. Delta Oil Prods.
Corp., 209 U.S.P.Q. 151, 153 (E.D. Wisc. 1979); Duplan Corp. v. Deering Milliken,
Inc., 397 F. Supp. 1146, 1168 (D.S.C. 1975); Jack Winter, Inc. v. Koratron,
54 F.R.D. 44, 47 (N.D. Cal. 1971)); see also Quantum Corp. v Western Digital
Corp., 15 U.S.P.Q.2d 1062 (N.D. Cal. 1990) (ordering production of draft applications
and transmittal letters).
Patent Agents
The attorney-client privilege acting under the supervision of an attorney and
also acting alone has been extended to patent agents registered with the
PTO. Glaxo, Inc. v. Novopharm Ltd., 148 F.R.D. 535, 539 (E.D.N.C. 1993) Stryker
Corp. v. Intermedics Orthopedics, Inc., 145 F.R.D. 298, 304 (E.D.N.Y. 1992);
Chubb Integrated Sys. Ltd. v. National Bank of Wash., 103 F.R.D. 52, 56 (D.D.C.
1984). Cf. Jabloner v. Korshak, 194 U.S.P.Q. 165 (P.O. Bd. Int. 1976) (refusing
to recognize privilege between applicant and patent agent who is not an attorney).
Patent agents and lawyers are bound by the same ethical rules. See In re
Ampicillin Antitrust Litig., 81 F.R.D. 377, 393 (D.D.C. 1978); Vernitron Med.
Prods., Inc. v. Baxter Labs., Inc., 186 U.S.P.Q. 325 (D.N.J. 1975).
Duty of Candor and the Attorney-Client Privilege
Breaching one’s duty of candor violates the PTO Code of Professional Responsibility
and can result in sanctions or disbarment. 37 C.F.R. * 10.23 (c)(10);
Jaskiewicz v. Mossinghoff, 822 F.2d 1053, 1057 (Fed. Cir. 1987) (“[W]here
a person entitled to practice before the PTO has breached that duty of candor
. . . it may well be appropriate or necessary to issue sanctions directly
against that attorney”); Kingland v. Dorsey, 338 U.S. 318, 319 (1949)
(affirming disbarment for breach of the duty of candor); Klein v. Peterson,
866 F.2d 412, 417 (Fed. Cir. 1989) (affirming two-year suspension and five-year
probation for violating duty of candor).
Federal Circuit dicta regarding the attorney-client privilege offers three
distinctive views. In Molins PLC v. Textron, Inc., 48 F.3d 1172 (Fed. Cir.
1995), the issues of inequitable conduct arose from the simultaneous representation
of two clients before the PTO. While the court resolved the matter of inequitable
conduct on other grounds, it did speak to the issue of attorney-client privilege
in dicta:
[D]ual representation of two clients seeking patents in closely related technologies
created a risk of sacrificing the interest of one client for that of the other
and of failing to discharge his duty of candor to the PTO with respect to each
client.
Whether or not there was a conflict of interest, however, is not before us,
and we express no opinion thereon. Nor do we express any opinion regarding
the apparent conflict between an attorney’s obligations to the PTO and the
attorney’s obligation to clients.
Nies, J., dissenting in part states, “Smith’s representation of clients
with conflicting interests provides no justification for deceiving the PTO.”)
(reaching the conflict of interest issue and finding that the duty to the PTO
outweighs any duty arising from the conflicting interests of two clients).
Newman, J., dissenting in part states, “[Smith's] obligation to preserve
the confidentiality of his client Lemelson was absolute.” (implying that
the attorney’s duty to his client supercedes the general duty to the PTO).
Unauthorized Practice of Law
Lawyer Competency – What the Lawyer Should Do, As Opposed to What the Lawyer
is Allowed to Do[8]
IP Litigation
Trademark Practice
Copyright Practice
Patent Practice
Trade Secret Practice
General IP Counseling
Technology Licensing
Antitrust
Practicing Patent Law
Patent Agents, Lawyers, and Non-lawyers
In patent practice, representation of an applicant may be undertaken by either
an attorney, or an agent, provided that registration to practice before the
Patent and Trademark Office has been obtained. Pro se prosecution of a patent
application is permitted. The PTO will not aid in selection of an attorney
or agent. See 37 C.F.R. * 1.31.
A registered patent agent is not an attorney. See Blodgett v. United States,
214 U.S.P.Q. 407 (Ct. Cl. 1980). Tax deduction for costs associated with legal
education of patent agent ruled not deductible as job related expense: “…a
registered patent agent is simply not an attorney.”
Patent agents cannot appeal the rejection of patent claims by the PTO to the
US Court of Appeals for the Federal Circuit even when the appeal is based on
claims drafted by the patent agent.
Unauthorized Representation as a Practitioner is Strictly Forbidden
General practitioners forbidden to practice before Patent and Trademark Office
in patent matters unless registered. See Vernitron Med. Prod., Inc. v. Baxter
Labs., Inc., 186 U.S.P.Q. 324 (D.N.J. 1975). Although general practitioners
may appear in courts where admitted, they cannot prosecute applications before
the Patent and Trademark Office.
Patent and Trademark Office determines qualification and fitness to practice
before it in patent matters. See In re Doe, 26 U.S.P.Q.2d 1235 (Comm’r Pat.
1993): Courses in Mathematics and Statistics not sufficient to demonstrate
requisite scientific and technical knowledge necessary to qualify for Patent
and Trademark Office registration examination. See also Leeds v. Mossbacher,
14 U.S.P.Q.2d 1455 (D.C. 1990): Applicant for registration as Patent Agent
who was formerly an Examiner with the Patent and Trademark Office denied waiver
of examination based upon his involuntary termination as Patent Examiner; Weiffenbach
v. Gould, 18 U.S.P.Q.2d 1397 (Comm’r Pat. 1989) Attorney suspended from practice
of law in Maine received reprimand for failure to inform Office of Enrollment
and Discipline of suspension from practice of law. Stein v. Coleman, 214 U.S.P.Q.
118 (S.D.N.Y. 1982). Attorney employed as patent attorney for corporation not
allowed admission to bar without examination based upon law which permits waiver
of examination where applicant had actively practiced law.
Former Patent Examiners are prohibited for two years from working on matters
related to their work at the PTO. 37 C.F.R. ** 10.10(b) and (c).
Work on prohibited matters can prevent registration / reinstatement of the
agent to the patent bar and can result in patent invalidity. Kearney & Trecker
Corp. v. Gidding & Lewis, Inc., 452 F.2d 579, 171 U.S.P.Q. 650 (7th Cir.
1971); see also Beall v. Kearney & Trecker Corp., 350 F. Supp. 978, 175
U.S.P.Q. 410 (D. Md. 1972).
Patent preparation is practice of law. See Lefkowitz v. Napatco, Inc., 212
U.S.P.Q. 617 (N.Y. App. Div. 1980). Patent preparation is not clerical activity,
but one that can only be performed by registered patent attorney or agent,
and is therefore legal service within meaning of state law. See also State
of New York v. Lawrence Peska Assoc., Inc., 201 U.S.P.Q. 321 (N.Y. 1977): preparation
of patent applications constitutes the practice of law in the State of New
York. Although state cannot regulate activities by non-lawyer practitioners
registered before the U.S. Patent Office, state has authority to control non-lawyers
not so registered as unlicensed practice of law within state.
State Regulation of Patent Lawyers and Agents
States cannot regulate practice of registered attorneys and agents not members
of State Bar. See Sperry v. Florida, 373 US 378, 137 U.S.P.Q. 578 (1963). “…since
patent practitioners are authorized to practice only before the Patent Office,
the State maintains control over the exercise of law within its borders, except
to the limited extent necessary for the accomplishment of the federal objectives.”
States not precluded from regulating unlicensed activity when federal registration
is lacking; see In re Amalgamated Dev. Co. & Blasius, 195 U.S.P.Q. 194
(D.C. Cir. 1977). Although state cannot interfere with patent practice by registered
practitioner (see Sperry v. Florida) state does not interfere with any federal
objective where state imposes its own licensing requirements upon unregistered
and unlicensed practitioner. State is not precluded from concurrently preventing
unlicensed practice of law even though the Commissioner may also punish such
activity.
Penalties For Unauthorized Practice of Law
Implied cause of action for unregistered representation in patent cases under
35 U.S.C. * 33. See Arnesen v. The Raymond Lee Organization, Inc., 172
U.S.P.Q. 1 (D. Cal. 1971): Implied right of action exists under 35 U.S.C. * 33
where party is a member of the class that the statute was intended to protect.
Enders v. American Patent Search Co., 189 U.S.P.Q. 569 (9th Cir. 1976): 35
U.S.C. * 33 not an act relating to patents, but to unregistered activity.
Leblanc v. Spector, 183 U.S.P.Q. 408 (D. Conn. 1973). Implied right of action
for unlicensed patent preparation under 35 U.S.C. * 33. Here, civil action
was permitted under 28 U.S.C. * 1338(a).
“Whoever, not being recognized to practice before the Patent and Trademark
Office, holds himself out or permits himself to be held out as so recognized,
or as being qualified to prepare or prosecute applications for patent, shall
be fined not more than $1,000 for each offense.”
Practicing Trademark Law
Representation of an applicant for Federal Trademark registration must be undertaken
by an attorney. No registration to practice before the Patent and Trademark
Office is required. An exception exists if the non-lawyer was recognized
to practice before the Patent and Trademark Office in trademark matters prior
to January 1, 1957. See 37 C.F.R. * 10.14; see also Jennifer Stiver
Chicoski, A Trademark Attorney’s Ethical Guide to the Patent & Trademark
Office and Its Code of Professional Responsibility, 8 Georgetown J. of Legal
Ethics 1013 (1994-95).
Individuals Who May Practice Before the PTO in Trademark
and Other Non-Patent Cases. Attorneys
Any individual who is an attorney may represent others before the Office in
Trademark and other non-patent cases. An attorney is not required to apply
for registration or recognition to practice before the Office in trademark
and other non-patent cases.
Non-lawyers
Individuals who are not attorneys are not recognized to practice before the
Office in trademark and other non-patent cases, except that individuals not
attorneys who were recognized to practice before the Office in trademark cases
under this chapter prior to January 1, 1957, will be recognized as agents to
continue practice before the Office in trademark cases.
Pro se representation before the Patent and Trademark Office in trademark
matters is permitted. Office will not aid in the selection of an attorney.
See 37 C.F.R. * 2.11.
Applicants may be represented by an attorney. The owner of a trademark may
file and prosecute his or her own application for registration of such trademark,
or he or she may be represented by an attorney or other individual authorized
to practice in trademark cases under * 10.14 of this subchapter. The Patent
and Trademark Office cannot aid in the selection of an attorney or other representative.
Representation in Trademark matters by Registered Patent Agent forbidden.
See Weiffenbach v. Frank, 18 U.S.P.Q.2d 1397 (Comm’r Pat. 1991): Patent agent
who was not attorney violated Patent and Trademark Office Code of Professional
Responsibility by representing for a fee trademark applicants before Patent
and Trademark Office. Patent agent received reprimand.
Representation by Patent Agent in Trademark matters may lead to exclusion
from patent practice. See Weiffenbach v. Klempay, 18 U.S.P.Q.2d 1397 (Dept.
of Comm. 1994): Patent agent who is not an attorney who represented trademark
applicants before the Patent and Trademark Office excluded from practice as
Patent Agent.
Practicing Copyright Law
The following persons are legally entitled to submit an application form:
The author. This is either the person who actually created the work or, if
the work was made for hire, the employer or other person for whom the work
was prepared.
The copyright claimant. The copyright claimant is defined in Copyright Office
regulations as either the author of the work or a person or organization that
has obtained ownership of all the rights under the copyright initially belonging
to the author. This category includes a person or organization who has obtained
by contract the right to claim legal title to the copyright in an application
for copyright registration.
The owner of exclusive right(s). Under the law, any of the exclusive rights
that go to make up a copyright and any subdivision of them can be transferred
and owned separately, even though the transfer may be limited in time or place
of effect. The term “copyright owner” with respect to any one of
the exclusive rights contained in a copyright refers to the owner of that particular
right. Any owner of an exclusive right may apply for registration of a claim
in the work.
The duly authorized agent of such author, other copyright claimant, or owner
of exclusive right(s). Any person authorized to act on behalf of the author,
other copyright claimant, or owner of exclusive rights may apply for registration.
There is no requirement that applications be prepared or filed by an attorney.
United States Copyright Office Circular No. 1, Copyright Basics, http://lcweb.loc.gov/copyright/circs/
circ1.html.
Conflicts of Interest in Intellectual Property Practice

Adverse Parties in Contemporaneous Litigation and Representation
in Non-litigation Matters
· The Gilman Corp. v. The Gilman Brothers Co., 20 U.S.P.Q.2d 1238
(Comm’r Pat. 1991) Disqualification of attorney in trademark cancellation proceeding
not warranted, even assuming that attorney “expressly or inherently” represented
adverse party in patent matter since no showing of “substantial relationship” was
shown.
· Parker Chem. Co. v. Widger Chem. Corp., 225 U.S.P.Q. 336 (E.D.
Mich. 1984) (law firm that had pending trademark applications for an accused
trade secret misappropriator should be disqualified from representing trade
secret owner in action against accused misappropriator).
· Koehring Co. v. The Manitowoc Co., Inc., 192 U.S.P.Q. 144 (E.D.
Wisc. 1976) Attorney that represented patent owner in patent validity suit
is disqualified from representing accused infringer in action involving same
patents.
Former-Client Conflicts
· Kearns v. Fred Lavery Porsche Audi, 223 U.S.P.Q. 881 (Fed. Cir.
1984) (upholding district court disqualification of attorney who had represented
a client in an infringement action when the attorney had been consulted earlier
by the patent owner regarding representation in a patent infringement action
involving the same patents against another defendant).
· DCA Food Industries, Inc. v. Tasty Foods, Inc., 227 U.S.P.Q.
874 (W.D. Wisc. 1985). Attorney who had represented assignor when subpoenaed
as a third party witness in a suit involving patent validity is not disqualified
from representing defendants in subsequent patent infringement proceedings
brought by patent assignee since assignee failed to demonstrate that it submitted
confidential information to attorney.
· SMI Industries Canada Ltd. v. Caelter Industries, Inc., 223 U.S.P.Q.
742 (N.D.N.Y. 1984) (absent evidence that the attorney “ought to” testify
in a pending action, and absent evidence that continued representation would
prejudice the party seeking disqualification, disqualification of counsel was
not required under Canon 5 for an attorney who formerly handled intellectual
property matters for company whose assets were acquired by party seeking disqualification).
· Abbott Lab. v. Centaur Chem. Corp., Inc., 214 U.S.P.Q. 670 (N.D.
Ill. 1980) (law firm representing Centaur Chemical in a patent matter not disqualified
from representing Centaur where attorney had previously represented Abbott
in a patent interference unrelated to the present proceeding).
· Cameron Iron Works, Inc. v. Hydril Co., 208 U.S.P.Q. 672 (S.D.
Texas 1980), firm representing Cameron disqualified when one member of firm
was formerly a patent attorney in charge of Hydril’s patent matters at a different
law firm when a patentability and infringement study was prepared relating
to the subject matter of case.
Imputed Disqualification
· Panduit Corp. v. All States Plastic Mfg. Co., Inc., 223 U.S.P.Q.
465 (Fed. Cir. 1984) (partner of law firm who was previously associated with
another firm where patent owner’s counsel was retained to handle a foreign
patent filing is not disqualified from representing an accused infringer, where
the partner had no involvement in any matter related to the patent owner).
· L. Gore and Associates, Inc. v. International Medical Prosthetics
Research Associates, Inc., 223 U.S.P.Q. 884 (Fed. Cir. 1984) (upholding disqualification
of attorneys of law firm who represented an accused infringer where one of
the partners had worked directly for the patent owner in a substantially related
case, and whose other partner, now accused infringer’s lead counsel, had been
an associate in a firm that represented the patent owner in a prior related
case).
· EZ Paintr Corp. v. Padco, Inc., 223 U.S.P.Q. 1065 (Fed. Cir.
1984) (upholding district court decision disqualifying law firm in an infringement
action where disqualified attorneys, who had previously worked with the patent
owner in the same action did not delay joining the firm until litigation was
completed, and where the firm failed to shield the disqualified attorneys once
they had arrived).
· Sunkist Growers, Inc. v. The Benjamin Ansehl Co., 221 U.S.P.Q.
1077 (Comm’r Pat. 1984) (although disqualification of a member of a law firm
will generally lead to disqualification of the firm, each case must be decided
on its facts. Since the disqualified attorney is an associate as opposed to
a partner, the use of screening avoids disqualification of firm).
· Plus Prod. v. Con-Stan Industries, Inc., 221 U.S.P.Q. 1071 (Comm’r
Pat. 1984) (attorney disqualified in trademark opposition matter since petitioner
was able to show that attorney was petitioner’s former attorney, who now represents
an adverse party).
· Beghin-Say v. Rasmussen, 212 U.S.P.Q. 614 (Comm’r Pat. 1980)
(the threshold question in disqualification cases is whether attorney had attorney-client
relationship with party seeking disqualification).
· General Electric Co. v. The Valeron Corp., 203 U.S.P.Q. 1053
(6th Cir. 1979) (disqualification of attorney by trial court upheld where substantial
relationship shown by access to files, patents, patent applications, and access
to confidential disclosures).
· Hooper v. Steelplank Corp., 215 U.S.P.Q. 829 (E.D. Mich. S. Div.
1981) (it is improper to assist one client in obtaining a patent, then to assist
another client in proving that the patent was not valid).
· Schloetter v. Railoc of Indiana, Inc., 192 U.S.P.Q. 566 (7th
Cir. 1976) (attorney precluded from representing accused infringer when attorney
was responsible for prosecution of original patent).
· The Foxboro Co. v. Spectrum Assoc. Inc., 213 U.S.P.Q. 439 (D.
Mass. 1981) (attorney’s work on single patent application not sufficient to
disqualify firm from representation in a trademark matter adverse to former
client, since matter not “substantially related”).
PTO Conflicts and Conflicts with Former Government Lawyers
· SCM Co. v. Aktieselskrabet Niro Atomizer, 212 U.S.P.Q. 93 (Comm’r
Pat. 1981) (disqualification of practitioners in proceedings before the Patent
and Trademark Office is discretionary with the Commissioner, but the Commissioner
has adopted the Code of Professional Responsibility of the American Bar Association
as the standard which governs conduct in disqualification cases).
· Phillips Petroleum, Inc. v. Hercules, Inc., 212 U.S.P.Q. 757
(Comm’r Pat. 1980) (former examiner was precluded from representing party in
a patent reissue protest where the former examiner had substantial responsibility
in matter while in government service).
· Friedman v. Lehman, 40 U.S.P.Q.2d 1206 (D.C. 1996) (upholding
public reprimand issued by Commissioner of Patents and Trademarks to attorney
that testifies as expert witness in proceeding where patents that that he had
examined while Examiner at Patent Office were at issue. See 37 C.F.R. * 10.111(b);
former patent office employees prohibited from accepting “private employment
in a matter in which he or she had personal responsibility while a public employee”).
Duty of Candor to the PTO
Under 37 C.F.R. * 1.56(a) (1995), each individual associated with the
filing and prosecution of a patent application has a duty of candor and good
faith in dealing with the U.S. Patent and Trademark Office (“PTO”).
This duty includes the duty to disclose to the PTO all information known to
that individual to be material to the patentability of a pending U.S. patent
application. “Individuals associated with the filing or prosecution of
a patent application” are defined under 37 C.F.R. * 1.56(c) as:
Each inventor named in the application, each attorney or agent who prepares
or prosecutes the application, and every person who is substantively involved
in the preparation or prosecution of the application and who is associated
with the inventor, with the assigned or with anyone to whom there is an obligation
to assign the application.
“Information material to the patentability” of an application is
defined under 37 C.F.R. * 1.56(b) as information that is not cumulative
to information of record in the application and which: (1) establishes, by
itself or in combination with other information, a prima facie case of unpatentability
of a claim, or (2) refutes, or is inconsistent with, a position that the applicant
takes in (i) opposing an argument of unpatentability that the PTO relies on,
or (ii) asserting an argument of patentability.[9] Failure to comply with the
duty of disclosure can result in any issued patent as being declared unenforceable
based on an inequitable conduct attack.
Inequitable Conduct
In general, even though a patent may be valid, a patent may be deemed unenforceable
by reason of inequitable conduct. Paragon Podiatry Lab. v. KLM Labs., 984
F.2d 1182, 1193 (Fed. Cir. 1993); LaBounty Mfg. v. United States Int’l Trade
Comm’n, 958 F.2d 1066, 1070 (Fed. Cir. 1992). Therefore, inequitable conduct
may be used as an affirmative defense to patent infringement. See Molins
PLC v. Textron, 48 F.3d 1172, 1177 (Fed. Cir. 1995); Paragon, 984 F.2d at
1184.
The doctrine of inequitable conduct prevents a party from enforcing a patent
that was procured by breaching the duty of candor owed to the PTO during prosecution
of the patent. LaBounty, 958 F.2d at 1070. A court may determine that inequitable
conduct has occurred when it finds that an associated individual, such as the
patent applicant/inventor or the applicant’s attorney, intentionally withheld
material information from the PTO during prosecution of the patent.[10] A determination
of inequitable conduct is left to the discretion of a judge; a party does not
have a constitutional right to a trial by jury on this issue. General Electro
Music Corp. v. Samic Music Corp., 19 F.3d 1405, 1408 (Fed. Cir. 1994); Paragon,
984 F.2d at 1190.
Specifically, a party shows inequitable conduct by producing clear and convincing
evidence that material information was misrepresented or not disclosed to the
PTO with intent to deceive the PTO. Molins PLC, 48 F.3d at 1178. To be intentional,
knowledge of the information or “prior art” and its materiality needs
to be chargeable to the associated individual. Id. Thus, the prior art must
be “material” and the applicant / associated individual must have “intended” to
deceive the PTO.
Essentially, information is considered material if there is a substantial
likelihood that a reasonable patent examiner would have considered such information
important in determining whether to allow the application to issue as a patent.
Id. at 1178. Whether or not the information would actually have been relied
upon by the PTO is irrelevant. Merck & Co. v. Danbury Pharmaceutical, 10
U.S.P.Q.2d 1682, 1686 (Fed. Cir. 1989). However, a finding that a withheld
reference anticipates a claim (thus rendering it invalid) satisfies “the
most stringent standard of materiality.” Fox Indus. v. Structural Preservation
Sys., 17 U.S.P.Q.2d 1579, 1581 (Fed. Cir. 1990).
Intent to deceive the PTO can be proved directly or inferred from the surrounding
circumstances. Molins PLC, 48 F.3d at 1180-81. However, intent to deceive can
be inferred from the circumstances only when “the involved conduct, viewed
in light of all the evidence, including evidence indicative of good faith,
[is sufficiently culpable] to require a finding of intent to deceive.” Id.
at 1181 (citing Kingsdown Med. Consultants v. Hollister, Inc., 863 F.2d 867
(Fed. Cir. 1988)); see also Paragon, 984 F.2d at 1189. In particular, gross
negligence by itself is not sufficient to justify an inference of intent to
deceive; rather the “conduct in its totality” needs to manifest a
state of mind indicating that the conduct was inequitable. See Consolidated
Aluminum Corp. v. Foseco Int’l Ltd., 910 F.2d 804, 808-809 (Fed. Cir. 1990).
In practice, such a standard may be difficult to meet because it requires clear
and convincing evidence. LaBounty, 958 F.2d at 1070. However, a party need
not submit proof of the associated individual’s actual state of mind. General
Electro Music, 19 F.3d at 1411. To establish a prima facie case (which must
be disproved by the patent holder), the party charging inequitable conduct
can produce evidence of an unexplained violation of the duty of candor. Paragon,
984 F.2d at 1192. In a case involving nondisclosure of information, the evidence
must show that “the applicant made a deliberate decision to withhold a
known material reference. Molins PLC, 48 F.3d at 1181. To disprove this showing,
the patent holder may need to refute this evidence with more than a “mere
denial of intent to mislead.” LaBounty, 958 F.2d at 1076; General Electro
Music, 19 F.3d at 1411.
Determinations of inequitable conduct have been made based upon proof of misleading
arguments to the PTO in conjunction with the withholding of highly pertinent
contemporaneously known prior art. LaBounty, 958 F.2d at 1076. For example,
in LaBounty, the court found inequitable conduct when the patentee failed to
disclose prior sales or public use of related devices. In Trilogy Communications,
Inc. v. Comm Scope Co., 754 F. Supp. 509 (W.D.N.C. 1990), a court found inequitable
conduct when the patentee failed to disclose known similar results available
from the prior art, internal memoranda unfavorably describing a method documented
in the patent specification, and a known more pertinent patent than that cited
by the patent examiner.
In addition, inequitable conduct has been found where the patentee made a
deliberate decision to withhold a known material reference from the PTO, even
without misleading statements. See Molins PLC, 48 F.3d. In Molins, the original
prosecuting attorney failed to disclose to the PTO a reference that was cited
in related foreign prosecution. Id. at 1181. The attorney had represented in
the foreign prosecution that the reference was the “closest prior art” and
over the ten years involved had on numerous occasions been reminded of the
materiality of the reference. Id. Attached below as Appendix A is a summary
of cases addressing inequitable conduct.
A successful determination of inequitable conduct has powerful consequences.
Under the doctrine of inequitable conduct, all claims of a patent are unenforceable
if a court establishes inequitable conduct with respect to any one claim. See
Fox, 17 U.S.P.Q.2d at 1581. Moreover, if one patent in a suit of related patents
is found unenforceable due to inequitable conduct, then, under the equitable
doctrine of unclean hands, a court has discretion to also find the other related
patents unenforceable. See Consolidated Aluminum, 910 F.2d at 809-12; Fox,
17 U.S.P.Q.2d at 1581. In essence, the doctrine of unclean hands provides that
a person who seeks equity from a court “must come with clean hands,” implying
that to obtain fairness, one must operate in a fair manner. See Consolidated
Aluminum, 910 F.2d at 809. Patents in a lawsuit can be considered related,
for the purpose of finding that the inequitable conduct extends to all of the
patents, if the inequitable conduct found in one patent “has an immediate
and necessary relation” to the remedy sought in court. Id. at 810. Such
a relation may be established if, for example, the patents in a lawsuit relate
to the same subject matter and the granting of later patents was based in some
part upon the inequitable conduct. See, e.g., id. at 811-12; Keystone Driller
Co. v. General Excavator Co., 290 U.S. 240 (1933).
Citing Information From One Client’s Application in Another
Client’s Application
One interesting issue involves a conflict between a patent attorney’s duty
of candor to the PTO and the duty of confidentiality to multiple clients. In
other words, what duty does an attorney representing both clients A and B have
toward the PTO when he or she becomes aware of material information during
the prosecution of client A’s patent application which is relevant to client
B’s patent application” The M.P.E.P. states at * 2001.06 that:
All individuals covered by 37 C.F.R. * 1.56 have a duty to disclose
to the Patent and Trademark Office all material information they are aware
of regardless of the source of or how they become aware of the information.
Materiality controls whether information must be disclosed to the Office, not
the circumstances under which or the source from which the information is obtained.
If material, the information must be disclosed to the Office.
M.P.E.P. * 2001.06, 6th ed., Jan. 1995 (emphasis in original). The M.P.E.P.
additionally states that:
Individuals covered by 37 C.F.R. * 1.56 have a duty to bring to the
attention of the patent examiner information within their knowledge as to other
co-pending United States applications which are “material to patentability” of
the application in question . . . accordingly the individuals . . . must .
. . bring such applications to the attention of the patent examiner.
M.P.E.P. * 2001.06(b), 6th ed., Jan. 1995. Although the M.P.E.P. then
recites the example of a particular inventor who must disclose information
from different pending applications material to the present application, the
language is clearly broad enough to cover cases in which the material information
comes from applications of different inventors or clients.
M.P.E.P. * 2001.06 was recently interpreted by the Federal District Court,
District of Delaware in Molins PLC v. Textron, Inc., 821 F. Supp. 1551 (D.
Del. 1992). In that case, attorney Smith represented Williamson, a Molins inventor
in the prosecution of a patent application while at the same time representing
Jerome Lemelson in the prosecution of an application involving similar technology.
The District Court found that Smith’s failure to disclose the co-pending application
of Lemelson during the prosecution of the Williamson application constituted
inequitable conduct because (1) the court found that claim 11 of the Lemelson
application was material to the patentability of claim 160 of the Williamson
application, and (2) because the court inferred an intent to deceive the PTO
from the fact of Smith’s dual representation of Molins and Lemelson. 821 F.
Supp. 1551 at 1577, 1578.
The Federal Circuit reversed the District Court’s finding of inequitable conduct.
In Molins PLC v. Textron, 48 F.3d 1172 (Fed. Cir. 1995), the Federal Circuit
stated that it did not “express any opinion regarding the apparent conflict
between an attorney’s obligations to the PTO and the attorney’s obligation
to clients,” 48 F.3d 1172 at 1185, but “regarding Smith’s obligation
to the PTO, which is before us, we agree with Smith that Textron failed to
establish by clear and convincing evidence that inequitable conduct occurred
in the non-disclosure of claim 11 of the Lemelson application.” Id. The
Federal Circuit found that Lemelson claim 11 was not material because it was
cumulative art already made of record during the prosecution of the Williamson
patent. 48 F.3d 1172 at 1186.
Textron had also asserted that Smith took inconsistent positions before the
PTO in the course of his dual representation, although Textron did not assert
that this in itself amounted to inequitable conduct. The reviewing court found
that the assertions Smith made during the prosecution of the Williamson patent
were not inconsistent with the statements he made during the prosecution of
the Lemelson patent. Id.
Thus, the Federal Circuit did not find inequitable conduct where the information
discovered during the prosecution of one client’s application is not material
to the prosecution of another client’s application. The court specifically
did not address (because it did not have to) the situation which arises when
the information pertaining to client A is material to client B’s application
and a conflict arises between the duty of confidentiality owed by the attorney
to the client and the duty of disclosure owed by the attorney to the PTO.
[1] Website may no longer be viable.
[2] “Of course it is also possible for someone to gain access to another’s
password and use that person’s computer to send out inauthentic messages. This
is a common but low-tech method of spoofing as well.” Robert L. Jones,
Client Confidentiality: A Lawyer’s Duties with Regard to Internet E-Mail (1995),

http://www.kuesterlaw.com/netethics/bjones.htm.

[3] Website may no longer be viable.
[4] See examples of facsimile and e-mail disclaimers in earlier section of
this paper.
[5] Why is the Arizona Bar so active” Because it was forced early to deal
with an issue of “spamming.”
· “Spamming” is a random indiscriminate posting of
items (often advertisements) on computer bulletin boards or by e-mail.
· Notorious “green card” incident – April 1993, two
immigration lawyers in a Phoenix firm posted an ad to thousands of Internet
news groups.
· Over 30,000 irate recipients “flamed” the firm
for breaking the unwritten rules of “netiquette” that prohibit unsolicited
advertising.
· The firm’s Internet access was dropped by their ISP.
· The lawyers were never disciplined for any ethics violations.
· Arizona Bar responded by noting that solicitations sent to
all members of a particular group (a listserve of environmental matters) are
acceptable.
· Washington State has enacted an anti-spamming law. ftp://ftp.leg.wa.gov/pub/rcw/title_19/chapter_190/.
[6] See also FMC Corp. v. Old Dominion Brush Co., 229 U.S.P.Q. 150 (W.D. Mo.
1985), in which the court stated that:
the attorney-client privilege protects communications from a client to its
counsel, not the information contained in the communication. The expectation
of confidentiality applies to the communication but not to the information
contained in the communication.
229 U.S.P.Q. 150, 151.
[7] Interestingly, the Advanced Cardiovascular court in the Northern District of California did not follow the Jack Winter line, although both Jack Winter cases were decided by the Northern District of California, while the McNeil-PPC
court, in Colorado did follow the Jack Winter line. Perhaps the fact that the
Jack Winter line was decided by Jack Doyle, a Colorado District Court judge
sitting by designation in the Northern District of California, has some bearing
on this outcome.
[8] See Chief Justice Warren Burger, The Special Skills of Advocacy: Are Specialized
Training & Certification of Advocates Essential to Our System of Justice”
42 Fordham L. Rev. 227 (1973) (charging that between 1/3 and 1/2 of the nation’s
trial lawyers were incompetent).
[9] 37 C.F.R. * 1.56(b) further defines a prima facie case of unpatentability
as being established when “the information compels a conclusion that a
claim is unpatentable under the preponderance of evidence, burden-of-proof
standard, giving each term in the claim its broadest reasonable construction
consistent with the specification, and before any consideration is given to
evidence which may be submitted in an attempt to establish a contrary conclusion
of patentability.”
[10] Rule 1.56 was modified in part in 1992 to more clearly delineate what
sort of information may be considered material to the PTO. Any changes to a
patent applicant’s duty of disclosure or that affect the rule’s use in defending
against an inequitable conduct assertion will likely apply only to applications
submitted after promulgation of the new rule.

Steps into China: Chinese Trademarks and Other Intellectual Properties

Just as the Chinese character and concept of Tao (Dao) has no direct equivalent in English, there is, perhaps no single “road” or “way” to doing business in China. There are, however, some practical steps that can be identified and followed.

Step One: Think About China as a Source and a Sale

There is a Chinese saying, “Those” that go to China to kill will be killed. Those who have tried to take advantage of China’s market without “buy-in” from the same understand this proverb only too well. The idea here is to think about how your business can benefit from China and how China can benefit from your business.

Step Two: Create a Product Protection Plan

Even a relatively small market share in China amounts to huge potential sales.

A 5 percent market share of China’s 1.2 billion people is about 50 million people – roughly equivalent to one-fifth of the population of the United States.

Think about not just getting into China, but how to stay there. Registering your important trademarks in the Chinese language, for example, is one effective way of building a foothold in the emerging Chinese market.

In addition to considering your long-term strategy, the most effective second step into China is the formal legal protection of your products and technology.

China is on the leading edge of international and domestic legal developments, offering tremendous potential protection for those doing or planning to do business in China. China’s membership in the World Intellectual Property Organization (WIPO) is one exciting recent development. Many of the legal protections outlined below are becoming even more valuable as China moves ever closer to legal harmonization of world intellectual property legal protection standards. With that said, caution is still advised.

An overlapping portfolio of copyright protection, product design protection, trademark protection and patent protection helps assure one’s competitive advantage in China, Hong Kong and, indeed, the world. Intellectual property registrations in other areas of the world, especially in key markets such as the United States, can be used to help bolster product protection in China. Steps three through six outline some important elements of a product protection plan.

Step Three: Trademark Protection Plan

A trademark is used to promote and identify one’s goods and services. Trademarks also enable the purchasing public to distinguish goods and services sold by different manufacturers. A trademark may be any sign that is visually perceptible and capable of being represented graphically and may, in particular, consist of words, personal names, letters, numerals, figurative elements or combination of colors, and include any combination of such signs. Chinese character trademarks are available to foreign companies in China too. Additionally, U.S. trademark registrations can be used to stop unauthorized (pirated or copycat) goods from entering the United States.

Step Four: Copyright Protection in China

Copyright protects creativity. The efforts of writers, artists, designers, software programmers and others need to be protected so that hard work can be rewarded. Copyrights, like patents and trademarks, are an effective tool against unauthorized manufacture, use, sales or imports of one’s creative expression, including package design and, in some cases, product configuration securing the necessary intellectual property rights protection, including copyright protection, helps assure your competitive advantage in China, Hong Kong and the world. Also, with the help of the United States Customs and copyright registrations, unauthorized (pirated or copycat) goods can be stopped at U.S. orders.

Step Five: Registered Product Designs In China

Product designs can be registered in China and Hong Kong to stop unauthorized manufacture, import, use, sale or hiring of your product designs in China and Hong Kong. Licensing product designs is another possibility once designs have been registered.

Designs not registered in China and Hong Kong may still be protected under copyright law for articles produced from your original design drawings. Protection under copyright law is for 15 years from first marketing of the article. But protection under copyright law has limitations. You cannot take legal action for copyright infringement where another person independently produces a similar design. If a design is registered, a similar design will infringe, even if it was independently created! It is also easier to defend against pirates when a design is registered.

Additionally, internal policies, agreements and forms can be leveraged to help assure a company’s rights in intellectual property developed by its employees, contractors or partners.

Step Six: Patent Protection

Patent protection is helpful in stopping unauthorized manufacturing, use, sales or imports of your invention in the countries where the patent has issued.

Patent protection is required in China and. Hong Kong, for example, to stop unauthorized manufacture, use or sales of your invention in China and Hong Kong. Likewise, patents in China and Hong Kong are important if you intend to license someone else to manufacture, use, sell or import an invention Hong Kong. Applying for a patent elsewhere in the world does not automatically give you patent protection in China and Hong Kong.

Step Seven: Licensing and Other Contracts

License agreements and other contracts can be used to help bolster your rights in the Chinese market. Technology is frequently commercialized by an entity other than its creator. Licensing a technology can give a company quick access to new market niches, and this has been the basis for many successful technology start-ups. Licensing also provides revenue to the technology’s creator, which can be a research lab or a company with technology outside its own focused niche.

Step Eight: Research and Collaboration

Sometimes it helps to have a partner. Many companies chose to collaborate with Chinese businesses to develop or improve technologies or products through joint research effort. The respective rights of the collaborators vis-à-vis new developments must be protected through well-crafted research and/or collaboration agreements.

Step Nine: Organizational Structures

In some cases, it helps to have a business entity in China. This is becoming less important as China harmonizes its trade laws in conjunction with its participation in WIPO Nevertheless, establishing an appropriate organizational structure for your business, high-tech. start-ups or otherwise, can be an important part of any “road to China.” Typically, one consider corporations, partnership agreements, single proprietorships, Limited Liability Companies (LLCs), joint ventures and off shore entities.

Navigating the “way” into China may seem as complicated as mastering the quiet profundities of Laozi’s Dao De Jing, but the nine steps outlined above should help in simplifying the journey.

The paper presents twelve hypothetical fact patterns with suggestions for
each hypothetical as to which Rules of Professional Conduct are most likely
applicable (and the text of those rules). Likewise, each hypothetical is followed
by a model “answer.” Many of the answers are based on actual state bar ethics
opinions addressing similar situations.

The “answers’ provided should not be considered dispositive on any particular
issue; they are intended as a reference and as a starting point of discussion.

Question No. 1

You are a lawyer recently admitted to the Washington State Bar and are working
for a general practice law firm. Your aunt approaches you regarding an administrative
child support hearing that she has been summoned to attend.

The administrative agency in this case allows claimants to be represented
by a lawyer or by other nonlawyer agents such as friends and family members.
In discussing strategy with your aunt, she mentions that she does not believe
the other side is represented by an attorney. She suggests that if you don”t
mention that you are a lawyer, the other side might think that you were simply
a nonlawyer family member. In order to avoid a legal “escalation” where the
other side might choose to be represented by an attorney, you decided to not
mention that you are an attorney at the upcoming hearing. Is this ethical”

A week before the hearing, the other side asks your aunt if she is represented
by an attorney. She tells them no but mentions a family member will be speaking
for her at the upcoming hearing. She tells you about the conversation. Do you
have an ethical dilemma”

At the hearing, the state’s attorney asks you if you are a lawyer and whether
you are acting in a representative capacity. What do you say”

Would the situation be any different if you were representing a client at
an administrative rule making hearing”

Question No. 1

Applicable Rules of Professional Conduct

Rule 3.3(a) Candor Toward The Tribunal

(a) A lawyer shall not knowingly:

(1) Make a false statement of material fact or law to a tribunal;

Rule 3.9 Advocate In Non-adjudicative Proceedings

A lawyer representing a client before a legislative or administrative
tribunal in a non-adjudicative proceeding shall disclose that the appearance
is in a representative capacity . . .

Rule 4.1(a) Truthfulness In Statements To Others

In the course of representing a client a lawyer shall not knowingly:

(a) Make a false statement of material fact or law to a third person[.]

Rule 8.3(a) Reporting Professional Misconduct

(a) A lawyer having knowledge that another lawyer has committed a violation
of the Rules of Professional Conduct that raises a substantial question as
to that lawyer’s honesty, trustworthiness or fitness as a lawyer in other
respects, should promptly inform the appropriate professional authority.

Rule 8.4(c) Misconduct

It is professional misconduct for a lawyer to:

(c) Engage in conduct involving dishonesty, fraud, deceit or misrepresentation

Question No. 1

Suggested Answer

Based on Michigan Bar Opinion, R1-55

Under Rule 3.3 a lawyer is probably under no affirmative obligation to sua
sponte disclose, in all employment undertaken, the possession of licensed professional
status. Any affirmative misrepresentation, or deliberate concealment, such
as failing to respond to inquiries as to professional status, done in conjunction
with any legal matter on which the lawyer has been employed, however, is likely
a violation of the Washington Rules of Professional Conduct.

The Rule 3.3 is applicable to adjudicative hearings while Rule 3.9 concerns
non-adjudicative proceedings. Under Rule 3.3 a lawyer must disclose all “material
fact[s]” but is not necessarily required to disclose his or her professional
status. Under Rule 3.9 a lawyer representing a client before a non-adjudicative
administrative proceeding or a legislature is not required to inform the legislative
or administrative tribunal of all material facts known to the lawyer but is
required to disclose whether they are acting in a representative capacity.

A lawyer may not make a false statement of material fact or law to a tribunal,
RPC 3.3(a), or to a third person, RPC 4.1(a). In proceedings before an Administrative
Law Judge, the fact that a client’s representative is a lawyer may be “material
fact,” because, although that status is not a prerequisite to the representation,
it may be relevant to the adjudicator’s fulfillment of their mandate under
Rule 8.3(a). Rule 8.3(a) says that a lawyer “having knowledge that another
lawyer has committed a violation of the Rules of Professional Conduct that
raises a substantial question as to that lawyer’s honesty, trustworthiness
or fitness as a lawyer in other respects, should promptly inform the appropriate
professional authority.”

Put another way, the legal professional as a whole, lawyers, ALJs, etc. have
a duty to each other and the public to police each other against ethical violations;
the potential for unchecked ethical abuse by ‘submarine” lawyers is enough
to potentially call such practice into question under any of the above mentioned
rules, including Rule 8.3(a).

At least one state bar ethics opinion[1] advocates requiring a lawyer to
always disclose the existence of professional status affirmatively when appearing
in a representational capacity. The opinion used the prefunctory ‘should” to
describe the lawyer’s duty, rather than the mandatory “must” or ‘shall.”

A second state bar ethics[2] opinion indicates that a lawyer acting as a
layperson in administrative proceedings could avoid indicating lawyer status
by making clear to the client that the lawyer “is not providing legal services
or practicing law,” thereby protecting the client from “any possible misunderstanding.”

Question No. 2

You are a staff attorney for the acting Chief Administrative Law Judge for
the [Redacted] Office of Hearings and Appeals (“OHA”). Your office is part
of the Social Security Administration and is responsible for adjudicating Social
Security disability, retirement, and survivors claims appealed from adverse
determinations made by lower level components of the administration. The Administrative
Procedure Act, Social Security Act, the code of Federal Regulations, and formal
Rulings issued by the administration provide the basic legal framework that
governs how hearings are held and decisions made in your office.

The Chief Administrative Law Judge asks you to research the applicability
of Rule 3.3 of the Washington Rules of Professional Conduct in social security
proceedings at the hearing level. Specifically, is a hearing held by an Administrative
Law Judge in any of the OHA offices located in Washington an “ex parte proceeding”
within the meaning of Rule 3.3(f)”

The Chief Judge explains to you that certain well-recognized Social Security
attorneys have lectured at CLE Seminars and even made videotaped presentations
during the past few years, suggesting that they have no duty to submit any
evidence, medical or otherwise, potentially adverse to their client. The Chief
Judge also points out that,

“. . .since the Federal Rules of Evidence do not per se apply in the administrative
proceedings we conduct and because the adjudication process we follow is non-adversarial
in nature, a real potential exists for decisions being made based on an incomplete
record. Therefore, a potential for abuse is created strictly by differing interpretations
of various applicable legal principles. It has been my experience that some
advocates view themselves as more of an officer of the court, while others,
as mentioned above, adopt a more zealous approach to representation with respect
to disclosure of facts adverse to their client.”

Question No. 2

Applicable Rules of Professional Conduct

Rule 3.3 Candor Toward The Tribunal

(a) A lawyer shall not knowingly:

(1) Make a false statement of material fact or law to a tribunal;

(2) Fail to disclose a material fact to a tribunal when disclosure is necessary
to avoid assisting a criminal or fraudulent act by the client unless such disclosure
is prohibited by rule 1.6;

(3) Fail to disclose to the tribunal legal authority in the controlling jurisdiction
known to the lawyer to be directly adverse to the position of the client and
not disclosed by opposing counsel;

(4) Offer evidence that the lawyer knows to be false.

(b) The duties stated in section (a) continue to the conclusion of the proceeding.

(c) If the lawyer has offered material evidence and comes to know of its
falsity, the lawyer shall promptly disclose this fact to the tribunal unless
such disclosure is prohibited by rule 1.6.

***

(f) In an ex parte proceeding, a lawyer shall inform the tribunal of all
relevant facts known to the lawyer that should be disclosed to permit the tribunal
to make an informed decision, whether or not the facts are adverse.

***

Question No. 2

Suggested Answer

Based on Alabama State Bar Ethics Opinion RO-93-06

Washington RPC 3.3(f) applies to lawyers participating in hearings before
Administrative Law Judges adjudicating social security disability, retirement,
and survivor claims. The term “tribunal”, as used in the Rule, includes both
courts and administrative proceedings.

Rule 3.3 of the Rules of Professional Conduct is a “fairness rule” designed
to protect the integrity of the decision-making process. Professors Hazard
and Hodes in their Handbook, The Modern Rules of Professional Conduct, Second
Edition, § 3.3:101, provide the following overview of the Rule:

“When the adversary system is operating smoothly, opposing counsel police
each other. They can generally be relied upon to expose false and misleading
representations made by the other side, and to present legal argumentation
in a sharp dialectic that will help the court come to a sound decision. But
opposing counsel may not always discover the truth or the law, either through
lack of diligence or because the truth has been effectively concealed. Without
rules assuring that lawyers will police themselves, therefore, courts would
occasionally make decisions on the basis of evidence that one of the professional
participants knows is false, or apply legal concepts that one of the professional
participants knows has already been rejected by a higher court.

The situation treated in Rule 3.3 entails the most severe tension between
duties to a client and duties to the tribunal. According to this rule, where
there is danger that the tribunal will be misled, a litigating lawyer must
forsake his client’s immediate and narrow interests in favor of the interests
of the administration of justice itself. In these situations, the conception
of lawyer as “officer of the court” achieves its maximum force.”

Rule 3.3(f) expands the lawyer’s duties in an ex parte proceeding requiring
the lawyer to inform the tribunal of all material facts known to the lawyer
which will enable the tribunal to make an informed decision, whether or not
the facts are adverse. Professors Hazard and Hodes provide this explanation
of subsection (f):

“Normally, the principal duty of an advocate in any proceeding is to present
the best possible case for his client. However, since opposing counsel will
not be present in ex parte proceedings, and will not be available to expose
deficiencies in the proofs or to present countervailing considerations, the
tribunal must be protected from making wrong decisions that it would not have
made in an adversary proceeding. In subsection (f), therefore, the special
duty of candor to the tribunal (and the public interest in the integrity of
the process) once again outweighs the advantage to an individual client.”

By deliberately using the term “tribunal” in Rule 3.3, the rule is applicable
to adjudications before administrative bodies, as well as courts. See also
Charles Pfizer and Co., Inc. v. Federal Trade Commission, 401 Fed. 2d 574,
579, (6th Cir. 1968) (holding that a patent lawyer must present adverse facts
to a U.S. Patent Office Hearing Officer even if that might cause the patent
to be denied).

Question No. 3

Your law firm represents or has represented two clients who are adverse in
an administrative proceeding. Specifically, your firm has represented Client
A for a considerable period of time with respect to matters that are regulated
by the Agency. Your firm successfully represented Client A in a completed,
non-adversarial matter before the Agency and, thereafter, continued to provide
advice regarding matters regulated by the Agency. Your firm has also represented
Client B in unrelated contract matters from time to time, but has not done
any work for Client B in some months (although the attorney-client relationship
arguably still might exist).

Client B, represented by separate counsel, has initiated an adversarial action
against Client A before the administrative Agency. Client B refuses to consent
to your law firm’s representation of Client A in the administrative matter.

Under what conditions can your law firm, consistent with the Washington State
Rules of Professional Conduct, represent Client A in the administrative proceeding
initiated by Client B”

Question No. 3

Applicable Rules of Professional Conduct

Rule 1.7 Conflict of Interest; General Rule

(a) A lawyer shall not represent a client if the representation of that client
will be directly adverse to another client, unless:

(1) The lawyer reasonably believes the representation will not adversely
affect the relationship with the other client; and

(2) Each client consents in writing after consultation and a full disclosure
of the material facts (following authorization from the other client to make
such a disclosure).

(b) A lawyer shall not represent a client if the representation of that client
may be materially limited by the lawyer’s responsibilities to another client
or to a third person, or by the lawyer’s own interests, unless:

(1) The lawyer reasonably believes the representation will not be adversely
affected; and

(2) The client consents in writing after consultation and a full disclosure
of the material facts (following authorization from the other client to make
such a disclosure). When representation of multiple clients in a single matter
is undertaken, the consultation shall include explanation of the implications
of the common representation and the advantages and risks involved.

Rule 1.9 Conflict of Interest; Former Client

A lawyer who has formerly represented a client in a matter shall not thereafter:

(a) Represent another person in the same or a substantially related matter
in which that person’s interests are materially adverse to the interests of
the former client unless the former client consents in writing after consultation
and a full disclosure of the material facts; or

(b) Use confidences or secrets relating to the representation to the disadvantage
of the former client, except as rule 1.6 would permit.

Rule 1.15 Declining or Terminating Representation

(b) Except as stated in section (c), a lawyer may withdraw from representing
a client if withdrawal can be accomplished without material adverse effect
on the interests of the client . . .

Question No. 3

Suggested Answer

Based on District of Columbia Bar Ethics Opinion No. 272

The first issue to be addressed is whether the lawyer may consider his representation
of Client B as having ended for purposes of the conflict of interest rules.
The second issue, assuming the answer to the first is in the negative, is whether
the lawyer may withdraw as counsel to Client B in order to be free to litigate
against that party under the less stringent rules governing conflicts of interest
with former clients.

Rule 1.7 of the Washington Rules of Professional Conduct provides that, without
the fully informed consent of the affected clients, a lawyer may not represent
a client in a matter if a position to be taken by that client in that matter
is adverse to a position of another client in the same matter. This rule deals
with a situation in which the lawyer is representing one client in a matter,
such as a litigation or an administrative proceeding, in which another client,
which the lawyer represents only in unrelated matters, takes a position adverse
to the first client. Rule 1.7 is designed to ensure that an attorney will act
with undivided loyalty to all existing clients. Undivided loyalty to a client
is, of course, a fundamental tenet of the attorney-client relationship. See
Wolfram, Modern Legal Ethics, 146 (1986).

A lawyer’s duty to a former client is somewhat different and is governed
by Rule 1.9. Under this rule, a lawyer may sue or otherwise take positions
antagonistic to a former client, without disclosure and without the former
client’s consent, if the new representation is not substantially related to
the matter in which the lawyer had represented the former client. The purpose
of this rule is to assure the preservation of attorney-client confidences gained
in the prior representation and to preserve the reasonable expectations of
the former client that the attorney will not seek to benefit from the prior
representation at the expense of the former client.

If the fact situation presented by this question were governed by Rule 1.7,
it is clear that the law firm could not undertake the representation of Client
A in the regulatory proceeding in which the firm’s Client B was a party with
separate representation, without the informed consent of both Clients A and
B. On the other hand, if the firm’s representation of Client B were at an end
at the time Client A sought the firm’s assistance against B, the situation
would be governed by Rule 1.9 instead of Rule 1.7. In that situation, there
would be no impediment to the firm’s representing Client A against former Client
B as long as the regulatory proceeding was unrelated to the firm’s prior representation
of former Client B.

In light of the difference in the conflict of interest rules governing present
and former clients, it is important to determine at the outset whether Client
B should be regarded as a current or a former client. In many instances, such
a question can be easily answered from objective facts. If the lawyer had previously
withdrawn from the representation of Client B under Rule 1.15, the withdrawal
would have terminated the relationship and converted the client into a former
client. Or, if the firm had completed the single discrete task for which it
had been retained, the client is a former one. That is arguably the situation
presented in this question, as the law firm completed all tasks for Client
B and there has been no communication between them for some months.

On the other hand, certain facts are presented suggest that the attorney/client
relationship is continuing in this situation with respect to Client B. The
law firm, for example, is from time to time consulted by Client B on contract
matters, which may indicate a continuing relationship punctuated by periods
of inactivity. Client B appears to have a subjective belief that it continues
to be a client of the firm. Since a reasonable subjective belief can be the
basis for the formation of an attorney/client relationship (see Westinghouse
Elec. Corp. v. Kerr-McGee Corp., 580 F.2d 1311 (7th Cir. 1978)), it may also
be the basis for the continuation of the relationship.

This question highlights the importance of distinguishing between existing
and former clients. In many situations, the relationship between an entity
and a lawyer and law firm is ambiguous. For example, a corporation, not providing
a retainer, may call upon a law firm from time to time for legal advice, paying
on a per hour basis for services rendered. During the hiatus between the last
call and before another possible request for advice, it may be unclear whether
the corporation is an existing client or simply a former and prospective client.
Absent an express termination, a court will likely examine the subjective expectations
of both parties, as evidenced by their relevant conduct, to determine whether
the attorney-client relationship continues. See, e.g., Manoir-Electroalloys
Corp. v. Amalloy Corp., 711 F.Supp. 188 (D.N.J. 1989). While additional facts
might affect any determination, let’s assume, for purposes of this analysis,
that Client B is a current client of the inquiring law firm.

If Client B is a current client, the question then arises whether a lawyer
may withdraw from representing Client B and invoke the more lenient conflict
of interest provisions of Rule 1.9 to determine any obligation to the former
client. Rule 1.15 provides, in relevant part, that a lawyer may withdraw from
representing a client only if withdrawal can be accomplished without “material
adverse effect” on the interests of the client.

Under the facts presented here, one can argue that the firm may withdraw
under Rule 1.15 because it appears that withdrawal as counsel from Client B
can be accomplished without “material adverse effect” on Client B. All projects
for Client B have apparently been completed; no work had been done on the unrelated
contract matters for several months; no outstanding projects appear to be contemplated
imminently; and Client B was able to obtain different counsel, as reflected
by the fact that Client B retained other counsel to represent it in connection
with the administrative proceeding.

Question No. 4

Attorney A is employed by a State Agency (“Agency”) as a member of its legal
staff. The Agency periodically enters into procurement contracts and is, therefore,
sometimes involved in protests concerning the letting of those contracts.

The protest process is a special administrative procedure that begins with
a hearing before one of three Chief Procurement Officers, chosen depending
upon the subject matter of the protest. These Chief Procurement Officers are
all employees of the State Office of General Counsel. Decisions by the Chief
Procurement Officers are reviewed by the State Procurement Review Panel (“Panel”),
and its decisions are likewise reviewed by the Circuit Court.

Attorney A has been appointed by the Governor to serve as an administrative
hearing officer on the Panel, which occasionally hears protest appeals involving
Agency contracts. In his capacity as staff counsel, Attorney A would normally
represent the Agency in matters before the panel.

May Attorney A appear before a Chief Procurement Officer on behalf of the
Agency, if he intends to recuse himself from the Panel if the matter is thereafter
appealed”

May Attorney A appear in Circuit Court on behalf of the Agency in an appeal
from the Panel, when he has recused himself from the Panel hearing on the matter”

May another member of the Agency legal staff appear before the Panel in a
matter involving the Agency, when Attorney A has recused himself from serving
on the Panel”

Does Attorney A’s membership on the Panel prevent other members of the Office
of General Counsel from appearing on behalf of the Agency before a Chief Procurement
Officer, the Panel, or in the Circuit Court on matters involving the Agency,
when Attorney A has recused himself from the Panel”

May Attorney A participate in Agency procurement matters such as contract
negotiation and procurement law interpretation”

Question No. 4

Applicable Rules of Professional Conduct

Rule 1.7 Conflict of Interest; General Rule

See Question 3.

Rule 1.10 Imputed Disqualification; General Rule

(a) Except as provided in section (b), while lawyers are associated in a
firm, none of them shall knowingly represent a client when any one of them
practicing alone would be prohibited from doing so by rules 1.7, 1.8(c), 1.9,
or 2.2. . . .

Question No. 4

Suggested Answer

Based On South Carolina Bar Ethics Opinion 94-33

Assuming Attorney A seeks to accept appointment to serve on the Panel while
at the same time continuing his employment as staff counsel for the Agency,
the essential ethical issue is thus whether Attorney A can serve as a hearing
officer on the Panel and still maintain a lawyer/client relationship with an
Agency that regularly appears before the Panel.

The obvious problems are Attorney A’s potential for exhibiting adjudicative
bias in favor of his Agency client, and his inability to zealously advocate
the interests of his client while maintaining his judicial impartiality. An
apt analogy would be a Justice of the Washington State Supreme Court practicing
law in the courts of this state during his tenure as a sitting Justice.

Rule 1.7(b) states that a lawyer may not represent a client “if the representation
of that client may be materially limited by the lawyer’s responsibilities …
to a third person.” In the situation presented, the lawyer’s responsibility
to the Panel, best characterized as a duty of strict impartiality, directly
conflicts with his responsibility to act in support of his client’s interests.
Such a conflict cannot be waived because representation of the client is by
necessity adversely affected by the duties inherent in the position of the
hearing officer and vice versa.

Accordingly, Attorney A cannot serve on the Panel and continue to represent
the Agency in matters that are reviewable by the Panel. This includes representation
before the chief procurement officer because, as hearing officer, the Attorney
would be reviewing decisions in which he had participated as an advocate and
also representation in the circuit court because he would then be advocating
a position regarding his decisions as hearing officer.

Rule 1.10(a) states “While lawyers are associated in a firm, none of them
shall knowingly represent a client when one of them practicing alone would
be prohibited from doing so by Rule 1.7 . . .”. The “Definitions’ section of
the Rules state that the term “firm” includes lawyers who work together in
the legal department of an organization or who are employed together in a legal
services organization. Accordingly, the imputed disqualification of Rule 1.10(a)
applies to other lawyers employed by the Agency.

As such, if the Attorney serves as a hearing officer on the Panel, the Agency’s
staff lawyers are disqualified from representing the Agency in matters reviewable
by the Panel.

If members of the Agency’s legal staff are disqualified from appearing before
the attorney in his capacity as panel hearing officer, they cannot avoid that
disqualification by limiting their role to one of a supervisory nature. If
a lawyer is disqualified from handling a matter, that disqualification is meaningless
unless it prohibits all involvement in the matter.

Question No. 5

Lawyer has recently left an unsuccessful private practice for a more secure
governmental position with Agency. In the past, Lawyer has represented claimants
from time to time before the Agency. While employed with the Agency one of
Lawyer’s former clients, Client, brings an action before the Agency that is
somewhat related to one that Lawyer assisted with while in private practice.
Is this a problem”

What if Lawyer, employed by the Agency for a number of years, handling a
high volume of cases, is later promoted to a hearings officer where former
claimants, whom Lawyer represented while employed with the Agency, come before
Lawyer as a hearings officer” Does it make a difference whether Lawyer can
recall specific information about a particular claimant whom Lawyer represented
in the past while employed with the Agency”

Question No. 5

Applicable Rules of Professional Conduct

Rule 1.9(b) Conflict of Interest; Former Client

A lawyer who has formerly represented a client in a matter shall not thereafter:

(b) Use confidences or secrets relating to the representation to the disadvantage
of the former client, except as rule 1.6 would permit.

Rule 1.11(c) Successive Government and Private Employment

(c) Except as law may otherwise expressly permit, a lawyer serving as a public
officer or employee shall not:

(1) Participate in a matter in which the lawyer participated personally and
substantially while in private practice or non-governmental employment, unless
under applicable law no one is, or by lawful delegation may be, authorized
to act in the lawyer’s stead in the matter; or

Question No. 5

Suggested Answer

Based On Rhode Island Ethics Opinion #92-69

Whether or not the matters are substantially related, Lawyer cannot not use
information arising from her prior representation of Client to Client’s disadvantage.
Further, any involvement in the matter is prohibited by Rule 1.11.

Rule 1.11 does not apply to the latter part of this question because any
relationship with the former claimants / clients stems from Lawyer’s employment
with the Agency and not from Lawyer’s former private practice.

Rule 1.9(b) should not apply when a lawyer does not recall any specific information
about a particular former client. Use of confidences and secrets requires actual
recollection of the same. Rule 1.9(b) does apply when a lawyer recalls specific
confidential or secret information about a former client when that knowledge
is relevant to adverse proceedings against the former client. In this case,
if Lawyer recalls specific information about a former claimant whom Lawyer
represented while employed with the agency and that knowledge is relevant to
the administrative proceedings, lawyer should recuse herself as the hearings
officer.

Question No. 6

You are an attorney who specializes in administrative matters before the
Department of Motor Vehicles. In your state, drivers license revocations hearings
are civil actions by the Division of Motor Vehicles to limit, suspend or revoke
a driver’s license. Can you ethically charge a contingent fee based on the
outcome of a driver’s license revocation hearing”

May you charge a contingency fee for a license revocation hearing before
the Commissioner of Motor Vehicles when the client is arrested for driving
while intoxicated”

Question No. 6

Applicable Rules of Professional Conduct

Rule 1.5 Fees

(c) A fee may be contingent on the outcome of the matter for which the service
is rendered, except in a matter in which a contingent fee is prohibited by
section (d) or other law.

(1) A contingent fee agreement shall be in writing and shall state the method
by which the fee is to be determined, including the percentage or percentages
that shall accrue to the lawyer in the event of settlement, trial or appeal,
litigation and other expenses to be deducted from the recovery, and whether
such expenses are to be deducted before or after the contingent fee is calculated.
Upon conclusion of a contingent fee matter, the lawyer shall provide the client
with a written statement stating the outcome of the matter and, if there is
a recovery, showing the remittance to the client and the method of its determination.

(d) A lawyer shall not enter into an arrangement for, charge, or collect:

(2) A contingent fee for representing a defendant in a criminal case.

Question No. 6

Suggested Answer

Based on Kansas Bar Ethics Opinion 96-10

Counsel is aware of the prohibition on contingent fees in criminal matters,
and while revocation of drivers licenses often turn on whether a person refused
a blood alcohol test during a DUI arrest and thus has the trappings of a criminal
action, a revocation hearing is by law a civil action which uses civil practice
rules and is, in essence, an administrative hearing. While the DUI criminal
defense could not be predicated on a contingent fee, there is no reason to
prohibit the resulting revocation hearing from such prohibitions. Other states
have approved contingent fees in similar situations.[3]

If otherwise lawful, contingent fees are possible in most any situation,
but there are two types: (1) fees contingent on a percentage of a res created
by the work of the attorney, and (2) fees that are determined on some basis
(hourly or fixed fee) that is paid, or not paid, depending on the results obtained.

There are problems that arise with the use of a personal injury-like contingent
fee. First, there is no res created by the attorney’s actions as one might
see with a recovery in a personal injury action. The attorney obtains no funds
for a client in revocation hearings. The ‘success’ is more intangible – the
ability of the client to keep his or her driving privileges which often impacts
employment. Thus a percentage fee is obviously difficult to craft along traditional
personal injury lines.

What counsel is truly seeking is a fee of some sort, determined in some manner,
that is or is not paid depending on the outcome of the revocation hearing.
For this sort of arrangement, the key is defining what constitutes ‘success”
in the endeavor. Further, counsel must first ask themselves whether there is
in fact some “contingency” on which to base a fee. Is the attorney adding value
to the client’s predicament or could the client have achieved the same results
acting pro se”

Lawyers have an ethical obligation to discuss alternative fee arrangements
with clients, especially new clients. Contracts should not only cover how much
the lawyer will charge but also how the client will be billed. Is the client
going to be charged a retainer fee to be applied against costs or will the
fee absorb out of pocket costs’ Rule 1.5 requires that the elements of the
fee agreement be expressed in writing at the outset of representation. The
rule requires the use of a written contract setting forth the nature of the
legal services, and the fee arrangement.

If there are to be financial charges on overdue fees, these and other sorts
of items must be fully covered in the document ab initio, not added later.
It is also wise to discuss with the client any arbitration or mediation system
available for fee disputes.

Any kind of fee arrangement must be reasonable under all the circumstances.
If, for example, counsel does little to earn the fee, then any kind of “incentive
or bonus fee” may not be reasonable regardless of the provisions in the contract.

The simplest system would be a flat fee arrangement which is reasonable for
the work necessary on the matter, and contingent on a defined level of ‘success”
set forth in the attorney agreement or engagement letter. The amount is escrowed
in counsel’s trust account and either transferred to the attorney’s operating
account upon success, or is reimbursed to the client if non-success is achieved.
Any retained fee must be reasonable. The contingent nature of the fee might
justify a slightly higher fee than simple hourly calculations.

Care must be taken as to the premium billing system, especially if done on
a contingent basis. Whether a fee is “reasonable” is often in the eye of the
beholder. A significantly high fee based on a rather simple case can see the
attorney facing discipline charges, or at the least result in an unhappy client
seeking fee dispute resolution services, which often leads to a disciplinary
complaint.

If the fee is determined based on an hourly or fixed rate basis and is otherwise
reasonable under Rule 1.5, the lawyer and client can agree to make the payment
of the fee contingent on a defined level of success of the representation in
a driver’s license revocation hearing. Such actions are civil in nature, not
criminal.

Question No. 7

You currently represent Dr. A, the defendant in an alleged medical negligence
action before the a Health Claims Arbitration Office. Dr. A recently re-opened
his practice in a Washington community after a revocation and subsequent reinstatement
of his license by the Board of Quality Physician Assurance.

Dr. A’s license to practice medicine was previously revoked as a result of
a finding that he was “guilty of immoral conduct in the practice of medicine.”
Such facts and the circumstances of his misconduct with his female patients
were reported in local newspapers at the time the decision was issued.

Attorneys representing the plaintiff in the malpractice action have placed
an advertisement in a newspaper in the community in which Dr. A practices.
The advertisement provides Dr. A’s name, refers to “litigation pending before
the Health Claims Arbitration Office of Washington” and requests anyone with
personal knowledge of Dr. A’s activities, ‘specifically, with respect to his
relationship with female patients of [B] Medical Group since 1982″ to contact
the named attorneys.

You have been told by Dr. A that several of his patients have seen the advertisement
and contacted his office. Some of these patients indicated that they believed
that the attorneys named in the advertisement were representing the Health
Claims Arbitration Office; others believed the advertisement involved the Board
of Physician Quality Assurance. You believe that the advertisement may cause
improper pretrial publicity. Is the advertisement proper”

Question No. 7

Applicable Rules of Professional Conduct

Rule 3.6 Trial Publicity

A lawyer shall not make an extrajudicial statement that a reasonable person
would expect to be disseminated by means of public communication if the lawyer
knows or reasonably should know that it will have a substantial likelihood
of materially prejudicing an adjudicative proceeding.

Guidelines for Applying RPC 3.6

II. Civil. The kind of statement referred to in rule 3.6 which may potentially
prejudice civil matters triable to a jury is a statement designed to influence
the jury or to detract from the impartiality of the proceedings.

Question No. 7

Suggested Answer

Based On Maryland State Bar Ethics Opinion 91-32

Rule 3.6 of the Washington Rules of Professional Conduct is relevant to the
question at hand. Rule 3.6 generally prohibits a lawyer from making extrajudicial
statements which the lawyer knows or reasonably should know have a substantial
likelihood of materially prejudicing an adjudicative proceeding.

The advertisement clearly states that information is being sought in connection
with pending litigation before the Health Claims Arbitration Office. While
it also states that information is being sought specifically about Dr. A’s
relationships with female patients, that statement does not appear to be prejudicial
in this case. Dr. A’s license to practice medicine was revoked as a result
of a finding that he was “guilty of immoral conduct in the practice of medicine.”
Such fact and the circumstances of his misconduct with his female patients
were reported in local newspapers at the time the decision was issued. Therefore,
such information is a matter of public record and as such cannot materially
prejudice an adjudicative proceeding.

Question No. 8

Associate handles patent and copyright matters for many of your clients including
some large software companies. His work is often praised.

While surfing the Internet one day, you come across a web site for the “League
of Computing Freedom” (“LCF”). The LCF’s motto is: “All Information Should
Be Free and Unrestricted.” You discover that Associate is one of the directors
of LCF and has been for a number of years.

As it turns, out LCF is a grass roots organization dedicated to abolishing
all legal regimes that protect software, including the copyright and patent
laws. The LCF regularly sends formal written comments to Congress urging legal
reform by abolishing copyright and patent protection for computer software.
Is Associate acting unethically by attempting to reform the law in such a way
that many of your clients would be adversely affected” Would the situation
be different if Associate was lobbing Congress for reform that would benefit
many of your clients”

Question No. 8

Applicable Rules of Professional Conduct

Rule 1.7(b) Conflict of Interest; General Rule

See Question 3.

Rule 6.4 Law Reform Activities Affecting Client Interests

A lawyer may serve as a director, officer or member of an organization involved
in reform of the law or its administration notwithstanding that the reform
may affect the interests of a client of the lawyer. When the lawyer knows that
the interests of a client may be materially benefited by a decision in which
the lawyer participates, the lawyer shall disclose that fact but need not identify
the client.

Question No. 8

Suggested Answer

Rule 6.4 of the Washington State Rules of Professional Conduct permit a lawyer
to engage in law reform activities that affect or potentially affect a client’s
interests. As such, the associate’s activities with the grassroots law reform
group are not unethical per se. As a practical consideration, the client may
resent the activity if it is discovered.

Under Rule 1.7 a lawyer has a duty to seek his or her client’s informed written
consent for any representation that may be “materially limited . . . by the
lawyer’s own interests.” The extent to which Rule 1.7(b) is implicated by a
lawyer’s “personal interest” in law reform activities is not entirely clear.
One can argue that a lawyer’s own “interest” in the political reform of the
patent and copyright laws is not the kind of “interests’ implicated by Rule
1.7(b). This view is supported by the official comment to Model Rule 6.4.

Although not adopted in Washington State, the comment to Model Rule 6.4 points
out that there is generally not a lawyer-client relationship formed when a
lawyer becomes involved with a law reform organization. Otherwise, the comment
points out, an antitrust lawyer would be precluded from drafting legislative
revisions to the rules affecting that subject. Presumably, the same reasoning
applies to this question. Although the associate has a duty of loyalty to his
or her clients, an actual conflict (as governed by the Rules of Professional
Conduct) might not arise because there is only one attorney-client relationship
that has been formed.

As a practical matter, however, it might be advisable to seek a client’s
informed written consent for the simple reason that it is easy to imagine situations
where the lawyer’s law reform activities could become directly adverse to a
particular client’s interests (perhaps impinging on a lawyer’s implicit duty
of loyalty to his or her client).

If a lawyer is engaging in law reform activities that could materially benefit
a particular client, then the lawyer must disclose that fact to any legislative
or rule making body before whom the lawyer appears in a representative capacity.
If, for example, a lawyer were to write a letter concerning the adoption or
rejection of a new bill before Congress that would be a material benefit to
a client, the lawyer is ethically required to disclose that fact. The client’s
identity, however, need not be disclosed.

Question No. 9

In your practice, you sometimes serve as an administrative law judge. In
that capacity you do not have a secretary. As a consequence, you must do all
your own scheduling of appointments, issuing of subpoenas, setting deadlines
for filings, and accepting such filings. You are concerned because of the general
prohibitions against all ex parte contact between lawyers participating in
a case and judges therein, including administrative law judges. Should you
continue to contact lawyers directly for the limited purpose of scheduling
hearings or performing other administrative or clerical tasks’ Do lawyers violate
the Rules of Professional Conduct by talking with the judge”

Question No. 9

Applicable Rules of Professional Conduct

Rule 3.5 Impartiality and Decorum of The Tribunal

A lawyer shall not:

(a) Seek to influence a judge, juror, prospective juror or other official
by means prohibited by law;

(b) Communicate ex parte with such a person except as permitted by law .
. .

Rule 8.4 Misconduct

It is professional misconduct for a lawyer to:

(a) Violate or attempt to violate the Rules of Professional Conduct, knowingly
assist or induce another to do so, or do so through the acts of another;

(d) Engage in conduct that is prejudicial to the administration of justice;

(f) Knowingly assist a judge or judicial officer in conduct that is a violation
of applicable rules of judicial conduct or other law.

Question No. 9

Suggested Answer

Based On Arizona Bar Ethics Opinion No. 87-17

Rule 3.5 of the Rules of Professional conduct prohibits a lawyer from communicating
ex parte with a judge except as permitted by law. The reasons for the prohibition
against ex parte communications are clear. Without such a prohibition, the
communicant might gain an unfair advantage in litigation by influencing the
judge, however innocently, while the other party is unable to rebut.

Generally speaking, the prohibition against ex parte communications is designed
to (1) insure the fairness of judicial proceedings, and (2) guard against the
appearance of any impropriety to the end that the integrity of the judicial
system may be preserved.

Given the wording of Rule 3.5, which prohibits ex parte communication between
lawyer and judge except as permitted by law, there seems little room to compromise.
Nevertheless, there appear to be alternatives. Conference calls can be arranged.
Communications could be in writing, addressed to all parties. The judge may
establish a routine status conference with all parties present to settle administrative
matters. As a final alternative, the administrative law judge may apprise the
other party of any ex parte communication, allowing the other party time to
be heard, and thus lifting the communication out of the realm of ex parte communications.
The latter alternative clearly should be used only for procedural matters.

Ex parte communication of any kind between a lawyer and a judge is prohibited
by Rule 3.5 unless permitted by law. The above example is not one in which
ex parte communication is specifically permitted by law. Nevertheless, the
administrative law judge may, by contacting the non-communicating party and
allowing her or him to be heard on a procedural matter, lift the communication
out of the ex parte realm. Such communications must be limited to purely procedural
matters.

Question No. 10

A friend comes to you asking for help with an opposition proceeding involving
the trademark “TIMCO”. Your friend explains to you that they were representing
themselves to get a trademark when things got a little bit out of control,
i.e. another party got involved. Your friend tells you something about a “discovery
deadline” but is unsure of what that is. You know nothing about trademark law
but do know what a discovery deadline is.

You tell your friend that you will look into the matter and get back to them.
Three weeks pass and your friend calls you up and tells you that there are
several upcoming deadlines and wants to know what you have found out. You tell
your friend that you have been very busy but are working on it. In fact, you
have done nothing. Another week goes by. You have still done nothing. You decide
to call your friend and tell them that you are too busy and that they should
talk with a lawyer who specializes in trademarks. Have you done anything wrong”

Question No. 10

Applicable Rules of Professional Conduct

Rule 1.1 Competence

A lawyer shall provide competent representation to a client. Competent representation
requires the legal knowledge, skill, thoroughness and preparation reasonably
necessary for the representation.

Rule 1.3 Diligence

A lawyer shall act with reasonable diligence and promptness in representing
a client.

Rule 1.4 Communication

(a) A lawyer shall keep a client reasonably informed about the status of
a matter and promptly comply with reasonable requests for information.

(b) A lawyer shall explain a matter to the extent reasonably necessary to
permit the client to make informed decisions regarding the representation.

Question No. 10

Suggested Answer

Rule 1.1 requires that a lawyer be competent. Representation should not be
undertaken when a lawyer is not competent to handle a matter or when a lawyer
is not able to become competent in a reasonable time or associate with competent
counsel. In this case, the lawyer was not competent, did not attempt to become
competent and did not try to associate with competent counsel.

Rule 1.3 requires a lawyer to act with diligence in all matters undertaken.
In this case, the lawyer waited three weeks and did nothing. After being informed
of upcoming deadlines a second time, the lawyer still did nothing. The lawyer
is not acting with diligence to protect his client’s interests.

Rule 1.4 requires that a lawyer keep his or her client informed. In this
case, the lawyer told the client almost nothing. The lawyer did not explain
the importance or meaning of a discovery deadline and did not tell the client
that a different attorney might be needed. In fact, the lawyer did not even
attempt to withdraw from the representation until after four weeks had passed
with almost no communications between the lawyer and the client.

Question No. 11

A new client comes into your office one day and makes inquiries regarding
the Washington State laws that regulate airplane pilot licensing. The client
seeks representation before an administrative board that will be reviewing
his pilot license. The client gives you a five thousand dollar retainer from
which you are entitled to draw fees and expenses. Your new secretary deposits
the money into your firm’s checking account.

Question No. 11

Applicable Rules of Professional Conduct

Rule 1.14 Preserving Identity of Funds and Property of A Client

(a) All funds of clients paid to a lawyer or law firm, including advances
for costs and expenses, shall be deposited in one or more identifiable interest-bearing
trust accounts maintained as set forth in section (c), and no funds belonging
to the lawyer or law firm shall be deposited therein except as follows:

(1) Funds reasonably sufficient to pay bank charges may be deposited therein;

(2) Funds belonging in part to a client and in part presently or potentially
to the lawyer or law firm must be deposited therein, but the portion belonging
to the lawyer or law firm may be withdrawn when due unless the right of the
lawyer or law firm to receive it is disputed by the client, in which event
the disputed portion shall not be withdrawn until the dispute is finally resolved.

Rule 5.3 Responsibilities Regarding Nonlawyer Assistants

With respect to a nonlawyer employed or retained by or associated with a
lawyer:

(c) A lawyer shall be responsible for conduct of such a person that would
be a violation of the Rules of Professional Conduct if engaged in by a lawyer
if:

(1) The lawyer orders or, with the knowledge of the specific conduct, ratifies
the conduct involved; or

(2) The lawyer is a partner in the law firm in which the person is employed,
or has direct supervisory authority over the person, and knows of the conduct
at a time when its consequences can be avoided or mitigated but fails to take
reasonable remedial action.

Question No. 11

Suggested Answer

Rule 1.14 prohibits the mixing of client funds with the funds of a lawyer
or the lawyer’s firm. Client funds must be maintained in a separate interest
bearing account or trust fund as provided in Rule 1.14. In this case, there
is a clear violation the Rules of Professional Conduct by the lawyer’s secretary.
Under Rule 5.3 the lawyer will be responsible for this ethical violation if
they ordered the act or knew about it. If the check was deposited in the wrong
account by accident and the situation is corrected as soon as it is discovered
and all parties are informed of the mistake, then no ethical violation will
likely be imputed to the lawyer under Rule 5.3.

Question No. 12

After reviewing the year’s accounting books for her solo practice, Lawyer
decides that she needs some advertising to bring business in before she goes
broke. Lawyer is a licensed patent attorney. Having an account with a local
Internet provider, she designs and posts a firm web page. The web pages reads
in part:

“Administrative Law Practice”

“Certified Patent and Trademark Attorney”

“Results Guaranteed”

Question No. 12

Applicable Rules of Professional Conduct

Rule 7.1 Communications Concerning A Lawyer’s Services

A lawyer shall not make a false or misleading communication about the lawyer
or the lawyer’s services. A communication is false or misleading if it:

(b) Is likely to create an unjustified expectation about results the lawyer
can achieve, or states or implies that the lawyer can achieve results by means
that violate the Rules of Professional Conduct or other law; or

Rule 7.2 Advertising

(a) Subject to the requirements of rules 7.1 and 7.3, a lawyer may advertise
services through public media, such as a telephone directory, legal directory,
newspaper or other periodical, outdoor, radio or television, or through written
communication.

(b) A copy or recording of an advertisement or written communication shall
be kept by the lawyer for 2 years after its last dissemination along with a
record of when and where it was used. Upon written request by the State Bar,
either instigated by the State Bar or as the result of any inquiry from the
public, the lawyer shall make any such copy or recording available to the State
Bar, and shall provide to the State Bar evidence of any relevant professional
qualifications and of the facts upon which any factual or objective claims
contained in the advertisement or communication are based. The State Bar Association
may provide the lawyer’s response to any person making inquiry.

Rule 7.4 Communication of Fields of Practice

A lawyer may communicate the fact that the lawyer does or does not practice
in particular fields of law. A lawyer shall not state or imply that the lawyer
is a specialist except as follows:

(a) A lawyer admitted to engage in patent practice before the United States
Patent and Trademark Office may use the designation “patent attorney” or a
substantially similar designation.

(b) Upon issuance of an identifying certificate, award, or recognition by
a group, organization, or association, a lawyer may use the terms “certified”,
‘specialist”, “expert”, or any other similar term to describe his or her qualifications
as a lawyer or his or her qualifications in any subspecialty of the law. If
the terms are used to identify any certificate, award, or recognition by any
group, organization, or association, the reference must meet the following
requirements: (1) the reference must be truthful and verifiable and may not
be misleading in violation of rule 7.1; (2) the reference must identify the
certifying group, organization, or association; and (3) the reference must
state that the Supreme Court of Washington does not recognize certification
of specialties in the practice of law and that the certificate, award, or recognition
is not a requirement to practice law in the State of Washington.

Question No. 12

Suggested Answer

Nothing in the Washington Rules of Professional Conduct specifically mentions
advertising over the Internet. Rule 7.2(b) does require a lawyer to keep a
copy of any advertising for two years (this presumably includes any Internet
advertising).

Rule 7.4 permits a lawyer to mention that he or she does or does not practice
in certain fields of law. Under Rule 7.4 the advertisement “Administrative
Law Practice” is probably acceptable, if true. Further, Rule 7.4 allows practitioners
licensed to practice patent law to refer to themselves as “patent attorneys”
or other similar designations. Rule 7.4 also allows an attorney to use the
words “certified” in some cases. In the situation mentioned above, the lawyer
is a certified patent attorney with a special license to practice patent law
so designation “Certified Patent . . . Attorney” is acceptable. There is nothing
to indicate, however, that the lawyer mentioned is certified in the practice
of trademark law. Even though the Patent and Trademark Office is the umbrella
agency involved, trademark and patent practice are quite distinct. As such
the lawyer’s use of “Certified . . . Trademark Attorney” is probably unethical.

Rule 7.1 prohibits advertisements that “create an unjustified expectation[s]
about results the lawyer can achieve”. As such the words, “Results Guaranteed”
appearing on the lawyer’s web site are unethical because no lawyer can guarantee
results.

[1] See Michigan Bar Opinion, R1-55 and CI-654.

[2] See Michigan Bar Opinion, R1-55 and CI-1117.

[3] Connecticut Informal Ethics Opinion 91-1 (1991) License revocation proceeding
before commissioner following client’s arrest for drunk driving); Pennsylvania
Ethics Opinion 92-183 (1993) (habeas corpus petition to have client transferred
to different prison).

Listed below is an overview of some of the issues most commonly faced by businesses developing and operating a web site. The list is broken down into do?s and don?ts organized under three major topic headings. This overview, while not fully comprehensive of all possible legal issues, provides an excellent starting point for understanding some of the most common legal issues facing businesses with web sites in the United States.

WEB SITE AND CONTENT

DO have your client get a written assignment and a Work-For-Hire Agreement from all independent contractors and web developers, to insure that the organization owns rights to the intellectual property that comprise the site, including the web site?s HTML code, design features, and user interface. Without a written agreement, a web site developer may have a plausible claim of ownership for some copyrighted aspects of the developed web site.

DO have your client obtain federal or foreign trademark registration for important domain names to protect against a third party claiming trademark infringement.

DO have your client review web site content for accuracy, fair advertising practices, intellectual property rights and marking issues, and other regulatory related issues.

DO NOT have your client assume that it is okay to copy contents from other web sites. If your client does not want to create their own content, then they will need to license the content from others. Although there is a Fair Use provision under the United States Copyright Act for copying small portions of any particular work, the safest procedure have your client license content that they do not wish to independently create. Such a license might provide the right to distribute, alter, publish, or otherwise use the licensed content, as well as provide representations, warranties, and any appropriate indemnification from the licenser.

DO have your client register all important top-level domain names and variations of the same and consider international country code top-level domain name extensions.

DO have your client register a copyright agent with the United States Copyright office to help limit liability for some copyright infringement claims under the Digital Millennium Copyright Act.

DO have your client post a policy regarding submissions from third parties to their web site in the site?s Terms and Conditions or Click Wrap Agreement. Third party content might appear on the web site in places like bulletin boards and chat rooms and may create liability based on defamation, harassment, copyright infringements or trademark infringement or other causes of action.

DO NOT have your client link or frame other web sites in such a way as to block the original source of origin or advertising and do not link or frame to web sites engaged in activities such as blatant copyright infringement. Under various theories of liability, an organization might be found liable for trademark infringement, patent infringement or unfair competition for framing another web site.

WEB SITE USER AGREEMENT

DO have your client post a Click Wrap, or Terms and Conditions Agreement on their web site to bind users of the site.

A Click Wrap Agreement is a screen or page that presents a web site?s legal terms and conditions to a user and requires the user to click “I Agree” or similar wording for gaining access to the site for completing a transaction.

Terms and Conditions, or Terms of Service are legal terms usually accessible through a link at the bottom of a home page of the site, the review of which is not a condition to obtaining information on the site or completing a transaction.

DO have your client include Proprietary Rights notices, disclaimers of liability, and warranty for the site, linking disclaimers, framing prohibition, a statement concerning the governing law and jurisdiction of any disputes, language conveying rights to use any content submitted to the site, return and refund policies (when applicable), rules for games or sweepstakes (when applicable), a prohibition on using the site to post obscene, infringing, or unlawful material and rules regarding conduct on bulletin boards, chat rooms, etc. (when applicable).

DO NOT have your client post a policy and then not comply with it.

SECURITY AND TECHNICAL ARCHITECTURE

DO have your client understand that security is a business and a legal issue. A web site?s performance can be dramatically affected if a site is attacked. In a business-to-business environment, their partners need assurance that their network is protected from hackers and the like. In a business-to-customer model, your client?s customers need to be assured that their transactions with credit cards, or otherwise, are secure.

DO have your client post a security statement on their site and designate an employee to manage the organization?s security responsibilities.

DO NOT have your client forget that their web site?s technical architecture must be adequate for its purpose. To reduce the likelihood of problems arising in this area, organizations might consider obtaining appropriate performance warranties and representations and indemnification from their web site developers, web site hosts, system integrators and providers of relevant software and hardware components.

As the area of Internet related law expands the rapid changes and complexity of the law make it important for lawyers to help their clients stay out of trouble. Sometimes a simple web site audit is all that stands between a heartbreaking lawsuit and breathtaking success in e-business. The issues identified above are a great starting point for helping clients to navigate the complex web of Internet law. Web site owners should be strongly encouraged to at least consider a basic range of legal issues when developing and operating a web site in the United States or internationally.

This article was originally printed in De Novo, VOLUME XV, ISSUE III MAY/JUNE 2001 and was written by our lead attorney Timothy B. McCormack

This recent Federal District Court decision addressing what appears to be a question of first impression for the Internet is significant for anyone using the Internet. The decision, Specht v. Netscape, questions the fundamental idea of mutual assent in a contract formation.

In particular, the Specht case questions the legitimacy of the “terms and conditions” found on most Web sites.

Web site terms and conditions have generally been thought to create a binding contract between the owner of the Web site and anyone viewing or downloading materials from the site. Typical Web site terms and conditions often reflect important business considerations such as requiring mandatory binding arbitration in a specific local jurisdiction when a dispute arises.

With the law of Internet jurisdiction still in its infancy, many businesses have made conscientious efforts to limit their exposure to lawsuits in inconvenient or foreign jurisdictions by crafting carefully worded terms and conditions (this is actually what happened in the Specht case).

To put the Specht decision in context, it is important to understand the legal landscape of Internet and software licenses. Generally speaking, almost everyone who has used the Internet or owned a computer has been exposed to at least one of three specific kinds of licensing mechanisms.

The most common form of computer-related licensing is referred to as a “shrink-wrap license.” A shrink-wrap license is the kind of license that comes prepackaged (wrapped in cellophane) for computer software.

If one takes the time to read one of these license agreements it says that use of the software will create an assent to the terms and conditions contained in the license agreement. Typically for these shrink-wrap licenses to be enforceable, the consumer must have the option of returning the software for a full refund if they find the terms and conditions of the shrink-wrap license unacceptable.

In fact, under the Uniform Commercial Information Transaction Act (UCITA), which has been adopted in two states so far, shrink-wrap licenses are only enforceable if the end user has an opportunity to return any software or product for a full refund if they find terms and conditions of the shrink-wrap license unacceptable.

Another common licensing scheme is referred to as the “click-wrap license.” The click-wrap agreement is a screen or a page that presents a Web site’s legal terms and conditions to a user and requires the user to click “I agree” or similar wording before gaining access to the site or before completing a transaction.

A third type of software license is referred to as a “browse-wrap” agreement. A browse-wrap agreement is usually accessible through a link at the bottom of a home page site (the review of which is not a condition to obtaining information on the site or completing a transaction). The Specht court found that the terms and conditions in that case were most like a browse-wrap agreement.

The law of enforcing shrink-wrap licenses has become well established. Click-wrap agreements are also generally thought to be enforceable, although one District Court located in Kansas has noted that both Kansas and Missouri courts may not enforce click-wrap agreements.

The question of whether a browse-wrap agreement is enforceable, however, is now clearly in question.

THE SPECHT CASE

The Specht decision resulted from a recent class action lawsuit by several plaintiffs, including Christopher Specht. These plaintiffs got together and sued Netscape Communications Corp. and America Online Inc., et al., claiming that the defendants’ software transmitted private information about the plaintiffs’ file transfer activity over the Internet.

The plaintiffs alleged that the tracking of their private download information amounted to an unlawful electronic surveillance activity in violation of two federal statutes. The two anti-surveillance statutes in question are the Electronic Communications Privacy Act and the Computer Fraud Abuse Act.

In an interesting procedural twist (that appears to ripple through every Web site on the Internet today), Netscape moved to compel an arbitration proceeding.

Netscape argued that the software license for the software in question contained a clause requiring binding arbitration.

The plaintiffs argued that they were not bound by the license agreement because they never agreed to it. District Court ruled in favor of the plaintiffs, holding that there was no “meeting of the minds” to make an enforceable contract of the license agreement offered independently of the free software because the license was not expressly accepted by the user of that software.

This District Court ruling is the first significantly reported case holding that links to terms and conditions on Internet Web sites do not necessarily create a binding contract for the use of that site.

In the context of the Internet, a terms and conditions link that is not viewed may not create the requisite assent in order to create a binding contract, at least according to the Specht court.

Interestingly, a recent bulletin published by the Federal Trade Commission on advertising guidelines on the Internet supports a similar kind of reasoning.

The FTC specifically recommends that businesses monitor the “click-through” rate of hyperlinked advertising disclaimers. The FTC reasons this empirical information can be used by companies to help avoid false advertising.

When one opens the Sunday paper to read a typical CompuVest advertisement, the appropriate disclaimers are typically clearly in place. With hyperlinking technology on the Internet, these disclaimers may get overlooked, thus creating a need for advertisers to monitor how often these links are viewed.

Following this same line of thought, the District Court in Specht found that Netscape’s license agreement hyperlink was merely an invitation to enter into a license, not a requirement for downloading the software in question. Thus no binding contract was formed.

In a similar way, if a typical Web surfer enters onto an Internet company’s Web site and is not required to explicitly accept the Web site’s terms and conditions, those terms and conditions may not be enforceable against that Web surfer.

The good news is that individuals may not be subject to non-negotiated contract terms over the Internet in some case. The bad news is that most Internet businesses may need to revise their Web site configurations or risk, for example, being sued in a nonlocal (expensive) jurisdiction.

The Specht Court also found that the language accompanying the hyperlink in question was merely an invitation to review the license agreement and that visitors were not required to affirmatively indicate their assent to the license agreement.

The hyperlink read, “Please review and agree to the terms of the Netscape Smart Download Software License Agreement before downloading and using the software.”

Ideas to consider might include:

Moving links to terms and conditions to the top of one’s web site page;

Providing language that indicates the terms and conditions MUST be reviewed and accepted before use of the Web site would be allowed.

Though this basic reordering of Web site layout may seem simple, it could have significant legal and aesthetic impacts. Such reordering may make the Web site terms and conditions more analogous to an enforceable shrink-wrap license and less like a browse-wrap license because the Web surfer is given a reasonable notice that use creates assent to the terms and conditions.