1 ethical issues in pro bono representation for ip cases and a practical guide for getting started...
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Ethical Issues in Pro Bono Representation for
IP Cases and A Practical Guide for
Getting Started
Austin IP Inn of CourtTeam 7
April 17, 2014Ethics credit: 0.75 hours
IP law credit: .5 hours
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America Invents Act Pro Bono Assistance Program
Craig Enoch
Justice (Ret.)
600 Congress Avenue, Suite 2800
Austin, Texas 78701
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The Competitive ThreatThe Center of Gravity of Innovation has shifted EastIn Dec 2012 - China overtook the U.S. as the world’s
largest patent filer.
In April 2012 the Chinese government announced “Special Funds for Subsidizing Foreign Patent Applications.”
It’s expected that by 2015 published patent applications will total 500,000 in China, 400,000 in the U.S. and 300,000 in Japan.
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The Competitive ThreatThe Center of Gravity of Innovation has shifted EastIn Dec 2012 - China overtook the U.S. as the world’s
largest patent filer.
In April 2012 the Chinese government announced “Special Funds for Subsidizing Foreign Patent Applications.”
It’s expected that by 2015 published patent applications will total 500,000 in China, 400,000 in the U.S. and 300,000 in Japan.
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The US Innovation andManufacturing LandscapeSmall Business and Patent Protection
Small businesses - primary driver of job creation.
Startups create three million jobs per year.
Capacity of small businesses to create jobs is at risk -must compete in a global market.must rely on patent protectionface significant costs in acquiring, maintaining,enforcing patents outside the US.
America Invents Act requires USPTO/Commerce Deptto study how to support businesseswith international patent protection.
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The US Innovation andManufacturing LandscapeImportance of Intellectual Property (IP) Related Industries in US Economy
Virtually every industry either produces or uses it.
IP-intensive industries accounted for 19% of all 2010 employment.
IP-intensive industries accounted for 34.8% of U.S. GDP in 2010.
7America Invents ActEstablished Regional USPTO Offices
Dallas-Ft. Worth-Arlington, Texas (Dallas)Denver-Aurora-Broomfield, Colorado (Denver)San Jose-Sunnyvale-Santa Clara, California
(Silicon Valley)Detroit, Michigan
Selection based on geographical diversity, regional economic impact, ability to recruit and retain employees, and the ability to engage the intellectual property community.
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The Dallas USPTO Satellite Office
Dallas expected to open September 2014.
Located at The Terminal Annex Federal Building, downtown Dallas.
The office will permit small businesses and entrepreneurs to
Navigate the patent processMeet with Patent ExaminersAccess USPTO’s comprehensive search
databases.
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America Invents Act and establishment of Pro Bono Assistance Centers
USPTO directed to work with and support intellectual property law associations to establish pro bono programs.
The Center for Innovation in Arlington, TX was chosen to house and manage the Pro Bono Assistance Center for Inventors in Texas and the surrounding region.
Ultimately each State will have such Inventors’ Centers
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America Invents Act and establishment of Pro Bono Assistance Centers
First Inventor Assistance Program launched in Minneapolis under LegalCorp (a non-profit and one of the key architects of the program) in September 2010.
Matches volunteer patent attorneys with inventors having already filed pro se patent applications for their inventions.
Provides a template for Pro Bono Assistance programs nationwide.
11The Center for Innovation – Creating Technology Based Economic Development through Open Innovation
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Law SchoolsLaw FirmsBusinesses
Committee membership comes with financial commitment
Volunteer participation requires only willingness to assist
AIA Pro Bono Patent Assistance Center Steering Committee Composition
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The Pro Bono Assistance Process
Inventor Entry
Initial Screening
Inventor / Attorney Match
Not Referred
Law School Legal Clinics
Subject Matter Experts
Patent Law Firms
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Pro Bono Assistance Intake
Program applicants pass a basic screening process by the Federal Circuit Bar (USPTO)
Pro Bono Patent Assistance Program Director receives cleared applicants and verifies they fall within 300% of federal poverty guidelines.
Pro Bono Patent Assistance Program Director forwards the information to the Pro Bono attorney.
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Pro Bono Assistance Intake
Pro bono attorney conducts an internal conflicts check and notifies Pro Bono Patent Assistance Program Director of the result.
If conflict check is clear, Pro Bono Patent Assistance Program Director notifies the client if there is an attorney match.
Attorney contacts Client and Engagement Letter is put in place
16Contacts
Glenda McCallExecutive Assistant+1(817)[email protected]
Center for Innovation202 E Border Street Suite 300Arlington, TX 76010, USA
Shekar Rao, Vice President and Chief Operating Officer +1(817)543-4292 W +1(214)914-0353 C [email protected]
Michael Muthig, Ph.D.Senior Director Technology Transfer+1(252)[email protected]
Kelly JacksonDirector – Inventors’ Assistance [email protected]
Gautham BrahmamudiManager Technology Transfer+1(817)[email protected]
Ben HerbigManager Business Development+1(817)[email protected]
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Questions?
Craig Enoch
Justice (Ret.)
600 Congress Avenue, Suite 2800
Austin, Texas 78701
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Pro Bono Ethics Question #1
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Hypothetical
Pam Practitioner agrees to handle a first office action response on a pro bono basis for Carl Client. After studying the application, the art, and the market, Pam realizes that a savvy lawyer could help Carl leverage this patent into a highly profitable business.
Can Pam suggest that she handle all patent matters for Carl under a creative fee arrangement?
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Ethics Issue
What ethical rules apply if you want to take on the Pro Bono client as a “regular” client?
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Business Transaction with a Client
See, e.g. ABA Formal Opinion 00-418 (A lawyer who acquires stock in her client corporation in lieu of or in addition to a cash fee for her services enters into a business transaction with a client.)
Taking an interest in the patent application ?
22Business Transaction with a Client
37 CFR 11.108(i): A practitioner shall not acquire a proprietary interest in the cause of action, subject matter of litigation, or a proceeding before the Office which the practitioner is conducting for a client, except that the practitioner may, subject to the other provisions in this section:
(3) In a patent case or a proceeding before the Office, take an interest in the patent or patent application as part or all of his or her fee.
“practitioners who take an interest in a patent or patent application as part of or all of their fee remain subject to the conflict of interest provisions of § 11.108.” 78 Fed. Reg. 20180, 20183 (April 3, 2013)
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Business Transaction With a Client
ABA Model Rule 1.8(a)
37 CFR 11.108(a)
Texas Rule 1.08(a)
24ABA Rule 1.8(a) and 37 CFR 11.108(a) Require:
Fair and reasonable terms which are fully disclosed and can be reasonably understood by the client;
The client is advised in writing to seek independent counsel and is given a reasonable opportunity to do so; and
The client gives informed consent in writing.
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Texas Rule 1.08(a) Requires:
Fair and reasonable terms which are fully disclosed and can be reasonably understood by the client;
The client is given a reasonable opportunity to seek the advice of independent counsel; and (No need to advice the client in writing as in PTO rules)
The client consents in writing. (No textual requirement of “informed consent”)
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The Burden is on the Lawyer
The burden to show that all necessary requirements has been met is on the lawyer, not the client.
See ABA Formal Op. 00-418 (2000), at n. 10 and accompanying text.
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Fees:ABA Model Rule 1.5
37 CFR 11.105
Texas Rule 1.04
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Reasonableness of Fees
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
Reasonableness of fees (cont’d)(3) the fee customarily charged in the locality for
similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.
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30ABA Rule 1.5 and 37 CFR 11.105
(a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses.
(b) The scope of the representation and the basis or rate of the fee and expenses of which the client will be responsible shall be communication to the client, preferably, in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee or expenses shall also be communicated to the client.
31ABA Rule Opinion 11-458 Changing Fee Arrangements During Representation
Modification of an existing fee agreement is permissible under the Model Rules, but the lawyer must show that any modification was reasonable under the circumstances at the time of the modification as well as communicated to and accepted by the client.
Modifications sought by a lawyer that change the basic nature of a fee arrangement or significantly increase the lawyer’s compensation absent an unanticipated change in circumstances ordinarily will be unreasonable.
Changes in fee arrangements that involve a lawyer acquiring an interest in the client’s business, real estate, or other nonmonetary property will ordinarily require compliance with Rule 1.8(a).
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Texas Rule 1.04
(a) A lawyer shall not enter into an arrangement for, charge, or collect an illegal fee or unconscionable fee. A fee is unconscionable if a competent lawyer could not form a reasonable belief that the fee is reasonable.
(b) enumerates factors concerning reasonableness
(c) When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation. (No Mention of Changing Fees)
33Changing Fee Agreements in Texas
McCleery v. Commission for Lawyer Discipline, 227 S.W.3d 99 (Tex. App.—Houston [1st Dist.] 2006, pet. denied)
McCleery represented an unsophisticated pro-bono client. On the eve of trial he presented Client with a 40% contingency fee agreement on “all sums collected.”
This change benefited McCleery only and not the client.
The pro bono agreement was changed to an unconscionable fee and McCleery was ordered to pay $20,000.
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Changing Fee Agreements in Texas
Jim Arnold Corp. v. Bishop, 928 S.W. 2d 761 (Tex. App.—Beaumont 1996, no writ)
Client could not pay Attorney’s hourly rate so a reasonable contingency fee arrangement was created.
Client signed the subsequent agreement.
Client failed to establish that the change in fee agreements harmed Client and was unable to recover on his legal malpractice claim.
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Tips
Narrowly define engagementConfirm termination of engagement before
opening discussions of new engagement
Anticipate in fee agreement the possibility that each party may, but is not required to, agree to future engagements on materially different terms
Advise in writing to obtain review by independent counsel
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Review
Accepting stock, taking interest in patent application implicate ethical rules governing (i) business transactions with client and (ii) fees
Modification of existing fee agreements will get heavy scrutiny
Burden of compliance is on the attorney
Pro Bono IP Representation from
an In-house Perspective
Erik M. Metzger Intel Corporation
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Internal Process Has Been DefinedTaking on matters now
Intel Benefits: USPTO relationshipIncreased volunteerism, corporate social responsibilityProfessional development
Differences from Other Pro Bono at IntelLow-Overhead Conflict Checking
Intel’s Pro Bono Patent Program
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Kinds of Matters
California Matters • ~75% are unrelated
to Intel’s Business• ~50% are unrelated
to IT• Examples of Non-IT
Matters:– Plants (~50)– Surgery (~50)– Drugs (~75)– Fashion/Garment (~50)– Misc. Mechanical (e.g.,
fishing reels) (~100)
<100
100’s
200’s
300’s700s
Non-IT
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Intel’s Internal Process• Conflict Screen
– CLA Screens Matters by Class Code• Intel Provides Desired Excluded Class Codes to CLA• IT (e.g., 200’s, 300’s and 700’s) matters excluded
– Intel Screens Remaining Matters Before Distributing• Screened against guidelines internally by small committee• Low-Overhead Check (10-20 matters per month)
• Selected Matter Assigned to Partner Firm– Intel attorney works under partner firm attorney– Partner firm attorney is ultimately responsible for the matter– No Intel attorney signs engagement letter or USPTO paper– Intel attorney works within firm’s patent engineer program
• Intel Attorney Delivers Final Draft– Partner firm attorney gives final approval and files
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Considerations
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Exemplary Matters• A self-gripping, self-adjusting oil filter wrench for domestic and foreign vehicles.• Folding gift bags or gift boxes that can be opened or closed in two different ways, and are reusable
as bags or purses.• Thermal Suppression Device• A pillow for side and back sleepers. Eliminates pressure on shoulder(s). Relieves
tension/pulling/strain on head, neck and shoulders.• A garment which uses color match technology in order to provide women with a more accurate way
of selecting "nude" undergarments.• Scalp massaging comb that is designed to alleviate itching or irritation for people who wear hair
extensions.• A device for quadriplegic people that allows them to drive radio controlled cars with maximal head
movement and minimal vision obstruction. • An electric arc to make nano particles and micron sized particles.• The invention is designed to protect the tailbone from being injured when engaging in sports
activities such as skateboarding, hockey, or rollerblade ice skating.• Portable snack bottle designed for infants and toddlers to help them eat healthy food on the go.• Software applications intended to help people achieve their wildest dreams that include multiple
"glass desktops"• A system in which a person can obtain a one-account gift card for purchase of goods or services by
establishing the account with a merchant based upon a user’s request and enabling the account to be accessed by a beneficiary with the use of a financial card subject to the terms and conditions of the merchant.
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America Invents Act
Plus
A Closer look at Section 32 – pro bono programs
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AIA - Section 32
The Director shall work with and support intellectual property law associations across the country in the establishment of pro bono programs designed to assist financially under-resourced independent inventors and small businesses.
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Current StructureNationwide Task Force
two member each from AIPLA, ABA - IP Section, IPO, USPTO and Federal Circuit Bar Association, plus ad hoc members from the Minnesota program and Denver program
Programs for 2012
Denver – June
Washington DC Metro area – June/July
Northern California – late 2012
Southern California – late 2012
Texas – November/December
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Pilot Program Overview
Minnesota-based pilot programTo be replicated/expanded to include other states
GoalsProvide pro bono legal assistance to qualified pro se
applicantsOutreach to the independent inventor communityProvide the patent bar with meaningful pro bono
opportunitiesReduce pro se generated USPTO backlog
Target intake for first year: 70 cases
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USPTO Pro Bono Initiative MN Pilot Structure
Client Identification
& Outreach
IntakeScreeningReferral
Clients
Patent Support Services
Attorneys & Agents
•USPTO•Inventor services organizations•Small Business Development Centers•SCORE•LegalCORPS website and printed materials
•Pro se applicants•Independent inventors•Micro entrepreneurs
•LegalCORPS 501(c)(3)
•Search services•Patent illustrators
•Patent prosecutors•Tech transfer lawyers
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USPTO Pro Bono Initiative Client Intake
Initial Screening
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USPTO Pro Bono Initiative Client Intake
• Pro se applicants from MN• Fed Cir. Bar conducts initial substantive
assessment (proposed)• Cases with merit referred to
LegalCORPS• USPTO website to become additional
application portal• Application• Invention Disclosure Form• Online seminar• Searchable list of programs in
other states when applicable
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USPTO Pro Bono Initiative Client Intake
• Administrator: .5 FTE LegalCORPS employee• Determines economic eligibility utilizing criteria
checklist• Will assist with program development,
fundraising, recruiting and establishing systems, tools and reporting mechanisms
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USPTO Pro Bono Initiative – Client Intake
Volunteer Attorney Panel
Client matched with
volunteer attorney
Ineligible
• Volunteer Attorney Panel: Set group of local patent attorneys
• Engagement letter• Volunteer attorney firm or law department
responsible for docketing• LegalCORPS administrator assists as needed
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Pro Bono Ethics Question #2
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Advance Waiver of Conflict
• What are the possible implications under the Texas and USPTO rules for waiving conflicts in advance?
• Threshold question: Why request an advance waiver of conflict?
• An advance waiver of conflict is a possible solution, but is not without its own challenges both generally and specifically as it relates to less sophisticated pro bono clients
A Litigated Advance Waiver ClauseWe understand and agree that this is not an exclusive agreement, and you are free to retain any other counsel of your choosing. We recognize that we shall be disqualified from representing any other client with interest materially and directly adverse to yours (i) in any matter which is substantially related to our representation of you and (ii) with respect to any matter where there is a reasonable probability that confidential information you furnished to us could be used to your disadvantage. You understand and agree that, with those exceptions, we are free to represent other clients, including clients whose interests may conflict with yours in litigation, business transactions, or other legal matters. You agree that our representing you in this matter will not prevent or disqualify us from representing clients adverse to you in other matters and that you consent in advance to our undertaking such adverse representations.1
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Relevant Rules• ABA Model Rule (Rule 1.7 and comment 22, Rule 1.0(e)
– For advance waivers, “informed consent”/”requisite client understanding” is the key
– No bright line test but “matter specific” is more enforceable than “general”– Relevant factors for advance waiver (from ABA 2005 Opinion)
• 1) comprehensiveness of description of conflicts and consequences• 2) client sophistication• 3) generality with regard to type of conflict and identity of counterparty• 4) whether client is independently represented by other counsel in giving
consent
• Texas Rule (TDRPC Rule 1.06)– Key differences (more relaxed)
• No conflict unless the matters are “substantially related”, i.e., concurrent representation of adverse parties in unrelated matters is less likely to be an issue
• Waiver is not required to be written
• USPTO Rule of Professional Conduct 37 CFR 11.107– Same as the ABA Model Rule 1.7 for Conflicts of Interest
• Other states– Rules vary and in some instances are more strict than the ABA Model Rule
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Recent Galderma Labs case(Galderma Labs, L.P., et al. v. Actavis Mid Atl. LLC, No. 3:12-cv-2038-K, 2013 Lexis 24171 (N.D. Tex., Feb. 21, 2013))
• Issue: Is a general advance conflict waiver valid? • Result: Yes, but key elements of the analysis were (1)
informed consent and (2) client sophistication• Informed consent facts
– 1) waiver outlined course of conduct for handling conflicts– 2) wavier explained possible risks– 3) wavier outlined reasonably possible alternatives
• Client sophistication facts– 1) client company itself was large and routinely engaged
large law firms– 2) in-house counsel had 20+ years experience and
frequently dealt with advance waivers
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Key takeaways
• Informed consent can be addressed in drafting by focusing on comprehensive discussions of possibilities and providing as much specificity as possible.
• Client sophistication on the pro bono side can be a challenge, even for IP matters. Particular focus on explaining the consequences of a conflict and memorializing the encouragement of separate counsel review may be helpful mitigating steps.
5858
Other Intellectual Property Pro Bono Representation in Texas
Larry WaksJackson Walker LLP
Lawrence A. WaksPartner
Jackson Walker LLPAustin, Dallas
(New York, L.A.)[email protected]
• Chair, Entertainment Practice – Jackson Walker
• Chair, Litigation Section, ABA Entertainment & Sports LAW Practice Section
• Chair, Copyright sub-section, Texas State Bar IP Section
• Voting Member – Grammy’s
• Founding Member – Latin Grammys, Austin Film Society, Dallas Film Society, Dallas Producers Association
• Spanish, French, Russian
60“Soft” IP
1. Copyright
2. Trademark
3. Trade Secrets
4. Confidentiality – Noncompetes
5. Contracts, Licenses, Royalties, Ownership, Financing (Equity, Debt, Crowdfunding)
6. Federal Court, State Court, Arbitration, International
7. Statute (Federal or State), Common Law
8. State Law (Texas, California, New York, Tennessee, Florida)
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“Soft” IP Pro Bono Opportunities1. TALA – Texas Accountants and Lawyers for the Arts
a. was in Houston, recently move to Austin, but statewide
b. contact – Sharesa Alexander, Esq. LLM [email protected]
2. Intel Sponsored Entertainment Law Initiative
a. California and now Texas
b. contact – Erik Metzger, Esq., Intel Senior Patent counsel (Austin, SF, World-wide) & Musician, [email protected]
3. Texas chapter – Grammys
a. Austin based – music focused
b. Contact – Theresa Jenkins – Senior Executive Director – [email protected]
4. Texas State Bar IP Section – Pro Bono Initiative – Stay tuned
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Summary
Next Steps Start an IP pro bono program Volunteer as an individual attorney
Patents: Pro Bono Assistance Program Copyright and trademark: TALA
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Summary
Four reasons to do pro bono: Practical: decrease PTO backlog Professional: obligation as a lawyer Ethical: people need help Psychological: your well-being
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Thank you
The Hon. Craig Enoch
Chair of the Steering Committee for the Pro Bono Assistance Program at the Center for Innovation
Erik Metzger
Senior Patent Attorney at Intel Corporation
Larry Waks
Partner at Jackson Walker LLP