The CAFC released an opinion today affirming the discipline of an invention promotion company’s patent attorney (Bender v. Dudas, __ F.3d __ (Fed. Cir. June 21, 2007)(Linn, J.)). A very interesting read.
For those wanting the quick summary:
S. Michael Bender (“Bender”) appeals from a final decision by the United States District Court for the District of Columbia that granted summary judgment upholding a disciplinary action taken by the director of the United States Patent and Trademark Office (the “PTO” or “agency”) to exclude Bender from practicing before the PTO. Bender v. Dudas, No. 04-CV-1301 (D.D.C. Jan. 13, 2006) (“SJ Order”). Because the PTO’s findings were supported by substantial evidence, and because the disciplinary action was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law, we affirm.
The background of this case reads like a novel but represents the true story of hopes dashed, fees wasted, and dreams lost by hundreds of individual inventors caught up in the world of self-interested promoters who promise the world and deliver very little.
In seeking to protect the public from unscrupulous invention promoters, the PTO has aggressively sought to monitor and enforce its disciplinary rules against those registered practitioners who act in concert and participation with these promoters in the prosecution of patent applications before the PTO. This case is about one such practitioner who became complicit in the activities of an invention promoter involving over 1,000 unsuspecting inventors. These unsuspecting inventors first sought help from American Inventors Corporation (“AIC”), an invention promoter…
[Working for AIC, patent attorney Leon] Gilden employed draftsmen to add decorative ornamentation or surface indicia to the drawings of the inventions even though such embellishment was not invented by the named inventor…The alleged purpose of this scheme was to make it easier to obtain a patent and to avoid a refund of the inventors’ fee under AIC’s money-back guarantee. Gilden’s alleged involvement in the embellishment scheme prompted the PTO to initiate disciplinary action against him in the early 1990s…Ultimately, Gilden entered into a settlement agreement with the PTO and received a five-month suspension.
In 1993, AIC contracted with Bender, a registered patent attorney, to continue the prosecution of over 1,000 design applications that had formerly been handled by Gilden (the “Gilden applications”). The contract provided Bender with up to $15,000 bi-weekly as compensation for both attorney’s fees and prosecution costs.
Eventually, Bender himself was charged with “violations of PTO rules governing attorney conduct.”
…the administrative law judge found that Bender had violated numerous PTO rules on attorney conduct [neglected an entrusted legal matter in violation of 37 C.F.R. §10.77(c); accepted employment where professional judgment may be affected in violation of 37 C.F.R. § 10.62(a) and accepted compensation from a person other than a client without a full disclosure to the client in violation of 37 C.F.R. § 10.68(a)(1); and engaged in conduct that was prejudicial to the administration of justice in violation of 37 C.F.R. § 10.23(b)(5)] and that exclusion from practice was warranted.
The CAFC, backing the USPTO decision on discipline, concluded by noting that:
Although Bender may have only had the best intentions in mind in assuming prosecution of the Gilden applications, the best of intentions cannot absolve Bender’s complicity with AIC in a scheme fraught with deception and adversely affecting a large number of unsuspecting inventors. As an experienced patent practitioner, Bender had to have appreciated that the wholesale practice of filing design applications with unauthorized design embellishments in hundreds of applications was not in the inventors’ interests but instead was driven by AIC’s money-back guarantee. He should have known that the kind of letter he sent to his newly acquired clients fell far short of the explanation needed to address the distressed circumstances in which his clients were placed by his new employer, AIC. His letter, even though well written and perhaps sufficient as an engagement letter of a client in the first instance, only perpetuated the harm done to the Gilden applicants by treating what had previously transpired as nothing out of the ordinary when the circumstances of this entire matter—and Bender’s conflicting interests in particular—were quite extraordinary. Bender’s failure to appreciate that fact supports the PTO’s determination that any sanction less than exclusion would not provide the necessary deterrent effect. Because we cannot conclude that the sanction of exclusion is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, we have no reason to disturb the PTO’s sanction of exclusion from practice.
A pdf of the case can be found here: Bender v. Dudas.
