Presenting a live 90-minute webinar with interactive Q&A Drafting Patent Counsel Engagement and Disengagement Letters Structuring Scope of Engagement, Confidentiality, Conflicts of Interest and Other Key Provisions THURSDAY, JULY 27, 2017 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Dr. Angela Foster, Ph.D., Esq., Principal, Law Office of Angela Foster , North Brunswick, N.J. Michael E. McCabe, Jr., Founder, McCabe Law , Potomac, Md. Dr. Andrew W. Williams, Ph.D., Esq., Partner, McDonnell Boehnen Hulbert & Berghoff , Chicago The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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ETHICAL CONSIDERATIONS FOR PATENT COUNSEL ENGAGEMENT AGREEMENTS Strafford Webinar Series July 27, 2017 Michael E. McCabe, Jr. McCabe Law LLC www.IPethicsLaw.com
Engagement Considerations • Are they necessary. • Defining the client. • Defining the scope. • Defining the fee. • Defining client’s and lawyer’s duties. 5
Are Written Agreements Required? • Generally: No rule of ethics requires a written “Engagement Agreement.” • ABA M.R. 1.5, PTO Rules, and most state rules say writing “preferable.” • Notable exceptions: – D.C., N.Y.: Written agreement for all new clients. – All jurisdictions: Contingency fee representation must be in writing. 6
Are Written Agreements Required? • No but . . . . Lawyers’ duty to: – Promptly inform client of situation when client’s informed consent is needed. – Consult about means for accomplishing client’s objectives. – Explain matter to extent needed for client to make informed decision. 37 C.F.R 11.104; ABA M.R. 1.4 • Can be addressed in Engagement Agreement. 7
Are Written Agreements Required? • “Informed consent” requires adequate disclosure of information, risks and alternatives. • PTO ethics rules require “informed consent” to be “confirmed in writing” – Conflict waivers – 37 CFR 11.107; 11.109 – Biz transactions w/clients – 37 CFR 11.108(a) 8
Defining The Entity Client 9
Entity Client Questions • When you represent the parent, do you represent its subsidiaries? • When you represent a subsidiary, do you represent the parent? • When you represent a subsidiary, do you represent other subsidiaries? • What does “client” believe who is the client? What does lawyer believe? 10
Defining Entity Client Matters • Duties of loyalty and confidentiality to “clients”. – Shall not take position adverse to present “client” even in unrelated matters. • 37 C.F.R. 11.107(a); ABA Model Rule 1.7(a). – Shall not represent a new client against a former “client” in a matter substantially related to former representation. • 37 C.F.R. 11.109; ABA Model Rule 1.9. 11
Engagement Agreement Tip: Identify Entity Client • Who Is Our “Client” Sample: “By agreeing to take on the representation, the parties agree that the Firm’s client in this matter is limited solely to XYZ, Inc. The Firm does not represent any parent, subsidiary, subsidiary of subsidiary, joint venture, or other entities, divisions, or organizations within any of the foregoing.” • Such provision at least can start dialogue. 12
Entity vs. Constituent Client 13
Single Entity “Clients” • When you represent the entity, do you represent just the entity? • What about those in entity whom you may communicate with during representation? – Officers – Board members – Employees – Inventors 14
Entity as Client • A lawyer retained by an organization represents the organization acting through its “duly authorized constituents.” – 37 CFR 11.113(a); ABA Model Rule 1.13(a). • But that general rules does not automatically insulate lawyer from claim that individual believed they were “client.” – E.g. Employed inventors. 15
Engagement Agreement Tip: Remove “Constituents” • Who Is Our “Client” Sample: “By agreeing to take on the representation, the parties agree that the Firm’s client in this matter is limited solely to XYZ, Inc. The Firm does not represent any officer, director, employee, agent, attorney, inventor, co-inventor, or any other person associated with or acting on behalf of XYZ, Inc.” 16
Inventor Clients 17
Multiple Inventors • Joint representation raises possibility that relationship may unfold into a conflict of interest. – E.g. Claims change, inventor drops off. • Lawyer representing multiple parties cannot put interests of one above the other. • Must communicate with both. 18
Engagement Agreement Tip: Multiple Inventors “Although the interests of both of you in this matter are generally consistent, you both acknowledge that you recognize and understand that differences may exist or become evident during the course of our representation. Notwithstanding these possibilities, the two of you have determined that it is in your individual and mutual interests to have a single law firm represent you jointly in connection with this matter.” 19
Engagement Agreement Tip: Multiple Inventors (cont’d) “Accordingly, this confirms the agreement of [Client A] and [Client B] that we may represent you jointly in connection with the above- described matter. This will also confirm that the two of you have each agreed to waive any conflict of interest arising out of, and that you will not object to, our representation of each other in the matter described herein.” 20
Engagement Agreement Tip: Multiple Inventors (cont’d) • Consider potentially conflicting “instructions” and practical issues of communicating with multiple persons. • One possible solution: “Firm will communicate directly with Client A, and Clients A and B agree that Client A is their agent. Firm authorized to rely on Client A as speaking for and on behalf of Clients A and B jointly.” 21
Defining Scope in Engagement • Patenting normally involves multiple discrete transactions that can extend over many years and can implicate rights in many countries. • Defining the scope of the representation is essential to limiting uncertainty. • Three types of scope limits: – Action-based – Temporal-based – Geographic-based 22
Defining Action Limits • Action limits in Engagement considerations: – Is representation solely for filing application? – Prosecution included? – Limiting number of O/A responses? – Appeals? – Continuations, CIPs, divisionals? 23
Defining Temporal Limits • A “perpetual” patent client is one who maintains a belief in current client status long after patent issues. • Consider express end of representation language when patent issues. • Identify who is responsible for docketing/ paying maintenance fees. – Reminders may cause belief in “current client” status. 24
Defining Geographic Limits • Since patent rights may be filed in many countries, ought to consider if Firm is agreeing to take on obligation of: – Advising client of foreign rights. – Taking action to help client acquire foreign rights. • Consider Limiting geographic scope of engagement solely to U.S. unless otherwise agreed in writing. 25
Communicating Fees and Expenses • Arguably most important point of an Engagement Agreement. • “The scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation.” – 37 CFR 11.105(b); ABA M.R. 1.5(b). 26
Reasonable Fees • Factors include: – Time, labor, skill involved; – Will it preclude other employment; – Customary fees; – Results obtained; – Experience, reputation and ability of practitioner; – Whether fee is fixed or contingent. 37 CFR 11.105(a); ABA M.R. 1.5(a). 27
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