For inbound foreign work, who’s the client?

A thoughtful reader (I’ll call him “WW”) asks:

I have an ethics-related question that should be relevant to most U.S. patent practitioners, though I haven’t been able to find any writings about it online.

The issue is, “who is the client”, for foreign-originated patent filings in the US?

The client could possibly be either the foreign originating firm, or it could be their own ultimate client, or possibly both.

To the extent we have a choice (for example, by specifying in an engagement letter signed by all parties), which would be better? I can see benefits and detriments to either choice.

I’ll offer one or two thoughts about this, and then I’d like to invite readers to please post comments with their own points of view about all of this.

I imagine that a chief concern for WW is the risk of a conflict of interest.  Suppose WW received work from ten non-US patent firms in the course of a year, and suppose each of those firms sent WW ten cases to file in the USPTO, from ten distinct entities.  Does this mean that WW needed to do one hundred conflict checks that year?  Can WW simply take the position that the actual client is the foreign firm rather than the underlying entity?  Does such a position mean that WW only needed to do ten conflict checks that year?

A first thing to realize, if one is a patent practitioner, is that trademark practitioners worried about this a long time ago and tried to protect themselves.  Decades ago, the US trademark bar somehow convinced the USPTO to take the position that (supposedly) the attorney-client relationship in a trademark cases ends when the trademark registration is granted.  In a six-year or ten-year trademark renewal, the USPTO’s position is that the attorney-client relationship ends when the USPTO grants the renewal.  For those trademark firms that do high volumes of inbound trademark work on behalf of large numbers of applicants, the USPTO’s position about this probably provides at least a little comfort about potential conflicts of interest.

But WW was asking about inbound patent work, not inbound trademark work.  And the possibility of a conflict of interest arising from inbound patent work is not merely theoretical.  See for example the case of Maling v. Finnegan, Henderson, which David Hricik blogged about here.

I have certainly encountered many a US practitioner who takes the position that the US practitioner’s client is not the foreign patent applicant, but is instead the foreign patent firm that sent the foreign patent applicant’s work to the US practitioner.

But if we look in the file wrapper, do we see a power of attorney there?  If the US practitioner has filed a power of attorney signed by the foreign patent applicant, then my reaction is that it would not be very easy to take the position that the actual client is anyone other than the foreign patent applicant.

I imagine many a practitioner would be uncomfortable trying to say that he or she simultaneously has two clients — the foreign patent firm and also the foreign patent applicant.  It is easy to imagine conflicts arising between the two, perhaps due to an unpaid bill.

May the US practitioner avoid the status of having attorney-client obligations to the patent applicant by the simple stratagem of avoiding filing a power of attorney at the USPTO?  I don’t know that OED or a state ethics body has ever ruled on this question, but it is possible to imagine an answer of “no”.

Now it’s true enough that if you were to look at filings at the USPTO by some US patent firms that do lots of inbound work, you will see file wrapper after file wrapper in which no power of attorney got filed.  It’s possible to imagine any of a range of possible explanations for this observed behavior by some US patent firms.  Is it simply to avoid the fuss and bother of having to round up signatures from the applicants?  Is it simply to avoid the fuss and bother of having to file such papers in the USPTO, and to have to deal with the occasional instance of USPTO bouncing the power of attorney?  Or does the firm actively avoid filing powers of attorney out of some real or imagined reduction in the risk of a later-identified conflict of interest?

I note that there are many good reasons for a US practitioner to go to the trouble of filing a power of attorney in a patent application.

Getting un-retained.  The USPTO position is that you can only get un-retained in a patent case if you have previously been retained.  That is, the USPTO will deny a request from a practitioner to withdraw as attorney from a file if the practitioner had not previously been made of record as the attorney on the file.  You never know when a problem or circumstance may some day put you in the position of needing to disassociate yourself with a patent or patent application.  For example an unpaid bill or an uncooperative client might prompt such a need.  But if you never actually filed a power of attorney, you won’t be able to get the USPTO to say that you have successfully withdrawn yourself from the file.

Signing a Terminal Disclaimer.  When an Examiner takes the position that there is some obviousness-type double patenting going on, often the only way to overcome the problem is to file a Terminal Disclaimer.  And often the history or status of the case leads to the need to overcome the problem right away.  Meaning that there is not the luxury of days or weeks to fuss around with rounding up a signature from the applicant. The Best Practice for TDs is to use the auto-granted TD function of EFS-Web.  But to use the auto-granted TD function of EFS-Web, you need to be counsel of record.  Meaning you need to have previously filed a power of attorney.

Paying an Issue Fee.  EFS-Web offers a streamlined system for paying an Issue Fee, a system that is faster and more efficient than the legacy practice of filling out Form 85B with a typewriter.  (I blogged about it here.)  You can use this system only if you are counsel of record.

Updating customer numbers automatically.  As I blogged here, USPTO now has a convenient system by which you can update a corespondence address customer number in real time in an automatic way and across multiple applications all at once.  It also works for “fee address” customer numbers.  But the system is only available to you if you are counsel of record.

So, who’s your client?  The foreign patent firm?  The underlying foreign patent applicant?  Can you reduce the conflict-of-interest risk by simply avoiding filing a power of attorney?  Please post a comment about this.

4 thoughts on “For inbound foreign work, who’s the client?

  1. Two separate issues: who is the client, and to whom one has a duty. Likely best handled by explicit written engagement letter between USA firm and foreign law firm. Either considering the foreign firm the client or giving the foreign firm the choice whether billings and holder of confidentiality should be foreign firm or patentee. Whoever is chosen as the explicit client, US firm will have duties to the other.

  2. I would argue that the Applicant is the client, because it is not the Foreign firm’s IP, but instead the Applicant’s. Also, similar to cases (like criminal) where a parent is paying for their child’s attorney, the child is the client, not the parent.

  3. Another view: Communication typically flows between the firms; not from US firm to foreign applicant. Developments are reported to the foreign firm and instructions are taken from the foreign firm. Likewise with invoices/payments.

    It would be equally as difficult to explain how the foreign applicant is a client when there have been no direct communications. In this view, the US firm could be seen more as a service provider to foreign counsel…much like a draftsman or a searcher. A standard agreement between the US and foreign firms could delineate that any US-firm POA executed by the applicant is limited to the actions that Carl mentioned.

  4. I simply do not see any way to call foreign counsel a client at all in my not so humble opinion – they are co-counsel. The scenario as I understand it is that foreign applicant or inventor hires local counsel in foreign jurisdiction to pursue patent protection. When it is time to consider filing in other jurisdictions, foreign counsel associates with US counsel to have the work performed because they are not competent to perform the work themselves. This practice is common in the US as well. When you are dealing with foreign clients that do not speak your language, you necessarily communicate through foreign counsel because of the language barrier. In addition, you provide advice through foreign counsel as they also represent the client and need or want to be kept in the loop. Think of it in reverse, if you associated with an attorney in China so a client can enter the national phase there, would you consider yourself to no longer represent your client? Would you consider yourself to be a client of the other firm or co-counsel?

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