On Monday, August 27, 2018, I had the opportunity to sit down for a lengthy on the record conversation with U.S. Patent and Trademark Office Director Andrei Iancu and Director of the Office of Enrollment and Discipline (OED) Will Covey. When news broke that the Office was planning to revive a proposal to begin charging annual patent practitioner dues and incentivize patent related continuing legal education (CLE), I requested an interview and one was very promptly granted.

The focus of this interview was OED generally, but more specifically why the Office felt it was necessary to begin charging annual dues to practitioners and what those funds would be used for. I indicated leading up to the interview that I would specifically like to discuss the issue of unauthorized practice of law, explaining that I personally was not philosophically opposed to dues but that as a registered patent practitioner myself I would like to see OED do more than just reciprocal discipline, which appears to be the overwhelming portion of their work, at least if you look at the OED Reading Room of published decisions. Director Covey came with statistics and followed up after the interview with the chart included below. While it may appear OED focuses overwhelmingly on reciprocal discipline, that is a tiny fraction of what they do.

At the end of the interview Director Iancu did field several questions relating to Chief Judge David Ruschke leaving the PTAB and future 101 guidance, which will be published separately. This interview is already quite long, but rather than break it up I elected to publish the entire OED conversation as one piece due to the fact that there will be a PPAC hearing on Thursday, September 6, 2018. This and other topics relating to fees will be discussed at that hearing, and some or all of this interview may inform that discussion.

Without further ado, what follows is part 1 of my interview with USPTO Director Andrei Iancu and OED Director Will Covey.

Gene Quinn: Thank you, Director, for taking the time to chat with me today. We can talk about whatever you might like to talk about, but I know the topic for the conversation today is the proposal – I guess it will become a proposal for patent practitioner yearly dues, and perhaps some beefed up responsibilities for the Office of Enrollment and Discipline. I appreciate you joining us also, Will, to chat about that, as well. This is something that OED and other Directors have tried to do in the past and have rolled it out and then received a lot of comments and negative feedback, and pulled it back, and then teased it again, and then pulled it back again.

Here we are, and I guess just an open-ended question to start, what is it you’re thinking, and why do you think now might be the right time to do it?

Andrei Iancu: Sure. First of all, thanks for coming by again. Good to see you. On the question about fees for attorney or practitioner registration at the PTO, look, I’m aware of the past history, and where we are now is just the proposal stage. I want basically to engage in a conversation with the public and the interested stakeholders to see what folks think about this and related issues. We’re in the very, very early stages, obviously, of the fee setting process.

The proposal is that once we go through the various steps and we make all the modifications that are necessary, new fees would be implemented in early 2021. We’re a ways away from all that.

This is the time to figure out what the public would like to do in this regard. I know that lawyers in other jurisdictions, states, for example, pay a bar fee. I also happen to be a registered professional engineer in California. I pay a fee for that, as well. Many registration bodies, if not a majority, charge a fee. The fact of the matter is that it costs the office a certain amount of money to run our practitioner registration and disciplinary system.

Look, we basically have one source of revenue at the PTO, and that is applicant fees. From the very beginning, I’ve said whatever policies we undertake here, a question that I would like to ask and have answered is does it help the inventors? Does it promote innovation? Recognizing that it costs some amount of money to regulate practitioners, the question is who should pay for that? Right now, it comes out of the only source of revenue that we have, which is application fees, basically, from inventors.

The question is should that continue or should the costs for regulating the practitioners be paid directly by the practitioners. Let’s see what the members of the public have to say.

Gene Quinn: I’m personally not philosophically opposed to that, but as you may know, and I think, Will, as you know, I’ve done a lot of writing on ethics over the last five to ten years. One of the things that I’ve been frustrated with, and I don’t think it’s a frustration so much with OED particularly. Well, I at first it was a frustration with OED until there was a recent decision by the previous Director about the limits of OED authority to bring initial discipline. There was a case, I think it was within the last year or about a year ago where OED tried to bring original discipline in a situation where they could have brought reciprocal discipline, and the previous Director ruled that in that scenario OED could only bring reciprocal discipline.

It seems like OED does an awful lot of reciprocal discipline, and that’s good and it’s bad. What it does is lead to what I perceive as an unequal treatment because if you’re a patent attorney in Texas, you might get disciplined different than a patent attorney in Virginia versus a patent attorney in California for the same or similar offense. If OED has to just go with whatever the state discipline was – well that’s always bothered me a little. I wonder what OED is going to become if OED is going to be getting more funds to regulate the practice.

If you thought about any of that, or you’ve thought about what OED will look like coming up next, or is there going to be greater authority for investigation, or is there going to be an ask for additional authority for OED to do more?

Andrei Iancu: Let me just begin at the higher level, and then I will ask Will to address the more detailed nuances of your question. At a higher level, let me just state the obvious, that what the OED does is very important for the profession. Will can get into a bit more detail about some of our statistics and all of the activities that OED actually is engaged in. I should say that if there is more for us to do, this is something also that we can engage in a public discussion over the next couple of years or so before the new fees get adopted, if they do get adopted.

We’re very open to hearing from the public as to what else the bar would like us to do in this regard, vis-a-vis of course what we can, given the various laws and regulations that regulate this issue. With that in mind, Will, do you want to address some of the issues?

Will Covey: Yes. Let me echo what the director said, too. I go out and speak quite a bit to the various bars around the country, and I always make the point that we are open, and we want information. There are many times when people hand me information on the spot at a conference too, or something like that. We’re always looking for what’s going on in the bar. Because we want to make sure that the integrity of the bar is kept at the highest possible level. I think one thing that’s interesting might be the actual data.

When I became the OED director a few years ago, we really didn’t share much data, so I started trying to respond to the question: “What is OED doing?” Patent attorneys and agents love data, so I started giving out numbers, bar charts, and pie charts. I think it might be helpful. Now, this is not something … I wasn’t asked before, but I’ll be happy to share with you is in the last few years, some of the data. In the current year, and our workload is up. People also ask me, “What’s going on? Why are the number of cases and grievances, investigations growing?”

The answer is, I’m not really sure. However, we’re letting the bar know that we are taking action, because I think there were some in the bar a few years ago that thought if you send something to OED, nothing would happen. A part of that was because there was a five-year statute of limitations. Now there’s a one-year statute. Let me just give you this data. We opened 210 investigations in fiscal year 2016, 216 the following fiscal year, and for this fiscal year, we are currently at 240 investigations received through August 1st and are projecting 280 total for fiscal year 2018.

The reciprocal cases that you referred to have been roughly 10% of those investigations. Some things that come in, we will do what’s called a warning letter. It’s non-public. We like to look to see is there an opportunity for the practitioner to realize that they made some error, or they came close to the line with regard to their responsibilities. If they’re willing to fix whatever and move on, we’re often happy with that.

We obviously keep a record of that. And then reciprocals, those are, on average, a little less than 10% of our total case load each year.

Gene Quinn: That’s interesting, because if you look at the decisions in the reading room, that’s not the impression that’s you get.

Will Covey: That’s why I brought the data. What I’m going to tell you is, I go out and I tell the bar, because I know they want to know. I always make comparisons to other state bars that are a similar size. Not to pick on them, but I like to look at Massachusetts and Michigan. They’re about the same. They’re a little bit smaller than our bar, but what’s their discipline rate roughly? Surprisingly it’s two, three, four times, depending on the year, higher than the PTO’s, which I think says good things about our bar.

It shows the bar is doing a good job complying with their ethical obligations to the Office. I think that’s just a good data point for people. You’re right, the reciprocals, if you look at that as a percentage of published decisions, they seem high, but as I said, they are, on average, less than 10% of our total investigations.

Let me give you data on the unauthorized practice. We really don’t break the data down that way. I looked at it, and approximately 20% of our current investigations involve unauthorized practice of law. Some past cases involved UPL along with other misconduct, or UPL was part of the investigation but did not make it into the published decisions. A number of them were cases where we worked with agencies like the FTC, and a company for example called World Patent Marketing.

We worked hand-in-hand with FTC. We had patent lawyers helping them figure things out, helping them with information and documents to make sure that they could understand the patent issues in the case. We’ve had some cases with some of the agents and attorneys who have been affiliated with WPM. For example, one you may have seen in our reading room is called Mikhailova. She was an agent out of Arkansas, and she was working with World Patent Marketing.

What was great was when she became aware of the issues with WPM, she then actually started helping the FTC understand. She helped their case, and cooperated with the FTC. I think we helped bridge the gap between the FTC and the practitioner and helped move the case forward.

Gene Quinn: That’s great to know, because I did not realize that. And the reason that unauthorized practice of law is an issue I bring up is because some of the folks that I’ve been talking to since the annual dues proposal came out have told me that they are not opposed to paying annual dues if the Office were doing something about the unauthorized practice of law. And I’ve had that same feeling myself being a registered practitioner. I’m certainly not opposed to paying a fee, and will obviously do whatever is required, but it feels sometimes as if we’re the only ones getting regulated, and there are actors out there that are acting in open that are not being regulated. That then that becomes a hard pill to swallow.

In years past, there’s been a number of these companies out there that file thousands of patent applications a year, but easily tens of thousands of trademark applications a year, and they do it under the scrivener’s exception. That can’t be what the scrivener’s exception was intended to allow for. When there’s a person that actually goes through and puts things together into a document that will be filed, and then they’re the ones that file it, that strikes me as the practice of law, at least based on the way the rule defines the practice of law.

In years past I’ve had it been explained to me that OED’s philosophy was that if you weren’t a member of the bar, not a registered practitioner, for example, OED didn’t feel like they had the authority to go after you. What I’m hearing, I think, is that philosophy is changing.

Will Covey: I don’t know if it’s changed. Maybe it just wasn’t known to the public. Let me mention another thing that we do. It’s kind of behind-the-scenes, and I’m curious if you even know that this goes on. Some unauthorized practice of law issues that we get coming into us, we will work with patents in shutting down that customer ID number and their PKI certificates. That happens behind-the-scenes. We also work with state bars.

In the past we have provided information not only to state bars, but also state attorneys general and criminal authorities, but we don’t necessarily advertise that fact. These are things that are going on behind the scenes. But I will say also, as I tell the bar, we are always interested in keeping the highest standards. Give us the information. What are we missing? What can we do better to help the bar, to get at these issues? Because when I started at the PTO, I actually litigated some of these cases. I don’t know if you recall a guy named Michael Bender.

Gene Quinn: Yes, I do.

Will Covey: I actually was one of the people who litigated that case down in Fort Lauderdale, Florida in 2001. I actually got to see the effects of what happened to independent inventors who relied on these companies, who lost thousands of dollars, and the work product they were getting. I actually got to see that first-hand, so I bring that now that I’ve moved to OED. I carry that with me and think about that when I see these types of cases.

Gene Quinn: That’s great that you do that, because I used to write about some of these more – let’s just call them questionable outfits – from time to time. Years ago, I gave a talk at the Manhattan Inventor’s Club, and there was this one outfit that wasn’t actually following the reporting requirements under the AIPA. They were reporting their successes over the life of the company, which was 30 years, but they reported number of people who were coming to them only over the last five years. Giving them the benefit of the doubt, the best odds were 1 in 3,000. I asked this room full of inventors if I told you that going to work with a particular company, your odds were 1 in 3,000, how many of you in this room would think you’re the one? Every inventor in the room raised their hands. That’s the problem that we have with inventors, they are so optimistic and hopeful, and that leads to them being easy prey for those who are unscrupulous, which is why this is such an important issue.

Andrei Iancu: It can be very detrimental, and I am very much aware of this. Will and I and some others have been discussing this, but the question really is we need to know about it. These things have to be brought to our attention, and then we need to be able to work with appropriate authorities that actually have jurisdiction over these types of folks. We are very much aware that it can be very detrimental to the inventors, and to the inventive communities that perhaps in an unfair way makes them spend money on these types of services instead of spending money on either inventing, or on legitimate patenting services from registered practitioners.

It’s a very important issue that we are working through the appropriate channels to address. But again, as I mentioned very early on this is the type of thing where we need the members of the public and of the bar to bring all these instances to our attention whenever possible.

Gene Quinn: Yes. I suspect, because I didn’t know some of these facts, and I follow what you do, and I write about what you do. My guess is that the bar doesn’t know about all that OED is doing. I know we have, not to bring up a sore subjective, but there’s a transparency issue in certain parts of government. And here I say that not in a bad way, like you’re hiding anything. I think you’re hiding some good stuff that you’re doing, and I understand that you can’t publish the names of the people who are complying, and that are not even getting reprimanded, or maybe they private letter of reprimand.

But to let people know that what your breakdown is. It was shocking to hear you say that only 10% is reciprocal discipline. I think you might get more cooperation from the bar if they knew this is the litany of stuff that OED actually has going on. Have you thought about doing that?

Will Covey: No. Not until you just mentioned it. I do try to respond to what people are interested in. I don’t know if you look at any of the charts or things, the presentations OED gives. For example, I was asked about whether patent attorneys were disciplined more or less than agents or trademark attorneys. I went back, pulled the data, and now I tell them, “Hey, by the way, if you think that the patent agents somehow get into more trouble than the attorneys because they don’t go to law school, the data does not show that. That’s not correct.”

They are disciplined at the same rate as their representation within the overall bar. It’s uncanny how close they track. I have data, but nobody has ever said to me, “Hey, how many agent cases do you have in total, or what’s the relative relationship?” I may now add it into my presentations as I go out. I’m curious how the bar would react to it.

Andrei Iancu: By the way, this is in part why you are here. You, as I mentioned to you last time we spoke, you provide a very valuable service to the community. You stay very much in touch with all the issues, and now you’ve asked this question. You have the ability to publish it to your audience, and there is a path.

Gene Quinn: Well, thank you. And I think there definitely is a path. This is really encouraging.

Now, I am familiar with your predecessor at OED who took some very different opinions than you have. You know that.

Will Covey: Right. I know that.

Gene Quinn: I think if I had asked him the question, he would have said, “Oh, this rule prevents me from doing this. This rule prevents me from doing this. This rule prevents me from doing … ” When I would go and look at those rules, I would say, “I don’t see that anywhere.” Because fundamentally, I always said that if you’re giving a patent bar exam for the purpose of allowing people and call themselves patent attorneys and patent agents, how can you not have the authority to prevent others from engaging in representation before the Office? It seems implicit in that authority, right? Are there any other rules that you might need or want to ask for?

Will Covey: I haven’t been asked that question, but it’s certainly something to think about for me. Again, let me just say, also, too, on the PKI issue, that’s something you may not have known about.

Gene Quinn: No, I didn’t.

Will Covey: The other thing we do is we’ve been working with trademarks, because that’s also been an issue on that side, too. They’ve been working a similar type of cease and desist process to cut that issue off. I think as I said to you earlier, I actually got to see first-hand what-

Gene Quinn: When you see the damage done-

Will Covey: It’s really sad.

Gene Quinn: I think most of us in the patent bar have had this kind of conversation. Whether at a cocktail party or somebody calls you on the phone. I had a woman one time early on in my career tell me she paid over $20,000 and got a design patent.

Will Covey: I was just telling Andrei about this.

Andrei Iancu: He was telling me about this.

Gene Quinn: She for all the world thought she … When you looked at, it was heart-wrenching. It was heart-wrenching. It wasn’t necessarily something she couldn’t have got a utility patent on. What she thought was someone was infringing. If she had a utility patent, it probably would have been infringement.

Andrei Iancu: We are looking at what’s within our means. We’re also looking at potential creative new things that we can try to do.

Gene Quinn: Okay. I didn’t mean to put you on the spot there.

Andrei Iancu: No, no, it’s okay.

Gene Quinn: I do think the bar would get behind this a whole lot more, and not to say that more authority to “jack us up on ethics charges”, that’s not what I’m saying.

Will Covey: Right. No, I know. It’s a delicate balance here.

Gene Quinn: A delicate balance, because the last thing, as we were just joking before, the last thing you want is your secretary buzzing in your office, “Will Covey is on the phone for you. Do you have time to talk to him?” No, I don’t. Tell him to go away!

You don’t want that, but if there’s new authorities that the Office feels that you need in order to better regulate the practice, particularly from those, what I will call, I won’t put words in you guys’ mouth, but the fly by night actors, for lack of a better way to describe the people who are doing harm. I think that those are authorities that, if the Office needs more maybe now might be the time to do that when you’re talking about raising the fees to give OED some additional revenue to police the industry.

Will Covey: Let me just say one thing, too. We’re not getting additional revenue, so it’s basically as the director said, shifting costs of the practitioner disciplinary system from applicants to practitioners. We’re not going to plus-up OED. Another point, too, is I’ve actually heard in the past, there’s been some concern: Is OED out affirmatively looking for cases? Are we monitoring PACER? Are we going out there? Some states actually do have investigators who go out and look for cases. No. Just to set the record straight, we don’t do that. Our numbers each year are up. I gave you numbers for this year. They’re up pretty good this year. We are getting information from the public and the bar.

One other thing we do to help inventors who might otherwise use some type of an invention company is we also, when we go out and talk to inventor groups, try to make them aware of the pro bono program and the law school program to say, “Hey, there’s another option for you out there, too, and those are programs are supported by the office.”

Gene Quinn: I speak on ethics a lot. I do CLEs, and every CLE looks at the ethics, so I get to talk about that a lot. I always say, so I’m going to throw it out there what I say, and you can agree or disagree.

Will Covey: Okay.

Gene Quinn: I say, “I fundamentally believe OED is not looking to jack up practitioners.” When you get in trouble, OED is looking to try and find a way to help you out of trouble if possible. I say the things you want to do is come clean, cooperate, acknowledge that you understand the rule OED is concerned about and why that rule is important. If you start off on that footing, you’re starting off on a good footing. Would you agree?

Will Covey: Yes, I agree with that 100%. One thing I will tell you is when I came to OED, I looked at the requests for information the office was sending out. I thought they could be a little more neutral. More, “Hey, we’re trying to figure out what really happened here, and how can we fix the problem,” as you said, too. Not in this accusatory, “We know you broke the rule so just come clean and admit it right now.”

I’ve had the attorneys change the tone of the way they ask the questions, too, because I thought our role was more just fact gathering. Like I said, I honestly believe that most people are honest, and if they make a mistake, they’ll want to fix it. They’ll want to move forward. I’ve even had people say to us, “Just tell me what I need to do. I’d like to fix it.” Which is great, but, we’re not going to dictate to you. These are what the rules say, and here’s the problem.

We honestly just want to work with them and fix it and move forward. The data shows that, too.

Gene Quinn: Yes, I think it does. You could always tell by the top of the second page, whether this person is going to get suspended or not.

Will Covey: Yes. We love to settle things, too. We don’t necessarily want to go to trial. I also tell the attorneys if we can settle or resolve something at the earliest possible stage, that’s great. It saves everybody time, allows people to move on, and allows the attorney then or the agent to fix, because then they’ll feel more comfortable fixing whatever they did wrong, and then move forward.

Gene Quinn: Right, right. All right. Now, what we’ve talked about so far is with respect to the possibility of practitioner dues, but as I understand it OED is also contemplating non-mandatory CLE. So, I have a couple questions about that. With it being non-mandatory it seems the Office is trying to encourage CLE by proposing lower annual dues if CLE is taken. So, first, what is the rationale; what is the Office thinking?

Will Covey: Relevant continuing legal education (“CLE”) is one tool to enhance practitioners’ legal skills and can lead to higher quality applications and more efficient prosecution. Patent grants become stronger, more reliable, and more predictable. At the same time, we want to avoid placing too many mandatory requirements on patent practitioners and with this proposal hope that many practitioners would satisfy the recommendation voluntarily. The Office would incentivize practitioners to complete CLE by offering a $100 annual fee discount as well as recognition on the register of patent practitioners. We hope that by doing so, practitioners will choose to complete CLE.

Gene Quinn: Does OED envision this CLE as being in addition to what some State Bar Associations already mandate? So, in other words, would attorneys admitted in states that requires 12 credits need to take 24 credits to make a CLE compliant dues filing under the Office proposal?

Will Covey: No, the USPTO has recommended six hours of CLE every other year, with five hours in the area of patent law and practice and one hour in ethics. We anticipate that for most attorneys this could be covered by what they are doing for their state bars and they would not need to take additional CLE to satisfy the USPTO recommendation. We also hope that this will encourage practitioners to seek out patent-specific CLE, both as a way to satisfy any state requirements they may have and to take advantage of this USPTO proposal. While the USPTO is in the very early stages of this proposal, we are very interested in the practitioners’ perspective on the most effective and efficient way to encourage patent practitioners to stay current on USPTO practice and procedure.

CONTINUE READING… The remainder of the interview is not long, and pivots to issues relating to David Ruschke leaving the post of Chief Judge of the Patent Trial and Appeal Board (PTAB), and likely upcoming 101 guidance from the Office.