10 June 2013

Professional Standards Board Releases Draft Code of Conduct

Know the RulesThe Intellectual Property Laws Amendment (Raising the Bar) Act 2012 brought major changes to the way in which Australian patent and trade marks attorneys are able to conduct business, such as permitting us to incorporate. 

One of the key changes was to make the Code of Conduct, administered by the Professional Standards Board for Patent and Trade Marks Attorneys (PSB), into a statutory instrument.  Previously, the Code was published by the PSB, and was taken into consideration in disciplinary proceedings.  However, as the Explanatory Memorandum accompanying the Raising the Bar Bill foreshadowed:

In the interests of ensuring transparent standards for attorneys and their clients, it is desirable that attorneys be legally bound by the Code and that it be clear in the primary legislation that the PSB is entitled to take a breach of the Code into account in assessing a disciplinary complaint against an attorney.

Accordingly, the amendments explicitly permit the regulations to provide for assessing attorneys’ professional conduct against standards set by the PSB. This will enable regulations to be made clarifying the obligation of all attorneys (including new incorporated attorneys) to comply with the Code.

The wording of the amendment is intended to encompass amendments to the Code as are made from time to time, to avoid the necessity of amending the legislation every time the Code is amended. The Code will be registered as a Legislative Instrument under the Legislative Instruments Act 2003 (Cth).

Since a new Code was not finalised when the Raising the Bar reforms commenced, on 15 April this year, the existing 2008 Code was simply registered under the Legislative Instruments Act, with the goal of finalising a new Code to commence on 1 August 2013.

On 7 June 2013, the PSB announced that an Exposure Draft of the new Code of Conduct [PDF, 306kB] is now available and open to public comment until 12 July 2013.

Patent and trade marks attorneys, as well as clients and other interested stakeholders, would be well-advised to review this document.  Now is the time to ensure that the Code meets everybody’s needs!

Objectives of the Code

As the delay in publishing this draft evidences, the new Code of Conduct has had a long gestation, during which the PSB, the Domestic Policy section of IP Australia and the Office of Parliamentary Counsel have sought to strike an appropriate balance between the rights and obligations of attorneys and clients alike.

The PSB explains that its primary objectives have been to develop a document that:
  1. makes clear to Attorneys the standard of behaviour that is expected of them, and aligns it where appropriate with behaviours expected of other professionals,
  2. makes clear to users of Attorney services (i.e. clients) what they can expect of individual and incorporated Attorneys, and
  3. provides a framework within which the Board can readily determine whether any notifications made to it which complain of the conduct of an Attorney should form the basis of referral of an Attorney to the Disciplinary Tribunal.

What Does the Code Mean for Attorneys?

For attorneys working in larger firms, it is likely that there will be few surprises in the draft Code, and very little additional burden imposed in order to meet the standards it sets.

In particular, attorneys should be close to compliance with the draft Code if they are already doing all of the following:
  1. complying with the existing 2008 Code of Conduct;
  2. complying with the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) Code of Ethics;
  3. following a formal process when commencing a relationship with a new client, including sending out a Terms of Engagement document, a schedule of charges, and providing cost estimates for whatever initial work is proposed; and
  4. generally keeping existing clients up-to-date with progress of work, any changes in anticipated costs which may occur, and the estimated costs of any new projects having a scope with which the client is not already familiar.
I will discuss that last point in a little more detail below, because this is an area in which the requirements for attorneys may be a little more onerous than is presently the case.

For attorneys in smaller practices, including sole practitioners, who may not have so many formal processes in place, there may be some initial burden in creating suitable documents and procedures to ensure compliance.  I would hope and expect that IPTA will be ready and able, prior to 1 August 2013, to assist members with the transition.

The main requirements of the draft Code which may be of some concern to attorneys are:
  1. subsection 11(5) of the draft Code places an obligation on an attorney to report suspected ‘professional misconduct’ (as defined in regulation 20.32) by another registered attorney;
  2. in comparison, subsection 11(6) makes reporting of ‘unsatisfactory professional conduct’ of another attorney discretionary; and
  3. subsection 13(1) of the draft Code requires attorneys to inform new clients, in writing, that they are: (a) registered; (b) equipped with relevant knowledge, skills and qualifications (including technical knowledge); and (c) bound by the Code of Conduct;
  4. subsection 13(2) further requires attorneys to provide new clients with: (a) a written cost estimate for proposed work; and (b) other relevant information in terms of procedures, cost and timing; and
  5. subsections 14(2) and (3) require attorneys to provide similar information to existing clients, prior to performing ‘new work’ as defined in paragraph 14(1)(b).
See below for further discussion of these points.

What Does the Code Mean for Clients

Hopefully, what the Code will mean for clients is that they are assured of being adequately informed of the scope of work being carried out by Australian patent and trade marks attorneys, the anticipated process, and the expected costs.

It should also mean that clients are better informed of their rights and obligations.

Part 4 of the draft Code, in particular, includes information about the procedures for making and processing complaints regarding the conduct of attorneys.

This, of course, assumes that clients actually read the Code.  Presumably, this is the reason for requiring attorneys to inform new clients that they (the attorneys) are bound by the Code.

It seems to me, however, that the new ‘legislative instrument’ form of the Code has two disadvantages, compared with the existing format:
  1. the requirement for it to be written in more formal legislative style makes it less user-friendly for clients, who may therefore be less inclined to read it closely (of course, attorneys are perfectly accustomed – and formally-trained – to read legislation); and
  2. because there is no legal basis to regulate the behaviour of clients, there is no equivalent of Section 4 of the existing Code, which sets out the reasonable expectations an attorney may have of a client, in order to assist clients in understanding the factors which make for successful client-attorney relationship.
This second point, in particular, I think is unfortunate.  I wonder if they may be some way to include this type of advice within the Code, by way of some client-friendly examples?

Alternatively, attorneys may elect to include a simplified summary of the Code, and information about their expectations of their clients, in a letter of engagement to new clients.

Self-Policing the Profession

The provisions of subsections 11(5) and (6), noted above, are clearly directed to imposing (in the case of professional misconduct) or encouraging (in the case of unsatisfactory professional conduct) a level of self-policing within the profession.

Specifically, subject to obligations in relation to privileged communications, registered patent and trade marks attorneys must report suspected professional misconduct of other registered attorneys, and may report suspected unsatisfactory professional conduct.  Subsection 11(7) bars attorneys from making, or threatening to make, such reports for ‘an improper purpose’.

The PSB appears to be acutely aware of the potential effect of these provisions, and has expressly invited comment:

The Board has vigorously debated subsections (5) and (6) which are closely based on similar, relatively new provisions in the New Zealand Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008. We are mindful that in a small profession, there is both risk of at least perceived cronyism or protectionism, but also of actual retribution against an attorney who makes a report under these subsections. Subsection (7) seeks to protect against abuse of the subsections for improper purpose. In a disciplinary context, the Board has had cause to consider the sort of issue that the subsections seek to address. We seek constructive feedback on these subsections in a genuine attempt to determine whether these subsections should be retained, and if so, in what form.

I would be interested to know what attorneys and clients alike think of this ‘self-policing’ proposal.  Even if you do not want to provide formal feedback to the board, please feel free to express a view in the comments below (anonymously, if you wish – the Disqus system does not compel you to provide a real name or genuine contact details).

Keeping Clients Informed

I am entirely in favour of keeping clients informed as to anticipated procedures, timelines and costs.  To the extent that this is the intent behind sections 13 and 14 of the draft Code, I can see no legitimate objection to what is being proposed.  In general, the proposed provisions are no more onerous than equivalent requirements on practising solicitors.

However, I am concerned that the circumstances in which information must be provided to existing clients may not be sufficiently clear.  In particular, paragraph 14(1)(b) provides that the obligation to provide information and cost estimates arises if:

…the client requests the registered attorney to perform work (new work) that:

(i) is materially different from work the registered attorney has previously performed for the client; or

(ii) requires knowledge, skills or qualifications that the registered attorney has not previously been required to apply for the client; or

(iii) makes a material difference to the cost or timing of work that the registered attorney is performing, or has performed, for the client, or to procedures required to perform that work.

I understand that this provision is intended to deal with the fact that much of the routine work conducted by patent and trade marks attorneys is quite different in nature from work conducted by solicitors.  For example, many attorney firms file hundreds of patent and/or trade mark applications each year on behalf of Australian and foreign clients, and charge for all such filings according to a well-defined schedule.  Requiring an attorney to provide a client with the same information every time the same service is provided would be unduly onerous for the attorney, and tedious for the client.  It is pure overhead, with absolutely no benefit to either party.

However, there is no guidance provided as to what constitutes a ‘material difference’, either in the nature of work, or in the cost or timing of work.  For example, if an attorney has previously drafted one or more patent specifications for a client, and is asked to draft a specification for a new invention in the same field of technology, it is not apparent whether the requirements of subsections 14(2) and (3) are triggered. 

I would not think that further drafting in relation to similar subject matter is ‘materially different’.  Clearly, the same skills, knowledge and qualifications are being applied.  The cost and timing are likely to be broadly similar, although every drafting task is different so some variation is to be expected.

Similar concerns could be raised in relation to various other common services provided by patent and trade marks attorneys.  Is one opposition ‘materially different’ from another, given that all oppositions follow the same process, yet no two oppositions are the same?  Is defending an opposition ‘materially different’ from acting for the opponent?  Is an attorney expected to estimate the cost of prosecuting each patent application from filing to grant, or is it sufficient to provide general information about the process initially, and then to provide cost estimates along the way?

Attorneys will naturally be concerned that a disgruntled client may use this provision to argue that they were not provided with adequate information about processes and costs, even if they were provided with the best information available at the time.  The patent system is complex – particularly when international strategies are included – and the course and timing of examination, and the costs involved, are difficult to predict.  Conscientious attorneys will do their best, but a degree of uncertainty is inherent in the system. 

It is important for the Code to strike the right balance between protecting the interests of clients, and accommodating the unavoidable uncertainties and risks to which attorneys are exposed in attempting to predict the future of something as unpredictable as an international patent application.  It is not clear that a subjective term such as ‘material difference’ achieves this balance.


Much of the content of the draft Code of Conduct is reasonable, and a natural evolution from the current regime.

The main areas of concern that I see are:
  1. a reduction in ‘user-friendliness’ for clients who may not be experienced with the formalities of legislative drafting;
  2. the proposal that members of the attorneys professions be obliged to police their own colleagues and competitors; and
  3. a possible lack of clarity around the circumstances in which attorneys will be obliged to provide existing clients with new assurances of competence, cost estimates and/or information regarding anticipated processes and timeframes.
On the last point, it would be good practice in any event to err on the side of caution, and provide clients with more information rather than less.  But it would still be preferable to have some additional guidance – in the form of examples, if not a clear definition of ‘materially different’ – on the extent of this obligation, and what expectations clients should have.

Interested readers are encouraged to provide feedback to the PSB prior to the deadline on 12 July 2013.  Submissions may be emailed to PSB.CodeOfConduct@ipaustralia.gov.au.

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