02 January 2024

Disciplinary Decision Against Registered Attorney a Reminder of the Importance of Clear Communication and Record Keeping


Back in July, the Trans-Tasman IP Attorneys Disciplinary Tribunal (‘the Tribunal’) issued a decision in relation to a complaint about a registered attorney (‘the attorney’) by a client (‘the client’) in response to which the Trans-Tasman IP Attorneys Board (TTIPAB, a.k.a. ‘the Board’) commenced disciplinary proceedings, bringing nine charges against the attorney.  The full decision of the Tribunal can be found here [PDF, 364kB], while a separate ruling on the penalties to be applied can be found here [PDF, 223kB].  This decision is a ‘first’ in a couple of respects.  It is the first time the Tribunal has sat as a three-member panel (rather than a single decision-maker).  It is also the first time that charges have been brought against an attorney under the Code of Conduct for Trans-Tasman Patent and Trade Marks Attorneys 2018 (‘Code of Conduct’’).  Reference to specific provisions of the Code of Conduct has resulted in charges having a clearer basis and greater precision than may have been the case in past disciplinary proceedings.

There are, in this decision, three important messages – or, one would hope, reminders – for registered trans-Tasman patent attorneys.

First, an attorney’s obligation to ‘disclose to a client all information of which the registered attorney is aware that is materially relevant to work being undertaken for the client’ (paragraph 17 of the Code of Conduct) extends to information about the state of the law.  In this case, the attorney was obliged to inform the client about the difficulties inherent in obtaining patents for business methods (whether or not implemented using computer technology), and about the requirement to provide a sufficient disclosure of a claimed invention along with the potential adverse consequences of failing to do so.  The attorney was found to have satisfied the first of these two obligations, but not the second.

Second, an attorney’s obligation to ‘have appropriate competency’ and to carry out work that they undertake ‘with due skill and care’ (paragraph 14 of the Code of Conduct) includes ‘adequately and properly advising’ a client of anticipated legal risks or difficulties that may be encountered in obtaining IP rights.  Closely related to the first point above, in this case the attorney was obliged to properly advise the client of the significant risk that a patent application directed to a business method would be refused, and of the risks associated with failing to include a sufficient disclosure of a claimed invention in a patent application.  Here, the attorney was found to have satisfied neither of these two obligations.

Third, an attorney’s obligation to ‘maintain standards of professional practice as a patent attorney … that are courteous, ethical and well-informed’ (sub-paragraph 13(2) of the Code of Conduct) encompasses appropriate record keeping.  In this case, the attorney was obliged to keep adequate documentation of the advice that had been provided to the client, whether or not that advice was given in writing.  The attorney was found to have failed in this respect with regard to advice provided in relation to two patent specifications prepared on behalf of the client.

I recommend that all registered and prospective trans-Tasman patent attorneys read the full decision.  It is a credit to the profession that disciplinary proceedings are few and far between, but this makes the rare decisions that we do have all the more important.  What follows is my own overview and comments.

Background – the Client’s Business Idea and the Attorney’s Strategy

The charges ultimately brought by the Board against the attorney related to three aspects of the work undertaken on behalf of the client: advice on the protection of a business idea (‘the Idea’); and the preparation of two patent specifications (‘the First Specification’ and ‘the Second Specification’).

The client initially approached the attorney with the Idea, namely a business based upon the concept of a ‘floating retirement village’.  This would take the form of a cruise ship set up to operate as a retirement and cruising facility in which clients purchase title to individual cabins.  The client was seeking advice on whether the business could obtain protection for its intellectual property in this idea prior to entering into various development activities, including discussions and negotiations relating to the acquisition and fit out of a suitable cruise ship.

It appears from the facts of the case that the attorney recognised early on the difficulty of obtaining a patent protecting the basic idea, which is evidently a business scheme.  The attorney therefore recommended that patent specifications be prepared for two distinct prospective inventions:

  1. structural aspects of the retirement and cruising facility, i.e. modifications to existing mechanical systems of a cruise ship (such as water, sewerage and ventilation) specifically directed to making it suitable for use as a low to medium care residential retirement facility (the First Specification entitled ‘Permanent retirement and cruising facility’); and

  2. the (business) method of issuing property titles to individual cabins purchased by prospective residents of a combination cruise liner and residential retirement facility, including the possibility of this method being implemented with the involvement of some form of computer technology (the Second Specification entitled ‘System of individual ownership in a hybrid ocean cruiser residential retirement facility’).

I infer from the evidence described in the Tribunal’s decision that it was the attorney who encouraged the client to consider any unique structural modifications that might be required in order to support the invention to be claimed in the First Specification.  The Second Specification would have more closely resembled the client’s original Idea, however it appears to have again been the attorney who incorporated the elements of computer implementation.  In both cases, this presumably reflects the attorney’s recognition that the prospects of obtaining a patent for a ‘pure’ business method, without any technological innovation, would be slim to none in every major jurisdiction.

With regard to the structural modifications, the attorney requested (on more than one occasion) that the client provide additional technical detail of precisely what form these modifications would take.  This is important because the invention claimed in the First Specification purported to rely upon the modifications, presumably for both subject matter and inventive step.  The description would therefore need to include sufficient detail to provide an enabling disclosure of this invention, in satisfaction of s 40(1) of the Patents Act 1990.  (This, or equivalent requirements, would also carry over into any further patent applications filed in Australia and/or other jurisdictions.)

The requested details were never provided, and were therefore not included in the draft of the First Specification that was subsequently delivered to the client.

Origins of the Complaint

The client’s complaint to the Board arose ultimately as a result of it seeking not one, but two additional opinions on the two specifications prior to filing.  (In the end, neither application was ever filed.)  The further opinions were uniformly adverse.  Both attorneys who provided the opinions were of the view that neither specification claimed patentable subject matter, and that what was described was clearly a business method or scheme.  Both commented on the difficulties of patenting computer software.

At this point, the client presumably formed the view that they had wasted their money with the original patent attorney, because they demanded a refund under threat of a complaint to the Board.  The attorney’s partner in their firm responded to this demand, contending that the client’s ‘attack’ and ‘threatened complaint’ were unfounded and ‘vexatious’.  It was further argued on behalf of the attorney that the purpose of the proposed patent applications was ‘not a means to an end’ (which I take to imply that the primary objective was not necessarily to obtain granted patent rights), but rather to use the pending applications to provide ‘commercial’ protection during development of the business and as ‘an ongoing marketing tool to investors’.

The client filed a complaint with the Board.

The Board – Procedure and Charges

When the Board receives a complaint, the first thing it does is to conduct its own investigation to determine whether to commence proceedings before the Tribunal.  There are two potential levels of offending conduct by an attorney.  The lower level is unsatisfactory professional conduct, while the higher level is professional misconduct.  These are defined in Regulation 20.32.  Briefly, however, unsatisfactory professional conduct includes conduct ‘that falls short of the standard of competence, diligence and behaviour that a member of the public is entitled to expect of an attorney’.  Professional misconduct includes ‘conduct that involves a substantial or consistent failure to reach reasonable standards of competence and diligence’.

Regulation 20.33(3) and (4) specify the conditions for the Board to commence proceedings against a registered attorney.  Where the Board finds that ‘there is a reasonable likelihood of the attorney being found guilty of unsatisfactory professional conduct’ then it may (i.e. at its discretion) commence proceedings.  However, where the Board finds that there is a reasonable likelihood of the attorney being found guilty of a more serious offence, including professional misconduct, then it has no discretion, and must commence proceedings.

In this case, following its investigation, the Board determined that it would be appropriate to commence proceedings in relation to nine charges of possible unsatisfactory professional conduct (i.e. the less serious offence).  These charges comprised three groups:

  1. breach of paragraph 17 of the Code of Conduct by failure to adequately and properly disclose to the client information material to the difficulties or risks associated with obtaining patents in relation to: (a) the Idea; (b) the invention subject of the First Specification; and (c) the invention subject of the Second Specification (charges 1-3);
  2. breach of paragraph 14 of the Code of Conduct by failure to properly advise the client of the difficulties or risks associated with obtaining patents in relation to: (a) the Idea; (b) the invention subject of the First Specification; and (c) the invention subject of the Second Specification (charges 4-6); and
  3. breach of sub-paragraph 13(2) of the Code of Conduct by failure to document advice given to the client in relation to: (a) the Idea; (b) the invention subject of the First Specification; and (c) the invention subject of the Second Specification (charges 7-9).

The Idea – Charges Dismissed

As far as the Idea – and related charges 1, 4, and 7 – are concerned, the Tribunal determined (at [93]) that the attorney’s recommendation to the client that ‘two separate provisional applications be prepared and lodged in preference to seeking patent protection in respect of the Idea per se, was in effect an acknowledgement that the Idea itself was not suitable subject matter for protection under the patent system’ and that once this recommendation had been provided, ‘the Idea ceased to exist as a concept in relation to which [the attorney] had an obligation to advise.’  These three charges were therefore dismissed.

The First Specification – Insufficient Disclosure

The difficulty or risk in seeking patent protection for the invention subject of the First Specification was alleged to be the insufficiency of the description to support the invention, comprising structural or mechanical modifications to make a cruise ship suitable for use as a residential retirement facility, that was defined in the claims.  While the attorney requested additional details, these were never provided.  Ultimately, the attorney requested that the client review the draft specifications and, if there were no changes required, that they be approved for filing.  The consequence of the lack of detail would have been that a provisional application based on the First Specification would not have been effective in establishing a priority date, such that any prospective patent rights would have been endangered by subsequent disclosures.

Two expert witnesses (i.e. experienced patent attorneys), called on behalf of the Board and the attorney respectively, substantially agreed that a competent attorney would have been aware of the disclosure requirements to establish a priority date, and would have advised their client before finalising an application for filing if there was a risk that these requirements would not be fulfilled (see [100]-[101] of the Tribunal’s decision).

The Tribunal found that the attorney had failed to disclose this risk, and to advise the client appropriately, and that the corresponding charges 2 and 5 were proven.

The Second Specification – Lack of Patentable Subject Matter

The difficulty or risk in seeking patent protection for the invention subject of the Second Specification was alleged to be the likelihood that claims directed to a business scheme, and/or to such a scheme implemented using computer technology that did not involve any technical change or improvement to a computer would be unlikely to comprise patent-eligible subject matter.  The two expert witnesses agreed that the Second Specification disclosed and claimed subject matter that was unlikely to be patentable (at least under the Australian ‘manner of manufacture’ test), and that a competent attorney would have recognised this and advised their client accordingly.

The Tribunal found that the attorney had initially recognised this issue, and had disclosed the risk to the client on at least two occasions.  Accordingly, charge 3 – relating to the attorney’s obligation to disclose materially relevant information – was not made out, and was dismissed.

However, the Tribunal further found (at [118]) that:

[the attorney] did not revisit that advice during the drafting of the Second Specification when the risk must have revealed itself more acutely.  Also, at this time, the character of the alleged invention as a business method, or mere scheme should have been obvious. [The Attorney]’s failure to advise about these problems demonstrates a lack of competency in relation to the work he undertook for [the client].

The corresponding charge 6 was therefore proven.

The Failures to Document Advice

The Tribunal found (at [125]) that the attorney did not provide the client with ‘any meaningful documented advice and retained only the most cursory diary notes of any verbal advice regarding risks having been provided’.  The evidence of the two experts established that ‘proper documentation is a core part of a competent patent attorney’s practice’.  Thus the failure to properly document advice did not ‘meet the standard of competence, diligence and behaviour that an ordinary member of the public is entitled to expect of an attorney’ (at [126]).

Corresponding charges 8 and 9 were therefore found to be proven.

Discussion – Misconceived Expectations?

It is not unheard of for an attorney to advise a client of difficulties or risks that may be encountered in pursuing patent protection for an invention, and for the client nonetheless to instruct the attorney to proceed.  There are many possible reasons for this.  The client may see a commercial benefit in having a application pending, even if the prospects of ultimately securing patent rights are slim.  They may be willing to accept the risk, even when the odds are significantly stacked against them.  In the case of computer-implemented inventions – an area in which the law has been in flux for many years – they may hold out hope that subsequent events (i.e. later court decisions or even legislative changes) may improve prospects while the application remains pending.

There is, in principle, no problem with an attorney accepting instructions to proceed in such circumstances.  But particular care is required to ensure that the client is properly informed and has a full understanding of the risks.  Patent law is extremely complex, and inexperienced clients may fail to comprehend the full import of information and advice provided to them verbally by an attorney.  It is apparent that, in this case, the client did not fully appreciate the difficulties that their applications would face.  By the time that the two patent specifications had been drafted, the client had clearly formed an expectation that they would result in granted patent rights.  It was only upon obtaining contrary opinions from not one, but two, further patent attorneys that the client became dissatisfied, which eventually resulted in the complaint to the Board.

In this case, it seems that despite the attorney’s early and – as the Tribunal found – sufficient warning about the ineligibility of business methods for patent protection, the client subsequently came to believe that the attorney’s recommended strategy of preparing and filing two separate applications would somehow circumvent this problem.  This is, perhaps, understandable.  When a client receives a full patent specification and drawings, including a detailed description of the invention and a set of carefully drafted claims, it is not hard to see how they might assume that the attorney has applied their considerable skill and experience to produce something that has good prospects of resulting in granted patent rights.  The fact that there is no amount of skill and experience that can take a clearly unpatentable idea, such as a business scheme, and make it patentable is something that is not going to be readily apparent to a client with no experience or knowledge of the relevant law.  The client relies upon their attorney to provide that advice and the attorney, in turn, has an obligation to ensure that the client understands the advice that they are given, and the consequences that may flow from their decisions and instructions based on that advice.

With regard to the insufficiency of disclosure in the First Specification, the evidence (as reflected in the Tribunal’s decision) indicates that while the attorney requested additional details, the client was never informed or properly advised of the potentially fatal consequences of not including such details.  Furthermore, the attorney subsequently represented to the client that the specification was in order for filing, subject only to any changes that the client might wish to make.  Absent appropriate information and advice, the client was in no position at this stage to know what changes might be necessary to meet the legal requirements to establish a priority date.  And the attorney, so it seems, was prepared to finalise and file the specification presumably knowing what the client did not – that the description did not provide the enabling disclosure necessary to establish a priority date or to support the eventual grant of a patent for the claimed invention.

Conclusion – Clear Communication is Key

You might be wondering, how could a qualified and experienced patent attorney fail to advise a client of potentially fatal flaws in two proposed patent applications?  I am necessarily speculating a little here, but I do not believe that it was due to any lack of legal knowledge or technical competency on the part of the attorney.  I think it more likely that what we’ve got here is a failure to communicate.  Along the way, it appears that the attorney formed a view that the client’s objectives were primarily commercial, relatively short-term, and did not necessarily require that patents ultimately be granted.  The client, on the other hand, clearly came to believe that the attorney’s efforts were directed principally towards securing granted patent rights.

Attorneys should keep in mind that responsibility for this kind of misunderstanding will rarely – if ever – lie with the client.  It is the attorney who has the relevant knowledge and expertise.  The attorney has an obligation to inform and advise the client of all relevant matters, and to ensure that the client’s ongoing instructions are based on a sound understanding of the attorney’s advice.  If the client has not understood the advice, and is not providing adequately informed instructions, it is the attorney’s responsibility to recognise this and to take the necessary actions to clarify matters for the client.

I am not suggesting that this is always easy.  Clients bring a broad range of prior experience and sophistication to their interactions with attorneys.  Some instructors, such as in-house counsel and foreign patent attorneys, will readily comprehend even the most terse and legally precise advice.  At the other end of the spectrum are total novices to the IP system, who may require detailed explanations, education, and hand-holding throughout their journey.  I have worked with a number of these types of clients over the years, so I know that they can be hard work.  But if you serve this segment of the market, then that is part of the job.

I would also say, from experience, that an attorney does not need to be infallible.  Clients will forgive an honest miscommunication or misunderstanding.  What they are less likely to forgive is an attorney refusing to accept responsibility for a misunderstanding or, worse, being told that they (i.e. the client) have to pay for it.  That might be a further message that registered attorneys can take from this decision.

Postscript – on Not Naming Names

It has long been my policy not to name the parties when reporting on disciplinary decisions of the Tribunal.  This is not to conceal the identities of the attorneys against whom the complaint was made, or their firm.  They are named in the Tribunal’s decision, which is available to the public and to which I have provided a link.

In deciding on penalties, the Tribunal takes into account the fact that the powers to discipline a practitioner are not punitive in nature, but are intended to protect the community.  There are, of course, inevitably punitive consequences to any adverse finding, such as potential damage to reputation, regardless of the extent of disciplinary action.

Nonetheless, I take the view that naming the parties in this blog, which tends to rank highly in web searches directed to Australian patent law and practice, might result in unintended additional adverse – and therefore punitive – consequences for those parties.  I am a mere commentator, not a journalist, and I do not wish to be responsible for any such consequences.  I trust that readers will understand and respect this position.


Post a Comment

Copyright © 2014
Creative Commons License
The Patentology Blog by Dr Mark A Summerfield is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Australia License.