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Michael Kroll - Stayed -Suspension !!!!!

Should he have been Disbarred ???


Correction:

Mr. Kroll called on 1-17-05, just three days after the page was posted to alert us to the fact that we had confusingly titled this page Michael Kroll - Disbarred  

Michael Kroll wrote: 

----- Original Message -----
From: mkroll <mkroll@optonline.net>
To: Error@
Cc: rjr@ ; inventor@ ; rjr@
Sent: Monday, January 17, 2005 8:35 PM
Subject: Error of Fact
 
3rd Request 
 
Immediately on receipt of this e-mail please correct the listing:
Kroll, Michael Disbarred Patent Attorney.....
The result of the PTO settlement was a Stayed Suspension the terms of which have been fully complied with. There is not now nor was there ever a disbarment.
 
 
=== Reply ===
 
Sorry for the delay but I am in the middle of setting up a TV show which is going to air examples of success and common pitfalls which independent inventors face.  This involves some major producers and personalities.  Hence my time is limited.
 
Per your request I posted your comments last night on the web page along with a notice of correction .
 
Please note that you left one voice message for InventorEd at 4:07 PM EST 1-17-05, the correction was posted by 8:30 PM EST on 1-17-05.  This email was your first email communication, not the third.  The correction was posted five minutes before you sent this communication.  Making the change within a bit over four hours is in my opinion pretty good service.
 
Your subsequent email dated Tuesday, January 18, 2005 8:18 AM (which is incorrectly labeled 4th request) says the change was not made.  I assure you that it was done but please note that you have to click refresh on your browser to see the updated web page. 
 
To give your point of view the broadest possible exposure I placed an announcement of the correction and a link on www.InventorEd's home page to the corrected web page today, 1-18-05. 
 
Since all the documents referring to USPTO actions are on the web page it did not occur to me that anyone would interpret the heading as disbarment from the state bar.  I have made changes to the site to clarify the issue.
 
I am a member of Investigative Editors and Reporters.  Accurate reporting is important.  I trust that I have addressed your concerns to your satisfaction.  Understand that as a journalist I enjoy "Reporters Privilege", http://www.rcfp.org/cgi-local/privilege/contents.cgi?st=MI&t=full
 
Ronald J. Riley

 

United States Patent and Trademark Office OG Notices: 23 March 2004

                             Notice of Suspension

   Michael I. Kroll (Kroll), of Syosset, New York, is a patent
attorney whose registration number is 26,755. The Director of the
United States Patent and Trademark Office has ordered Kroll be
suspended for three years from practice before the United States 
Patent and Trademark Office in patent, and non-patent law cases. 
The suspension is for violating USPTO Disciplinary Rules ("DR")
10.36(a)(1) 
(proscribing charging and collecting 
a clearly excessive fee),
 DR 10.23(c)(2)(ii) 
(proscribing knowingly giving false or 
misleading information to the USPTO) 
and DR 10.85(a)(6) 
(proscribing participation in the creation 
of false evidence). 
This action is taken
pursuant to the provisions of 35 U.S.C. 32, and 37 C.F.R. 10.156 and
10.159. The suspension will be stayed, so long as Respondent
complies with the terms of the settlement agreement entered into on
February 24, 2004. Those terms include refunding one-half of attorney
fees, in accordance with an agreed-upon payment schedule, collected
from 75 particular applicants for filing International Applications
under the Patent Cooperation Treaty (PCT). Those terms also include
filing new Powers of Attorney to replace defective Powers of Attorney
in all pending PCT cases in which Kroll signed his clients' names on
the Power of Attorney forms. Upon any violation of any term of the
settlement agreement during the period of the payment schedule, the
stay will be vacated and Kroll, at that time, will serve a three year
suspension.

February 25, 2004                                     JAMES A. TOUPIN
                                                      General Counsel
                            United States Patent and Trademark Office
                                                         on behalf of
                                                         JON W. DUDAS
                                Acting Undersecretary of Commerce for
                                            Intellectual Property and
                                               Acting Director of the
                            United States Patent and Trademark Office

UNITED STATES PATENT AND TRADEMARK OFFICE

BEFORE THE DIRECTOR OF THE

UNITED STATES PATENT AND TRADEMARK OFFICE

 

HARRY I. MOATZ, )

Director, Office of )

Enrollment and Discipline, )

)

v. ) Proceeding D03-07

)

MICHAEL I. KROLL, )

Respondent. )

)

FINAL ORDER

Harry I. Moatz, Director of the Office of Enrollment and Discipline (OED Director), and Michael I. Kroll (Respondent), have submitted a settlement agreement in the above proceeding that meets the requirements of 37 C.F.R.  10.133(g). Pursuant to that agreement, it is ORDERED that:

1. Respondent is suspended from practice before the United States Patent and Trademark Office (USPTO) for a period of three years.

2. Respondents suspension will be stayed, and he will be permitted to continue to practice, so long as he complies with the agreed-upon terms of the agreement.

(InventorEd Editorial note: It would be interesting to see if Kroll's victims agree with this slap on the wrist.)

3. In the event that Respondent fails to comply with any of the terms of the agreement, the stay of suspension will be immediately vacated and Respondent shall serve a three year suspension, starting at the time the stay is vacated, prior to being eligible for reinstatement.

4. Before vacating the stay, the USPTO shall provide Respondent with an Order To Show Cause Why The Stay Should Not Be Vacated. The Order To Show Cause will give Respondent ten (10) days to show cause to the OED Director why the stay should not be vacated. The OED Director may then exercise his discretion to vacate the stay. Any review that might be available would not operate to postpone vacating of the stay during pendency of the review. Respondent shall be suspended and ineligible to practice during such review.

5. In considering a response to an Order To Show Cause, the OED Director will exercise his discretion with the understanding that Respondent should generally have a brief chance to cure any minor and unintentional breach of his obligations under the agreement.

6. Upon providing evidence of fulfilling all terms of this agreement, Respondent will no longer be suspended, and thus the need for any stay will no longer be required.

7. The following Notice shall be published in the Official Gazette:

Notice of Suspension

Michael I. Kroll (Kroll), of Syosset, New York, is a patent attorney whose registration number is 26,755. The Director of the United States Patent and Trademark Office has ordered Kroll be suspended for three years from practice before the United States Patent and Trademark Office in patent, and non-patent law cases. The suspension is for violating USPTO Disciplinary Rules ("DR") 10.36(a)(1) (proscribing charging and collecting a clearly excessive fee), DR 10.23(c)(2)(ii) (proscribing knowingly giving false or misleading information to the USPTO) and DR 10.85(a)(6) (proscribing participation in the creation of false evidence). This action is taken pursuant to the provisions of 35 U.S.C. 32, and 37 C.F.R.  10.156 and 10.159. The suspension will be stayed, so long at Respondent complies with the terms of the settlement agreement entered into on _________. Those terms include refunding one-half of attorney fees, in accordance with an agreed-upon payment schedule, collected from 75 particular applicants for filing International Applications under the Patent Cooperation Treaty (PCT). Those terms also include filing new Powers of Attorney to replace defective Powers of Attorney in all pending PCT cases in which Kroll signed his clients names on the Power of Attorney forms. Upon any violation of any term of the settlement agreement during the period of the payment schedule, the stay will be vacated and Kroll, at that time, will serve a three year suspension.

8. Starting from the date of this ORDER and continuing until December 1, 2010, Respondent will provide partial refunds of legal fees charged to a designated list of clients as agreed to by the OED Director and Respondent and reflected in the refund payment schedule provided in Attachment A of the agreement. Respondent will comply with the refund payment schedule, which will be initiated with a $ 1000.00 payment to each client on the designated list by December 1, 2004.

9. Subsequent to the initial payment, Respondent will make annual payments (by December 1 of each year until December 1, 2010) to each client on the designated list in compliance with the repayment schedule provided in Attachment A of the agreement.

10. Within 30 days of the entry of the order of stayed suspension, Respondent shall notify all bars of which he is a member the order of the stayed suspension in separate written communications and shall file a copy of each written communication with the OED Director pursuant to the provisions of  10.158(b)(1). All notices required by this paragraph shall be served by certified mail, return receipt requested. To the extent that another bar disciplines Respondent for only the conduct covered by the present Complaint, the USPTO will not impose any further discipline as a result of the other bar's discipline.

11. Within 30 days of the entry of the order of stayed suspension, Respondent shall notify in writing all clients on the designated list, based on their last known address using certified mail, return receipt requested, that he will be providing a partial refund of past collected legal fees and shall notify them of the refund payment schedule. Respondent will not make any claim to being absolved from any and all claims upon fulfilling the payment schedule. Respondents written notice will (i) notify each client of the payment schedule, (ii) set forth the amount Respondent is obligated to pay each year until 2010, and (iii) include the following paragraphs:

 

After reviewing my files, I have come to realize that I charged you too much for the service of filing an International Application under the Patent Cooperation Treaty. I promise to return one-half of the relevant attorney fees I collected, in accordance with the following payment schedule:

SCHEDULE HERE

As you can see from the payment schedule, this refund to you will total $______ over a period of six years. The reason for this payment schedule is because I cannot afford to pay the entire refund immediately.

 

12. Within 30 days of giving written notice to all clients on the designated list of his intent to provide a refund, Respondent must provide copies to the OED Director of each and every letter sent to all clients on the designated list.

13. Respondent shall send payments to each client on the designated list by certified mail, return receipt requested. Throughout the period of stayed suspension, Respondent will provide the OED Director copies of all refund payment checks sent to clients on the designated list, along with the cover letters identifying the certified mail number, within 30 days of the mail date of each check and cover letter, and shall continue to provide copies of checks and cover letters evidencing payment until the refund payment schedule is completed. Throughout the period of stayed suspension, Respondent will provide the OED Director copies of all returned receipts showing delivery of the certified mail.

14. If any letter or check is returned by the Post Office as undeliverable, Respondent will make a reasonable effort to locate the intended recipient. Reasonable effort shall be defined as (1) searching Respondent's files for any alternate contact information and (2) performing an Internet search and printing out the results. If the person still cannot be located, Respondent shall promptly document his reasonable efforts to OED. Respondent shall be thereafter released from his obligations hereunder to that person who could not be located, unless OED locates the person and provides Respondent the person's address. In addition, if at any time during the payment schedule period a client who had not been successfully located becomes discovered, then Respondent is still obligated to pay that client the full amount of the refund.

15. For any future PCT applications that Respondent files, Respondent will charge and collect a fee that falls within the 25% to 75% range listed in the most recently published AIPLA Economic Survey Report.

16. When offering legal services to a client or potential client, Respondent will clearly articulate the specific services covered by the specific fees charged and provide full disclosure to the client explaining all possible, future fees for complete prosecution of a given case to issuance. In addition, all future offer letters to file PCT applications from Respondent for clients, or potential clients, must clearly detail, upfront, all costs in filing and prosecuting a PCT application from the initial filing, to each national stage to issuance of a patent. The content of the letter shall be devoid of ambiguity of the fees and costs anticipated to be incurred, and the services covered by the charged fees.

17. Respondent shall obtain clients signatures on documents that require the client to sign.

18. Respondent shall rectify within six months of entry of the order of stayed suspension any defective client signatures on any documents in pending US or PCT applications. This includes acquiring the actual signature on the document by the client and filing that document with the respective Office where the application is pending. Respondent must send letters to these clients explaining the need for corrective action in their cases. Respondent shall provide copies of the letters sent to each client to the OED Director.

19. Within two months of entry of the order of stayed suspension, Respondent will provide the OED Director with a list of all pending US or PCT applications containing defective client signatures, and provide a copy of the letters sent to the clients having said applications. Within six months of entry of the order of stayed suspension, Respondent will provide the OED Director with proof that Respondent has rectified the defective client signature in each relevant US or PCT application.

20. If any client refuses to cooperate with rectifying the defective client signature, or the client cannot be found or reached after reasonable effort (as defined in paragraph 18 of this agreement), Respondent shall file a notice of the defective client signature in the clients application within six months of the entry of the order of stayed suspension. Within six months of entry of the order of stayed suspension, Respondent will provide the OED Director with proof of each clients refusal to cooperate in rectifying the defective client signature, or that the client cannot be found or reached after reasonable effort, and proof that Respondent has filed a notice of the defective client signature in the clients application within six months of the entry of stayed suspension.

21. Should the stay of the suspension be vacated, then after being suspended for three years, Respondent may petition for reinstatement in accordance with the following:

(A) The Petition for Reinstatement for reinstatement is to include the following items:

(i) A statement that Respondent has complied with all provisions of this ORDER;

(ii) Copies of all relevant documents not previously furnished to demonstrate compliance with the provisions of this ORDER;

(iii) A statement and proof that the Respondent has the moral character qualifications, competency, and learning in law required under 37 C.F.R. 10.7 or any succeeding regulation;

(iv) A statement that the resumption of practice before the Office will not be detrimental to the administration of justice, or subversive to the public interest;

(v) A statement that Respondent will not sign clients names to documents required to be signed by the client;

 

(vi) A statement that Respondent will not charge fees for legal services that are clearly excessive as defined by 37 C.F.R. 10.36 or any succeeding regulation (i.e., the fee exceeds a reasonable fee for the amount, type and caliber of legal services rendered or exceeds the fee customarily charged for similar services, in particular when filing a PCT application based upon a previously filed U.S. application, etc.), and will provide full disclosure and itemize the amount and type of work involved before charging such fees.

(B) Upon receipt of the Petition for Reinstatement and the above enumerated accompanying documentation and statements by Respondent, OED Director agrees, as provided for in 10.160 (or successor regulations), that if Respondent has complied with the regulation existing at the time the stay of suspension is vacated (37 C.F.R.  10.158 or its successor regulations) and granting the Petition for Reinstatement will not be contrary to the public interest, that he will accept the Petition, not oppose the granting of the Petition, and will promptly forward it for public comment with his recommendation that it be granted.

(C) OED Director further agrees to publish Respondents name in a Notice of Petition for Reinstatement for public comment as required by  10.160(e) (or successor regulations). It is further agreed that the OED Director shall conduct investigations pursuant to 37 C.F.R. 10.131 (and successor regulations) of possible violations of USPTO disciplinary rules by Respondent upon receipt from within or outside the USPTO of a complaint or information of a possible violation of said rules, and in conducting the investigation the OED Director may communicate with current, or potential future clients of Respondent, as well as any other person or party possibly having relevant information regarding said violations.

(D) It is further agreed that if Respondent has not complied with the provisions of this settlement agreement during the period of suspension, he shall not be entitled to reinstatement and the OED Director shall deny the Petition for Reinstatement.

(E) It is further agreed that Respondent shall comply with the procedures and fees in effect at the time he files a petition for reinstatement.

22. This ORDER is intended to encompass all complaints against Respondent by the OED Director on behalf of itself or on behalf of clients of Respondent as of the date of this agreement to the extent that the complaints consist of matters encompassed in the Complaint filed by the Office of Enrollment and Discipline against Respondent on May 14, 2003.

23. The OED Director and Respondent shall each bear their own costs.

 

 

 

February 24, 2004_________ ________/s/_____________________

Date James A. Toupin

General Counsel

United States Patent and Trademark Office

on behalf of

Jon W. Dudas

Acting Undersecretary of Commerce for Intellectual Property and Acting Director of the United States Patent and Trademark Office

cc: Harry I. Moatz

Director, Office of Enrollment

and Discipline, USPTO

 


United States Court of Appeals for the Federal Circuit




00-1176

MICHAEL I. KROLL,

Plaintiff-Appellant,

v.

FRANK A. FINNERTY, JR., Chief Counsel
for the New York State Grievance Committee
for the Tenth Judicial District,

Defendant-Appellee.


Edwin D. Schindler, of Coram, New York, argued for plaintiff-appellant.

Melanie L. Oxhorn, Assistant Solicitor General, Office of the Attorney General of the State of New York, of New York, New York, argued for the defendant-appellee.  With her on the brief was Eliot Spitzer, Attorney General of the State of New York.  Of counsel was Robert K. Drinan, of Mineola, New York.

Appealed from:   United States District Court for the Eastern District of New York

Judge Arthur D. Spatt

 United States Court of Appeals for the Federal Circuit

00-1176
MICHAEL I. KROLL,

         Plaintiff-Appellant,
v.
FRANK A. FINNERTY, JR., Chief Counsel
for the New York State Grievance Committee for the Tenth Judicial District,

Defendant-Appellee.

__________________________

DECIDED:  March 21, 2001
__________________________

Before MICHEL, Circuit Judge, SMITH, Senior Circuit Judge,* and GAJARSA, Circuit Judge.

MICHEL, Circuit Judge.
This is an attorney misconduct case that concerns the scope of federal patent jurisdiction.  Michael Kroll appeals from the November 12, 1999 judgment of the United States District Court for the Eastern District of New York, entered upon the district court's November 9, 1999 order granting summary judgment in favor of Frank Finnerty (nominal defendant for the New York State Grievance Committee, or "Grievance Committee") and dismissing Kroll's complaint seeking a declaratory judgment that federal patent law preempts the Grievance Committee's authority to bring disciplinary action against him.  On January 7, 2000, Kroll filed a notice of appeal to this court.  To the extent that the district court properly premised its decision on 28 U.S.C. 1338(a), we have exclusive appellate jurisdiction pursuant to 28 U.S.C. 1295(a)(1).  We heard oral arguments in this case on December 8, 2000.  Because we conclude that Kroll's assertion of federal jurisdiction is insubstantial and devoid of merit, we vacate the trial court's grant of summary judgment and remand the case for the district court to dismiss the complaint for lack of subject matter jurisdiction.  The complaint simply fails to invoke federal question jurisdiction under 28 U.S.C. 1331 or patent jurisdiction under 28 U.S.C. 1338(a).
I. Background
A. Kroll's Alleged Misconduct
Michael Kroll was and is a member of the Bar of the State of New York and is also registered to practice as a patent attorney before the United States Patent and Trademark Office ("PTO").  As described below, the Grievance Committee initiated disciplinary action against Kroll in response to grievances filed by the following three clients regarding Kroll's patent prosecution practice on their behalf.

1. Elly Ildiko Elias
In approximately 1990, Elly Ildiko Elias conceived of the idea of making a "LOVE BED" for dogs and puppies.  As described in a letter she later wrote to her Congressman, she contacted Kroll through the Yellow Pages, and after putting "faith and trust in [his] advertisement," paid him $8425 to obtain a patent claiming her invention.  On August 28, 1990, Kroll filed a patent application on her behalf, which, according to Elias, disclosed that the LOVE BED could be made of wood, with mattress, bed sheets, narrow pillow, with pillow cases, and that the LOVE BED could come in different sizes, and would be a great gift idea.
Approximately one year later, Elias was looking through an L.L. Bean Inc. catalogue, and saw a dog bed for sale, allegedly very similar to the one described in her patent application.  When Elias called Kroll to report this possible act of infringement, he was "not very nice," and he allegedly rebuffed her subsequent calls inquiring about the progress of her patent application, stating only that "it will take a very long time."  It was not until the summer of 1992, when Elias contacted another attorney to investigate the matter, that Kroll disclosed to her that the PTO actually had rejected her application in July 1991.  
Upset over Kroll's failure to inform her promptly of the rejection, Elias wrote a letter to her Congressman, who forwarded the complaint to the Grievance Committee.  The Grievance Committee informed Kroll of the matter and dismissed the complaint, subject to Kroll's future compliance with his professional responsibilities. 

2. Charles Strieber
In January 1993, Charles Strieber hired Kroll to file a patent application on his behalf.  For approximately $21,000, Kroll prepared several dozen drawings, but never finalized the application.  In April 1995, Strieber terminated Kroll's representation, and requested by phone an accounting of his payments and the return of his files.  On August 11, 1995, Strieber wrote Kroll a letter (signed, "Zombies for Ever, Charles Strieber"), repeating his request.  On September 16, 1996, his request still unfulfilled, Strieber filed a complaint with the Grievance Committee.

3. Vincent Davi
On March 2, 1996, Vincent Davi gave Kroll his credit card number and authorized a charge of $825.00 to initiate a patent application.  Kroll charged $850.00 to the card on March 2, 1996, an additional $800.00 on March 8, 1996, and a further $1850.00 on March 10, 1996.  After repeatedly calling Kroll, insisting that he credit his account for the overcharges, Davi closed his credit card account, initiated a fraud investigation, and filed a complaint with the Grievance Committee. 

B. The District Court Litigation
On June 30, 1997, Kroll filed suit in the U.S. District Court for the Eastern District of New York, seeking a declaratory judgment that federal patent law preempts the Grievance Committee's subject matter jurisdiction to consider the Elias, Strieber, and Davi grievances.  Kroll asserts that 35 U.S.C. 2(b)(2)(D) and 35 U.S.C. 32, which grant the PTO the authority to regulate the practice of patent law before the PTO, preempt the authority of the Grievance Committee to discipline him for conduct arising out of his patent prosecution practice.   Kroll argues that his suit constitutes a "civil action arising under any Act of Congress relating to patents," and thus that the federal district court had jurisdiction, pursuant to 28 U.S.C. 1338(a).
The Grievance Committee moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), and moved for summary judgment pursuant to Fed. R. Civ. P. 56.  According to the district court, on May 14, 1999, the Grievance Committee dismissed Davi's and Strieber's allegations without qualification.  As to Kroll's challenge to the Elias grievance, the district court ruled that the conditional nature of the Grievance Committee's dismissal of that complaint gave rise to a sufficient case or controversy to permit Kroll to seek a declaratory judgment.  The court stated, moreover, that resolution of the dispute would require judicial interpretation of 28 U.S.C 1338(a), 35 U.S.C. 2(b)(2)(D), and 35 U.S.C. 32, and thus that Kroll had "asserted a colorable federal claim arising under federal law" sufficient to establish federal jurisdiction.  The district court, reasoning that allowing the state to discipline a member of its own bar would not frustrate the objectives of the patent system, granted the Grievance Committee's motion for summary judgment that federal patent law does not preempt the authority of the Grievance Committee to discipline Kroll.  
II. Discussion
A. Legal Standard for Dismissal of Meritless Claims for Lack of Subject Matter Jurisdiction

A court must dismiss a complaint for lack of subject matter jurisdiction when the alleged basis for exercising federal jurisdiction is "so attenuated and unsubstantial as to be absolutely devoid of merit."  Hagans v. Lavine, 415 U.S. 528, 536-37 (1974).  Although the Supreme Court has cautioned against dismissing complaints for lack of subject matter jurisdiction when unstated questions of federal law may underlie a complainant's cause of action, see id. at 536-38, in this case the sole basis for alleging federal preemption, and hence federal jurisdiction, is plainly evident from the complaint.  
Kroll asserts that the district court had jurisdiction to hear his declaratory judgment complaint pursuant to 28 U.S.C. 1338(a), which grants federal district courts jurisdiction to adjudicate any "civil action arising under any Act of Congress relating to patents."  The Supreme Court has interpreted this provision to confer jurisdiction upon district courts when "a well-pleaded complaint establishes either that federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims."  Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808-09 (1988); see also Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1325, 47 USPQ2d 1769, 1773 (Fed. Cir. 1998) (overruled on other grounds by Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 50 USPQ2d 1672 (Fed. Cir. 1999)). 
Kroll's preemption claim rests on 35 U.S.C. 2(b)(2)(D) and 35 U.S.C. 32, which authorize the PTO to regulate the conduct of patent practitioners appearing before it, and to discipline them for related misconduct.  The first of these statutes provides that the PTO may establish regulations governing patent practitioners:
(b) The [United States Patent and Trademark] office ?  
. . .
     (2) may establish regulations, not inconsistent with law, which ?
. . .
     (D) may govern the recognition and conduct of agents, attorneys, or other persons representing applicants or other parties before the Office, and may require them, before being recognized as representatives of applicants or other persons, to show that they are of good moral character and reputation and are possessed of the necessary qualifications to render to applicants or other persons valuable service, advice, and assistance in the presentation or prosecution of their applications or other business before the Office.

35 U.S.C. 2(b)(2)(D).
The Director of the PTO has authority to discipline malfeasant patent practitioners pursuant to 35 U.S.C. 32, which provides:
The Director may, after notice and opportunity for a hearing, suspend or exclude, either generally or in any particular case, from further practice before the Patent and Trademark Office, any person, agent, or attorney shown to be incompetent or disreputable, or guilty of gross misconduct, or who does not comply with the regulations established under section 2(b)(2)(D) of this title, or who shall, by word, circular, letter, or advertising, with intent to defraud in any manner, deceive, mislead, or threaten any applicant or prospective applicant, or other person having immediate or prospective business before the Office.  The reasons for any such suspension or exclusion shall be duly recorded.  The Director shall have the discretion to designate any attorney who is an office or employee of the United States Patent and Trademark Office to conduct the hearing required by this section.  The United States District Court for the District of Columbia, under such conditions and upon such proceedings as it by its rules determines, may review the action of the Director upon the petition of the person so refused recognition or so suspended or excluded.

35 U.S.C. 32.
The question for appeal is whether either of these statutes creates a cause of action entitling Kroll to relief, or whether Kroll's preemption argument raises "a substantial question of federal patent law."  Christianson, 486 U.S. at 808-09.
B. The Scope of Federal Preemption 
A fundamental principle of the Constitution is that Congress has the power to preempt state law.  U.S. Const. art. VI, cl. 2; Crosby v. National Foreign Trade Council, 120 S.Ct. 2288, 2294-95 (2000) (citing cases).  Federal statutes may contain express statements that they preempt state law.  Crosby, 120 S.Ct. at 2294.  Even without an express provision for preemption in a federal statute, state law must yield to a congressional Act in at least two circumstances.  First, when Congress intends federal law to "occupy the field," state law in that area is altogether preempted under the doctrine of "field preemption."  Id. (citing cases).  And even if Congress has not occupied the field, state law is still preempted to the extent of any conflict with a federal statute.  Id. (citing cases).  "Conflict preemption" is found where under the circumstances of a particular case, the challenged state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.  Id.  
As far as express preemption is concerned in this case, it is clear that there is none. The text of 35 U.S.C. 2(b)(2)(D) and 35 U.S.C. 32 gives no indication that either of these statutes are intended to preempt the authority of states to punish attorneys who violate ethical duties under state law.  These statutes certainly do not "create[] the cause of action" that Kroll asserts.  Christianson, 486 U.S. at 808-09.  Indeed, the regulations promulgated pursuant to these statutes make clear that, while the Director is entitled to regulate the conduct of patent practitioners before the PTO, the Director's authority is not intended to preempt states' authority to discipline attorneys.  The first paragraph of the PTO's regulations governing the conduct of patent practitioners states:
This part governs solely the practice of patent, trademark, and other law before the Patent and Trademark Office.  Nothing in this part shall be construed to preempt the authority of each State to regulate the practice of law, except to the extent necessary for the Patent and Trademark Office to accomplish its Federal objectives.

37 C.F.R. 10.1 (emphasis added).  Far from express preemption, PTO regulations expressly disavow an intent to preempt state laws governing the practice of law.
As for field preemption and conflict preemption, there is indeed a limited field of law where the PTO's powers under 35 U.S.C. 2(b)(2)(D) and 35 U.S.C. 32 do preempt state law.  Under these statutes, the PTO has the exclusive authority to establish qualifications for admitting persons to practice before it, and to suspend or exclude them from practicing before it.  A state, for example, may not impose additional licensing requirements beyond those required by federal law to permit a non-lawyer patent agent to practice before the PTO.  In Sperry v. State of Florida, 373 U.S. 379 (1963), the U.S. Supreme Court ruled that the State of Florida could not enjoin a local patent practitioner, who was not admitted to the State Bar of Florida, from preparing patent applications and other legal instruments that are filed solely in the PTO.  See id. at 385.  To do so, the Court reasoned, would "hinder or obstruct the free use of a license granted under an act of Congress."  Id.  (quoting Pennsylvania v. Wheeling & Belmont Bridge Co., 54 U.S. 518, 566 (1851)).  Thus, the PTO has exclusive authority to establish qualifications and procedures for admitting persons to practice before the PTO, and to suspend or exclude those patent practitioners from practicing before the PTO.  In this case, because the State of New York is not seeking to suspend or expel Kroll from practicing before the PTO, the conduct of the Grievance Committee does not fall within the field of preemption outlined by Sperry.
The scope of field preemption under 35 U.S.C. 2(b)(2)(D) and 35 U.S.C. 32 is narrower than the range of the Director's powers under those statutes.   The Director has the authority to "suspend or exclude . . . from further practice before the Patent and Trademark Office, any . . . attorney shown to be incompetent or disreputable, or guilty of gross misconduct." 35 U.S.C. 2(b)(2)(D).  This statute grants the Director broad authority to discipline patent practitioners for incompetence and a wide range of misconduct, much of which falls within the disciplinary authority of the states.  That the PTO and the states may share jurisdiction over certain disciplinary matters, however, does not mean that the states' authority is preempted.  To the contrary, the Supreme Court emphasized in Sperry that "the State maintains control over the practice of law within its borders except to the limited extent necessary for the accomplishment of federal objectives."  Sperry, 373 U.S. at 402.  Here, the Grievance Committee has threatened to discipline Kroll for failing to promptly inform Elly Ildiko Elias that her LOVE BED patent application was rejected by the Patent Office.  It is beyond serious argument to suggest that such state action would frustrate the ability of the PTO to accomplish its federal objectives.  Kroll's alleged mistreatment of Elias involved only communications, or the lack thereof, between the lawyer and the client.  The alleged misconduct in this case is not entitled to any special consideration just because a patent is involved.  The state ethical violation would be no different if Kroll had failed to advise his client of a state court decision, for example.
Kroll's contentions are particularly unfounded considering that he is not only enrolled with the PTO, but is also a member of the State Bar of New York.  Kroll, of course, did not have to join the New York Bar to practice before the PTO.  By choosing to join the New York Bar, and thus committing to abide by its Code of Professional Responsibility, he voluntarily submitted himself to the jurisdiction of the Grievance Committee.  The Grievance Committee is free to punish him, and indeed to disbar him, for violations of his duties arising under the Code.   Kroll identifies no authority even suggesting that federal patent law preempts the authority of a state bar from disciplining its own members for failing to comply with the state's Code of Professional Responsibility.  But even were the Grievance Committee to disbar Kroll, there would still be no conflict with federal law.  Because Kroll is enrolled to practice before the PTO, he could continue to do so unless also expelled by the Director.  Thus, the respective powers of the Grievance Committee and the Director can be exercised without conflict.  Indeed, by disciplining patent attorneys who violate their ethical duties to clients, the Grievance Committee would advance the goals of the patent laws by promoting better relationships between patent lawyers and their clients.  
Because, as noted above, neither 35 U.S.C. 2(b)(2)(D) nor 35 U.S.C. 32 "create[] the cause of action" asserted by Kroll, he must show that his preemption argument poses a "substantial question of federal patent law."  Christianson, 486 U.S. at 808-09.  Here, Kroll's alleged misconduct involved reported ethical lapses having nothing to do with substantive patent law.  The violations alleged by the Grievance Committee concern breaches of the duties he swore to uphold as a condition of his voluntary membership in the Bar of the State of New York.  Although resolving his complaint certainly requires an understanding of 35 U.S.C. 2(b)(2)(D) and 35 U.S.C.  32, as well as a review of the case law and PTO regulations concerning these two statutes, it is readily apparent that Kroll's alleged misconduct simply does not raise a colorable question of preemption.  Particularly in light of 37 C.F.R. 10.1, which generally disavows preemption of the authority of each State to regulate the practice of law, we cannot agree that Kroll's preemption argument poses a "substantial question of federal patent law."  Christianson, 486 U.S. at 808-09.
Kroll points to several cases regarding PTO disciplinary actions, and urges that his case should similarly be accorded federal jurisdiction.  Wyden v. Commissioner, 807 F.2d 934, 231 USPQ 918 (Fed. Cir. 1986), holds that an applicant who failed the PTO examination, and who sued to overturn the PTO's decision, stated a federal claim "relating to patents" that falls within the Federal Circuit's exclusive jurisdiction, rather than that of a regional circuit court.  Wyden, of course, is inapposite because the PTO has taken no disciplinary action against Kroll.  
Two other cases relied on by Kroll concern disciplinary decisions by the PTO that were initially appealed to regional circuits, and then transferred to the Federal Circuit.  See Franchi v. Manbeck, 947 F.2d 631 (2d Cir. 1991) (transferring to the Federal Circuit complaint of wrongful denial of admission to PTO bar); Jaskiewicz v. Mossinghoff, 802 F.2d 532 (D.C. Cir. 1986) (transferring to the Federal Circuit appeal from decision by PTO to suspend patent attorney for misconduct).  Like Wyden, these cases are irrelevant to the present appeal because the PTO has not acted to discipline Kroll.  If the Director decides to exercise his authority pursuant to 35 U.S.C. 32 to discipline Kroll, then Kroll presumably would be entitled to federal review of the Director's decision, including in this court.
Kroll also relies on People v. Miller, 23 A.D.2d 144 (N.Y. App. Div. 1965), which recognizes that states are limited in their authority to compel non-attorney members of the patent bar to conform to requirements of the state bar.  In Miller, a non-attorney advertised his services as a "patent attorney" after being granted that title by the PTO prior to 1938, before which time the PTO did not distinguish between "patent attorneys" and "patent agents."  See id. at 146.  The court concluded that, absent a showing that the defendant was engaged in the practice of law distinct from matters before the PTO, the state could not prohibit him from using the federally granted title of "patent attorney."  See id. at 146-47.  As above, Miller is of no help to Kroll, because, as an attorney and a member of the New York Bar, Kroll is subject to its professional responsibility standards.  
In the present case, the district court, noting that Kroll had pled federal preemption based upon 35 U.S.C. 2(b)(2)(D) and 35 U.S.C. 32, and recognizing that the Supreme Court had previously held in Sperry that these statutes give rise to a limited field of federal preemption, may have been reluctant to grant the Grievance Committee's motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6).  Finding that Kroll had "asserted a colorable federal claim arising under federal law," the court proceeded to dispose of this case at the summary judgment stage, and found for the Grievance Committee on the merits.  We hold, however, that Kroll's allegation of preemption is
"so attenuated and unsubstantial as to be absolutely devoid of merit."  Hagans, 415 U.S. at 536-37.  We rule that the district court lacked jurisdiction to proceed to the merits of the case, and thus that the district court's judgment must be vacated.  Accordingly, we remand to the district court for the purpose of dismissing Kroll's complaint for lack of subject matter jurisdiction.  For the above reasons, the district court's judgment and the case are, respectively, 
VACATED and REMANDED.

Costs
Costs to Frank Finnerty, nominal defendant for New York State Grievance Committee.


 

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A list of service providers whom we believe to be good prospects for inventors is located at www.InventorEd.org/service/ and at www.InventorEd.org/marketorg/ .

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Be sure to check for published complaints on the Patent Office web site:

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How the "Extreme" list was compiled.

1) The initial list was generated by searching the FTC web site for companies or people associated with those companies whom the FTC had brought action against for their invention promotion activity.

2) Then other court records were searched and that information added to the list.

3) Additional names of people from individual complaints sent to InventorEd or forwarded to InventorEd from other organizations were added only where a company was already identified by FTC or court documents or where the company rose from the ruins of another company which had been subject to government or civil action.

4) All the above information was sorted and associated groups were color coded to allow easy visual identification of companies who are known to work together or where common ownership is clear. Associations where someone got their start in the business by working for another invention promotion firm but then went on to start their own company are not shown in the caution list. We are happy to supply such information to law enforcement or journalists.

5) Last, complaints received about companies who fit the Caution Flags profile http://www.InventorEd.org/flaglist/  are listed in our "watch-list".  Please note that there are no known legal actions against these companies, but that we are requesting that they be investigated.

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InventorEd has heard of scams exceeding $40,000.