Michael Kroll - Stayed -Suspension !!!!!
Should he have been Disbarred ???
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 -----
Cc: rjr@ ; inventor@ ; rjr@
Sent: Monday, January 17, 2005 8:35 PM
Subject: Error of Fact
Immediately on receipt of this e-mail please
correct the listing:
Kroll, Michael Disbarred Patent
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
Ronald J. Riley
Patent and Trademark Office
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")
(proscribing charging and collecting
a clearly excessive fee),
(proscribing knowingly giving false or
misleading information to the USPTO)
(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
February 25, 2004 JAMES A. TOUPIN
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, )
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.
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
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
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. Respondent’s
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
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
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 client’s
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
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
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 client’s
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
(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 Respondent’s
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
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
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
MICHAEL I. KROLL,
FRANK A. FINNERTY, JR., Chief Counsel
for the New York State Grievance Committee
for the Tenth Judicial District,
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
MICHAEL I. KROLL,
FRANK A. FINNERTY, JR., Chief Counsel
for the New York State Grievance Committee for the Tenth Judicial
DECIDED: March 21, 2001
Before MICHEL, Circuit Judge, SMITH, Senior Circuit Judge,* and GAJARSA,
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).
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
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
A. Legal Standard for Dismissal of Meritless Claims for Lack of Subject
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
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
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
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 to Frank Finnerty, nominal defendant for New York State Grievance
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