Why You Cannot Hire a Patent Attorney Who Worked for a Competitor

I talk to countless patent holders, and I often hear that their patent attorney did all this work for a direct competitor before doing their patents. Somehow, the client seems to think this is a good thing.

It is not.

It is always a bad thing to hire a patent attorney who has previously worked for a competitor and has extensive knowledge of the competitor’s patents and technology.

The American Bar Association (ABA) Model Rules of Professional Conduct states that a lawyer must not represent a client if the representation involves a concurrent conflict of interest. This includes situations where the representation of one client will be directly adverse to another client or where there is a significant risk that the representation will be materially limited by the lawyer’s responsibilities to another client, a former client, or a third person.

What does this really mean?

It means that either the attorney:

1. Must be utterly silent and offer no help in expanding/improving the invention because they know confidential information from your competitor. This patent attorney is a useless scrivener adds no value, and by withholding information, they create 37 CFR 1.56 obligations that will invalidate your patent – and expose themselves to willful malpractice and ethics violations.
2. Will suggest improvements that violate the confidential information gained from your competitor. This can set up intentional/unintentional but unnecessary conflicts and litigation with the previous client – and you can assume that the attorney will divulge your confidential information to the next client willing to pay.

At the end of it all, the greed of the attorneys – the need to bill yet another client – causes them to take on new clients that create serious conflicts. And your patents will be invalidated by your attorney’s deceitful, intentional, and malicious inequitable conduct. All in pursuit of taking your money.

Subject Matter Conflicts

In patent law, subject matter conflicts are particularly problematic. If a patent attorney has previously worked on similar technologies for a competitor, their ability to represent a new client impartially is, unequivocally compromised.

If the attorney has knowledge of a previous client’s technology (which is, by definition, required to write a patent application), they have been exposed to the most valuable and most important trade secrets of that client.

When a patent attorney takes on a new client in a similar technology, they will tout their experience with the technology. But that comes at a price. The price is either that they cannot tell you anything that they learned from the previous client (which not only makes them useless, it potentially invalidates your patent under 37 CFR 1.56), or they spill the beans, which compromises their integrity. Remember that they will do the same thing to their next client, giving away your technology and undermining your business.

The USPTO Rules of Professional Conduct emphasize that a practitioner must not represent a client if the representation involves a concurrent conflict of interest, which includes subject matter conflicts. The key here is that the subject matter conflict of interest does not end when they terminate the previous representation.

Duty of Confidentiality

Patent attorneys are bound by a duty of confidentiality, which extends beyond the termination of the attorney-client relationship. This duty requires attorneys to protect their former clients’ confidential information and not use it to the disadvantage of the former client. The Orange County Bar Association highlights that a lawyer’s duty of confidentiality survives the termination of the lawyer-client relationship and prohibits the use of confidential information against the former client.

The duty of confidentiality is sacred. “No rule in the ethics of the legal profession is better established nor more rigorously enforced than this one.” Wutchumna Water Co. v. Bailey, 216 Cal. 564, 572 (1932).

The key to the duty is that it goes on forever, even then the attorney is no longer getting paid by the first client. Just because they no longer represent the previous client does not mean they are free to represent anyone else in the same technology.

What is the Attorney’s Responsibility?

Under 37 CFR 1.56, an attorney must disclose anything they know that is material to patentability of a patent application. This includes any knowledge they had from a previous client.

If the attorney fails to disclose, such as if they are embarrassed about how bad it will look to their current client, they risk invalidating your patent under the case law of TheraSense.

Think about this: your patent can be invalidated because of the conflict of interest created by hiring a patent attorney “experienced” in your specific technology.

This creates a situation where the attorney has to choose between breaching confidentiality or failing to disclose material information, both of which are ethical violations. See Maling v. Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, 473 Mass. 336 – Mass: Supreme Judicial Court 2015 where the court explains that this conflict can force the attorney to cease representation of the new client to avoid ethical breaches.

What are the Attorney’s Risks?

Remember that the attorney should always avoid representation if there is a potential for a conflict, but the attorney’s pure, unadulterated greed is the only motivation to take on the next client.

The attorney’s greed always creates problems.

Conflicts of interest are the major driver in legal malpractice claims. It is always interesting that things go swimmingly for a long time, but when trouble arises, the client always winds up suing their attorneys.

The USPTO and the ABA have strict rules regarding conflicts of interest and the use of confidential information. Violating these rules can result in severe penalties, including suspension or disbarment.

There plenty of other ways that ethical conflicts can arise when a patent attorney’s personal interests or previous engagements interfere with their professional responsibilities, including naming themselves as an inventor, taking stock as part of payment for fees, and others.

Is it Worth It?

Ultimately, is it worth it to hire an attorney with specific expertise in your field?

I know it is a distasteful answer, but the more experience your patent attorney has in your field from other clients, the more problems it creates. As appealing as it seems to have a patent attorney with direct experience, it creates a problem that always results in the attorney being conflicted, which undermines your IP.

The best solution: find a patent attorney that is skillful enough to learn your technology quickly, and with a broad enough background that they can help to expand your invention and guide you through the patent process. But don’t hire anyone who has direct experience in similar technologies.