Intellectual Property Law Section Re: Assisting Clients with Multi-State Intellectual Property Law Problems - Center for Professional Responsibility

[ABA IPL Section Letterhead]



For:             Commission on Multijurisdictional Practice
                   February 2, 2001

From:        Intellectual Property Law Section

Subject:    Assisting Clients with Multi-State
                  Intellectual Property Law Problems

        This memorandum is submitted in response to the request of the Commission for information about lawyers who practice across State lines and about alternatives that are preferable to current limits on such practice.

        The 21,000 members of the Intellectual Property Law Section assist clients who typically have multi-State legal problems and want to use the same lawyer to handle all similar problems, regardless of the State where they arise. Intellectual property law includes a number of highly specialized fields, principally copyright, patent, trademark, and trade secret law, and related licensing and litigation law. These fields are based on national and international law or law that is constant in many respects across State lines. Our members not only have expert knowledge of that law, but they also have expert knowledge of the scientific or business subject matter involved and the kinds of transactions involved.

        While our assistance to clients often also involves State law, our expertise in intellectual property law and in the subject matter, often combined with knowledge of a client’s business, is the overriding reason our clients retain us. For such clients we frequently travel to or communicate to many States where they have laboratories or offices, or States where they have negotiations, the possibility of litigation, or on-going litigation. In fact, our clients frequently place a greater value on our expertise than on our location, retaining us even though we do not have an office in any State where they do business. Such clients are seeking uniform, well-informed and efficiently rendered advice regardless of State lines, and they do not want to hire multiple lawyers for multiple States.

        Intellectual property law has always had these multi-State and specialized practice aspects to a certain extent for a limited number of clients, but the increasing importance of (a) technology, (b) single national and global market places, and (c) digital commerce, have combined not only to increase greatly the number of multi-State intellectual property law problems but also to make such problems more and more important to more and more companies and individuals.

        Current Unlicensed Practice of Law ("UPL") rules, however, unnecessarily impede our ability to assist our clients with their multi-State law problems. To cite only one example, a law firm in one State often represents a multi-State client with a laboratory in a second State. After working with an inventor at that laboratory to prepare a patent application, the inventor may refuse to assign it to the client. Can the law firm write to the inventor in the second State, demanding that he sign the assignment pursuant to his employment agreement, or must the client hire a second law firm to write to the inventor because the employment agreement is governed by State law? Such uncertainty for us and for our clients should be eliminated.

        The Supreme Court has recognized a right of federal practice for one area of intellectual property law. In Sperry v. Florida Bar, 373 U.S. 379 (1963), the Court upheld the right of a person who was registered to practice before the U.S. Patent Office, but not a member of the Florida bar, to maintain an office in Florida, advise Florida inventors and prepare and prosecute U.S. patent applications on their behalf. Much of the practice of those in the IPL Section, however, lies outside the scope of this decision.

        Our concern with present UPL rules is only lessened a small amount by the fact that they are seldom enforced against out-of-State lawyers. First, there remains the risk that they will be used for some ulterior purpose. An adversary may use them for disqualification, or a client may use them to justify not paying a bill. Second, as a matter of principle, keeping outdated laws on the books breeds public disrespect, particularly when the law relates to conduct of those who have a duty to uphold it.

        We are also seriously concerned that current UPL rules prevent cautious clients from obtaining the lawyer they want or lead cautious lawyers to decline to provide legal assistance which they are entirely capable of providing and which the client wants them to provide. For example, a company might prefer to use an in-house lawyer who could provide the best service because of experience with the legal and technical subject matter generally and knowledge of the company in particular, but the company may feel compelled in an abundance of caution to retain local counsel at unnecessary expense and at the risk of receiving less sound legal advice.

        Please understand, however, that the IPL Section does not see a need to change provisions that protect the interests of citizens of a State or the functioning of a State’s courts or agencies. Specifically, the IPL Section does not see a need, particularly in the face of expected strong opposition, to change the following:

A. A State should continue to have the power to regulate the opening of law offices in the State and the advertising and solicitation of legal services directed to citizens of the State.

B. Courts and agencies should continue to have the power to make reasonable pro hac vice rules for lawyers who appear before them.

C. A State should continue to have power over lawyers who render incompetent advice to a citizen of that State or performs any other prohibited act that affects a citizen of that State. This power should include the ability to require the lawyer to advise the State where the lawyer is admitted, bar collection of attorneys fees, levy fines and enjoin offensive activity.

D. Lawyers practicing in States where they are not admitted should be subject to traditional obligations governing the practice of law in those States, including obligations (a) to maintain the confidences of clients, (b) to decline conflicting representations, and (c) to uphold the rule of law through civil behavior, professionalism and ethical practices. Again, the State where a lawyer fails to meet those obligations should have power to sanction the lawyer.

        On the other hand, the IPL Section is convinced that the following changes in UPL rules are important to providing effective, economical and sound legal assistance and will benefit the legitimate interests of clients in retaining the intellectual property lawyers they want:

        1. State UPL laws should be uniform and clear with respect to legal work performed by out-of-State lawyers. Present UPL laws vary greatly from State to State and seldom distinguish between non-lawyers attempting to practice law and lawyers in good standing in their home States.

        2. Lawyers in good standing in their home States should be permitted to practice in other States in the following circumstances:

  1. Practice by Employed Lawyers. Employed lawyers should be permitted to move to another State as a full time employee of a company (or other entity) to practice law for and advise that employer and its affiliates as long as they remain employed.
  1. Temporary Practice. Lawyers temporarily visiting a State should be permitted to engage in a particular matter or perform work for a particular client for which a law license is normally required. "Temporarily visiting" for "a particular matter" or "a particular client" excludes permanent offices, advertising or systematic solicitation of clients, but those phrases include visits for particular transactions, conferences, delivery of oral advice, arbitrations, depositions, negotiations, preparations for litigation where the lawyer expects to be admitted pro hac vice, and the like.
  1. Practice by Mail, Telephone or Other Remote Means. As a corollary to "b," lawyers should be permitted to write letters on behalf of their clients on a particular matter into another State -- and make telephone calls or take other actions on behalf of their clients on a particular matter which enter into another State -- where such actions would constitute activities for which a law license is normally required. "On behalf of their clients on a particular matter" excludes advertising and solicitation.

        The IPL Section has no opinion on how these changes for uniformity, clarity and reduced obstacles to clients’ using the lawyer of their choice should be accomplished.

        This memorandum has been prepared in terms of multi-State law problems, but the same principles pertain to international law problems.

        If you would like us to go into more detail on any of the above, please let us know.