Who is Your Client Part 2: Inventors Subject to Assignment to Your “Other” Client

[This is pre-AIA. I need to think through what happens next month….  I am not sure it's too different, though.]

Obviously, if you represent an inventor,  you represent the inventor.  If I were to hire you to file an application, you'd be my lawyer:  you're providing legal services to me.

What if a third party pays you?  Suppose I can't afford to hire a lawyer, but a friend has a company with money, and it pays for you to represent me.  I'm still your client — and you better make sure that the company understands that fact, and you need to ensure that the fact that it is paying you to represent me doesn't interfere with your loyalty to me.

Now, I"m going to skip over a hundred fact patterns between that end and the very common (indeed, the paradigm I'd suggest) of patent prosecution in the U.S. — a lawyer hired by a company to file an application for its benefit, but the inventor is an employee under an obligation to assign to the company — but I'll come back to it at the end.  These middle ground circumstances are the risky areas, we'll see.

Let's deal with the paradigm:  BigCo hires you to file an application, and tells you that Inventor is subject to an obligation to assign.  What if it's wrong?  If you go to the Inventor and put an assigment in front of him and have him grant you a PoA, you're dealing with a person with adverse interests (the invention is his, not your client's, at least without more facts and law).  See Model Rule 4.3 (obligations to unrepresented person).

So, step one ought to be to ensure that there is, in fact, an obligation to assign.  (This may not take much — if you've represented the company for years and know it has a regular policy, for example, of requiring absolute assignments you're probably done.) 

What if you investigate, but have doubts about the enforceability of what you find?  Suppose, for example, you think it's ineffective to require assignment?  Putting an assignment in front of an unrepresented inventor, and asking for a POA, creates three risks that many other lawyers have had to litigate — often successfully, but not always.

First, under Rule 4.3 you are likely going to be viewed as providing advice to an unrepresented person with interests adverse to your client.

Second, under some states, you have an affirmative legal obligation to warn people who might reasonably believe that you represent them, that you don't.  Imagine an unsophisticated inventor, presented with a "power of attorney" and told to sign some documents.  A jury could find such person should have been warned.

Third, you may be deemed to have formed an attorney-client relationship with the inventor.  Even in cases where the lawyer thought there was an absolute obligation of assignment, sometimes (for purposes of disqualification or legal malpractice) courts have found an attorney-client relationship.  These are rare circumstances (usually the inventor loses), but not uncommon.

Now, there is Federal Circuit case law, initially applying Ninth Circuit "law" on the formation of attorney-client relationships (is there such a thing?), holding that without more, obtaining a POA from an inventor subject to an absolute obligation of assignment does not create an attorney clent relationship.  I have severe doubts about whether "Ninth Circuit law" matters, even in the Ninth Circuit, to a state law malpractice claim, but even where this reasoning controls, it's a pretty narrow holding, which explains why inventors often bring claims, either in malpractice or disqualification motions, that they were also represented by the company's lawyer.  

But the "without more" part is important:  if the attorney is doing anything besides very minimal work with an inventor, she does risk creating an attorney-client relationship even under this standard.  Also, in many states the subjective belief of the party claiming to have been a client matters a lot more than the Ninth Circuit "law" would suggest, and so state law can avoid the "rule" that without more a POA does not create an attorney client relationship.

And then there are all those cases in the middle — where the facts are not so crisp as a routine employee-obligated to assign, such as where an acquisition or some other transaction is involved.

"You're crazy, David." Yes, I've heard that many times.  But I've read the cases, seen the muddy realities of real life, and worried about two things:  legitimate confusion by an inventor about whether the lawyer represents him, and "baseless" claims brought to disqualify a lawyer or impose malpractice liability. Both concerns matter to BigCo and to lawyers, I hope.

So, (and consistent with a comment above), be very thoughtful before you obtain a POA from an inventor.  Consider transmitting it with an email that simply says "As you know, I do not represent you, I only represent BigCo."  That sort of simple thing will go a long way to avoid problems. In a perfect world (also consistent with the comment above, or below?), don't obtain a POA from an inventor — I realize that in the real world that doesn't always work for practical reasons.  But it is the best approach.


About David

Professor of Law, Mercer University School of Law. Formerly Of Counsel, Taylor English Duma, LLP and in 2012-13, judicial clerk to Chief Judge Rader.

3 thoughts on “Who is Your Client Part 2: Inventors Subject to Assignment to Your “Other” Client

  1. 3

    David, it has been my practice to file a patent application with and assignment and a power of attorney from the “client” not the inventor.

    If the inventor refuses to sign an assignment, we file the employment agreement that generally creates a present assignment or an obligation to assign, together with a declaration that we presented the application to the inventor and he refused to sign.

    If we have no such employment agreement and if there really is no obligation to assign, we do not file. That is more than a complete waste time and money….

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