TM Attorney Sued for Allegedly Attacking TM he had Obtained for Client

By David Hricik, Mercer Law School

A lawyer registered a mark for Annie Sloan Interiors Ltd. (ASI) to register a mark for it, but later represented Jolie Design & Decor LCC (JDD) and Jolie Home, LLC (Jolie Home) to challenge the mark (“CHALK PAINT”) asserting genericness (apparently at the USPTO and in litigation).  ASI, a former client by then, sued for breach of fiduciary duty and legal malpractice.

Defendant moved to dismiss. The court held the complaint adequately pled breach of a fiduciary duty. Specifically, the court reasoned ASI alleged the lawyer had “breached a duty of loyalty by using knowledge gained during his representation of ASI to assist a different client in a challenge to its mark, and that its damages consist of the money expended in defending the mark and any resulting diminution in the value of the mark.”

The court found that an agreement “waiving” (i.e., consenting) to this was insufficient because, among other things, in it ASI acknowledged the firm would be representing JDD, and made no mention of Jolie Home.

As for legal malpractice, the defendant argued the claim was time-barred, and here is a key lesson for practitioners. The lawyer had, it seemed, “terminated” the representation in 2015, at a time when the malpractice claim would have become barred. However, the complaint alleged that the lawyer “remained ASI’s designated attorney in the CHALK PAINT® stylized design trademark proceedings—and held the power to act on ASI’s behalf—throughout the time period from June 2012 through mid-2018, until his power of attorney was revoked and he was replaced as attorney of record on June 1, 2018.” The court reasoned that because it was “ASI’s position that Kappel’s representation did not actually terminate until he was removed as its attorney before the United States Patent and Trademark Office (“USPTO”), on June 1, 2018, and that up until that date, he remained enrolled before the USPTO as ASI’s attorney of record, holding the full power of attorney for CHALK PAINT® design mark before the USPTO. ASI also argues that in failing to withdraw as attorney of record at the USPTO, Kappel failed to perfect or complete his termination based on the 2015 termination letter.”  The court denied the motion to dismiss based on the defense of limitations given those allegations.

It’s rare to see a lawyer allegedly challenging a patent, or mark, it obtained for a former client, and this is one more example of why it seems risky to do so.

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.

5 thoughts on “TM Attorney Sued for Allegedly Attacking TM he had Obtained for Client

  1. 2

    It doesn’t look like he did anything in 2018, it likes like someone else filed a new appearance. “The plaintiff’s complaint alleges that ‘Kappel remained ASI’s designated attorney in the CHALK PAINT® stylized design trademark proceedings—and held the power to act on ASI’s behalf—throughout the time period from June 2012 through mid-2018, until his power of attorney was revoked and he was replaced as attorney of record on June 1, 2018.'” That’s describing a single document filed by new counsel, not by the old one. The court and/or the plaintiff must have inferred that representation is continuous until it’s revoked but that’s not true. Also in 2018 the new attorney didn’t have to file a revocation (because there was nothing to revoke), it could have just filed an appearance. But it’s not surprising that a revocation was filed, I imagine it’s often done to be on the safe side.

    I’d have to go look at the file wrappers to know whether and when his appearance actually ended, but it definitely ends without doing anything: link to tmep.uspto.gov

  2. 1

    This is very wrong. According to the USPTO, representation ends once the mark registers. We don’t file withdrawals.

    1. 1.1

      Ah, the law. I know a lot about certain aspects of TM practice, but not a lot about others. But, if I were the plaintiff’s lawyer here, I’d say “so what” to that: did you tell your client you were done? If not, the law (generally) is that the attorney-client relationship continues to the matter is “over.”

      But, even if it were over, you can’t be adverse to a former client in the same, or a substantially related, matter. So, it sounds like a problem even if the representation was over.

      Don’t misunderstand me — I don’t know the facts. The judge was addressing 12(b)(6).

      1. 1.1.1

        Right, I agree on the ethics aspect, but the date of termination related to SoL and he had sent a letter terminating the relationship. “Kappel’s January 15, 2015 termination letter recited that ‘I [Kappel] will be filing the necessary paperwork with the United States Patent and Trademark Office and the Trademark Trial and Appeals Board to notify them of my withdrawal of counsel.’ ASI contends that Kappel’s failure to file the necessary paperwork until June, 2018 means that Kappel’s representation did not terminate until June, 2018.” For registered marks there was nothing to file to withdraw, you are automatically withdrawn (although I would have filed something if I said I was going to, the system allows you to file one even if the PTO won’t honor it).

        1. 1.1.1.1

          Ah, I see. Like I said, I’m more familiar with patent practice, maintenance fees, correspondence address, and so on. But, (and I realize it’s a 12b6, it sounds like the lawyer DID file something in 2018…) If I understand you, though, in TM practice (a) he could have said in 2015 “I’m done” and (b) whatever he filed in 2018 wasn’t necessary? Is there not in TM practice the equivalency of a correspondence address as in patent practice, for section 8 (or whatever it is called) notices?

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