United States District Court, E.D. Virginia, Alexandria Division
MATTHEW H. SWYERS, Plaintiff,
UNITED STATES PATENT AND TRADEMARK OFFICE, et al., Defendants.
O'GRADY, District Judge.
Swyers filed this action to enjoin the United States Patent
and Trademark Office ("PTO") from pursuing
disciplinary proceedings against him stemming from the Office
of Enrollment and Discipline's ("OED")
purportedly unconstitutional investigation into his patent
practice. In addition to injunctive relief, Swyers seeks
damages from three individual PTO employees pursuant to
Bivens.  During the pendency of the complaint,
the PTO initiated a formal disciplinary proceeding against
Swyers that is now pending before an administrative law
moves to dismiss the complaint on the ground that the
statutory scheme put in place by Congress precludes judicial
review of Swyers' claims at this stage or, alternatively,
for failure to state a claim. (Dkt. No. 14). The individual
defendants have separately moved to dismiss for failure to
state a Bivens cause of action or, alternatively, on
the basis of qualified immunity. (Dkt. No. 17). The motions
are fully briefed, and the Court heard argument on May 6,
2016. For substantially the same reasons identified in the
defendants' briefing, the Court will grant the motions
and dismiss the complaint.
section first sets out the relevant statutory and regulatory
framework and then turns to the facts as alleged in the
Disciplinary Investigations and Proceedings
vested the PTO with "broad authority to govern the
conduct of proceedings before it and to govern the
recognition and conduct of attorneys." Lacavera v.
Dudas, 441 F.3d 1380, 1383 (Fed. Cir. 2006); see
also Kroll v. Finnerty, 242 F.3d 1359, 1364
(Fed. Cir. 2001); Halvonik v. Dudas, 398 F.Supp.2d
115, 121 n.12 (D.D.C. 2005) (describing the power as
"plenary"). Among other things, 35 U.S.C. Â§ 2
provides that the PTO may establish regulations
"govern[ing] 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."
Id. Â§ 2(b)(2)(D). Section 32, titled
"Suspension or Exclusion from Practice, " provides
that "[t]he Director may, after notice and opportunity
for a hearing, suspend or exclude, either generally or in any
particular case, from further practice before the [PTO], 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)." Id. Â§ 32. A grieving practitioner
may seek review in this Court.
to this authority, the PTO promulgated rules of professional
conduct and subjects attorneys to discipline for failure to
comply. See 37 C.F.R. Â§Â§ 10.20-112 (Code of
Professional Responsibility); id. Â§Â§ 11.101-901
(Rules of Professional Conduct). The PTO's disciplinary
process proceeds in two phases: the investigation of possible
grounds for discipline and the institution of formal
disciplinary proceedings. See id. Â§Â§ 11.2,
11.19-11.60. Disciplinary investigations are the province of
the Office of Enrollment and Discipline and its Director.
Id. Â§Â§ 11.2(b)(3), 11.22(a). "An investigation
may be initiated when the OED Director receives a grievance,
information or evidence from any source suggesting possible
grounds for discipline." Id. Â§ 11.22(a). When
an investigation is initiated, the Director must provide the
practitioner written notice. Id. Â§ 11.22(e).
conducts investigations by issuing requests for information
and evidence (a "RFI") to either "(i) [t]he
grievant, (ii) [t]he practitioner, or (iii) [a]ny person who
may reasonably be expected to provide information and
evidence needed in connection with the grievance or
investigation." Id. Â§ 11.22(f)(1). The Director
may also "request information and evidence... from a
non-grieving client" if one of two conditions is met.
Either the practitioner consents to the contact or a member
of the Committee on Discipline-an independent
panel- finds "that good cause exists to
believe that the possible ground for discipline alleged has
occurred with respect to non-grieving clients."
Id. Â§ 11.22(f)(2).
rules require practitioners to respond to "lawful
demand[s] or requests] for information from an admissions or
disciplinary authority, " except to the extent that
doing so would "require disclosure of information
otherwise protected by [privilege]." Id. Â§
11.801(b). A practitioner who "knowingly fail[s] to
respond" may be subject to discipline. Id.
regulations contain a mechanism by which any
"dissatisfied" party may challenge "any action
or notice of any employee of the [OED] during or at the
conclusion of a disciplinary investigation."
Id. Â§ 11.2(e). In full, that section provides:
(e) Petition to USPTO Director in disciplinary matters. A
party dissatisfied with any action or notice of any employee
of the Office of Enrollment and Discipline during or at the
conclusion of a disciplinary investigation shall seek review
of the action or notice upon petition to the OED Director. A
petition from any action or notice of the staff reporting to
the OED Director shall be taken to the OED Director. A party
dissatisfied with the OED Director's final decision shall
seek review of the final decision upon petition to the USPTO
Director to invoke the supervisory authority of the USPTO
Director in appropriate circumstances in disciplinary
matters. Any petition under this paragraph must contain a
statement of the facts involved and the point or points to be
reviewed and the action requested. Briefs or memoranda, if
any, in support of the petition must accompany the petition.
Where facts are to be proven, the proof in the form of
affidavits or declarations (and exhibits, if any) must
accompany the petition. The OED Director may be directed by
the USPTO Director to file a reply to the petition to the
USPTO Director, supplying a copy to the petitioner. An oral
hearing on petition taken to the USPTO Director will not be
granted except when considered necessary by the USPTO
Director. The filing of a petition under this paragraph will
not stay an investigation, disciplinary proceeding, or other
proceedings. Any petition under this part not filed within
thirty days of the mailing date of the action or notice from
which relief is requested may be dismissed as untimely. Any
request for reconsideration of the decision of the OED
Director or the USPTO Director may be dismissed as untimely
if not filed within thirty days after the date of said
decision. Only a decision of the USPTO Director regarding
denial of a petition constitutes a final decision for the
purpose of judicial review.
PTO's regulations governing disciplinary investigations
were not always so extensive. In 2004, the lack of procedural
safeguards within PTO investigations resulted in a rebuke by
the Fourth Circuit. See Goldstein v. Moatz,
364 F.3d 204 (4th Cir. 2004). In Goldstein, a
practitioner sued several PTO employees for damages and
declaratory relief arising out of "the violation of his
constitutional rights to free speech and due process through
issuance of the RFIs." Id. at 210. In denying
the individual defendants absolute immunity, the court
reasoned that "[t]he importance of denying absolute
immunity... is underscored by the utter lack of procedural
safeguards protecting Goldstein's rights and his
clients' secrets." Id. at 217. At that
time, the regulations contained no mechanism through which a
practitioner could challenge an RFI, absent the PTO formally
initiating disciplinary proceedings. Thus, the Fourth Circuit
noted that Goldstein "had no option but to answer the
RFIs because failure to comply would itself constitute a
violation of the disciplinary rules." Id.
wake of Goldstein, the PTO made some
changes. The section of the Code addressing
investigations now explicitly provides authorization to the
OED Director to issue RFIs. See 37 C.F.R. Â§
11.22(f). Before that, the authorization was contained
somewhat ambiguously elsewhere. See
Goldstein, 364 F.3d at 217-18. Section 11.2(e) was
added, giving all parties the ability to petition for relief
from an RFI through administrative channels and ultimately to
an Article III court. Thus, a practitioner "can [now]
challenge the RFIs as unduly burdensome or as protected by
attorney-client privilege or attorney work-product privilege,
" as the Goldstein court envisioned.
Id. at 218. Finally, as noted above, a practitioner
can only be subject to discipline for failing to response to
"a lawful demand or request for
information" and discipline cannot stem from refusal to
disclose information otherwise protected by privilege. 37
C.F.R. Â§ 11.801(b) (emphasis added).
OED Director believes an investigation has uncovered grounds
for discipline, he may institute disciplinary proceedings
only if the Committee on Discipline makes a finding of
probable cause. Id. Â§Â§ 11.22(b), 11.32. If probable
cause is found, the OED Director may file a complaint.
Id. Â§ 11.32. The practitioner, who may be
represented by counsel, then has thirty days to file an
answer. Id. Â§Â§ 11.36, 11.40. From that point, the
proceedings bear many of the same hallmarks as traditional
litigation. See id. Â§ 11.43 (Motions); Â§ 11.44
(Hearings); Â§ 11.45 (Amendment of Pleadings); Â§ 11.50
(Evidence); Â§ 11.51 (Depositions); Â§ 11.52 (Discovery). An
independent hearing officer presides over the proceedings,
id. Â§ 11.39, and the OED Director must prove
violations by clear and convincing evidence. Id. Â§
nine months, the hearing officer must issue an initial
decision with findings of fact, conclusions of law, and if a
violation is found, an appropriate sanction. Id. Â§Â§
11.39(d), 11.54(a). A practitioner may appeal an adverse
ruling to the PTO Director. Id. Â§ 11.55. The
Director may conduct a de novo review and either
affirm, reverse, or modify the initial decision, or,
alternatively, remand for further proceedings. Id. Â§
11.56(a). Both the practitioner and the OED Director have an
opportunity to move the PTO Director for reconsideration.
Id. Â§ 11.56(c). Review of the PTO Director's
final decision "may be had... by a petition filed in
accordance with 35 U.S.C. 32." Id. Â§ 11.57.
32 provides that "[t]he United States District Court for
the Eastern District of Virginia, 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. Â§ 32. In turn, this Court has
promulgated a local rule addressing its jurisdiction over
A person refused recognition to practice or suspended or
excluded from practice before the United States Patent and
Trademark Office ("USPTO") may seek judicial review
of such action by filing in the Alexandria Division of this
Court a petition against the Under Secretary of Commerce of
Intellectual Property and Director of the USPTO
("Director") within 30 days after the date of the
order recording the Director's action. Service of the
petition shall be effected in accordance with Fed.R.Civ.P.
4(i)(2). Within 60 days after service of the summons and
petition on the U.S. Attorney, the Director shall respond to
the petition and file a certified copy of the record and
proceedings before the USPTO, which shall constitute the sole
basis for the Court's review. The Court may, in its
discretion, require briefing and argument prior to making a
decision on the petition.
Va. Local Rule 83.5.
Allegations in the Complaint
Swyers is a practicing patent attorney and founder of The
Trademark Company, PLLC, "a Virginia law firm whose
practice is dedicated exclusively to the representation of
clients in the protection of their federal trademark and
copyright rights." Compl. Â¶ 13. The Trademark Company
aims to "provide access to thousands of persons who
would not normally be able to afford to protect their
intellectual property under standard law firm pricing
structures." Id. Â¶ 14. On an annual basis, the
firm "handles thousands" of matters. Id .
\ 15. From the time of its founding in 2003 to date, The
Trademark Company has represented more than 20, 000 clients.
Id. Â¶ 16. As of 2015, the Company had employed
Swyers and fourteen other employees, none of whom were
attorneys. Id. Â¶49.
2014, the OED initiated an investigation into Swyers'
practice before the PTO. Id. Â¶18. Over the course
of a year, the OED sent Swyers five RFIs, in what Swyers
believes was "an unwarranted, oppressive, and
unconstitutional investigation... impacting his ability to
practice law, robbing him of thousands of hours of
professional time in attempts to respond to the OED requests
for information, and costing hundreds of thousands of dollars
in legal fees." Id. Â¶ 36. Because the gravamen
of Swyers' complaint is the OED's method of
investigation, it is necessary to go into some detail.
received the first RFI in August 2014 from defendant Leonardo
Villarreal Alejandro, an OED staff attorney. Id. Â¶Â¶
19, 37; Defs.' Ex. 1. It contained eight inquiries
directed at three trademark applications filed by Swyers.
Compl. Â¶ 37; Defs.' Ex. 1 at 2. The letter also
identified six PTO rules "under possible consideration
in th[e] investigation, " and further warned that
It is a violation of the USPTO Rules of Professional Conduct
to fail to cooperate with OED in an investigation of any
matter before it, or to knowingly fail to respond to a
request from OED. See 37 C.F.R. Â§ 11.801(b). In
addition, if you do not respond to this request for
information, the Committee on Discipline may draw an adverse
inference in making a determination under 37 C.F.R. Â§ 11.23.
Â¶19; Defs. Ex. 1 at 3. The letter requested a response within
provided the requested information in October. Compl. 21, 37.
"Almost immediately, the OED's investigation
broadened into an inquiry into virtually every trademark
matter ever handled by Swyers." Id. Â¶ 22. OED
staff attorneys began contacting Swyers' clients by
letter and telephone regarding their trademark
applications. Id. Â¶ 23. In December 2014,
Mr. Villarreal Alejandro sent a letter to Swyers' clients
without his knowledge or consent that requested
"assistance in connection with a review of [their]
trademark application." Id. The letters asked
for a written response regarding whether the client had
actually provided marks to The Trademark Company.
Id. 25, 27. The letters did not state that the OED
was investigating Swyers or that the purpose of the letter
was to gather evidence for that investigation. Id. Â¶
24. They also did not advise the clients of their rights with
regard to answering the RFI, suggest that they contact a
lawyer before answering, or mention attorney-client
privilege. Id. 25-26.
least one occasion, OED staff called one of Swyers'
clients and inquired about a trademark application.
Id. Â¶28. Upon information and belief, OED staff
"assured the client that they did not need to worry
because the caller was not an attorney, and expressly advised
the client that they need not speak with Swyers before
answering questions, again without advising the client
regarding the existence of the attorney-client relationship
or about the potential waiver of such privilege."
began contacting Swyers and informing him of the OED
contacts. On December 16, 2014, Swyers, by counsel,
"spoke to the individual defendants" and asked that
they stop contacting clients and also provide a complete list
of clients contacted. Id. Â¶ 29. Although defendant
Ronald Jaiks said a list would be provided, it never was.
December 19, Mr. Villareal Alejandro issued a second RFI.
Id. Â¶38; Pl.'s Ex. A. The RFI explained that
part of the OED's inquiry "concerns... compliance
with USPTO electronic signature rules." Pl.'s Ex. A
at 14. The RFI identified approximately 500 trademark
applications, see id. at 2-14, and requested that
for each submission filed in each of the 500 applications
Swyers identify whether he personally entered his signature
or whether he had another person do so; identify each
submission filed electronically for which he did not
personally enter the signature; explain for each document
that was not personally signed why he did not do so; and
identify all other submissions filed electronically with the
PTO for which Swyers did not personally enter his signature.
Id. at 14-15. Swyers contends that the last request