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Kroll v. Lee

United States District Court, E.D. Virginia, Alexandria Division

May 22, 2017

MICHAEL I. KROLL, Petitioner,
MICHELLE LEE, Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Respondent.


          Leonie M. Brinkema United States District Judge

         Michael I. Kroll, Esq. ("petitioner" or "Kroll"), has filed a document styled a "Complaint" [Dkt. 1] alleging that he was improperly suspended from practicing as a patent attorney before the United States Patent and Trademark Office ("USPTO").[1] The USPTO has responded by treating Kroll's complaint as a petition for review, citing Local Civil Rule 83.5, which provides that a "person refused recognition to practice or suspended... from practice before the [USPTO] may seek judicial review of such action by filing [in this court] a petition" for review (emphasis added). "Response to Petition for Review" ("Resp.") [Dkt. 26]. After obtaining leave of Court, Kroll filed an Opposition[2] ("Opp.") [Dkt. 33] and a Supplemental Submission in opposition ("Supp.") [Dkt. 35]. The Court has found that oral argument would not aid the decisional process, and for the reasons that follow, will treat this civil action as a petition for review, which will be denied.


         Kroll, who was represented throughout the administrative process by counsel, [3] has not challenged the respondent's factual findings in the agency proceedings, which this Court accordingly adopts. See Final Order, [Dkt. 1-1] at 13-20.

         Kroll is an active member of the New York State Bar and has been a registered patent attorney since December 6, 1973, with nearly 80 percent of his work occurring before the USPTO. Id. at 13. He also maintains several websites, on which he posts his clients' inventions "in hopes of attracting potential buyers or investors." Id. Since 1973, he has been generally aware that an invention cannot be patented "if the invention is described in a written publication [or placed on sale] more than one year before filing a patent application on the invention[J" Id. at 12-13; see also 35 U.S.C. § 102(b), and he concedes that placing an invention on his website constitutes publicly describing an invention or placing it on sale, Final Order, [Dkt. 1-1] at 14. Accordingly, Kroll normally waits to post an invention on his website until after he has filed a patent application with the USPTO for that invention. Id. at 15.

         In his patent practice, Kroll did not have an automated system to remind him of upcoming deadlines; rather, he manually entered deadlines into a docket sheet, which he manually searched to keep track of dates. Id. at 14. He also maintained his files in "approximately 125 five-drawer filing cabinets." Id. Although the drawers themselves were organized by the client's last name, the files within the drawers were not kept in an organized fashion. Id. At least one cabinet was labeled "Applications in Process/Ready to be Filed, " in which Kroll kept applications before they were filed. Id. When an application was in fact ready to be filed, Kroll or one of his employees would pull the file from that cabinet, file the application with the USPTO, and then return the file to the "Ready to be Filed" cabinet until the USPTO confirmed receipt of the application. Id. at 15. Once the confirmation from the USPTO arrived, the file would then be moved to the alphabetical cabinets to await the USPTO's final decision. Id.

         In 2001, Kroll first met with Adil Sersh ("Sersh") about representing Sersh in connection with an application for a patent for a traffic control device that Sersh had invented. Id. at 5. In 2004, Sersh paid Kroll $8, 000 to prosecute the patent application. Id. By October 15, 2005, Sersh provided Kroll with all the necessary documents for the application, which Kroll prepared but did not file. Id. at 16. Instead, on December 3, 2005, Kroll listed the traffic control device for sale on one of his websites, marking it as "U.S. Patent: Pending" even though he had not filed the patent application. Id. After Kroll listed the device, Sersh's file was placed in the "S" cabinet, a deviation from Kroll's system of placing files in the alphabetical cabinet only after the USPTO has confirmed receipt of a patent application. Id. Throughout this period, Kroll "took no action to confirm whether the traffic control device application had been filed with the USPTO, " id, and he failed to "file a patent application for the traffic control device within 12 months of his posting the invention for sale on his" website, Id. at 17.

         Nearly two years later, in August 2007, Kroll found Sersh's application "by chance, " and realized it should have been, but had not been, filed with the USPTO. Id. Without checking his website to determine if the invention appeared there, or conducting "any additional investigation into the invention's patentability, " Kroll filed the application ("the '052 application") for Sersh's traffic control device on August 13, 2007, and informed Sersh that he had done so. Id. At the time of filing, Kroll knew that a patent attorney, by filing "any paper" with the USPTO, certified to the best of his knowledge "formed after an inquiry reasonable under the circumstances that... the claims and other legal contentions therein are warranted by existing law[.]" Id. at 14; 37 C.F.R. § 10.18(b) (2004).[4]

         On December 28, 2009, the USPTO sent Kroll an "Office Action" raising written description and obviousness concerns about the '052 application, which required further response for the application to proceed. Final Order, [Dkt. 1-1] at 17; [Dkt. 18-2] at 85-97. Kroll informed Sersh about the Office Action, requested a $2, 375 fee to respond to it, and alerted Sersh that failure to respond would constitute abandonment of the application. Final Order, [Dkt. 1-1] at 17-18. Sersh did not respond, Kroll did not contact him again, and no response to the Office Action was filed. Id. at 18. Consequently, the USPTO sent Kroll a Notice of Abandonment for the '052 application on July 7, 2010, about which he did not inform Sersh. Id.

         Kroll has had other run-ins with disciplinary authorities both before and after the incident that gave rise to this proceeding. In 2004, the USPTO suspended him from practice for three years for charging an excessive fee, giving false or misleading information to the USPTO, and creating false evidence, although this suspension was "stayed pending compliance with the terms of a settlement agreement[.]" Id. at 19. The New York Supreme Court publicly censured him in 2006, reminding him "not to neglect patent applications[.]" Id. at 18. In 2010, the USPTO suspended him for 60 days for permitting an application to be abandoned by failing to inform the USPTO that foreign patent applications for the same invention had been filed. Id. at 19. This suspension, too, was stayed. Id.

         On February 28, 2014, based on Kroll's handling of the Sersh application, the director of the USPTO's Office of Enrollment and Discipline filed a disciplinary complaint alleging ten violations of the USPTO Rules of Professional Conduct. Id., at 20. On April 24, 2015, an administrative law judge ("ALJ") found that three violations had been proven: (1) engaging in disreputable or gross misconduct in violation of 37 C.F.R. § 10.23(a); (2) signing a paper filed with the USPTO without first conducting a reasonable inquiry in violation of 37 C.F.R. §§10.18 and 10.23(a); and (3) neglecting a legal matter entrusted to him in violation of 37 C.F.R. § 10.77(c). Id. at 21. Considering these violations and Kroll's disciplinary history, the ALJ imposed a two-year suspension. Id. at 21-22.

         Kroll appealed to the Director of the USPTO, who affirmed the ALJ on March 4, 2016, Id. at 35, and denied reconsideration on May 18, 2016, Id. at 8. The order denying Kroll's motion for reconsideration informed him that he had 30 days from the date of that order to seek judicial review of his suspension. Id. Kroll filed his "complaint" in this court on June 21, 2016. [Dkt. 1].

         n. discussion As an initial matter, the parties disagree over the nature of this civil action and, consequently, the appropriate standard of review. The USPTO argues that it is appropriately characterized as a "petition for review" under 35 U.S.C. § 32 and this court's Local Civil Rule 83.5, and that a deferential standard of review applies. Kroll argues that the procedures set out in § 32 and Rule 83.5 are unconstitutional and that this dispute should be treated like any other civil complaint filed in this court in the first instance and be reviewed de novo.

         On the merits, Kroll contends that he cannot be suspended unless he violated the USPTO's practice rules with wrongful intent. Respondent argues that Kroll's complaint was untimely and that the rules in ...

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