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State’s Ability to Take Disciplinary Action Against Patent Attorney Is Not Preempted by Federal Law

March 21, 2001

Decision icon Decision

Last Month at the Federal Circuit - April 2001

Judges: Michel (author), Smith, and Gajarsa

In Kroll v. Finnerty, No. 00-1176 (Fed. Cir. Mar. 21, 2001), the Federal Circuit vacated a district court’s grant of SJ in favor of Frank Finnerty (nominal Defendant for the New York State Grievance Committee, or “Grievance Committee”), and remanded with instructions to dismiss for lack of subject matter jurisdiction. The Federal Circuit found that the Complaint simply failed to invoke federal question jurisdiction under 28 U.S.C. § 1331 or patent jurisdiction under 28 U.S.C. § 1338(a).

Michael Kroll is a member of the Bar of the State of New York and is registered to practice before the PTO. In response to certain grievance reports, the Grievance Committee initiated disciplinary action against Kroll. In particular, one inventor for whom Kroll prepared a patent application complained that Kroll, after preparing and filing a patent application, ignored her concerns about possible acts of infringement and failed to contact her after the PTO had rejected her application.

Kroll charged a second inventor $21,000 to prepare several dozen drawings, but never finalized an application. Kroll ignored requests by the inventor to return his files, even after the inventor terminated Kroll’s representation.

Kroll charged the credit card of a third grievant on three separate occasions, although he had been authorized to make only a single charge to initiate a patent application.

After the Grievance Committee began its investigation, Kroll sued in the U.S. District Court for the Eastern District of New York, seeking a DJ that federal patent law preempts the Grievance Committee subject matter jurisdiction to consider the alleged grievances. The district court disagreed and granted SJ in favor of the Grievance Committee.

The Federal Circuit concluded that the federal statutes 35 U.S.C. § 2(b)(2)(D) and 35 U.S.C. § 32 do not create the cause of action asserted by Kroll and show no intent to preempt the authority of states to punish attorneys who violate ethical duties under state law. Where these statutes permit the PTO to discipline patent practitioners, the PTO and the states may share jurisdiction over these disciplinary matters, but this does not mean that the state’s authority is preempted. The Court ruled that Kroll’s allegations of preemption were so attenuated and unsubstantiated that they were absolutely devoid of merit. As such, the district court lacked jurisdiction to proceed to the merits of the case, which must be dismissed for lack of jurisdiction.