• Emil J. Ali

Understanding OED’s Reciprocal Discipline System under 37 CFR § 11.24

Updated: Aug 1


Many practitioners describe reciprocal discipline by any jurisdiction as akin to “kicking us when we’re down.” Moreover, the apparent lack of discretion by the OED Director makes matters worse for those who practice before the USPTO. Specifically, upon being disciplined in another jurisdiction, practitioners (including those trademark practitioners who are not registered to practice and have never even heard of the Office of Enrollment and Discipline (OED)) are purportedly required to notify the OED Director so that they can be equally disciplined by the USPTO Director for the same conduct. See 37 CFR § 11.24. For example, a non-USPTO registered trademark practitioner who is suspended from practice in of the state of New York must proactively and timely (within 30 days of the discipline) send notice of the suspension to the OED, and as a result will be reciprocally disciplined by the USPTO. Even with a timely reported sanction the USPTO may impose on the practitioner the same sanction--sometimes long after the original sanction has been completed, adding insult to ever-increasing injury.


OED Director’s Apparent Lack of Discretion

The text of the rule is clear: “[t]he OED Director shall, in addition, without Committee on Discipline authorization, file with the USPTO Director a complaint complying with § 11.34 against the practitioner predicated upon the public censure, public reprimand, probation, disbarment, suspension or disciplinary disqualification.” See 37 CFR § 11.24(a) (emphasis added). In a 2018 Final Order, the USPTO Director interpreted “shall” as requiring the OED Director to institute reciprocal discipline unless the factors in Selling v. Radford, 243 U.S. 46 (1917) were at issue. The USPTO Director specifically noted that such a proceeding was “mandatory.”


While the respondent in the 2018 Final Order, Arno T. Naeckel, argued that it would be inappropriate, nonsensical, and impossible to reciprocally discipline him, the USPTO Director was unmoved. The respondent carefully articulated that, during a pro bono representation, an opposing party filed a bar complaint against him. It was alleged that Mr. Naeckel failed to comply with court orders. By Order dated August 30, 2016, the Arizona Supreme Court ultimately admonished the respondent and ordered probation that appears to have required completion of a CLE within two years. The respondent promptly reported the matter to the OED Director on October 5, 2016, as required by Section 11.24. Upon completion of the CLE in November 2016, Mr. Naeckel petitioned to have his probation terminated. Thereafter, the Arizona Supreme Court issued an order terminating probation on March 15, 2017.


Fast forward to September 28, 2017 (almost one year after the notification by the respondent), the OED Director filed a Complaint for Reciprocal Discipline Pursuant to 37 CFR § 11.24 against the respondent. By Final Order dated May 17, 2018, the USPTO Director imposed the discipline, with a probation of 196 days. Strikingly, the USPTO Director failed to grant the respondent nunc pro tunc relief because he had not established that he voluntarily ceased practice before the USPTO and complied with 37 CFR § 11.58. Again—oddly, this was not a suspension, and no restriction of practice would have been required. Of course, even more troubling was that the USPTO Director treated an admonition as a reprimand, especially considering that the ABA Model Rules for Lawyer Disciplinary Enforcement define them as different levels of sanction.


OED’s Sudden Discretionary Authority

In a recent 2019 Final Order, the USPTO Director censured David J. Furtado based upon his November 2, 2015 discipline in the State of Colorado. Oddly enough, the discipline was imposed using a proposed settlement agreement, which implicates 37 CFR § 11.26, rather than 37 CFR § 11.24. Of course, it appears that Mr. Furtado did receive the exact same discipline by the USPTO as imposed by Colorado.


Therefore, while the 2018 Final Order, teaches that the OED Director lacks authority to not institute reciprocal proceedings, the 2019 Final Order introduces a variation from the norm. Of course, we are aware that the General Counsel of the USPTO has the authority, pursuant to 37 CFR § 11.3(a), to suspend or waive the rules on behalf of the USPTO Director. See Delegation of Authority 06-01. More recently, however, on July 14, 2018 the General Counsel delegated that same authority to the OED Director, meaning it is possible that the OED Director now decides when to exercise discretion by suspending the rules.


Effect on Reciprocal Matters

You really never know unless you ask. Frankly, countering the OED Director’s Complaint and Notice and Order is an uphill and often expensive battle. However, with the apparent change in discretionary authority it appears that it is now possible, in some narrow circumstances, to receive relief from the OED Director. Respondents should therefore carefully articulate any rationale for seeking a variance from identical reciprocal action through a request for suspension or waiver of the rules.


For additional information, please contact McCabe & Ali, LLP at 877-OED-4097.

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