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Stringent Requirements likely to be imposed on Patent Attorney Groups

Hot on the heels of the recent purchase of AJ Park by the stock exchange listed company IPH Ltd, the final draft of the proposed Code of Conduct for Trans-Tasman Patent and Trade Marks Attorneys (the Code) has been released. As written, the Code will place some stringent requirements on the three listed IP holding companies or ‘ownership groups’ of this type[1]. In this regard the Code appears to reflect and attempts to address some of the concerns which have been expressed about publicly listed companies owning groups of patent attorney firms.

Communication

One criticism which has been expressed is the lack of transparency by firms in an ownership group and a lack of adequate disclosure to their clients about the ownership structure. Anecdotal evidence has shown that many clients and many overseas associates who advise them are still – three years after the first of the companies arose – unaware that their patent attorney firm is a member of one of these ownership groups.

The Trans-Tasman IP Attorneys Board (the TTIPAB) has determined that clients should be provided with enough information to make an informed decision as to whether they wish to utilise a firm within these ownership groups. Accordingly, the Code requires:

• Registered attorneys within an ownership group to notify all new clients, or clients for whom they are doing materially different work, of their membership of a group as well as the firms who are members of the group.
• Where there is a change in the group, (for example a purchase of a further firm) the attorney will also be required to notify existing clients of the change.
• Registered attorneys within a group will be required to publicise their membership of the group as well as the firms within the group in a manner that it can be reasonably expected the information will come to the attention of, and by understood by, the public.

Conflicts and Independence

Concerns have also been raised about the situation where different firms within a single ownership group are acting for clients who have interests which are adverse to one another. At what stage is there an actual or perceived conflict of interest between those firms? The TTIPAB has determined that:

• Independent firms within a group can act for adverse clients during filing and prosecution. Independently in this regard means being independent in the client facing services. Sharing back office services may be permissible provided they would not result in a breach of duties of confidentiality.
• Written informed consent of the client is required for independent firms within a group to act on either side of a proceeding between two clients before a court or tribunal, adjudicative body or intellectual property office.

In this area the Code of Conduct has a dual role, ensuring not only that registered patent and trade mark attorneys are held to appropriate professional standards, but also maintaining a level of public confidence in the profession. Often the latter is more to do with perception than reality. The TTIPAB has clearly considered that there are some concerns, whether real or perceived, with the ‘ownership group’ model and has moved to address some of them in the Code. While the requirements of disclosure and informed consent may seem onerous, they leave the power with the client to make their own decision, and thus promote public confidence in the patent attorney system.

The Draft Code of Conduct is now undergoing a final period of submissions on ‘unintended consequences’. This period will close on 20 November 2017, with the Code needing to be in force by 23 February 2018.

As an independent and owner operated firm, we welcome the increased transparency for clients and associates working with the firms within the ownership groups.

If you have any concerns of comments, feel free to contact us.