Importance of Due Diligence for Patent Practitioners and the US/China Economic War

by Dennis Crouch

37 C.F.R. § 11.18(b) imposes crucial responsibilities on patent applicants, attorneys, and agents. Documents submitted to the USPTO implicitly certify that:

1. Statements made are true or are are believed to be true (based upon information and belief) and do not include any attempt to conceal a material fact; and
2. That a reasonable inquiry was conducted to confirm that: (i) statements have no improper purposes, (ii) legal contentions are supported by existing law or valid arguments for change, (iii) allegations and factual contentions have or are likely to have evidentiary support, and (iv) denials of factual contentions are based on evidence or a reasonable lack of information or belief.

Recent USPTO disciplinary cases underscore the seriousness of these obligations. Examples include filing a micro entity status request without proper investigation and submitting an information disclosure statement (IDS) by a non-practitioner without practitioner review. Rubber stamping is not permitted.

The PTO Just released a final order in a case against Jinggao Li, operator of the Dragon Sun Law Firm.  In re Li, D2023-19 (PTO Order).  Li received a public reprimand for relying on foreign counsel’s guidance on micro entity status, resulting in unwarranted status in 19 of 27 cases.  Similarly, in In re Wu, D2023-24 (PTO Order), US patent agent Qianqian Wu was reprimanded for submitting 20+ applications with micro entity status, despite the income-level qualification allowing only four applications.  She also reported relying upon client’s statements regarding their qualification for micro entity status.  Similar recent cases include In re Tung-Yun McNally, D2023-22 (PTO Order); and In re Chew, D2023-08 (PTO Order).

It is worth noting that these cases involve practitioners whose names with Chinese origins and Chinese entities as clients. In a recent conversation with Dir. Vidal, she acknowledged her role as Undersecretary of Commerce focuses on the economic war between the US and China, but assured that her role as PTO director does not involve discrimination against China-originated innovation. She explained that the agency did not target Chinese fraudulent activity, but recognized that most of the current fraud and blatant misconduct before the PTO originates from China.

As a practitioner, ask yourself: Are you conducting inquiries, reasonable under the circumstances, to validate the information you present?

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11.18 Signature and certificate for correspondence filed in the Office.

(a) For all documents filed in the Office in patent, trademark, and other non-patent matters, and all documents filed with a hearing officer in a disciplinary proceeding, except for correspondence that is required to be signed by the applicant or party, each piece of correspondence filed by a practitioner in the Office must bear a signature, personally signed or inserted by such practitioner, in compliance with § 1.4(d) or § 2.193(a) of this chapter.

(b) By presenting to the Office or hearing officer in a disciplinary proceeding (whether by signing, filing, submitting, or later advocating) any paper, the party presenting such paper, whether a practitioner or non-practitioner, is certifying that –

1. All statements made therein of the party’s own knowledge are true, all statements made therein on information and belief are believed to be true, and all statements made therein are made with the knowledge that whoever, in any matter within the jurisdiction of the Office, knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact, or knowingly and willfully makes any false, fictitious, or fraudulent statements or representations, or knowingly and willfully makes or uses any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement or entry, shall be subject to the penalties set forth under 18 U.S.C. 1001 and any other applicable criminal statute, and violations of the provisions of this section may jeopardize the probative value of the paper; and
2. To the best of the party’s knowledge, information and belief, formed after an inquiry reasonable under the circumstances,
   • i. The paper is not being presented for any improper purpose, such as to harass someone or to cause unnecessary delay or needless increase in the cost of any proceeding before the Office;
   • ii. The other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law;
   • iii. The allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and
   • iv. The denials of factual contentions are warranted on the evidence, or if specifically so identified, are reasonably based on a lack of information or belief.

(c) Violations of any of paragraphs (b)(2)(i) through (iv) of this section are, after notice and reasonable opportunity to respond, subject to such sanctions or actions as deemed appropriate by the USPTO Director, which may include, but are not limited to, any combination of –

1. Striking the offending paper;
2. Referring a practitioner’s conduct to the Director of the Office of Enrollment and Discipline for appropriate action;
3. Precluding a party or practitioner from submitting a paper, or presenting or contesting an issue;
4. Affecting the weight given to the offending paper; or
5. Terminating the proceedings in the Office.

(d) Any practitioner violating the provisions of this section may also be subject to disciplinary action.