# Appendix — Bender v. Dudas (No. 07-847)

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386010_0436%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 2007

## Text

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APPENDIX A

United States Court of Appeals
For The Federal Circuit

2006-1243

[Filed June 21, 2007]

S. MICHAEL BENDER,
Plaintiff-Appellant,

Vv.

Jon W. Dudas, DIRECTOR,
PATENT AND TRADEMARK OFFICE,
Defendant-Appellee.

ll i i i i a a

Before RADER, Circuit Judge, PLAGER, Senior
Circuit Judge, and LINN, Circuit Judge.

LINN, Circuit Judge.

S. Michael Bender (“Bender”) appeals from a final
decision by the United States District Court for the
- District of Columbia that granted summary judgment
upholding a disciplinary action taken by the director of
the United States Patent and Trademark Office (the
“PTO” or “agency”) to exclude Bender from practicing
before the PTO. Bender v. Dudas, No. 04-CV-1301
(D.D.C. Jan. 13, 2006) (“SJ Order”). Because the

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PTO’s findings were supported by substantial
evidence, and because the disciplinary action was not
arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with the law, we affirm.

I, BACKGROUND

This case involves the PTO’s continuing efforts to
regulate the conduct of patent agents and attorneys
registered to practice before it and to provide
assurance to inventors of effective counsel in filing and
prosecuting applications for patents in the United
States. The background of this case reads like a novel
but represents the true story of hopes dashed, fees ©
wasted, and dreams lost by hundreds of individual
inventors caught up in the world of self-interested
promoters who promise the world and deliver very
little.

In the area of patent law, as in most other areas of
the law, sophisticated clients generally are able to
determine the kinds of legal representation they need
and where to find counsel with the skills, integrity,
and character appropriate for the matter at hand.
Individual inventors, however, are often unfamiliar
with even the most basic principles of patent law, do
not know where to turn for help, and are vulnerable to
those who seek to take advantage of their
inexperience. Commonly available sources of guidance
often are of little help, either because they are too
simplistic or too generalized to be of any particular
assistance or because they are too complex to be
readily understood. Even mainstream media sources
frequently confuse and misunderstand basic
intellectual property law precepts. How often do we

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read articles confusing the forms of protection
applicable to an invention, to a symbol indicating
origin, or to a work of authorship with expressions
like, “copyrighted his invention,” “trademarked his
idea,” or “patented her textbook”?

The PTO has recognized the need to regulate those
who practice before it. To this end, the PTO has
determined minimum levels of legal competence and
has rigorously administered testing of those who seek
tc become registered patent agents and attorneys. It
has also established minimum standards of ethical
conduct expected of registered practitioners and has
promulgated rules implementing those standards and
providing a mechanism for their enforcement.

For individual inventors, the PTO’s listing of
registered patent agents and attorneys is a basic
resource and an assurance of legal competence and
good moral character. But as sophisticated as the PTO
is in regulating practitioners who appear before it and
in providing information about registered practitioners
on its website and in other publicly distributed
materials, it frequently finds itself challenged by
so-called “invention promoters” who exploit
unsophisticated inventors, heap every invention with
praise regardless of the merits or the real prospects of
legal protection, and entice inventors into engagement
agreements filled with hollow guarantees of patent
protection and promises of royalty-bearing licenses
that seldom yield anything of any significant value.

In seeking to protect the public from unscrupulous
invention promoters, the PTO has aggressively sought
to monitor and enforce its disciplinary rules against

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those registered practitioners who act in concert and
participation with these promoters in the prosecution
of patent applications before the PTO. This case is
about one such practitioner who became complicit in
the activities of an invention promoter involving over
1,000 unsuspecting inventors.

These unsuspecting inventors first sought help
from American Inventors Corporation (“AIC”), an
invention promoter. According to testimony and |
declarations of past employees and clients, AIC would
solicit inventors to present their ideas, tell each
inventor that their idea was great, and then perform
a patent search. After the search, AIC would conduct
a sales presentation that provided the inventor with a
positive evaluation of the invention and offered AIC’s
services in procuring a patent and promoting the
invention to manufacturers and other interested
parties. The inventor then signed a standard form
contract in which he or she paid a flat fee or a
combination of a flat fee and a percent of royalty .
income in exchange for AIC’s promise to hire a patent
attorney on the inventor's behalf, pay all legal fees
associated with prosecuting a patent application, and
conduct various marketing activities to promote the
invention. AIC also guaranteed that it would refund
100% of the inventor’s flat fee if a patent was not
procured. The contract did not specify what type of
patent would be obtained or in any way explain the
differences in protection between a design patent and
a utility patent. Indeed, according to past employees
-and clients, AIC’s general policy and practice was to
conceal those differences from the inventors.

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After the contract was signed, AIC would forward
the inventor’s disclosure to a patent attorney.
Initially, that patent attorney was Leon Gilden.
Although a number of the inventors’ disclosures
indicated that they sought to protect the useful and
functional features of the invention—as opposed to
ornamentation—Gilden drafted design patent
applications in every case. In addition, Gilden
allegedly employed draftsmen to add decorative
ornamentation or surface indicia to the drawings of the
inventions even though such embellishment was not
invented by the named inventor. Gilden would send
the completed design patent application to AIC, which
would get the inventor’s signature, and the application
would then be filed using Gilden’s registration
number. At no point did Gilden consult with the
inventors regarding the filing of a design patent
application or the embellished drawings because,
according to a former AIC employee, direct contact
between the inventors and the attorney was
emphatically discouraged by AIC.

The alleged purpose of this scheme was to make it
easier to obtain a patent and to avoid a refund of the
inventors’ fee under AIC’s money-back. guarantee.
Gilden’s alleged involvement in the embellishment
scheme prompted the PTO to initiate disciplinary
action against him in the early 1990s. The PTO also
sent each applicant a Request for Information (“RFI”)
asking the inventors whether they invented the
patterns on the drawings, whether they intended to
apply for a design patent over a utility patent, and
whether they understood the difference between a
design and a utility patent. Ultimately, Gilden

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entered into a settlement agreement with the PTO aindg
received a five-month suspension.

In 1993, AIC contracted with Bender, a register-ed
patent attorney, to continue the prosecution of ower
1,000 design applications that had formerly besen
handled by Gilden (the “Gilden applications”). The
contract provided Bender with up to $15,000 bi-weekly
as compensation for both attorneys fees aind
prosecution costs. Bender sent each Gilden applicant
an engagement letter that included, among other
things, the RFI that Gilden had failed to provide to tthe
client and a brief discussion of the differences between
a design patent and a utility patent. The engezeméent
. letter to each applicant was essentially the same; it (did
not provide any advice or inquiries that directly
related to the particular invention at issue, the typée of
patent best suited to protect the invention, or tthe
consequences of pursuing a design patent or a utillity
patent in each particular inventor’s§ caise.
Furthermore, other than instructing the inventors to
respond to the RFIs, Bender did not attempt, to
determine whether the Gilden applicants had intendled
to file design patent applications and whether tlhat
decision had been made on an informed basis. As ‘the
responses to the RFIs indicated, a number of ithe
inventors either did not understand the differeince
between a design and utility patent or had wanterd a
utility patent at the time the application was filled.
Bender nevertheless continued to prosecute the Gilaien
applications as design patent applications, takting
steps only to have Gilden’s improperly added
embellishments removed.

Ta

In the late 1990s, the Office of Enrollment and
Discipline at the PTO began investigating Bender after
receiving information indicating that he had violated
the PTO’s Code of Professional Responsibility. During
that investigation, the Office of Enrollment and
Discipline sent Bender several RFIs posing questions
about his actions and conduct. In August 1999, a
meeting of the Committee on Discipline was held in
which it was determined that there was probable
cause to bring charges against Bender for violations of
PTO regulations. An administrative Complaint and
Notice dated June 20, 2000, set forth ten counts
alleging violations of PTO rules governing attorney
conduct.

The charges against Bender were tried before an
administrative law judge from March 26 through
March 29, 2001. In a thorough 48-page opinion, the
administrative law judge found that Bender had
violated numerous PTO rules on attorney conduct and
that exclusion from practice was warranted. Bender
sought review of that initial decision under 37 C.F.R.
§ 10.154. In an equally thorough opinion, the general
counsel for the PTO issued a final decision that
adopted some of the violations found in the initial
decision and affirmed the sanction of exclusion.
Specifically, the general counsel found that Bender
had neglected an entrusted legal matter in violation of
37 C.F.R. § 10.77(c); accepted employment where
professional judgment may be affected in violation of
37 C.F.R. § 10.62(a) and accepted compensation from
a person other than a client without a full disclosure to
the client in violation of 37 C.F.R. § 10.68(aX1); and
engaged in conduct that was prejudicial to the
administration of justice in violation of 37 C.F.R.

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§ 10.23(b)(5). Bender requested reconsideration of the
final decision under 37 C.F.R. § 10.156(c).
Reconsideration was largely denied.

Bender then filed a petition in the U.S. District
Court for the District of Columbia to challenge the
PTO’s final decision. 35 U.S.C. § 32; 37 C.F.R.
§ 10.157. Based on the administrative record, Bender
and the government filed cross-motions for summary
judgment. Bender alleged procedural and due process
violations; lack of jurisdiction; improper application of
statutes, precedent, and agency regulations; and lack
of a factual basis for the administrative law judge’s
and general counsel’s decisions. See SJ Order, slip op.
at 5. The district court confirmed that there were no
genuine issues of material fact with respect to those
issues and—in a 50-page opinion—addressed each of
Bender’s arguments, finding them unpersuasive. See
id., slip op. at 7-49. Accordingly, the district court
denied Bender’s motion for summary judgment and
granted summary judgment to the government. ZId.,
slip op. at 50.

Bender filed a timely appeal to this court.
Following oral argument, we instructed the parties to
submit supplemental briefing addressing the standard
utilized by the PTO in determining the sanction of
exclusion and the proper standard of review for
reviewing that determination. We have jurisdiction
pursuant to 28 U.S.C. § 1295(a)(1). See Wyden uv.
‘Comm’r of Patents & Trademarks, 807 F.2d 934, 937
(Fed. Cir. 1986) (en banc).

Sa
Il. DISCUSSION

The PTO has statutory authority to suspend or
exclude “from further practice before the Patent and
Trademark Office, any person, agent, or attorney
shown to be incompetent or disreputable, or guilty of
gross misconduct, or who does not comply with the
regulations established under section 2(b)(2)(D) of this
title.” 35 U.S.C. § 32. Section 2(b)(2XD) delegates to
the PTO the authority to establish regulations
governing the conduct of attorneys prac cing before
the PTO. Id. § 2(bX2XD). Pursuant to that statutory
authority, the PTO has enacted disciplinary rules, see
37 C.F.R. § 10.20(b) (listing the various disciplinary
rules), and has established procedures and standards
for determining whether those rules have been
violated and what sanction should be imposed, 37
C.F.R. §§ 10.130-10.170.

The disciplinary action taken by the PTO is subject
to review by the U.S. District Court for the District of
Columbia according to the provisions of the
Administrative Procedure Act. See 5 US.C.
§§ 702-706; 35 U.S.C. § 32. Under that Act, the
agency’s choice of sanction is held unlawful only if it is
“arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.” 5 U.S.C. § 706;
see also Butz v. Glover Livestock Comm’n Co., 411 U.S.
182, 185-86 (1973) (“[W]here Congress has entrusted
an administrative agency with the responsibility of
selecting the means of achieving the statutory policy
‘the relation of remedy to policy is peculiarly a matter
of administrative competence.” (citation omitted)).
The underlying factual findings used to support such
a sanction are reviewed for substantial evidence.

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Lipman v. Dickinson, 174 F.3d 1363, 1367 (Fed. Cir.
1999). We review the district court’s decision on
summary judgment without deference, reapplying on
appeal the same standards applicable to the district
court. Lacavera v. Dudas, 441 F.3d 1380, 1382 (Fed.
Cir. 2006).

Bender argues that substantial evidence does not
support the PTO’s findings that he violated various
disciplinary rules, that the PTO exceeded its authority
and violated his constitutional rights, and that the
PTO abused its discretion in determining that
exclusion was an appropriate sanction. We disagree
and address each of Bender’s arguments in turn.

A. Substantial Evidence

The agency found that Bender violated multiple
regulations governing attorney conduct before the
PTO.

1. Section 10.77(c)

First, the PTO found that Bender “neglect/ied] a
legal matter entrusted to the practitioner” in violation
of 37 C.F.R. § 10.77(c). As the Gilden applicants’
responses to the PTO indicated, many of Bender’s
clients did not appreciate the substantive difference
between a design patent and a utility patent at the
time the application was filed. Some applicants
indicated that they had wanted to file a utility patent
application. Although Bender was aware of those
responses, he continued to prosecute the Gilden
applications as design patents. The brief discussion of
the difference between design and utility patents

lla

provided by Bender’s engagement letter was an
entirely hollow and formalistic gesture because it did
not provide any of the Gilden applicants with advice
that directly related to the particular inventions at
issue, the type of patent best suited to protect these
particular inventions and the inventor's interests
therein, or the consequences of pursuing a design
patent instead of a utility patent. This failure is even
more glaring in view of AIC’s money-back guarantee
that a patent would issue without regard to the type of
patent that would be procured. Because design
applications had already been filed in each case, and
because AIC’s money-back guarantee motivated
continued prosecution of those applications as design
applications, the information provided by Bender’s
engagement letter was an inadequate response to the
confusion demonstrated by his clients’ earlier
responses to the RFIs. Any reputable attorney would
have appreciated that the wholesale filing of design
applications under such circumstances and the
unauthorized addition of design embellishments were
driven in large measure if not entirely by AIC’s
money-back guarantee. Such an attorney would have
identified that motivation to each inventor, explained
that such a motivation was not necessarily in the
inventor’s best interests, educated that inventor on the
steps needed either to fix the improperly embellished
design applications or to file continuation utility
applications, and otherwise advised that inventor on
how best to proceed in his or her particular case. As
the PTO correctly found, Bender’s communications to
the Gilden applicants at the outset of his
representation fell far short of these minimum
standards.

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Bender also fell short in neglecting to notify some
of his clients of final rejections in their applications
until after the three-month period for responding to
those rejections had expired. Bender does not dispute
this failure, but instead explains that he purposefully
delayed action in those cases pending the resolution of
an appeal in a “test case” that directly related to the
rejections.’ While such an explanation might justify
advising the client to seek an extension of time under
37 C.F.R. § 1.136 or a stay of proceedings pending
resolution of the test case, it does not justify an
absolute failure to notify the client at all that a final
rejection had issued, let alone the response needed,
until after the period for response expired. Although
Bender argues that the delayed notification had no
adverse impact on the applications, prompt
notification of the final rejection accompanied with an
explanation of the available options would have given

+ After assuming the Gilden applications, Bender filed
continuation design applications on the applicants’ behalf that
amended the original applications by deleting the improperly
added patterns from the drawings. In one of those applications,
the Board of Patent Appeals and Interferences described the
matter as an issue of first impression and concluded that such an
amendment constituted “new matter” that did not benefit from
the earlier filing date. See In re Daniels, 144 F.3d 1452, 1455
(Fed. Cir. 1998). Bender was counsel for that applicant on appeal
to this court, and we ultimately reversed the Board’s decision. Jd.
at 1457.

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Bender’s clients the choice as to how best to proceed
and would have avoided depriving them of the right to
avoid paying late filing surcharges.”

Because substantial evidence supports the PTO’s
determination that Bender neglected to advise his
clients on how best to protect their inventions and
neglected to promptly inform his clients that final
rejections were received in their applications, we see
no basis to overturn the decision that Bender violated
37 C.F.R. § 10.77(c).

2. Sections 10.62(a) and 10.68(a\(1)

Second, the agency found that Bender’s financial
relationship with AIC created a conflict of interest.
. Specifically, the PTO concluded that Bender's
compensation from AIC affected Bender’s “professional
judgment on behalf of the client” in violation of 37
C.F.R. § 10.62(a) and constituted compensation by one
other than the client without “the consent of the
practitioner’s client after full disclosure” in violation of
37 C.F.R. § 10.68(aX(1). The PTO interpreted section
10.62(a) as requiring, at a minimum, that Bender
disclose the extent of his relationship with AIC and
explain how AIC’s money-back guarantee to procure a
patent and its alleged involvement in improperly
adding non-invented patterns to the drawings of the
Gilden applications could create divergent interests in
the continued prosecution of those applications. The

* At the time, AIC had declined to pay for such prosecution costs,
and Bender informed the individual clients that they were
responsible for any continued prosecution costs and fees.

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PTO also interpreted the “full disclosure” requirement
of section 10.68(aX1) as requiring disclosure of the
amount that Bender was being paid by AIC. Because
both regulations require “full disclosure”’—an
undefined term that is left to the agency to
determine—we defer to these interpretations of the
agency’s own regulations because they are not “plainly
erroneous or inconsistent with the regulation.”
Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512
(1994) (quoting Bowles v. Seminole Rock & Sand Co.,
325 U.S. 410, 414 (1945)). Because Bender fails to
point to any indication in the record that he met the
disclosure requirements of 37 C.F.R. §§ 10.62(a) and
10.68(a)(1) as interpreted by the agency, we again see
no basis to overturn the PTO’s determination that
Bender violated those regulations.

3. Section 10.23(bX5)

Finally, the agency found that Bender “[e]ngaged in

conduct that is prejudicial to the administration of
justice” in violation of 37 C.F.R. § 10.23(bX(5) by
providing the PTO with evasive responses to RFIs. In
the RFI dated September 18, 1999, Bender was asked
to explain when AIC made the offer to Bender to
assume prosecution of the Gilden applications and
when Bender accepted that offer. Bender responded
by referring to another answer in which he stated only
that he had represented the inventors since about
1993. The same RFI also asked Bender whether he
had disclosed his financial relationship with AIC to
certain clients and whether he had explained to both
those clients and AIC that he represented the clients’
interests and not AIC’s interests. Bender’s only
response to that question was to object that such a

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request was argumentative, indefinite, and based on
the false premise that he represented the interests of
AIC. The PTO’s questions were specific questions
directed to Bender’s relationship with AIC and his
disclosure of that relationship to his clients. His
failure to respond to those questions in any meaningful
way hindered the PTO’s investigation. We therefore
conclude that substantial evidence demonstrates that
Bender engaged in evasive conduct prejudicial to the
PTO’s investigation, and we see no basis to overturn
the PTO’s determination that Bender violated 37
C.F.R. § 10.23(b)(5).

B. The Propriety of the Agency's Regulations and
Actions

} a

Bender argues that 35 U.S.C. §§ 2(b2)(D) and 32
only authorize the PTO to establish regulations
governing the conduct of attorneys “before the Office”
and that the regulations at 37 C.F.R. §§ 10.62, 10.68,
and 10.77 exceed that authority because they relate to
client communications that are not made “before the
Office.” The language of those statutes indicates that
they are broadly directed to service, advice, and
assistance in the prosecution or prospective
prosecution of applications. See 35 U.S.C. § 2(bX2XD)
(ensuring that attorneys “render to applicants or other
persons valuable service, advice, and assistance in the
presentation or prosecution of their applications or
other business before the Office”); id. § 32 (providing
for the suspension or exclusion of any attorney that
defrauds, deceives, misleads or threatens “any
applicant or prospective applicant, or other person

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having immediate or prospective business before the
Office”). The regulations in question are well within
the scope of the enabling statutes. To the extent the
phrase “before the Office” in sections 2 and 32 is
ambiguous, we defer to the PTO’s reasonable
interpretation of that phrase as authorizing
regulations that govern a patent attorney's
communications with and disclosures to a client in
connection with the prosecution of applications before
the PTO. See Chevron, U.S.A., Inc. v. Natural Res.
Def. Council, Inc., 467 U.S. 837, 842-845 (1984);
Lacavera, 441 F.3d at 1383 (“Because the PTO is
specifically charged with administering [85 U.S.C.
§ 2(bX2)], we analyze a challenge to the statutory
authority of its regulations under the Chevron

framework.”).

2.

Bender also argues that the Fourth Circuit’s
decision in Goldstein v. Moatz, 364 F.3d 205 (4th Cir.
2004), establishes that the PTO’s use of RF is in his
disciplinary investigation lacked procedural
safeguards and was therefore constitutionally
defective. The constitutionality of such RFIs was not
at issue in Goldstein. Rather, the issue in that case
was whether employees of the PTO were entitled to
absolute or qualified immunity when conducting a
disciplinary investigation. Id. at 211. The Fourth
Circuit held that the employees were entitled only to
qualified immunity, a determination it supported by
the fact that such an investigation lacked procedural
safeguards to protect the investigated attorney's
rights. See id. at 217-19. The Fourth Circuit’s

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decision did not hold that the use of RFIJs in a
disciplinary investigation was unconstitutional.

As the Supreme Court has recognized, “when
governmental action does not partake of an
adjudication, as for example, when a_ general
fact-finding investigation is being conducted, it is not
necessary that the full panoply of judicial procedures
be used.” Hannah v. Larche, 363 U.S. 420, 442 (1960);
see also id. at 444-49 (surveying legislative, executive,
and judicial investigative agencies and noting that
those that appear before such agencies are generally
not accorded procedural safeguards). That is because
such procedures would unduly stifle the agency in its
gathering of facts. See id. at 443-44. Here, the PTO
issued to Bender RFIs in the course of conducting a
nonadjudicative, fact-finding investigation prior to the
initiation of any adjudicative proceedings. 37 C.F.R.
§ 10.181. This type of RFI not only assists the agency
in gathering facts, it also protects practitioners by
providing them with an opportunity to explain any
questionable conduct and present reasons why
disciplinary proceedings are not warranted. We
therefore reject Bender’s arguments based on
Goldstein that the PTO’s use of RF Is in its disciplinary
investigation violated his right to procedural due
process. We have considered Bender’s remaining
constitutional arguments and find them unpersuasive.

C. The Sanction of Exclusion

In deciding what sanction to impose, the PTO
normally considers “(1) the public interest; (2) the
seriousness of the violation of the Disciplinary Rule;
(3) the deterrent effects deemed necessary; (4) the

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integrity of the legal profession; and (5) any
extenuating circumstances.” 37 C.F.R. § 10.154(b).
Bender argues that exclusion was improper because
such a “draconian” sanction was motivated by malice,
was punishment oriented, and failed to account for
extenuating circumstances.

The PTO properly initiated disciplinary action in
this matter based on improper practices conducted in
the course of Bender’s representation of clients that
had been originally represented by Gilden and referred
by AIC. After the improprieties surrounding the
affairs of AIC came to light, Gilden agreed to a
five-month suspension from practice to avoid formal
disciplinary proceedings. That sanction was the result
of a settlement agreement in which Gilden admitted to
violating various regulations. Bender, however, has
maintained throughout these proceedings that he has
done nothing wrong. Moreover, he has continued to
demonstrate a complete lack of remorse despite the
clear findings, supported by substantial evidence, that
Bender neglected legal matters with which he was
entrusted, failed to disclose the conflict created by his
financial relationship with AIC, and engaged in
conduct prejudicial to justice. |

Bender’s sanction was not punishment oriented or
based on malice. To the contrary, the PTO carefully
evaluated and applied the factors outlined by section
10.154(b), including the extenuating circumstances
that Bender identified. Specifically, the PTO
considered Bender’s efforts in litigating the Daniels
case, the sanctions imposed in similar circumstances,
and Bender’s age. The PTO also noted that Bender
had violated multiple regulations, that his misconduct

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was aggravated by specific notice from the outset that
the arrangement with AIC was not resulting in
adequate consideration of the inventors’ needs, and
that Bender refused to recognize the impropriety of his
conduct or to express any remorse for his actions. The
PTO ultimately concluded that Bender's failure to
recognize that his conduct was improper created a
likelihood that he would continue to violate the same
disciplinary rules again and that, as a result, exclusion
was necessary. The district court agreed.

Although Bender may have only had the best
intentions in mind in assuming prosecution of the
Gilden applications, the best of intentions cannot
absolve Bender’s complicity with AIC in a scheme
fraught with deception and adversely affecting a large
number of unsuspecting inventors. As an experienced
patent practitioner, Bender had to have appreciated
that the wholesale practice of filing design applications
with unauthorized design embellishments in hundreds
of applications was not in the inventors’ interests but
instead was driven by AIC’s money-back guarantee.
He should have known that the kind of letter he sent
to his newly acquired clients fell far short of the
explanation needed to address the distressed
circumstances in which his clients were placed by his
new employer, AIC. His letter, even though well
written and perhaps sufficient as an engagement letter
of a client in the first instance, only perpetuated the
harm done to the Gilden applicants by treating what
had previously transpired as nothing out of the
ordinary when the circumstances of this entire
matter—and MBender’s conflicting interests in
particular—were quite extraordinary. Bender’s failure
to appreciate that fact supports the PTO’s

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determination that any sanction less than exclusion
would not provide the necessary deterrent eiffect.
Because we cannot conclude that the sanction of
exclusion is arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law, we
have no reason to disturb the PTO’s sanction of
exclusion from practice.

Ill. CONCLUSION

- For all of the foregoing reasons, we affirm the
district court’s grant of summary judgment.

AFFIRMED

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APPENDIX B

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

Civil Action No.: 04-1801 (RBW)

[Filed March 13. 2006]

S. MICHAEL BENDER,
Plaintiff,

Vv.

JON W. DUDAS,
Director of the United States
Patent and Trademark Office,
Defendant.

i i i i i a i

MEMORANDUM OPINION

The plaintiff, S. Michael Bender (“Bender”), brings
this action against the defendant, Jon W. Dudas
(“Dudas”), Director of the United States Patent and
Trademark Office (“PTO”), pursuant to 35 U.S.C. § 32
(2000), challenging the Director’s Final Decision
precluding him from practicing law before the PTO.
Complaint (“Compl.”) {{ 2, 6. Currently before the
Court is the Plaintiffs Motion for Summary Judgment
and Memorandum in Support Thereof (“Pl.’s Mot.”),
requesting this Court to vacate the Director’s Final

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Decision, and the defendant’s Cross-Motion for
Summary Judgment, which asks this Court to grant
summary judgment in its favor with respect to the
Director’s Final Decision on the grounds that it was
reasonable, lawful, and supported by substantial
evidence in the record. Defendant’s Cross-Motion for
Summary Judgment (“Def.’s Mot.”). For the reasons
discussed below, the plaintiffs motion for summary
judgment is denied and the defendant’s motion for

summary judgment is granted.
I. Background

Bender is an attorney who has been practicing
patent law since 1966. Plaintiffs Statement of
Undisputed Material Facts (“Pl.’s Stmt.”) { 59. In
1993, Bender assumed the prosecution of a large
number of patents before the PTO formerly handled by
another attorney, Leon Gilden (“Gilden”). P1.’s Stmt.
¥ 1. At that time, Gilden was involved in disciplinary
proceedings which stemmed from Gilden’s filing of
over 1000 patent applications “under the auspices” of
American Inventor’s Corporation (“AIC”), an invention
marketing company. Id. {{ 2, 3. The disciplinary
proceedings resulted from the PTO’s discovery that
Gilden, or someone associated with his office, had
“embellished the drawings in each application with a
unique decorative pattern of surface indicia,” a tactic
allegedly employed for the purpose of obtaining a
patent for each application and “avoid[ing] a refund of
AIC’s service fee under a guarantee clause contained
in some, but not all of the contracts between each
inventor and AIC.” Jd. 4 4. The matter was ultimately
settled with Gilden receiving a 5-month suspension
from practicing before the PTO. Id. { 2.

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In assuming Gilden’s cases, Bender entered into an
agreement with AIC that required the company to pay
him for his work and the associated costs on the patent
cases. Id. 4 6. At some point, the PTO discovered
Bender’s relationship with AIC and began sending him
“disciplinary letters in the form of Requirements for
Information” (“RF Is”); ultimately the PTO sent Bender
at least 20 such letters. Id. {¥ 7-8, 28. The letters
were all signed by Harry I. Moatz (“Moatz”), who was
at the time an investigator in the PTO’s Office of
Enrollment Discipline (“OED”); Moatz eventually
became the OED’s Director. Id. {{¥ 38, 42, 47. On
September 18, 1998, the PTO sent Bender an RFI that
required him to answer questions concerning his
representation of several clients associated with AIC.
Defendant’s Statement of Material Facts with respect
to which there is No Genuine Issue (“Def.’s Stmt.”)
¥ 17. In August, 1999, Moatz called a meeting of the
Committee on Discipline (“Committee”) to determine
whether there was probable cause to bring charges
against Bender and presented evidence to the
Committee procured during his investigation of
Bender. Compl. { 48, 50. The Committee determined
that there was probable cause, and an administrative
Complaint and Notice of Proceedings, dated June 20,
2000, and signed by Moatz, was served on Bender. Jd.
q 56. The complaint set forth 10 counts alleging
violations of the PTO’s rules governing attorney
conduct in conjunction with Bender’s representation of
nine AIC related clients and one other client that was
associated with another invention promotion company
named “Phase 2.” Pl.’s Stmt. {J 33-34. Each count of
the administrative complaint related to a particular
inventor and multiple rules violations. See generally
Administrative Complaint (“Admin. Compl.”).

24a

Administrative Law Judge (“ALJ”) William B.
Moran presided over Bender's hearing on the
allegations charged in the complaint, which occurred
on March 26 through March 29, 2001. Initial Decision
of the ALJ (“ALJ Decision”) at 1." The ALJ found that
Bender had violated several provisions of the PTO’s
rules on attorney conduct, which resulted in his
exclusion from practice before the PTO. ALJ Decision
at 44-48. Bender appealed the ALJ Decision and a
Final Decision (“GC Decision”) was then issued by
James A. Toupin (Toupin”), General Counsel of the
PTO, which concluded that some of the ALJ’s rules
violation findings against Bender were in error, but
that others were not.’ Specifically, the GC Decision
reversed the AL.J’s decision with respect to 18 of the
violation findings, and sustained the ALJ’s decision
with respect to 21 of the violation findings.’ GC

* Pursuant to Local Rule 83.7, Bender filed a copy of the
administrative record with this Court on September 24, 2004. See
plaintiffs Notice of Filing. The administrative record contains,
inter alia, the administrative complaint, the administrative law
judge’s decision and the general counsel’s decision. Because both
parties rely extensively on the content of these documents, and
because this Court’s review also depends in part on an
examination of these documents, they will be cited to directly
throughout this opinion.

* The Under Secretary of Commerce for Intellectual Property and
the Director of the PTO delegated to Toupin on January 31, 2002,
the authority to decide appeals from the initial decision and to
issue decisions pursuant to 37 C.F.R § 10.156. GC Decision at 47
n.5.

* As indicated, each count of the administrative complaint
pertains to a particular client of Bender. With the exception of

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Decision at 39-40. Toupin concluded that the ALJ
correctly found that Bender violated several PTO
disciplinary regulations, which are set forth in Chapter
37 of the Code of Federal Regulations (“C.F.R.”).
Namely, Toupin found that Bender violated 37 C.F.R.
§ 10.23(bX5) (2000), which prohibits PTO practitioners
from engaging in conduct that is prejudicial to the
administration of justice; 37 C.F.R. § 10.62(a) (2000),
which prohibits PTO practitioners from accepting
employment where the practitioners’s professional
judgment may be affected by his own interests; 37
C.F.R. § 10.68(aX1) (2000), which prohibits PTO
practitioners from accepting compensation from a
person other than his own client; and 37 C.F.R.
§ 10.77(c) (2000), which prohibits PTO practitioners
from neglecting a legal matter entrusted to the
practitioner. GC Decision at 1. As to these violations,
the GC Decision thoroughly explained why the ALJ’s
findings of the violations were both factually and
legally correct. GC Decision at 20-36 (internal
evidentiary references omitted). The GC Decision also
addressed and rebutted Bender’s challenges to the
ALJ’s findings, as well as various arguments raised by
Bender. Jd. Specifically, Bender raised several
questions with respect to the sufficiency of the
administrative complaint, id. at 4-9; the PTO’s
compliance with the Administrative Procedure Act
(“APA”), id. at 9-11; the PTO’s jurisdiction to sanction
practitioners like Bender and the related issue of state

count 2, which is not at issue in this case because the violation
therein was not sustained by the GC Decision, each count consists
of four or five core allegations that apply to each of Bender’s
clients.

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law preemption, id. at 12; the meeting conducted by
the Committee on Discipline and whether its finding
of probable cause to file the administrative complaint
constituted an adjudication, id. at 13; the AL.J’s
exclusion of certain evidence and whether the
exclusions were proper, id. at 14-16; whether the ALJ
was biased and whether his appointment was proper,
id. at 16-18; whether expert testimony was required in
the case, id. at 18; whether the ALJ’s decision not to
dismiss the counts where witness testimony was not
adduced was correct, id. at 18-19; whether certain
violations found by the ALJ cannot be sustained based
on the ALJ’s findings of fact and whether other
findings of fact were warranted, id. at 36-38, and
whether the sanction of exclusion from practice before
the PTO was appropriate, id. at 40.

In response to Bender’s Request for
Reconsideration of the GC Decision, the PTO,
pursuant to 37 C.F.R. § 10.156(c) (2004), issued its
decision on July 26, 2004, upholding the GC Decision
in its entirety.‘ Defendant’s Memorandum of Points
and Authorities in Support of his Cross-Motion for
Summary Judgment and in Opposition to Plaintiffs
Motion for Summary Judgment (“Defs Mem.”) at 5.

Now, in this action filed in this Court, Bender
raises many of the same objections and arguments
that he raised before the PTO, as well as new
arguments based on the GC Decision. Currently
before this Court are the parties’ cross-motions for

‘ The only correction of the GC Decision was the removal of an
erroneous footnote. Def.’s Mem. at 5.

27a

summary judgment. Some of these arguments question
the factual basis for the administrative law judge’s and
general counsel’s conclusions. Other arguments allege
procedural and due process violations, lack of
jurisdiction, and improper application of statutory and
case law and agency regulations. Each of these
arguments are discussed below.

I. Standard of Review

“Summary judgment is an appropriate procedure
for resolving a challenge to an agency’s administrative
decision when review is based upon the administrative
record.” R.D. ex rel. Kareem v. District of Columbia,
374 F. Supp. 2d 84, 89 (D.C. Cir. 2005) (citing
Richards v. I.N.S., 554 F.2d 1173, 1177 & n.28 (D.C.
Cir. 1977)). “By its very terms, [the summary
judgment] standard provides that the mere existence
of some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion
for summary judgment; the requirement is that there
be no genuine issue of material fact.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)
(emphasis in original).

The material facts in this case are those that
pertain to the disciplinary violations upheld in the GC
Decision.” This Court’s review of the parties’
statements of material fact as well as_ the

* To the extent that the parties’ statements of undisputed fact do
not address the facts relating to the violations found in the GC
Decision, the Court has reviewed the administrative record to
determine what facts were presented to the PTO.

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administrative record confirms that there are no
genuine issues of material fact in dispute with respect
to the questions to be decided by this Court.
Accordingly, the Court will review each of the parties’
claims under the appropriate standard, as set forth in
the Administrative Procedure Act. The specific issues
to be addressed by this Court are (1) whether the
Fourth Circuit's decision in Moatz v. Goldstein, 364
F.3d 205 (4th Cir. 2004), has any impact on the case
presently before the Court; (2) whether the PTO has
the authority to promulgate disciplinary rules and to
impose the sanction of exclusion for conduct such as
those found in this case; (3) whether the violations are
supported by substantial evidence in the record and
whether the PTO’s interpretations of its disciplinary
rules are reasonable; (4) whether there is evidence of
bias or prejudgment amounting to a denial of the
plaintiffs right to be adjudicated by a neutral
decisionmaker; (5) whether the PTO violated the APA
with respect to the separation of functions requirement
and in dispensing with the notice requirement; (6)
whether the administrative complaint was sufficiently
specific to comply with the APA; and (7) whether the
PTO or the ALJ commited significant procedural
errors regarding the plaintiffs hearing and
adjudication. Each issue will be discussed in turn.

Il. Analysis

A. Impact of the Fourth Circuit’s Decision in Moatz v.
Goldstein

Bender argues that “{a]s a matter of law, the GC
Decision in this proceeding is void in view of a
dispositive controlling decision handed down .. . in

29a

Goldstein v. Moatz, 364 F.3d 205 (4th Cir. 2004).” Pl.’s
Mot. at 17. He contends that the Goldstein decision
voids the GC Decision and compels this Court to grant
his motion for summary judgement. P1.’s Opp’n at 1-4.
Bender also claims, more specifically, that under
Goldstein, the RFI to which his answers were deemed
evasive and thus in violation of 37 C.F.R. § 10.23(b)(5),
constituted a request for improper discovery and that
the charge of evasion therefore “cannot be supported
by substantial evidence as a matter of law.” Plaintiffs
Opposition (“P1.’s Opp’n”) at 21-22. Further, Bender
argues that the PTO acted in bad faith in “concealing”
the Goldstein decision when issuing its Decision Upon
Reconsideration (“DUR”) by not mentioning or
following the Goldstein decision. PIl’s Mot. at 1920.
Finally, Bender argues that he did not waive the claim
that the RFIs amounted to requests for improper
discovery because (1) “he frequently contested the
‘appropriateness’ of the ‘improper RFIs” during the
investigation and (2) Goldstein is an “intervening
change in law” which permits him to advance the
argument even if he failed to do so before the agency if
the supervening decision has changed the law in his
favor and the law was so well-settled at the time of
trial that any attempt to challenge it would have
appeared pointless. Pl.’s Opp’n at 2 (citing United
States v. Washington, 12 F.3d 1128, 1139 (D.C. Cir.
1994)).

On the other hand, the PTO contends that
Goldstein v. Moaiz has no bearing on the instant case
for several reasons. First, the PTO argues that Bender
waived his argument with respect to the impropriety
of the RFIs and therefore cannot raise the argument at
this time. Def.’s Mem. at 20-21; Reply in Support of

30a

Defendant's Cross-Motion for Summary Judgment
(“Def.’s Reply”) at 1-3. The PTO further asserts that it
did not “conceal” the Goldstein opinion (to the extent
that was possible), but rather did not cite the opinion
because it was not relevant to its decision. Def.’s Mem.
at 21. Second, the PTO argues that while Goldstein is
characterized by the plaintiffs as a “dispositive
controlling decision,” as a Fourth Circuit decision it is
not binding on this Court. Jd. at 22. Third, the PTO
argues that the Goldstein decision did not reach the
questions of the constitutionality of RFIs and that its
discussion concerning the authority of the PTO to issue
RFIs was dictum. Id. at 23-25. Lastly, the PTO
argues that even if Goldstein does hold that RFT’s are
unconstitutional, application of the exclusionary rule
to the discovered information is inappropriate because
the rule does not apply to administrative proceedings.
Id. at 27-29.

In Goldstein, the plaintiff was a patent attorney
who was under investigation for misconduct and was
directed by the PTO to respond to RFIs. 364 F.3d at
207-08. Goldstein then filed suit against several PTO
officials in their individual capacities, seeking
damages and declaratory relief in a Bivens® action
arguing, inter alia, that the issuance of the RFIs
violated his constitutional rights to free speech and
due process. Jd. at 209-10. The district court had held
that the defendants were entitled to absolute
immunity, and the issue on appeal to the Fourth
Circuit was whether the district court’s absolute

* Bivens v. Six Unknown Named Agents of Fed. Bureau of
Narcotics, 403 U.S. 388 (1971).

3la

immunity ruling was correct. Id. at 210-11. The
Fourth Circuit reversed the district court’s decision
and found that the defendants were not entitled to
absolute immunity because they were performing
investigative, as opposed to prosecutorial activities.
Id. at 215. As a factor that supported denying the
officials absolute immunity, the Goldstein Court noted
that the process of requiring information through
RFETs prior to the initiation of formal charges lacked
any procedural safeguards. Id. at 217. The Court
made this point because the “Supreme Court hal[d]
indicated that, in assessing whether absolute
immunity applies in a particular situation, [courts]
should consider whether the system in question
contains adequate procedural safeguards, such that
private litigation is unnecessary to protect
constitutional rights.” Jd. at 217 (citing Butz v.
Economou, 438 U.S. 478, 512 (1978)). The Fourth
Circuit concluded that Goldstein lacked the protection
he would have been afforded by the formal discovery
process, and it therefore remanded the case to the
district court to determine whether the defendants
were entitled to qualified immunity. Id. at 219.

Although the Fourth Circuit noted that the PTO’s
process of obtaining information through RFIs lacked
any procedural protections, nowhere in the opinion did
the court hold that the PTO did not have the authority
to issue them. Rather, the Fourth Circuit’s finding
that the officials were not entitled to absolute
immunity was based on the notion that attorneys must
be provided procedural protections when RFIs are
submitted to them. The Court found that “the only
available limitation in this system is a private lawsuit;
therefore, it is all the more important that the

32a

{djefendants not be accorded absolute immunity.” Id.

at 219. In other words, the Goldstein Court recognized
that patent attorneys needed procedural protection
from coercive RFIs issued by the PTO, but it did not
hold that the PTO lacks the authority to issue them.
Lawyers may choose not to respond and seek redress
by filing a lawsuit, or they may choose to respond to
them. Goldstein therefore does not support the
proposition which Bender urges, i.e., that the PTO
lacks the authority to issue RF Is prior to the initiation
of an action under § 32. Accordingly, the Court
declines to address any arguments advanced by the
plaintiff that are based on the premise that the PTO
lacks such authority.

To the extent that Bender’s arguments regarding
the PTO’s lack of authority to issue RF Is are his own
independent positions and are not based on his
position that Goldstein is dispositive or binding, the
Court must first determine whether he is raising these
arguments for the first time on appeal from the GC
Decision, and if so, whether they have therefore been
waived. The District of Columbia has instructed that
“[tlo preserve a legal or factual argument, we require
its proponent to have given the agency a ‘fair
opportunity to entertain it in the administrative
forum before raising it in the judicial one.” Nuclear
Energy Institute, Inc. v. Envtl. Prot. Agency, 373 F.3d
1251, 1290-1291 (D.C. Cir. 2004). Thus, the general
rule with respect to waiver is that “claims not
presented to the agency may not be made for the first
time to a reviewing court.” Jd. at 1290 (quoting
Omnipoint Corp. v. FCC, 78 F.3d 620, 535 (D.C. Cir.
1996)).

33a

It is Bender’s position that he did not waive his
claim that coercive RFIs are, as a general matter,
improper. Pl.’s Opp’n at 2. In support of this position,
he points to several instances in which he challenged
certain specific RFIs as improper. Jd. In his response
to the August 21, 1998 RFI, for example, Bender
argued to the PTO that the RFI was “retaliatory,”
intended to “harass” him, and “[sought] to injure
invention marketing companies” and attorneys
associated with such companies. Jd. (citing response
to RFI of August, 21, 1998). In response to another
RFI, Bender made similar arguments, and also alleged
that the RFI was essentially repetitive and an abuse of
process. Id. (citing response to RFI of September 17,
1998).”? These and other objections must be considered
in light of the fact that Bender responded to numerous
other RFTs without objection. Indeed, as pointed out
by the PTO in its Opposition, the ALJ questioned
Bender about the duty of an attorney to respond to
RFIs, asking him, “if the Patent Office sends you a
letter and that letter is received by you and you do not
make a response would that be . . . at least a technical
violation of the duty that a patent attorney owes to the
Patent and Trademark Office... .?” Def.’s Reply at 2
(citing Administrative Hearing Transcript at 63-64.).
To this question, Bender replied: “Yes. It’s my opinion
that no response would definitely be a violation . . .
({bjut I responded to every letter and there were many,
many letters.” Id. It therefore appears that while
Bender objected to certain RFI’s on specific grounds,
he did not raise the objection that the mere issuance of

’ Bender references objections to four RFIs that were submitted
to him.

34a

RF Is to attorneys is improper, and that he agreed that
as a general matter, patent attorneys had a duty to
respond to them.

It therefore appears that Bender is raising his
claim about the general impropriety of RF Is for the
first time in his appeal to this Court. Nevertheless, it
is Bender’s position that the claim was not waived
because “it is well settled that an intervening change
in law permits assertion of a non-pleaded defense on
appeal, particularly when it would have been fruitless
to do-so below before the change in jurisprudence.”
Pl.’s Opp’n at 2 (citing Washington, 12 F.3d at 1139).
Thus, because this argument relies on the Fourth
Circuit’s decision in Goldstein, and because, as
explained above, Goldstein does not stand for the
proposition that issuance of RF Is prior to the initiation
of a § 32 action is beyond the PTO’s authority,
Bender’s claim that Goldstein constitutes a
supervening change in law must be rejected. This
Court therefore concludes that Bender waived his
general challenge to the propriety of the PTO even
issuing RFIs, and it therefore declines to address the
merits of this argument.®

® Even if there was no waiver, the information acquired from the
plaintiff was properly considered by the PTO because exclusion
pursuant to the exclusionary rule is not an appropriate remedy in

administrative proceedings.

35a

B. Does the PTO have the authority to promulgate
disciplinary regulations and to impose the sanction
of exclusion for the conduct found in this case?

1. The PTO’s Statutory Authority to Discipline
Attorneys

Bender argues that the PTO lacks the statutory
authority to discipline attorneys for conduct such as
that found in this case. Pl.’s Mot. at 10; Pl.’s Opp’n at
11, 21. He contends that the regulations promulgated
by the PTO with respect to the conduct and discipline
of attorneys are beyond the “federal objectives” of the
PTO as set forth in 35 U.S.C. § 2(bX2XD) (2000). P1.’s
Mot. at 10; Pl.’s Opp’n at 11, 21. Specifically, Bender
asserts that the term “before the Office” in § 2, restrict
the PTO’s authority to.regulate the conduct of patent
attorneys, and that the regulation in this case exceeds
that authority because the conduct at issue in this case
does not constitute a matter pending “before” the
agency. Pl.’s Mot. at 10; Pl.’s Opp’n at 11, 21.

Where an agency is charged with implementing the
statute at issue, the analysis in Chevron, U.S.A. v.
NRDC, 467 U.S. 837, 842-845 (1984) must be employed
to determine whether the agency’s interpretation of
the statute must be upheld. The familiar two-step
inquiry set forth in Chevron is as follows:

[courts] ask first whether ‘Congress has directly
spoken to the precise question at issue,’. . . if so
. .. this court must give effect to Congress's
‘unambiguously expressed intent.’ If ‘the
statute is silent or ambiguous with respect to
the specific issue,’ [courts] ask whether the

36a

agencys position rests on a ‘permissible
construction of the statute.’

Sec’y of Labor, Mine Safety and Health Admin. v.
Federal Mine Safety and Health Review Comm’n, 111
F.3d 913, 916 (D.C. Cir.1997) (citing Chevron, 467 U.S.
at 843). Where the text of the statute is ambiguous,
“the agency’s interpretation of the statute is entitled to
deference so long as it is ‘reasonable’ and not otherwise
‘arbitrary, capricious, or manifestly contrary to the
statute.” Motion Picture Ass’n of America v. F.C.C.,
309 F.3d 796, 801 (D.C. Cir. 2002) (citing Chevron, 467
U.S. at 843-44).

35 U.S.C. § 2(bX2XD) states that the PTO

may govern the recognition and conduct of
agents, attorneys, or other persons representing
applicants or other parties before the Office,
and may require them, before being recognized
as representatives of applicants or other
persons, to show that they are of good moral
character and reputation and are possessed of
the necessary qualifications to render to
applicants or other persons valuable service,
advice, and assistance in the presentation or
prosecution of their applications or other
business before the Office.

35 U.S.C. § 2 (emphasis added). Furthermore, 35
U.S.C. § 32 (2000) states, in relevant part, that:

The Director [of the PTO] may, after notice and
opportunity for a hearing, suspend or exclude,
either generally or in any particular case, from

37a

further practice before the Patent and
Trademark Office, any person, agent, or
attorney shown to be incompetent or
disreputable, or guilty of gross misconduct, or
who does not comply with the regulations
established under section 2(bX2XD) of this title,
or who shall, by word, circular, letter, or
advertising, with intent to defraud in any
manner, deceive, mislead, or threaten any
applicant or prospective applicant, or other
person having immediate or prospective
business before the Office.

32 U.S.C. § 32 (emphasis added). Pursuant to this
authority, the PTO promulgated regulations governing
the conduct of attorneys, several of which are
implicated in this case. See, e.g., 37 C.F.R. §§ 10.23,
10.62, 10.68, 10.77. Accordingly, this Court must
determine whether the PTO’s promulga®*ion and
enforcement of these regulations is within the
authority granted to it by Congress under the standard
set forth in Chevron, 467 U.S. at 842-845.

While it is clear from the language of 35 U.S.C. §§ 2
and 32 that Congress intended to provide the PTO
with the authority to regulate practitioners appearing
“before the Office,” including attorneys, what is not
clear is the scope of this authority. This authority can
be construed narrowly to include only those matters
“directly involving a proceeding” before the PTO. PIl.’s
Opp’n at 12. Under this narrow reading, which is
urged by Bender, a failure to disclose a conflict of
interest with respect to a particular patent application,
for example, would not qualify as being “before the
Office.” Id. at 21. On the other hand, helping a client

36a

to falsify a patent application would qualify. Jd. The
language of the statute may also be read broadly, and
would thus include a wider range of conduct relating
to representation of a patent applicant or a potential
patent applicant. An analysis of the text of the
statutes at issue here under Chevron, 467 U.S. at
842-45, supports the PTO’s broader interpretation.

In 35 U.S.C. § 2, Congress provides that the PTO
may adopt regulations to ensure that attorneys
“render to applicants or other persons valuable service,
advice, and assistance in the presentation or
prosecution of their applications or other business
before the Office.” 35 U.S.C. § 2 (emphasis added).
The language of § 2 is broad in its description of the
individuals intended to be covered by the provision,
and in the scope of the type of representation it covers.
The language in § 32 is also broad in its reach,
providing for the suspension or exclusion of an
attorney found to have defrauded, deceived, mislead or
threatened “any applicant or prospective applicant, or
other person having immediate or prospective business
before the Office.” 35 U.S.C. § 32 (emphasis added).
The language of these provisions indicates that the
phrase “before the Office” covers even prospective
applicants, and suggests that Congress intended the
statute to create broad authority. Although the
language in § 2 is vague as to the outer limits of the
authority intended by Congress, the second step of
Chevron compels this Court to give substantial
deference to the PTO’s interpretation and to uphold its
interpretation of the statute in this case. See Chevron,
467 U.S. at 842-45. Given the language of the statutes
at issue, the PTO’s interpretation is in no sense
“arbitrary, capricious, or manifestly contrary to the

39a

statute.” Id. at 844. In fact, it also appears that the
PTO’s interpretation of the statutes seems far more
realistic than the interpretation urged by Bender due
to the exceedingly narrow bounds of Bender's
interpretation. The Court therefore concludes that the
PTO did not exceed its statutory authority in
prescribing and enforcing the disciplinary rules the
plaintiff is challenging.

2. Preemption of state law

Bender cites the Supreme Court’s decision in
Sperry v. Florida, 373 U.S. 379, 402 (1963), for the
proposition that the PTO’s ability to preempt state law
is limited to its “federal objectives,” which are strictly
limited to the prosecution of patent applications before
the PTO, does not include matters that fall under the
disciplinary authority of the state bars. Pl.’s Mot at
11; Pl.’s Opp’n at 13-14, 21. While Sperry does hold
that the PTO’s authority to preempt state law is
limited to its federal objectives and that states retain
control over matters they would normally regulate, 373
U.S. at 402, Sperry does not hold that there is a
“toggle” switch with respect to state or federal
authority to discipline attorneys. The Federal Circuit
made this point clear in Kroll v. Finnerty, 242 F.3d
1359, 1365 (Fed. Cir. 2001), ruling that the PTO has
broad authority to discipline practitioners for
misconduct. In Kroll, the New York Attorney
Grievance Committee sought to discipline a patent
attorney who was licensed in New York for conduct
related to a patent application. Jd. The Federal
Circuit explained that the Committee was not
preempted from acting. Jd. The Court did not indicate
that only the state or the PTO has disciplinary

40a

authority, as Bender suggests. Id.; Pl.’s Mot. at 11.
Rather, Kroll concluded that the state and the PTO
share jurisdiction to discipline attorneys in cases
where a violation of both PTO regulations and state
ethical rules are alleged. Kroll at 1365. Accordingly,
the PTO’s actions in this case do not preempt state law
in an impermissible manner, and Bender’s contention
to the contrary is therefore without merit.

3. The sanction of exclusion

Bender challenges the ALJ’s decision to exclude
him from the practice of law before the PTO and the
GC Decision which uphedd the exclusion. Pl.’s Opp’n
at 41-46; Appeal Brief Pursuant to 37 C.F.R. § 10.155
(2000) (“Appeal Brief”) at 88-100.° While he presents
numerous arguments as to why the sanction is not
appropriate, this Court must adhere to the teachings
-of Chevron, 467 U.S. at 842-845, and Bowles v.
Seminole Rock & Sand Co., 325 U.S. 410, 413-414
(1945); and therefore must accord the PTO substantial

* In his Motion for Summary Judgment and Memorandum of
Points and Authorities in Support Thereof, Bender primarily
argues that the violations found by the PTO were not supported
by substantial evidence, that the PTO acted beyond its statutory
authority, and that Goldstein v. Moatz requires the dismissal of
this case. However, in his motion Bender incorporates by
reference the arguments raised in his Appeal Brief before the PTO
pursuant to37 C_F.R. § 10.155 (2000), and his subsequent Request
for Reconsideration filed pursuant to 37 C.F.R. § 10.156(c). Pl.’s
Mot. at 21. Bender sets forth these arguments in his Opposition
to the Defendant's Cross-Motion for Summary Judgement.
Accordingly, this Court will address all arguments that have been
raised by Bender.

4la

deference with respect to its decision that Bender’s
exclusion was reasonable under the applicable statutes
and regulations. Bender’s main argument is that 35
U.S.C. § 32 allows the agency to exclude him from
practice only if he is shown to be “incompetent or
- disreputable” or “guilty of gross misconduct.” P1.’s
Opp’n at 40; Appeal Brief at 88. The PTO responds,
and this Court agrees with its position, that this is not
a correct reading of the statute. 35 U.S.C. § 32
provides that

[t]he Director may, after notice and opportunity
for a hearing, suspend or exclude, either
generally or in any particular case, from further

‘practice before the Patent and Trademark
Office, any person, agent, or attorney shown to
be incompetent or disreputable, or guilty of
gross misconduct, or who does not comply with
the regulations established under section
2(bX2XD) of this title ....

35 U.S.C. § 32 (emphasis added). A plain reading of
the statute permits an attorney who violates
§ 2(bX2XD), including Bender, to be excluded from
practicing before the PTO. This reading clearly covers
Bender because as the ALJ Decision correctly
concluded, Congress has provided the PTO with
express statutory authority to bring cases such this
one. ALJ Decision at 5 (citing Goldsmith v. U.S. Board
of Tax Appeals, 270 U.S. 117, 122 (1926)). And the
sanction of exclusion is not inappropriate because the
ALJ did not provide a “reasoned discussion” of each of
the factors set forth in 37 C.F.R. § 10.154(b) (2001) as
argued by Bender, P1.’s Opp’n at 40, because this Court
is not free to disturb the PTO’s decision of exclusion so

42a

long as it is reasonable. Bowles, 325 U.S. at 413-414.
As explained in the GC Decision, Bender’s failure to
recognize that his conduct was improper, combined
with his assertion that he would continue to associate
himself with invention promotion companies,
warranted the sanction of exclusion to prevent him
from causing harm to future clients. GC Decision at
44. The GC Decision also considered Bender's
arguments that alleged improper conduct by the PTO
amounted to extenuating circumstances because it
hampered his efforts in litigating the Daniels” case, as
well as case law cited by Bender to support his claim
that exclusion from practice was excessive given the
facts. Id. at 41-45. The GC Decision provided an
explanation for its rejection of Bender’s arguments and _
provided support for the sanction of exclusion. Id.
Specifically, the GC Decision explained that 35 U.S.C.
§ 32 does not require a showing of “incompetent or
disreputable conduct” or “gross misconduct” because
the statute does not distinguish between the grounds
for suspension and exclusion. Id. at 40-41.

The GC Decision also explained that the alleged
improper PTO conduct with respect to Bender’s
litigation of the Daniels case did not preclude taking
disciplinary action against Bender because it was
ultimately his choice to take such a large number of
clients, and that it was therefore Bender’s actions and

© In re Daniels, 144 F.3d 1452 (Fed. Cir. 1998), was a case in
which Bender succeeded in “having a large number of design
applications revived, after they had been rejected by the PTO for
including non-invented indicia in design applications.” ALJ
Decision at 25 n.25.

43a

not the conduct of the FIO in reviewing the patent
applications that were at fault in this case. P1.’s Opp’n
at 41. Moreover, the sanction of exclusion was found
to be warranted because improper conduct by the PTO
did not mitigate Bender’s “failure to ensure that
continued prosecution of the application was in fact in
the clients’ best interests” and that conflicts of interest
on Bender’s part remained, despite any action of the
PTO. Id. at 41-42. The GC Decision went on to note
that while some violations found in the ALJ Decision
were not sustainable, “the core violations upon which
the recommended remedy rests, and the only ones
specifically discussed in the penalty section of the [ALJ .
Decision],” namely, Bender’s conflicts of interest and
failure to give adequate advice to his clients, “have
been upheld.” Jd.:at 42: The GC Decision further
explained that the reversal of the ALJ Decision’s
finding with respect to count 2 did not mitigate against
exclusion because the counts that were upheld
nevertheless supported the sanction of exclusion. Id.
The GC Decision also distinguished the cases cited by
Bender to show that the remedy in this case was
unduly harsh, explaining that Bender’s violations were
more serious than those in the cases he cited. Id. at
42-44. Finally, the GC Decision explained that
Bender’s stated intent to continue representing clients
associated with invention promotion companies and
his failure to recognize that his conduct was improper
created the possibility that he would again violate the
rules and cause further harm to clients. Id. at 44. In
light of the explanation provided in the record, both in
the ALJ Decision and the GC Decision, the sanction of
exclusion is in accordance with both 35 U.S.C. § 32 and
37 C.F.R. § 10.154(b). Accordingly, the Court has no

44a

basis to disturb the sanction of exclusion imposed by
the PTO.

C. Are the violations found by the PTO supported by
substantial evidence and are the PTO’s
interpretations of its disciplinary regulations
reasonable?

Bender challenges the PTO’s findings that his
actions violated its disciplinary rules. P!.’s Mot. at
15-17; Pl.’s Opp’n at 4-10, 14-20, 21-24 While the
parties agree that the standard of review is the
“substantial evidence” standard, several of Bender’s
arguments challenge the PTO’s interpretation and
application of its own disciplinary regulations, rather
than the evidence underlying the violations found by
the PTO. Pl.’s Mot. 15-17; Pl.’s Opp’n at 4-10, 14-20,
21-24. And there is no question that with respect to
the questioned interpretation and application of the
disciplinary regulations, the deferential standard set
forth in Bowles, 325 U.S. at 413-414, and its progeny
applies in this case. Under the APA, a reviewing court
must set aside agency decisions that are not supported
by substantial evidence. 5 U.S.C. § 706(2)(A) (2000);
Throckmorton v. Nat'l Transp. Safety Bd., 963 F.2d
441, 444 (D.C. Cir. 1992). The District of Columbia
Circuit has reiterated what the Supreme Court
explained amounts to “substantial evidence” sufficient
to uphold an agency decision. Morall v. Drug
Enforcement Admin., 412 F.3d 165, 176 (D.C. Cir.
(quoting N.L.R.B. v. Columbian Enameling &
Stamping Co., 306 U.S. 292, 299-300 (1939)). Morall
noted that “[s]ubstantial evidence ‘means evidence
which is substantial, that is, affording a substantial
basis of fact from which the fact in issue can be

45a

reasonably inferred. [Thus,] [s]ubstantial evidence is
more than a scintilla, and must do more than create a
suspicion of the existence of the fact to be established.”
Id. In reviewing a decision to determine whether it
was based on substantial evidence, “[t}he court’s
function is to determine only ‘whether the agency .. .
could fairly and reasonably find the facts that it did.”
Robinson v. Natl Transp. Safety Bd., 28 F.3d 210, 215
(D.C. Cir.1994) (internal citations omitted).
Importantly, “an agency decision ‘may be supported by
substantial evidence even though a plausible
alternative interpretation of the evidence would
support a contrary view.” Morall, 412 F.3d at 176
(quoting Robinson, 28 F.3d at 215). However, while
the substantial evidence standard is a deferential
standard of review, an agency decision must take
contradictory evidence into account in making its
determination, and must “reflect attentive
consideration” to the AL.J’s decision. Morall, 412 F.3d
at 177. In other words, an agency cannot simply
ignore contradictory evidence or the decision of an ALJ
in making its final determination. See, e.g., E. Tenn.
Natural Gas Co. v. F.E.R.C., 953 F.2d 675, 681 (D.C.
Cir.1992). Thus, in reviewing the agency’s decision to
assess the presence of substantial evidence, the
reviewing court must look to the administrative
record. Fed. Power Comm'n v. Transcontinental Gas
Pipe Line Corp., 423 U.S. 326, 331 (1976) (“[Tlhe focal
point for judicial review should be the administrative
record already in existence, not some new record made
initially in the reviewing court.”) (citing Camp v. Pitts,
411 U.S. 138, 142 (1973)).

With respect to an agency’s interpretations of its
own regulations, courts must give substantial

46a

deference to what the agency has concluded. Thomas
Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994).
The Supreme Court has explained that “[the courts’]
task is not to decide which among several competing
interpretations best serves the regulatory purpose.
Rather, the agency’s interpretation must be given
‘controlling weight unless it is plainly erroneous or
inconsistent with the regulation.” Jd. (internal
citations omitted) (quoting Bowles, 325 U.S. at 414);
see also Martin v. Occupational Safety and Health
Review Comm’n, 499 U.S. 144, 150-51 (1991) (courts
should give effect to agency’s interpretation as long as
it is reasonable where the meaning of the statute is
“not free from doubt.”); Lyng v. Payne, 476 U.S. 926,
939 (1986) (courts must confer substantial deference to
an agency’s construction of its own regulations.); Udall
v. Tallman, 380 U.S. 1, 16 (1965) (interpretation of a
statute by agency charged with its administration
generally is entitled to great deference.)

1. The neglect charges (neglect of entrusted
matters)

With respect to the charge that Bender, in violation
of 37 C.F.R. § 10.77(c)," neglected to notify several of
his clients about the rejection of their patent
applications in a timely manner, which then required
the clients to pay an extension fee if they desired to
appeal the réjection, Def.’s Mem. at 8, Bender argues
that both the ALJ Decision and the GC Decision failed
to take into account why he delayed notifying his

4 37 C.F.R. § 10.77(c) states that “[a] practitioner shall not
. . njeglect a legal matter entrusted to the practitioner.”

47a

clients about the rejection of their patents. Pl.’s Opp’n
at 5-6. Specifically, Bender argues that the timing of
the letters was based on the pending decision in the
Daniels case, and that his decision to delay notifying
his clients was therefore not neglect, but rather a
tactical decision on his part, designed to save his
clients from paying unnecessary appeal fees. Jd.
Bender also argues that the PTO’s failure to produce
an expert witness to testify as to the meaning of the
word “prompt” also resulted in erroneous holdings both
in the ALJ Decision and the GC Decision on the issue
of his alleged neglect. Id. at 6.

In response, the PTO argues that whaiever
“tactical advantages” Bender’s clients may have gained
by delaying the filing of appeals, there is no adequate
explanation for his failure to inform his clients of the
situation in a timely manner, a decision which “simply
deprived the client of the option to file within the
three-month period and so avoid fees.” Def.’s Mem. at
8-9 (citing GC Decision at 26-27). The PTO therefore -
argues that Bender’s failure to provide timely
notification with respect to five clients is supported by
substantial evidence. Def.’s Mem. at 8-9.

The GC Decision addressed these and other
arguments made by Bender with respect to the neglect
charges. GC Decision at 20-27. The GC Decision ©
based its conclusion that Bender violated rule 10.77(c)
on (1) his failure to advise his clients about the type of
patent that should be sought in letters he sent to them
on this point, id. at 20-25, and (2) his failure to
promptly notify his clients of the final rejections of
their applications. Id. at 25-27. The GC Decision
provides an explanation as to why Bender’s

48a

justifications for his conduct are not sufficient, and
refers to facts in the record in support of its conclusion.
Id. Specifically, the GC Decision explained that with
respect to Bender’s failure to promptly notify his
clients of the rejection of their design applications
(within the three-month period when the payment of
a fee to appeal the decisions was not required), his
clients would have had more time to decide on a course
of action and would have avoided payment of the late
filing surcharge. Id. The GC Decision found that
Bender’s justification for the delayed notification ofhis
clients was not plausible, because the action he
ultimately took (late notification) was inconsistent
with his justification for why he did not notify his
clients earlier. Id. at 26 (citing Appeal Brief at 31).
The GC Decision also concluded that Bender could
have notified his clients of the rejections with an
exylanation that options were available to them, and
was professionally obligated to do so. Id. at 27. Based
on these considerations, the GC Decision found that
Bender did not provide an adequate explanation of the
reasons for his delay. Id. Accordingly, the PTO’s
decision did not ignore Bender’s justifications for his
actions, but rather rejected them with specific and
persuasive explanations as to why Bender's
justifications for his actions were not convincing. The
explanation in the GC Decision therefore meets the
substantial evidence standard because it “could fairly
and reasonably find the facts that it did,” Mora/l, 412
F.3d at 176-77, namely, that Bender’s explanations for
his actions are not plausible.” The controversy is

* Importantly, there is no dispute as to when Bender notified his
clients of the rejections. GC Decision at 8 (citing ALJ Decision at

49a

therefore reduced to whether the undisputed time of
notification was or was not “prompt.” Furthermore, to
the extent that the PTO’s decision is based on its
interpretation of § 10.77(c), such as Bender’s argument
regarding the meaning of the term “prompt”, the PTO’s
decision is consistent with language of the regulation.
Therefore, it must be upheld by this Court. Thomas
Jefferson Univ., 512 U.S. at 512.

2. The conflicts of interest charges

Bender received substantial sums of money from
AIC, GC Decision at 27 (citing ALJ Decision at 23),
and the ALJ Decision and GC Decision concluded that
Bender should have recognized that his interests
might diverge from those of his clients and that he was
therefore required to inform them about the potential
conflict of interests and to obtain his clients’ informed
consent to represent them. ALJ Decision at 24; GC
- Decision at 31-32. The ALJ found that Bender violated
37 C.F.R. § 10.62(a)* by accepting employment
without disclosing that his professional judgment
could be affected by his own financial interests. GC
Decision at 27.

15-16, 30, 34, 36, 42). The only dispute then is whether his delay
in notifying his clients was neglectful, or whether it was justified.

* 37 C.F.R. § 10.62(a) states that “[e]xcept with the consent of a
client after full disclosure, a practitioner shal] not accept
employment if the exercise of the practitioner’s professional
judgment on behalf of the client will be or reasonably may be
affected by the practitioner’s own financial, business, property, or
personal interests.”

50a

Bender asserts that the conflicts of interest
findings under 37 C.F.R. § 10.62(a) cannot be upheld
because he viewed AIC as the agent of the inventors,
whom he characterized as his clients, and that his
relationship with AIC was not the same as that of a
client because he dealt with AIC at arms-length and
collected legal fees only after his work was completed.
Pl.’s Opp’n at 14. He further asserts that there was no
proof of a “conflict” arising from his relationship with
AIC based on the evidence adduced at the hearing and
that an agent or intermediary acting on behalf of the
client does not create a conflict per se, and that indeed,
the PTO’s own rules sanction such relationships. Id.
at 17. He also contends that the PTO did not present
any evidence that his relationship with AIC “would or .
reasonably might affect his professional judgment with
respect to his representation of his client at the outset
of his employment.” Id. at 18.

~The PTO argues, on the other hand, that there
were, at the very least, interests that were potentially
divergent because there was a 100% money-back
guarantee to the clients if the patents were not issued,
and further that Bender knew about this guarantee.
Def.’s Mem. at 11 (citing RX-31 at 3, 10).* While the
PTO acknowledges that a practitioner may represent
a client where potential conflicts of interest are
properly disclosed, the PTO contends that in this case,
Bender failed to provide adequate disclosures because

'* The parties utilize, as does the Court, the following references
to the record: Respondents’ Exhibits are referred to as RX, and the
PTO’s exhibits are referred to as GX, with both references
followed by Bates numbers.

5la

he did not explain the extent of his involvement with
AIC, and did not address the money-back guarantee
and the potential conflicts arising from AIC’s addition
of the non-invented features to the patent applications.
Id. at 12 (citing GC Decision at 31). The PTO also
contends that Bender violated 37 C.F.R. § 10.68(aX(1)”
because full disclosure pursuant to the regulation
requires disclosure as to the amount of the payments
a practitioner receives from other sources, and that the
record shows that Bender failed to do this. Def.’s
Mem. at 13-14 (citing ALJ Decision at 15; GC Decision
at 34-35).

The GC Decision addressed the very same
arguments Bender makes here, and concluded that the
conflict charges were amply supported by the evidence.
GC Decision at 27-33. The GC Decision discusses with
specificity the reasons supporting its conclusion that
there were conflicts between Bender’s interests and
those of his clients, pointing to Bender’s significant
financial interests, the issue of whether AIC or the
inventors were culpable for the added surface
drawings, and the money-back guarantee. Id. at
27-29. The GC Decision also explained why, in the
ALJ’s view, there was no full disclosure as to the
- conflicts and lack of effective consent by the clients.
Id. at 30-33. These explanations sufficiently establish
that there was substantial evidence in the record to

* 37 C.F.R. § 10.68(aX1) provides that “[e]xcept with the consent
of the oractitioner’s client after full disclosure, a practitioner shall
not . . .[aJccept compensation from one other than the
practitioner’s client for the practitioner’s legal services to or for
the client.”

52a

uphold the ALJ’s decision. Furthermore, the GC
Decision specifically addressed and rejected Bender’s
“arms-length” argument, the essence of which was that
Bender was not dealing closely with AIC, but was
representing his clients directly with AIC as their
agent. GC Decision at 33. The record therefore
establishes that there was sufficient evidenc to
conclude that Bender violated 37 C.F.R. § 10.62(a).

The GC Decision also explained why there was a
finding of a lack of full disclosure pursuant to 37
C.F.R.§ 10.68(aX1) with respect to Bender accepting
funds from a source other than his clients. GC
Decision at 34 (citing ALJ Decision at 15 (citing
Transcript at 231-233)). Specifically, the GC Decision
explained that “full disclosure” within the meaning of
the regulation includes disclosure of the amount of the
payment received from a third party. Id. at 34
(emphasis added). This conciusion was based on the
PTO’s interpretation of its own regulation and must
therefore be given substantial deference. Thomas
Jefferson Univ., 512 U.S. at 512. And the PTO’s
interpretation of the regulation is reasonable and is
not “plainly erroneous or inconsistent with the
regulation.” Id. (quoting Bowles v. Seminole Rock &
Sand Co., 325 U.S. 410, 414 (1945). Indeed, the
regulation states that “[e]xcept with the consent of the
practitioner’s client after full disclosure, a practitioner
shall not . . . [alccept compensation from one other
than the practitioner’s client for the practitioner’s legal
services to or for the client.” 37 C.F.R. § 10.68(a)(1)
(emphasis added). Therefore, Bender’s argument that
the rule was erroneously interpreted by the PTO must
be rejected. As additional support for this Court’s
conclusion, the GC Decision also pointed to evidence

53a

discussed in the ALJ Decision that demonstrated that
Bender failed to make full disclosure in accordance
with the regulations. GC Decision at 34; ALJ Decision
at 15 (noting that one of Bender’s clients “was not
apprised of the amount [he] was billing A.I.C. for his
legal services.”). Accordingly, the Court concludes that
the evidence set forth in the ALJ Decision and the GC
Decision with respect to Bender’s conflicts of interest
amounts to substantial evidence of this conclusion.

3. The evasion charges

The PTO found that Bender violated 37 C.F.R.
§ 10.23(bX5) by allegedly “engaging in conduct
prejudicial to the administration of justice, when he
provided evasive answers to RF Is served upon him on
September 18, 1998.” Def.’s Mem. at 14 (citing ALJ
Decision at 30-31; GC Decision at 35-36; GX-1 at 190).
Bender argues that the evasion charge under 37 C.F.R.
§ 10.23(bX5) was not supported by the record and that
the answers he provided in response to the RFI were
not evasive. Pl.’s Opp’n at 21-24. Further, he argues
that the ALJ failed to explain how the answers were
evasive. Id. at 23. He also argues that the
administrative complaint did not specify the questions
to which his answers were deemed evasive and that
the finding itself was based on the issuance of
“improper” RFIs."* Jd. at 22-24. On the other hand,
the PTO argues that “[t]he ALJ’s decision specifically

® Bender’s argument with respect to the RFIs was addressed in
the section of this opinion that addresses the impact of the
Goldstein decision on the RFIs at issue in this case. See supra
Section I1.A., pp. 7-11.

54a

addressed [Bender]’s evasion of several questions,”
identifying the relevant questions, and contends that
Bender “could and should simply have stated that he
did not make the disclosures which the [PTO]
required, and, if he wished, explained why he did not
believe they were legally required.” Def.’s Mem. at
14-15 (citing GX-1 at 193, 197-198, 212, 214-215).

37 C.F.R § 10.23(bX5) provides, in part, that “[a]
practitioner shall not . . . engage in conduct that is
prejudicial to the administration of justice.” 37 C.F.R
§ 10.23(b(5). Consequently, the GC Decision upheld
the evasion finding only with respect to the September
18, 1998 RFI, as it was the only one specifically
identified in the administrative complaint and “[o]nly
with respect to Count 1 [did] the ALJ Decision make
specific findings of evasion that clearly relate[d] to the
charged conduct.” GC Decision at 35. Specifically, the
ALJ considered Bender’s answers to several specific
questions and determined those answers to be evasive.
Def.’s Mem. at 14-15; ALJ Decision at 30. Moreover,
the GC Decision, which discussed the finding of
evasion alleged in Count 1, explainled] that the
answers were evasive on their face and that the record
therefore supported that finding. GC Decision at 35.
In reaching this conclusion, the GC Decision rejected
Bender’s argument that there was no evidence in the
record to support the charge. Id. Importantly, Bender
did not explain how the answers were not evasive, and
apparently did not do so at his hearing. Based on the
record, the finding of evasion was supported by
substantial evidence. The Court also finds that the
specific discussion of the answers deemed to be evasive
is sufficient to uphold the finding, given that the

55a

“evasive” nature of the answers is apparent on their
face, and the requirement that the agency's
determination of what constitutes evasion under
§ 10.23(b)(5) be accorded substantial deference.
Bowles, 325 U:S. at 414.

D. Is there evidence in the record of bias or
prejudgment amounting to a denial of the plaintiffs
right to be adjudicated by a neutral decisionmaker?

1. Prejudgment and Institutional bias

Bender contends that his case was prejudged, and
points to the statements of certain PTO officials as
evidence that an “institutional bias” pervaded the
PTO’s investigation and adjudication of his case. Pl.’s
Mot. at 4-5, 9; Pl.’s Opp’n at 24-26. For one, he relies
on the statements of Michael Kirk, former Deputy
Commissioner of Patents and Trademarks, made
during his testimony to the Senate Subcommittee on
Regulation and Government Information in 1994. Id;
Pl.’s Stmt.{ 12. Specifically, Kirk made the following
statements:

[W]le have taken two individuals off the rolls
and we have cases pending against four others
. . . G]it is a very small percentage fof the
registered patent attorneys], but nonetheless
bad apples create very bad situations . . . The
ones that we are dealing with were working
with the invention promotion companies
.. .[bJut J they are not properly representing
their clients’ interests. They are working more
for the invention development firm and so we

56a

have taken action against them to take them off
the rolls.

Id. Although Kirk did not mention him by name,
Bender contends that he was one of the attorneys
being referenced by Kirk as “bad apples” for three
reasons: (1) when the statement was made, he was
being investigated by the PTO; (2) the facts involving
the attorneys mentioned were the same as those in his
case, that is, situations where drawings had been
added to design applications; and (3) information he
has about three other attorneys who were excluded
from practice logically leads to the conclusion that he
was the fourth attorney Kirk mentioned. P1.’s Opp’n
at 26. He also points to the statement of Q. Todd
Dickinson, a former Commissioner of Patents and
Trademarks, who stated that invention promotion
companies are like “weeds” or “cockroaches” and need
to be “more aggressively stamped out.” Pl.’s Mot. at 9.
Bender contends that these statements reveal an
“institutional bias” against any attorney affiliated with
an invention promotion company, and thus an
institutional bias with respect to him personally,
making it impossible for him to receive a fair
adjudication. Pl.’s Opp’n at 24-26.

The PTO responds that Bender’s theory regarding
the PTO’s animus against invention promotion
companies and consequently against him are merely
“speculative allegations.” Def.’s Mem. at 15. The PTO
notes that the officials Bender identified never
referred to the situation involved in this case or
mentioned him by name. ZId. In addition, the PTO
contends that Bender fails to cite any record evidence
in support of his theory or even to allege that the

57a

theory would form a basis for overturning the PTO’s
decision, even if true. Id. at 16.

Where a violation of due process resulting from bias
is alleged, the complaining party bears the burden of
showing “a risk of actual bias or prejudgment” and
must “overcome the presumption of honesty and
integrity in those serving as adjudicators.” Withrow v.
Larkin, 421 U.S. 35, 47 (1975). The Supreme Court
has held that earlier statements about a position on an
issue of law or policy is not a sufficient basis to
disqualify a decisionmaker. See, e.g., Hortonville Joint
Sch. Dist. No..1 v. Hortonville Educ. Assn., 426 U.S.
482, 493 (1976) (“Mere familiarity with the facts of a
case gained by an agency in the performance of its
statutory role does not, however, disqualify a
decisionmaker. Nor is a decisionmaker disqualified
simply because he has taken a position, even in public,
on a policy issue related to the dispute . . . .”); Laird v.
Tatum, 409 U.S. 824, 831-838 (1972); Fed. Trade
Comm’n v. Cement Inst., 333 U.S. 683, 700 (1948). In
order to prevail on the claim that he was denied due
process because the decision maker was biased,
Bender must show that the “decision maker [was] ‘not
capable of judging a particular controversy fairly on
the basis of its own circumstances.” NEC Corp. uv.
United States, 151 F.3d 1361, 1373 (Fed. Cir. 1998)
(quoting Hortonville, 426 U.S. at 493) (internal
quotations omitted), cert. denied, 525 U.S. 1139 (1999).
This standard can be met, for example, by showing
that “the decision maker’s mind is ‘irrevocably closed
....” Id. (quoting Cement Inst., 333 U.S. at 701).

In Cement Institute, prior to the filing of a
complaint by the Federal Trade Commission (“FTC” or

58a

“Commission”) against, inter alia, cement industry
businesses, alleging antitrust violations, the
Commission, or some of its members, had concluded
that the system used in the industry amounted to a
restraint of trade in violation federal antitrust
legislation. Jd. at 687, 700-01. In ruling.on whether
the Commission should have granted the industry's
request that the Commission disqualify itself, the
Supreme Court assumed that “an opinion [on the
-issues under consideration] had been formed by the
entire membership of the Commission . . .” Id. at 700.
Nonetheless, the Court rejected the argument that the
Commission had prejudged the issues or was biased.
Id. at 700-701. The Court concluded:

the fact that the Commission had entertained
such views as a result of its prior ex parte
investigations did not necessarily mean that the
minds of the members were irrevocably closed
on the subject of the respondents’ basing point
practices. . . .[The members of the industry]
produced evidence-—volumes of it. They were
free to point ovt to the Commission by
testimony, by cross-examination of witnesses,
and by arguments, conditions of the trade
practices under attack which they thought kept
these practices within the range of legally
permissible business activities. _

Id. at 701. Similarly, in Keating v. Office of Thrift
Supervision, 45 F.3d 322 (9th Cir. 1995), the Director
of the Office of Thrift Supervision had made
statements which indicated that he had prejudged the
facts of a case that was before the agency. Id. at 327.
But, the Ninth Circuit held that these statements,

59a

along with other factors, did not result in an unfair
decision because the agency head resigned before the
ALJ issued his decision, and the final order was also
issued by another official. Jd. While finding the
former Director’s comments troubling, the Keating
Court determined that his role in the ultimate decision
was minor, and that the agency therefore did not
violate the neutral decisionmaker requirement. Id.
-On the other hand, in Cinderella Career and Finishing
Sch., Inc. v. FTC, 425 F.2d 583 (D.C. Cir. 1970), the
Circuit Court for this Circuit held that FTC committed
a due process violation because its Chairman made
statements that indicated prejudgment of both the law
and the facts ofa particular case while the appeal from
a hearing examiner’s decision the Examiner’s case was
pending before him. Jd. at 589-91.

Here, the facts of this case do not rise to a level that
would warrant a finding that there was prejudgment
or institutional bias against Bender. Like the agency
decisions in Keating, the initial and final decisions
here were not those of the individual who made the
comments at issue. Keating, 45 F.3d at 327. The
individuals in this case had left the PTO prior to the
issuance of the GC Decision, and the actual decision
makers (the ALJ and Toupin) did not personally make
any statements that would indicate bias. Thus, this
case is distinguishable from Cinderella on this crucial
point because there, the biased statements were made
by the decision maker, who at the time had the case
pending before him. Cinderella, 425 F.2d at 589.
Furthermore, Cinderella involved statements made in
a public speech, which the Court found different than
a pre-decision press release that expresses concern
about the activities of a party. Jd. at.590. The

60a

comments at issue in this case were general in nature
and reflected opinions essentially related to a policy
position. See Cement Inst., 333 U.S. at 700. In any
event, to the extent the statements made by Kirk and
Dickinson pertain to the facts of Bender’s case, they
are exceedingly vague and do not identify Bender by
name, and Bender’s contention that the statements
were specifically directed at him is highly conjectural.
Moreover, they do not provide an adequate basis for
this Court to conclude that the agency as a whole
prejudged the facts of his particular case, and thereby,
failed to provide him with a neutral decision maker.
Under these circumstances, the Court concludes that
Bender has not provided proof of prejudgment or
institutional bias sufficient to show a violation of the
neutral decision maker requirement. Keating, 45 F.3d
322 at 327.

Bender also alleges that the Committee on
Discipline was tainted because one of its members
(Rolla) knew that the PTO had a policy which was
hostile to invention promotion companies and that
Bender was affiliated with such a company. PI.’s
Opp’n at 30; Appeal Brief at 79. The Court rejects this
argument because Bender has failed to offer any proof
that this was indeed the case, and thus has not
established “a risk of actual bias or prejudgment,”
which is necessary to “overcome{] [the] presumption of
honesty and integrity in those serving as adjudicators

... Withrow, 421 U.S. at 47. Indeed, Bender
himself acknowledges that this argument is based on
speculation. Pl.’s Opp’n at 30 (“Even though Mr.
Rolla’s vote was not necessary for a majority, there is
no way to know whereby his influence upon the others
can be quantitatively measured.”). Accordingly,

6la

Bender has failed to show either prejudgment or
institutional bias.

2. Was there bias on the part of the ALJ?

Bender further argues that the ALJ was biased
because during his hearing the ALJ made remarks
that Bender characterizes as “intemperate” and
“hostile.” Pl.’s Opp’n at 35; see also Appeal Brief
102-109. He also argues that the ALJ
“mischaracterized” or “belittled” his evidence. P1.’s
Opp’n at 36. He further contends that the ALJ’s “sua
sponte” conclusions with respect to certain findings of
fact and law are not supported by evidence. Id. at
36-37."" In response, the PTO argues that there is no
indication of bias on the part of the ALJ, and that his
unfavorable statements about Bender constitute

“reasonable inferences from the record.” Reply in
Support of Defendant’s Cross-Motion for Summary
Judgment (“Def.’s Reply.”) at 21. Furthermore, the
PTO argues that there is no evidence in the record of
“deep-seated favoritism or antagonism” against Bender
by the ALJ. Id. (citing Liteky v. U.S, 510 U.S. 540, 555
(1994)).

'’ For the reasons explained above, the findings of the ALJ on the
charges upheld in the GC Decision are supported by substantial
evidence and this Court therefore declines to address in this
section of the opinion Bender’s argument that there was not
substantial evidence in the record to support the AL.J’s
conclusions.

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Bias on the part of a decision maker sufficient for
disqualification is difficult to prove. As the Supreme
Court has stated:

opinions formed by the judge on the basis of
facts introduced or events occurring in the
course of the current proceedings, or of prior
proceedings, do not constitute a basis for a bias
or partiality motion unless they display a
deep-seated favoritism or antagonism that
would make fair judgment impossible. Thus,

_ judicial remarks during the course of a trial
that are critical or disapproving of, or even
hostile to, counsel, the parties, or their cases,
ordinarily do not support a bias or partiality
challenge.

Liteky, 510 U.S. at 555. The Liteky Court cited Berger
v. United States, 255 U.S. 22 (1921), a German
espionage case from World War I where the Judge
stated that “[o]Jne must have a very judicial mind,
indeed, not {to be] prejudiced against the German
Americans’ because their ‘hearts are reeking with
disloyaltylI,]” as an example of impermissible bias, i.e. ,
“such a high degree of antagonism as to make fair
judgment impossible.” Liteky, 510 U.S. at 555 (quoting
Berger, 255 U.S. at 28). On the other hand, the Court
noted that “expressions of impatience, dissatisfaction,
annoyance, and even anger, that are within the bounds
of what imperfect men and women .. . sometimes
display” are not sufficient to show impermissible bias.
Id. at 555-56. Thus, the Court explained that only
rarely will remarks by the adjudicator rise to the level
of impermissible bias. 7d. at 555. Furthermore, the
Liteky Court explained that bias should not be imputed

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to a judge where the judge declines to find all or most
of the evidence put forth by a party credible. /d.
Indeed, as the Supreme Court has noted, “in the
determination of litigated facts, the testimony of one
who has been found unreliable as to one issue may
properly be accorded little weight as to the next.
Accordingly, total rejection of an opposed view cannot
of itself impugn the integrity of competence of a trier
of fact.” N.L.R.B. v. Pittsburgh S.S. Co., 337 U.S. 656,
659 (1949). Thus, the District of Columbia Circuit
explained, “[a] trial judge must be free to make rulings
on the merits without the apprehension that if he
makes a disproportionate number in favor of one
litigant, he may have created the impression of bias.
Judicial independence cannot be subservient to a
statistical study of the calls he has made during the
contest.” S. Pac. Commce’ns Co. v. Am. Tel. and Tel.
Co., 740 F.2d 980, 995 (D.C. Cir. 1984). And the
Circuit Court has applied the Liteky standard to ALJs
in the administrative hearing context. See e.g., Pioneer
Hotel, Inc: v. N.L.R.B., 182 F.3d 939, 944 (D.C. Cir.
1999).

Here, none of the ALJ’s remarks identified by
Bender reveal bias which “display a deepseated
favoritism or antagonism that would make fair
judgment impossible.” Liteky, 510 U.S. at 555. While
some of the remarks do evidence a frustration with
Bender and a sense that his positions and evidence
lack credibility, both the Supreme Court and the
District of Columbia Circuit have made it clear that a
judge who forms views or opinions within the context
of the hearing, including those causing frustration or
hostility toward one of the parties, do not exhibit
disqualifying bias. Liteky, 510 U.S. at 555; Pittsburgh

64a

S.S. Co., 337 U.S. at 658; S. Pac. Comme’ns Co., 140
F.2d at 995. Accordingly, Bender has failed to show
that the AL.J was impermissibly biased against him.

E. Did the PTO violate the APA by failing to provide
Bender with written notice of the disciplinary
violations and the opportunity to demonstrate or
achieve compliance with its disciplinary regulations
before initiating the disciplinary proceedings?

Bender next argues that the PTO violated § 558(c)
of the APA, 5 U.S.C. § 558(c) (2005), by failing to (1)
_give him notice of the facts or conduct which may
result in disbarment and (2) the opportunity to show
that he had complied or to bring himself into
compliance with the regulations he was found to have
violated. Pl.’s Opp’n at 27-29; Motion for
Reconsideration pursuant to 37 C.F.R. § 10.156(c)
(“Mot. for Recon.”) at 7-10. In essence, Bender argues
that the decision of the PTO to bring the case against
him was subject to the requirements of § 558(c) of the
APA, and therefore, he did not receive the required
notice and opportunity to demonstrate compliance, or
to bring himself into compliance, as called for by the
APA. Pl.’s Opp’n at 27-28. Further, Bender argues
that if PTO deemed these requirements unnecessary,
such a determination under § 558(c) could be made
only upon a finding of either willfulness or the need to
act in the public interest, and that an “adjudication” of
this nature was not made before the disciplinary -
proceedings against him were initiated. Id. The
precise question raised by Bender is therefore whether
the PTO’s decision to initiate disciplinary proceedings
against him had to be preceded by compliance with the
requirements of § 558(c).

65a

The PTO argues that its decisions made prior to the
ALJ hearing, such as the decision to bring the
administrative proceeding against Bender, “are not
subject to the APA’s judicial review provisions.” Reply
in Support of Defendant’s Cross-Motion for Summary
Judgment (“Def.’s Rep.”) at 16. The PTO contends that
Ҥ 558(c) does not, by its terms, require any proceeding
whatsoever to determine whether its notice and
opportunity requirements apply in a particular case”
because the decision does not constitute an “agency

proceeding.” . Id. at 16-17.

Section 558(c) of the APA states that “/e/xcept in
cases of willfulness or those in which public health,
interest, or safety requires otherwise, the withdrawal,
suspension, revocation, or annulment of a license is
lawful only if, before the institution of agency

proceedings therefor, the licensee has been given — (1)
notice by the agency in writing of the facts or conduct
which may warrant the action; and (2) opportunity to
demonstrate or achieve compliance with all lawful
requirements.” 5 U.S.C. § 558(c) (emphasis added).
“Willfulness” under § 558(c) has been defined as “an
intentional misdeed or such gross neglect of a known
duty as to be the equivalent thereof.” Capitol Packing
v. United States, 350 F.2d 67, 78-79 (10th Cir.1965).
In addition, a violation has been deemed willful if “the
violator (1) intentionally does an act which is
prohibited, — irrespective of evil motive or reliance on
erroneous advice, or (2) acts with careless disregard of
statutory requirements ....” Potato Sales Co., Inc. v.
Dep't of Agric., 92 F.3d 800, 805 (9th Cir.1996)
(quoting Lawrence v. Commodity Futures Trading
Comm’n, 759 F.2d 767, 773 (9th Cir.1985)). The
District of Columbia Circuit has held that a formal

66a

determination as to willfulness is not required prior to
bringing a complaint. Finer Foods Sales Co., Inc. v.
Block, 708 F.2d 774, 778 (D.C. Cir. 1983) (“The
petitioner arguefd], however, that the Secretary's
action was impermissible because, prior to instituting
the disciplinary proceeding, he did not make a formal
determination of willfulness. Nothing in the
Administrative Procedure Act imposes that
requirement or supports the petitioner's apparent
contention that the determination of willfulness itself
may be made only after a hearing.”). Rather, an officer
making a determination of willfulness must know the
“extent and character of the violations, [so as to
provide] an adequate basis for making that
determination.” Id.

Finer Foods dealt with the issue of what is required
for a finding of willfulness sufficient to dispense with
the APA’s “opportunity to demonstrate or achieve
compliance . .. requirements.” Jd. at 777. There, the
petitioner was “a licensee under the Perishable
Agricultural Commodities, 7 U.S.C. §§ 499a-499s . . .
,” id. at 776, who was found to have failed to pay for
agricultural goods acquired in 24 transactions in
violation of that Act. Jd. at 777. The petitioner did not
dispute that the payments had not been made, but
argued that the Secretary of Agriculture’s decision
that Finder Food’s conduct amounted to “flagrant and
repeated violations,” id., “was impermissible because,
prior to instituting the disciplinary proceeding, he did
not make a formal determination of willfulness.” Jd. at
778. The District of Columbia Circuit rejected the
petitioner’s argument, finding that “[nlothing in the
[APA] imposes that requirement or supports the .. .
contention that the determination of willfulness itself

67a

may be made only after a hearing;” that “[iJf. . . the
violations were willful, the requirement .. . of
opportunity for correction of the violations is
inapplicable;” that “[w]hen the Secretary instituted the
disciplinary proceeding without first giving [Finer
Foods} the opportunity to cure the violation,
necessarily he determined that the violations were
willful;” and, that “[s]ince at that time [the Secretary]
already knew the extent and character of the
violations, he had an adequate basis for making that
determination.” Id.

Here, Benders argument with respect to
willfulness must be rejected under the law of this
Circuit. First, there was no requirement that an
adjudication of willfulness be made prior to the
institution of the disciplinary proceedings. Second, in
any event, Bender’s conduct, which was found to
constitute neglect, failure to disclose conflicting
financial interests and evasion in violation of the
PTO’s regulations can properly be classified as
“willful” conduct as defined and found in Finer Foods.
Lastly, the Director of the OED had knowledge as to
both the extent and character of Bender’s violations,
and therefore had an adequate basis to conclude that
Bender’s conduct was willful and thus dispense with
the APA’s notice and opportunity to demonstrate or
achieve compliance requirements before disciplinary
proceedings were initiated.

F. Did the PTO violate the APA’s separation of
functions requirement?

Bender argues that the PTO violated the
separation of functions requirement, as mandated in

68a

5 U.S.C. § 554(d), by allowing Harry Moatz to
investigate the allegations against him, and then to
also permit Moatz to participate in the deliberations of
the Disciplinary Committee that decided to bring the
administrative complaint against him, as well as
allowing him to then prosecute Bender at the ALJ
hearing. P1.’s Opp’n at 29; Appeal Brief at 77-78. The
PTO responds that the determinations and processes
in which Moatz participated were not subject to the
proscription of § 554(d). Def.’s Rep. at 17-18.

Section 554(d) of the APA states that

lajn employee or agent engaged in the
performance of investigative or prosecuting
functions for an agency in a case may not, in
that or a factually related case, participate or
advise in the decision, recommended decision, or
agency review pursuant to section 557 of this
title, except as witness or counsel in public
proceedings.

5 U.S.C. § 554(d). Further, the relevant PTO
regulation provides that

[t]he Committee on Discipline shall meet at the
request of the Director and after reviewing
evidence presented by the Director shall, by
majority vote, determine whether there is
probable cause to bring charges under § 10.132
against a practitioner. When charges are
brought against a practitioner, no member of
the Committee on Discipline, employee under
the direction of the Director, or associate
solicitor or assistant solicitor in the Office of the

69a

Solicitor shall participate in rendering a
decision on the charges.

37 C.F.R. § 10.4(b) (2000). The question, then, is
whether the decision of the Committee to bring
charges against Bender is an “agency review pursuant
to section 557” of the APA. 5 U.S.C. § 554(d). Bender
contends that the Disciplinary Committee decision is
an “adjudication’ within the meaning of the APA
because it triggers a proceeding under § 32 of the
patent statute.” Pl. Opp’n at 29. This argument is
unpersuasive. 37 C.F.R. § 10.4(b) does not provide
that the Disciplinary Committee’s decision to bring a
complaint is an “adjudication” under § 557 of the APA.
The APA defines an adjudication as an “agency process
for the formulation of an order.” 5 U.S.C. § 551(7). An
order is defined in the APA as “the whole or a part of
a final disposition, whether affirmative, negative,
injunctive, or declaratory in form, of an agency in a
matter other than rule making but including
licensing.” 5 U.S.C. § 551(6). The decision to bring a
complaint in no way constitutes part of a final
disposition, and therefore is not an adjudication.
Furthermore, Bender’s argument fails because an
agency’s interpretations of its own regulations are
entitled to substantial deference, and the PTO’s
decision in this case to allow Moatz to proceed under
§ 10.4(b) is reasonable and must be upheld. See, e.g.
Thomas Jefferson Univ., 512 U.S. at 512. With respect
to Moatz’s subsequent prosecution of Bender, there
was likewise no violation of the separation of functions
requirement, as prosecution of a matter does not
constitute “participation” in the final decision, which
is what is prohibited by the APA.

70a

G. Was the administrative complaint sufficiently
specific to comply with the APA?

Bender makes several arguments with respect to
the complaint that initiated the administrative case
against him. Pl.’s Opp’n at 30-31; Appeal Brief at
75-77. He argues that the administrative complaint
“failfed] to give adequate notice of the grounds of
alleged misconduct” because it lists “averments” and
“disciplinary rules” separately, and does not provide a
“linkage” between the two sections. P1.’s Opp’n at 31.
This structure, argues Bender, makes the
administrative complaint “incoherent and confusing”
and thus failed to provide fair notice. Id. In addition
to these general arguments about the alleged
deficiency of the complaint, Bender also makes
arguments specific to the individually charged
violations.

Specifically, with respect to the claims pertaining
to neglect under 37 C.F.R. § 10.77(c), Bender argues
that the complaint fails to comport with the APA
because: (1) the allegations regarding Bender’s failure
to discuss the appropriateness of the pending patent's
design application with his client are not linked with
a particular rule, making it hard for him to determine
whether the allegation related to neglect or some other
charge, such as misrepresentation; and (2) that the
allegation in the complaint stating that Bender failed
to act with sufficient promptness in informing his
clients about the status of their patent applications is
similarly defective because it is not tied to any specific
rule violation identified in the complaint. Pl.’s Opp’n
at 10-11. Additionally, with respect to the charges
made under 37 C.F.R. §§ 10.62(a) and 10.68(a\X1),

7la

Bender argues that the complaint does not set forth
the charges with sufficient particularity. Pl.’s Opp’n at
20. Specifically, he contends that the factual
allegations that formed the basis for the alleged
violations of these regulations are set forth “in a
conclusory manner without any particularization ....”
Id. Accordingly, Bender claims that these allegations
‘are “non-specific, vague and ambiguous... .” and failed
to “sufficiently inform [him] before the [hjearing of a
conflict of interest under the rule, let alone what are
the alleged diverging conflicting interest.” Id.

The PTO argues, in response, that Bender was
adequately informed by the complaint of each of the
charges lodged against him. Def.’s Rep. at 7-8.
Furthermore, the PTO contends that the complaint
was sufficient to allow Bender to prepare a defense,
and that he was not misled by the complaint. Id. It is
therefore the PTO’s position that the complaint was
sufficient and contained all that was required
pursuant to 5 U.S.C. 37 § 554(b) (2000) and 37 C.F.R.
§ 10.134 (2000). Id. Def.’s Rep. at 7-8. Moreover,
posits the defendant, the complaint specifically states
the charges that were made against Bender, and
separately identified the facts on which those charges
are based. See Admin. Compl.

The required content of an administrative
complaint is set forth in § 554(b) of the APA. 5 U.S.C.
§ 554(b). This section provides that “[pJersons entitled
to notice of an agency hearing shall be timely informed
of — (1) the time, place, and nature of the hearing; (2)
the legal authority and jurisdiction under which the
hearing is to be held; and (3) the matters of fact and
law asserted.” Id. The Court notes that the language

72a

used by Congress in subsection three of § 554(b), while
specific in its directive that matters of law and fact
must be set forth in the notice, provides no guidance
about how matters of fact and law must be asserted.
As explained elsewhere in this opinion, an agency
regulation which construes this directive is entitled to
substantial deference as to its interpretation under
Chevron, 467 U.S. at 842-845. And, the PTO has
adopted a regulation (37 C.F.R. § 10.134), which
governs the content of its administrative complaints.
The regulation provides that the complaints filed by
the PTO must “[glive a plain and concise description of
the alleged violations of the Disciplinary Rules by the
practitioner.” 37 C.F.R. § 10.134(aX(2). And this
regulation does not on its face conflict with § 554(b) of
the APA.

The National Labor Relations Board (“NLRB”)
regulation which governs complaints filed by the
NLRB” is similar to the PTO regulation. Thus, the
District of Columbia Circuit’s cases addressing
complaints filed by the NLRB provide guidance with
respect to what must be provided in a complaint issued
by the PTO and under what circumstances a complaint
may be insufficient. In NLRB v. Blake Const. Co., 663
F.2d 272 (D.C. Cir. 1998), the Court of Appeals held

18 29 C.F.R. § 102.15 (2005) provides, in relevant part, that “[t]he
complaint shall contain: (a) A clear and concise statement of the
facts upon which assertion of jurisdiction by the Board is
predicated, and (b) A clear and concise description of the acts
which are claimed to constitute unfair labor practices, where
known, the approximate dates and places of such acts and the
names of respondent’s agents or other representatives by whom
committed.”

73a

that “[t]he Board may not make findings or order
remedies on violations not charged in the General
Counsel’s complaint or litigated in the subsequent
hearing.” Id. at 279; see also Gen. Teamsters and
Allied Workers Local Union No., 992 v. N.L.R.B., 427
F.2d 582, 588 (D.C. Cir. 1970). Thus, the NLRB’s
“own rules require that the complaint inform . . .[the
other party] of the violation asserted.” Id. (footnote
omitted). Therefore, an administrative complaint
must, at a minimum, set forth the charged violations
and the facts on which those violations are founded so
that the charged party may adequately prepare and
present a defense. Blake Const. Co., 633 F.2d at 283.

Although, in some instances, the PTO did not
specifically correlate the factual allegations with the
regulation violations charged in its complaint, this
Court finds that the complaint was sufficient to
provide Bender with sufficient notice of the charged
conduct. As explained above, the APA requires only
that the matters of law and fact be asserted in the
complaint, and the PTO has done this. The PTO has
also reasonably interpreted what its own regulation
requires be contained in its complaints and substantial
deference must be accorded to that interpretation.
And all of the violations which Bender was ultimately
found to have committed were sufficiently designated
in the complaint (or the violations found by the ALJ
were reversed by the GC Decision for a failure to do
so), as both the underlying factual conduct and the
regulations allegedly violated were asserted, consistent
with what the Court required in Blake Const. Co., 663
F.2d at 279, and General Teamsters, 427 F.2d at 588.
Accordingly, this Court finds that the additional step
of specifically identifying which particular facts

T4a

correspond with the particular disciplinary regulation
charged in the complaint is simply not required by
Congress or the law of this Circuit where it is
ascertainable, as here, which facts pertain to which
charges. Therefore, Bender’s challenge to the
sufficiency of the complaint must be rejected.

H. Did the PTO or the ALJ commit significant
procedural errors bearing on the plaintiffs hearing
and the adjudication?

1. Failure to permit discovery

Bender argues that the AL.J’s pre-hearing decision
not -to allow him to take the testimony of certain PTO
employees “adversely affected [his] ability to put on an
effective defense thereby denying him a full and fair
(hjearing.” Pl.’s Opp at 33; Appeal Brief at 80-83. It is
Bender’s contention that if he had been allowed to take
testimony from these individuals, he would have been
able to present “exculpatory evidence” about, inter
alia, improper agency conduct as to various aspects of
his case (some which are discussed elsewhere in this
opinion), improper agency motives, and institutional as
well as individual bias. Pl.’s Opp’n at 33-34.

The PTO contends, as a preliminary matter, that
the PTO’s rejection of certain patent applications is
“hardly germane to [the p)laintiffs duty to notify his
clients.” Def.’s Reply at 1920. Furthermore, the PTO
argues that Bender’s contention that such discovery
would show “unclean hands” on the part of the PTO
would not show bias on the part of the ALJ. Jd. at 20.

75a

With respect to discovery in agency proceedings,
the District of Columbia Circuit has explained that

[t]he extent of discovery that a party engaged in
an administrative hearing is entitled to is
primarily determined by the particular agency:
both the Federal Rules of Civil Procedure and
the Federal Rules of Criminal Procedure are
inapplicable and the Administrative Procedure
Act fails to provide expressly for discovery;
further, courts have consistently held that
agencies need not observe alli the rules and
formalities applicable to courtroom proceedings.

McClelland v. Andrus, 606 F.2d 1278, 1285 (D.C. Cir.
1979) (citations omitted) (footnotes omitted). 37 C.F.R.
§ 10.152(0B8) states that “[djiscovery shall not be
authorized . . . of any matter which: (1) will be used by
another party solely for impeachment or
cross-examination.” In seeking the testimony of the
. three PTO employees, Bender’s very purpose was to
illicit admissions that the PTO’s investigation and
complaint against him, in which these employees
participated or were involved, was unfair and flawed
on multiple levels. Pl.’s Opp’n at 33 Appeal Brief at
80-83. Therefore, the discovery sought by Bender was
-reasonably construed as designed to develop
“impeachment or cross-examination” material, and
according deference to the agency’s int

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386010_0436%3A2. Public record. Not legal advice.