Compliance with applicable Laws & Bar Association guidelines

PASS takes an active role in ensuring compliance with applicable Bureau of Industrial Security and Export Administration Regulations as well as Bar Association Opinions and Rules of Professional Conduct with regard to the unauthorized practice of law and avoiding potential conflicts of interest.

Bar Associations & Professional Rules of Conduct Compliance

Some concerns about utilizing LPO voiced by legal professionals relate to the practice of law by non-lawyers and conflict of interest concerns. The American Bar Association and a few other state bar associations have addressed these concerns in published opinions. To summarize, it is the affirmative duty of an attorney to ensure when outsourcing work that there does not exist a conflict of interest, such that the interests of your client may be compromised. As part of its screening process, PASS requests any information, specifically other clients and other kinds of patents, which could expose the attorney to a potential conflict of interest situation. We then review this information against other work in process and clients that we are currently working with to ensure a conflict does not exist before accepting the assignment.

Another area for concern is whether outsourcing/off-shoring is violating bar association bans on partnering with non-lawyers; or violates the prohibition on the practice of law by non-legal professionals. In both cases bar associations have issued opinions that off-shoring legal work can be done without violating either of these prohibitions. However, it is required that the attorney "adequately supervise" the work of non-attorneys to protect the interests of their clients.

PASS assists in this regard by providing an iterative process so our attorney clients participate in the development of the finished product as we move towards completion. For example, with searches, the team will review the disclosure and present the client with a list of suggested search terms and classifications. The client either approves the lists or suggests revisions and returns that to the team, along with any other special instructions. The team then proceeds with the search exactly as the attorney client would. It is also expected that the client will review the completed search and recommendations to ensure it has been completed as expected. If not, the team will make revisions to the report as recommended by the client at no additional charge as long as the changes are within the scope of the original search.

Similarly, with draft patent applications, the team reviews the disclosure and requests additional information via email if necessary, then provides the client with a brief summary called 'understanding of the invention'. The client then reviews and approves or suggests changes so that the team approaches the application as the client would. The team can also provide drafts of the claims and/or the background of the application for the client's review before completing the final draft.

Both the USPTO and the California Bar Association have issued opinions that the only way for us to avoid the unauthorized practice of law is for our clients to adequately supervise our work. We try to make that as easy for you as possible. If there are other ways we can help in this regard, let us know.

American Bar Association Cites Legal Outsourcing as a Method to Hold Down Rising Legal Costs, But Certain Conditions Must Be Met

American Bar Association Allows Legal Outsourcing

In the first opinion issued by the ABA regarding legal outsourcing, the nation's largest bar association not only allows for legal outsourcing but commends the trend as a "salutary" one for a globalized economy. (ABA Opinion 08-451 pg. 2)

The Opinion explains that due to the varying costs of labor across the US and the world, outsourcing affords lawyers the ability to reduce costs for themselves and their clients, by leveraging lower cost legal work. Moreover, the availability of lawyers to perform discrete tasks can allow smaller firms to provide labor-intensive legal services, as required. For example, the Opinion cites to large discovery-intensive litigation as one that outsourcing makes possible for firms with limited human resources.

The ABA states clearly that legal outsourcing is not unethical: "There is nothing unethical about a lawyer outsourcing legal and non-legal services provided the outsourcing lawyer renders legal services to the client with the 'legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation', as required by Rule 1.1". (ABA Opinion 08-451 pg. 2)

According to the ABA, a lawyer may outsource legal work provided that the lawyer remains ultimately responsible for rendering competent legal services to the client.

Finally, the Opinion permits a law firm outsourcing legal work to add a surcharge to the cost paid by the billing lawyer, provided that the total charge represented a reasonable fee for the services rendered. (Opinion 08-452 pg. 6) In fact, the Opinion compares this to how a conventional law firm bills its services for its lawyers. The firm pays a lawyer a salary and certain other benefits, and the client is generally not informed of the details of the financial relationship between the lawyer and the firm. Similarly, a law firm is not obligated to inform a client how much it is paying for offshore legal work. (ABA Opinion 08-452 pg. 5-6)

ABA Opinions 08-451 & 08-452

Export Control Compliance

Because any U.S. data or technical information provided to a foreign national is considered an export under the Export Administration Regulations (EAR), PASS screens each disclosure prior to assigning the work to India. Each client provides summary data via email that provides sufficient information for our U.S. screener to classify the subject matter of the application. Our screener has been trained by the Bureau of Industrial Security (BIS), the agency responsible for the administration and enforcement of the EAR, to utilize the applicable sections of the EAR to determine if the subject matter of the patent application triggers an export license requirement; and if so, whether a license exception is available.

In the past 8 years, none of the patent disclosures we have received triggered an export license requirement. Moreover, companies that work with products or data that may require an export control license will already have screening protocols in place. As an aid to those who may not be familiar with those exports that might require an export license the following list contains some of the "red flag" areas where the subject matter/end use of a patent may require an export license. This includes:

  • Nuclear, Chemical & Biological Weapons
  • Crime Control
  • Encryption and Dual-Use (commercial/military) Software
  • Firearms Control
  • Missile Technology
  • Weapons that could threaten the National Security of the US
  • Communications Intercepting or surreptitious listening devices
  • Items for the development, production or overhaul of aircraft engines or components

The subject matter of any other patent disclosures that do not relate to the above-named subjects will normally be classified EAR99; and because they will not normally trigger any of the General Prohibitions, would be designated as No License Required (NLR).

If it is determined that an export control license is required, the screener will notify the client that the work cannot be accepted by PASS without an export control license; or a certification from an attorney that an export control license is not required.

Because all of the patent disclosure information goes to one place in India, there are a number of other steps that are taken by our facility to screen current employees and new hires against the various BIS lists to ensure compliance with other BIS requirements.

We often receive questions about the USPTO Notice issued July 23, 2008 entitled "Scope of Foreign Filing License". In this Notice the USPTO reminds patent practitioners that it has the responsibility and authority from the BIS to screen all patent applications that will be filed in a foreign country through its issuance of a Foreign Filing License. It goes on to point out that it has no screening ability or export authority over patent disclosures initiated in the U.S. and drafted in other countries for filing in the U.S. The Notice states in part:

Applicants who are considering exporting subject matter abroad for the preparation of patent applications to be filed in the United States should contact the Bureau of Industry and Security (BIS) at the Department of Commerce for the appropriate clearances.

Many patent professionals have interpreted this to mean that a foreign filing license is required to send patent disclosures to foreign countries. This is not the case. It does require that the disclosure be analyzed against the EAR, like any other export, to determine if an export control license is required. The PASS screening process is intended to satisfy this requirement.