Opinion ID: 772427
Heading Depth: 2
Heading Rank: 2

Heading: The Scope of Federal Preemption

Text: 22 A fundamental principle of the Constitution is that Congress has the power to preempt state law. U.S. Const. art. VI, cl. 2; Crosby v. National Foreign Trade Council, 120 S.Ct. 2288, 2294-95 (2000) (citing cases). Federal statutes may contain express statements that they preempt state law. Crosby, 120 S.Ct. at 2294. Even without an express provision for preemption in a federal statute, state law must yield to a congressional Act in at least two circumstances. First, when Congress intends federal law to occupy the field, state law in that area is altogether preempted under the doctrine of field preemption. Id. (citing cases). And even if Congress has not occupied the field, state law is still preempted to the extent of any conflict with a federal statute. Id. (citing cases). Conflict preemption is found where under the circumstances of a particular case, the challenged state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. Id. 23 As far as express preemption is concerned in this case, it is clear that there is none. The text of 35 U.S.C. §§ 2(b)(2)(D) and 35 U.S.C. §§ 32 gives no indication that either of these statutes are intended to preempt the authority of states to punish attorneys who violate ethical duties under state law. These statutes certainly do not create[] the cause of action that Kroll asserts. Christianson, 486 U.S. at 808-09. Indeed, the regulations promulgated pursuant to these statutes make clear that, while the Director is entitled to regulate the conduct of patent practitioners before the PTO, the Director's authority is not intended to preempt states' authority to discipline attorneys. The first paragraph of the PTO's regulations governing the conduct of patent practitioners states: 24 This part governs solely the practice of patent, trademark, and other law before the Patent and Trademark Office. Nothing in this part shall be construed to preempt the authority of each State to regulate the practice of law, except to the extent necessary for the Patent and Trademark Office to accomplish its Federal objectives. 25 37 C.F.R. §§ 10.1 (emphasis added). Far from express preemption, PTO regulations expressly disavow an intent to preempt state laws governing the practice of law. 26 As for field preemption and conflict preemption, there is indeed a limited field of law where the PTO's powers under 35 U.S.C. §§ 2(b)(2)(D) and 35 U.S.C. §§ 32 do preempt state law. Under these statutes, the PTO has the exclusive authority to establish qualifications for admitting persons to practice before it, and to suspend or exclude them from practicing before it. A state, for example, may not impose additional licensing requirements beyond those required by federal law to permit a non-lawyer patent agent to practice before the PTO. In Sperry v. State of Florida, 373 U.S. 379 (1963), the U.S. Supreme Court ruled that the State of Florida could not enjoin a local patent practitioner, who was not admitted to the State Bar of Florida, from preparing patent applications and other legal instruments that are filed solely in the PTO. See id. at 385. To do so, the Court reasoned, would hinder or obstruct the free use of a license granted under an act of Congress. Id. (quoting Pennsylvania v. Wheeling & Belmont Bridge Co., 54 U.S. 518, 566 (1851)). Thus, the PTO has exclusive authority to establish qualifications and procedures for admitting persons to practice before the PTO, and to suspend or exclude those patent practitioners from practicing before the PTO. In this case, because the State of New York is not seeking to suspend or expel Kroll from practicing before the PTO, the conduct of the Grievance Committee does not fall within the field of preemption outlined by Sperry. 27 The scope of field preemption under 35 U.S.C. §§ 2(b)(2)(D) and 35 U.S.C. §§ 32 is narrower than the range of the Director's powers under those statutes. The Director has the authority to suspend or exclude . . . from further practice before the Patent and Trademark Office, any . . . attorney shown to be incompetent or disreputable, or guilty of gross misconduct. 35 U.S.C. §§ 2(b)(2)(D). This statute grants the Director broad authority to discipline patent practitioners for incompetence and a wide range of misconduct, much of which falls within the disciplinary authority of the states. That the PTO and the states may share jurisdiction over certain disciplinary matters, however, does not mean that the states' authority is preempted. To the contrary, the Supreme Court emphasized in Sperry that the State maintains control over the practice of law within its borders except to the limited extent necessary for the accomplishment of federal objectives. Sperry, 373 U.S. at 402. Here, the Grievance Committee has threatened to discipline Kroll for failing to promptly inform Elly Ildiko Elias that her LOVE BED patent application was rejected by the Patent Office. It is beyond serious argument to suggest that such state action would frustrate the ability of the PTO to accomplish its federal objectives. Kroll's alleged mistreatment of Elias involved only communications, or the lack thereof, between the lawyer and the client. The alleged misconduct in this case is not entitled to any special consideration just because a patent is involved. The state ethical violation would be no different if Kroll had failed to advise his client of a state court decision, for example. 28 Kroll's contentions are particularly unfounded considering that he is not only enrolled with the PTO, but is also a member of the State Bar of New York. Kroll, of course, did not have to join the New York Bar to practice before the PTO. By choosing to join the New York Bar, and thus committing to abide by its Code of Professional Responsibility, he voluntarily submitted himself to the jurisdiction of the Grievance Committee. The Grievance Committee is free to punish him, and indeed to disbar him, for violations of his duties arising under the Code. Kroll identifies no authority even suggesting that federal patent law preempts the authority of a state bar from disciplining its own members for failing to comply with the state's Code of Professional Responsibility. But even were the Grievance Committee to disbar Kroll, there would still be no conflict with federal law. Because Kroll is enrolled to practice before the PTO, he could continue to do so unless also expelled by the Director. Thus, the respective powers of the Grievance Committee and the Director can be exercised without conflict. Indeed, by disciplining patent attorneys who violate their ethical duties to clients, the Grievance Committee would advance the goals of the patent laws by promoting better relationships between patent lawyers and their clients. 29 Because, as noted above, neither 35 U.S.C. §§ 2(b)(2)(D) nor 35 U.S.C. §§ 32 create[] the cause of action asserted by Kroll, he must show that his preemption argument poses a substantial question of federal patent law. Christianson, 486 U.S. at 808-09. Here, Kroll's alleged misconduct involved reported ethical lapses having nothing to do with substantive patent law. The violations alleged by the Grievance Committee concern breaches of the duties he swore to uphold as a condition of his voluntary membership in the Bar of the State of New York. Although resolving his complaint certainly requires an understanding of 35 U.S.C. §§ 2(b)(2)(D) and 35 U.S.C. §§ 32, as well as a review of the case law and PTO regulations concerning these two statutes, it is readily apparent that Kroll's alleged misconduct simply does not raise a colorable question of preemption. Particularly in light of 37 C.F.R. §§ 10.1, which generally disavows preemption of the authority of each State to regulate the practice of law, we cannot agree that Kroll's preemption argument poses a substantial question of federal patent law. Christianson, 486 U.S. at 808-09. 30 Kroll points to several cases regarding PTO disciplinary actions, and urges that his case should similarly be accorded federal jurisdiction. Wyden v. Commissioner, 807 F.2d 934, 231 USPQ 918 (Fed. Cir. 1986), holds that an applicant who failed the PTO examination, and who sued to overturn the PTO's decision, stated a federal claim relating to patents that falls within the Federal Circuit's exclusive jurisdiction, rather than that of a regional circuit court. Wyden, of course, is inapposite because the PTO has taken no disciplinary action against Kroll. 31 Two other cases relied on by Kroll concern disciplinary decisions by the PTO that were initially appealed to regional circuits, and then transferred to the Federal Circuit. See Franchi v. Manbeck, 947 F.2d 631 (2d Cir. 1991) (transferring to the Federal Circuit complaint of wrongful denial of admission to PTO bar); Jaskiewicz v. Mossinghoff, 802 F.2d 532 (D.C. Cir. 1986) (transferring to the Federal Circuit appeal from decision by PTO to suspend patent attorney for misconduct). Like Wyden, these cases are irrelevant to the present appeal because the PTO has not acted to discipline Kroll. If the Director decides to exercise his authority pursuant to 35 U.S.C. §§ 32 to discipline Kroll, then Kroll presumably would be entitled to federal review of the Director's decision, including in this court. 32 Kroll also relies on People v. Miller, 23 A.D.2d 144 (N.Y. App. Div. 1965), which recognizes that states are limited in their authority to compel non-attorney members of the patent bar to conform to requirements of the state bar. In Miller, a non-attorney advertised his services as a patent attorney after being granted that title by the PTO prior to 1938, before which time the PTO did not distinguish between patent attorneys and patent agents. See id. at 146. The court concluded that, absent a showing that the defendant was engaged in the practice of law distinct from matters before the PTO, the state could not prohibit him from using the federally granted title of patent attorney. See id. at 146-47. As above, Miller is of no help to Kroll, because, as an attorney and a member of the New York Bar, Kroll is subject to its professional responsibility standards. 33 In the present case, the district court, noting that Kroll had pled federal preemption based upon 35 U.S.C. §§ 2(b)(2)(D) and 35 U.S.C. §§ 32, and recognizing that the Supreme Court had previously held in Sperry that these statutes give rise to a limited field of federal preemption, may have been reluctant to grant the Grievance Committee's motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). Finding that Kroll had asserted a colorable federal claim arising under federal law, the court proceeded to dispose of this case at the summary judgment stage, and found for the Grievance Committee on the merits. We hold, however, that Kroll's allegation of preemption is so attenuated and unsubstantial as to be absolutely devoid of merit. Hagans, 415 U.S. at 536-37. We rule that the district court lacked jurisdiction to proceed to the merits of the case, and thus that the district court's judgment must be vacated. Accordingly, we remand to the district court for the purpose of dismissing Kroll's complaint for lack of subject matter jurisdiction. For the above reasons, the district court's judgment and the case are, respectively, 34 VACATED and REMANDED. Costs 35 Costs to Frank Finnerty, nominal defendant for New York State Grievance Committee.