IP attorney’s exclusion from USPTO practice is affirmed

A decision by the director of the U.S. Patent and Trademark Office to exclude an intellectual property attorney from practicing before the agency should be affirmed, a U.S. District Court in the Eastern District of Virginia has ruled, even though the administrative law judge who considered the grievances filed against her came from another federal agency.

Multiple clients filed grievances against an intellectual property attorney licensed in Illinois and Wisconsin. An investigation by the USPTO’s Office of Enrollment and Discipline found that the attorney violated multiple ethics rules.

The OED filed a 26-count complaint against the attorney and an ALJ from the Department of Housing and Urban Development determined the USPTO had demonstrated ethical violations, concluding that the only appropriate sanction was to exclude the attorney from practicing before the agency.

The director of the USPTO affirmed, and the attorney appealed again to the federal court.

“[The director] correctly asserts that the duties of an ALJ presiding over HUD administrative proceedings are clearly ‘germane’ to the duties of an ALJ presiding over USPTO administrative proceedings, at least where the USPTO proceedings involve only questions about a practitioner’s alleged misconduct, rather than technical and scientific questions surrounding a particular patent or trademark,” U.S. District Court Judge Leonie M. Brinkema wrote. “Accordingly, because neither HUD nor the USPTO are attempting to ‘circumvent[] the Appointments Clause by unilaterally appointing an incumbent to a new and distinct office,’ allowing a properly appointed HUD ALJ to preside over a USPTO administrative disciplinary proceeding does not run afoul of the Appointments Clause.”

The 23-page decision is Welytok v. Director of the United States Patent and Trademark Office (VLW 025-3-486).

The USPTO did not respond to a request for comment. The attorney proceeded pro se.

Grievances filed, agency finds ethical violations

Jill Welytok, a licensed attorney in Illinois and Wisconsin, registered with the USPTO as a patent attorney in 2004.

In 2019, Jack Garczynski retained Welytok to prepare and file a non-provisional utility patent application for his clothes hanger invention. Welytok accepted two payments which she did not deposit into a client trust account.

A few weeks later, Garczynski asked if she had filed the application and whether it was safe to publish a website and promote his invention, and Welytok responded in the affirmative.

Garczynski questioned Welytok when he realized he had never received a charge for the government filing fee and she emailed him a document which purported to show the USPTO had received a submission for an application.

However, Garczynski contacted another patent attorney who could find no record of the application. That attorney filed a grievance against Welytok on behalf of Garczynski.

In 2017, Elizabeth Kemp retained Welytok to represent the IP rights of herself and her two companies. Again, Welytok accepted an advance and did not place it into a client trust account. Kemp terminated Welytok’s representation based on a series of incidents where she demonstrated a lack of understanding surrounding the IP at issue and failed to take promised actions. Kemp also filed a grievance.

The OED investigated and concluded that Welytok had violated multiple ethical rules, filing a 26-count complaint.

Pursuant to an Interagency Agreement between HUD and the USPTO, the complaint was assigned to a HUD ALJ who had been formally appointed in August 2018.

Welytok repeatedly failed to comply with the ALJ’s orders and the rules governing the administrative proceedings. The ALJ determined that the USPTO demonstrated by clear and convincing evidence that Welytok had violated several Rules of Professional Conduct and as a sanction, excluded Welytok from practice before the agency.

The USPTO general counsel affirmed, and Welytok appealed.

Federal law permits ALJ sharing

Welytok argued that the HUD ALJ was not appointed in compliance with the U.S. Constitution and was hired in violation of the Administrative Procedure Act.

But the HUD ALJ was properly appointed in 2018 — well before the commencement of Welytok’s administrative disciplinary proceedings in 2021 — by the then-HUD secretary, the court said. Further, he was allowed to preside over a USPTO administrative disciplinary proceeding if the role was “germane” to that of an ALJ presiding over HUD administrative proceedings, the court explained.

“Specifically, while presiding over HUD administrative proceedings, HUD ALJs rule on motions, control the conduct of discovery, take oral testimony, receive evidence, and issue initial decisions,” the court wrote. “These functions mirror the functions performed by ALJs who preside over USPTO administrative disciplinary proceedings.”

Federal law permits any agency “which occasionally or temporarily is insufficiently staffed with administrative law judges” to “use” ALJs from other agencies, the court noted, rejecting Welytok’s position that because the USPTO has used HUD ALJs for multiple years, the use was neither occasional nor temporary, as required by § 3344.

“[T]he purpose of § 3344 was to ‘permit[] an interchange of hearing commissioners among the agencies’ to ‘reduce the use of temporary hearing officers,’ ‘save expense,’ ‘provide some variety for the hearing commissioner,’ and ‘impart fresh points of view to the agencies,’” the court explained. “[T]his court finds that § 3344’s text and purpose support a robust use of the ALJ loan program and refute Welytok’s narrow interpretation of the ALJ loan program.”

Sanction upheld

As for Welytok’s contention that the sanction imposed ran afoul of the APA and USPTO procedures, the court found her arguments “difficult to comprehend,” but held that the agency followed the correct procedures in disciplining Welytok for her misconduct and that the ALJ did not err by allowing the OED investigator to testify.

Finally, the court held that the director did not have an obligation to provide Welytok with written findings, “because, as the administrative record shows, this case is replete with evidence that Welytok’s misconduct was willful,” noting her many fabrications and representations to clients, and affirming her exclusion from practice before the agency.