The opinion of the court was delivered by: Donald C. Pogue United States District JUDGE*fn34
In this case, the Court is asked to review the seven month suspension of John P. Halvonik ("Halvonik") from the Patent and Trademark Office ("PTO"). In proceedings below, the PTO charged Halvonik with three counts of misconduct. An Administrative Law Judge ("ALJ") found Halvonik guilty of certain charges contained in two counts, but dismissed one count as barred by the statute of limitations. Much of the ALJ's decision was affirmed on appeal to the Commissioner of the PTO ("Commissioner"). Thereafter, Halvonik sought judicial review by this Court claiming that the PTO had (1) violated its own rules, (2) did not accord him due process, and (3) misapplied the law. This matter is now before the Court on the parties' Cross-Motions for Summary Judgment. The Court affirms the PTO's decision. The Petitioner's Motion for Summary Judgment is denied and the Respondent's Motion for Summary Judgment is granted.
Halvonik graduated from Allegheny College with a Bachelor of Science in Chemistry and attended American University Law School ("American"). Halvonik Tr., Nov. 13, 1997 ("Halvonik Transcript"), PTO 02121, PTO 02121 (p. 958).*fn2 While at American, Halvonik pursued an interest in patent law, id. at PTO 02121-22 (pp. 959-60), and worked at law firms where he conducted patent searches. Id. In 1987, while still a student at American, Halvonik took and passed the Patent Bar. Id. at PTO 02122 (p. 962). The following May, Halvonik graduated from American. Id. Thereafter, he became licensed before the PTO and took and passed the Pennsylvania State Bar exam.*fn3 Id.
Following his graduation, and during and after his completion of the Pennsylvania Bar exam, Halvonik worked as an independent patent searcher for law firms. Id. at PTO 02122 (p. 961-62). His practice gradually grew into an independent practice with its own, non-legal, clientele. Id. However, throughout his legal practice Halvonik never worked as an associate employee of a law firm, id. at PTO 02122 (p. 965), or associated himself with a more senior attorney, id. at PTO 02123 (p. 966). Rather, he started off by "hanging out a shingle" and putting ads in the Yellow Pages and magazines that he was available for patent work. Id.
In his practice, Halvonik's business model catered to "small, independent inventors," to whom he would offer "[t]imely, efficient patent services" focusing on the drafting of patent applications. Id. at PTO 02123 (pp. 967-68). Additionally, he sought to attract clients with flat fees, at rates lower than the hourly rates offered by competing firms. Id. at PTO 02123 (pp. 968-69). As the Administrative Law Judge recounted, Halvonik:
[W]as a relatively new practitioner who hung his shingle out with little guidance from a more seasoned practitioner. By doing so, he received significant economic benefits . . . . [His] marketing strategy of undercutting his competition generated 250-275 client actions per year. Essentially such amounts to over one action per day. . . . The undersigned's impression is not that [Halvonik] is an inattentive practitioner, but rather one who undertook more than he could reasonably handle and as a result his practice began to resemble that of the 'little Dutch boy' running to put his finger wherever the dike was leaking.
Initial Decision in Bovard v. Halvonik, ("Initial Decision"), PTO 00973, PTO 01039-40 (pp. 59-60).
As the ALJ's Decision implies, Halvonik's relative inexperience, combined with an increasing work-load, eventually had consequences. As a result, starting in 1990, the PTO began to receive complaints regarding Halvonik's work and conduct. See Joint Stipulation of Facts in Initial Decision, PTO 00973, PTO 00993 (p. 21) at ¶ 11. The first complaint was brought by "individual inventor" Robert Marcon ("Marcon"). Id.*fn4 Marcon had retained Halvonik to search the validity of a patent. Id. at ¶ 3. Although Halvonik estimated that the search would take four weeks, Halvonik (a) did not provide a final report until ten months later, (b) repeatedly gave assurances of when he would provide a finished report, but (c) never honored those assurances. Id. at ¶¶ 4-9. During the course of their relationship, Marcon wrote to the PTO in December 1990 complaining about Halvonik, "particularly in regard to the delay in receiving the formal report and what he perceived to be Halvonik's lack of responsiveness to his telephone inquiries." Id. at ¶ 11. The PTO notified Halvonik of Marcon's complaint and invited him to respond. Id. at PTO 00994 (p. 22) at ¶ 12. After receiving Halvonik's response, on November 4, 1992, the Director of Enrollment and Discipline advised Halvonik by letter that:
I have decided not to present this case to the Committee on Discipline at this time, but to give you the opportunity under 5 U.S.C. § 558(c) to come into compliance with the rules and regulations of the PTO. Accordingly, this investigation is terminated at this time. However, this matter will be considered in dealing with any further complaint or evidence of misconduct which may come to the attention of the office in the future.
Id. at ¶ 13. Unfortunately for Halvonik, the PTO received additional complaints from two of Halvonik's other clients. These complaints, from Jack Rick Nelson ("Nelson"), id. at PTO 00995 (p. 23) at ¶ 32, and Diane Palmer ("Palmer"), id. at PTO 00996 (p. 24) at ¶ 48, provide the basis for this case.
A. APPLICATION ON BEHALF OF NELSON
In August 1992, Nelson retained Halvonik to prepare and file a patent application for his invention of "a molding strip to be used in replacing automobile windows." Id. at PTO 00994 (p. 22) at ¶ 15. During the course of their relationship, Halvonik would send drafts of the application to which Nelson would proffer suggestions. Initial Decision, PTO 00973, PTO 01038 (p. 58). However, by the third iteration of this process, Halvonik still had not begun to make many of Nelson's suggested revisions despite the fact that, in the ALJ's words, Halvonik "was effectively being spoon-fed by his own client and should have grasped and made the requested changes and likewise should have included a preferred embodiment and a descriptive disclosure . . . ." Id. The ALJ found that during a telephone call on October 21, 1992, Halvonik had promised to make specific "changes and additions" and "asked Nelson to sign . . . the necessary paperwork to file the application . . . ." Id. at PTO 01038-39 (pp. 58-59). Based on the assurances that Halvonik would make the agreed upon revisions, Nelson signed the paperwork necessary to file the application even though he knew the application, in its then present form, to be incomplete. Id. at PTO 01005-06 (pp. 32-33). The next day, Nelson sent Halvonik the signed Patent Declaration and the $355.00 filing fee. Joint Stipulation of Facts in Initial Decision, PTO 00973, PTO 00994 (p. 22) at ¶ 22. On October 29, 1992, Halvonik filed the application with the PTO without the agreed upon revisions. Id. at ¶ 23; Initial Decision, PTO 00973, PTO 01040 (p. 60). The ALJ found that, "[a]s a result of his lack of follow-through and failure to carefully scrutinize that which he was about to file, [Halvonik] filed an application which did not conform to the inventor's intentions, which had been clearly expressed to him on several occasions prior to the time Nelson signed the declaration." Initial Decision, PTO 00973, PTO 01040 (p. 60). Nelson did admit that he asked Halvonik to file the application "as soon as possible" early in his relationship with Halvonik, id. at PTO 01004 (p. 32), and never communicated anything to the contrary thereafter. Id. Nevertheless, the ALJ found that Nelson had not put "a significant degree of pressure on [Halvonik]" to justify the misfiling of his application. Initial Decision, PTO 00973, PTO 01040 (p. 60).
Following the filing of the application, Nelson inquired regarding the final filing Halvonik made on his behalf. Joint Stipulation of Facts in Initial Decision, PTO 00973, PTO 00995 (p. 23) at ¶ 24. In November, Halvonik sent Nelson a copy of the draft application without any of the agreed upon revisions. Final Decision in Bovard v. Halvonik, ("Final Decision"), PTO 02568, PTO 02571 (p. 4). Thinking that Halvonik had mistakenly sent him the wrong version, Nelson phoned Halvonik attempting to determine which version had been filed. Id. Although Halvonik received the PTO filing receipt sometime in December 1992, he did not review the application file until late January 1993, or notify Nelson that he received the filing receipt. Id. In early February, Halvonik advised Nelson that he had "screwed-up" in that he filed the application without the agreed upon revisions, id., and that an "Office Action"*fn5 had been issued by the PTO regarding the application. Joint Stipulation of Facts in Initial Decision, PTO 00973, PTO 00995 (p. 23) at ¶ 25. The following day Nelson discharged Halvonik and subsequently retained new counsel, id. at ¶ 26, to whom he paid $2,500 to handle his application, Initial Decision, PTO 00973, PTO 01041 (p. 61) n.12. On February 19, 1993 Nelson filed a complaint with the PTO regarding Halvonik. The PTO charged Halvonik with violating six disciplinary rules in connection with Nelson's application, Compl., PTO 00007, PTO 00014-15 (pp. 8-9) at ¶ 50.
B. APPLICATION ON BEHALF OF PALMER
In late March 1993, Palmer retained Halvonik to prepare and file a patent application for a kitty litter box claimed to be completely waterproof. Final Decision, PTO 02568, PTO 02571 (p. 4). Along with a check for $1,300 and the necessary disclosure forms, Palmer sent her invention to Halvonik. Id. at PTO 02571-72 (pp. 4-5). A month later, Halvonik sent Palmer a draft of a patent application with at least four errors. Id. at PTO 02572 (p. 5). According to the ALJ, the "initial draft of the Palmer application did not measure up to [Halvonik's] own nor the expert's standard for what is an acceptable first draft . . . ." Findings of Fact in Initial Decision, PTO 00973, PTO 01065 (p. 85) at ¶ 19. Dissatisfied with his draft, Palmer sent Halvonik an eight-page revision with penciled figures on May 10, 1993. Id. at ¶ 20; Joint Stipulation of Facts in Initial Decision, PTO 00973, PTO 00995-96 (p. 23-24) at ¶ 36. However, upon further reflection, on May 19, 2003, Palmer telephoned Halvonik that she wished to discontinue his services. Final Decision, PTO 02568, PTO 02572 (p. 5). In response, later that same day, Halvonik faxed Palmer a new draft of the application which was nearly verbatim of Palmer's revised draft but still did not contain a claim section.*fn6 Id. Still displeased, Palmer discharged Halvonik and demanded he return a portion of the fee she had already paid, Findings of Fact in Initial Decision, PTO 00973, PTO 01065 (p. 86) at ¶¶ 28-30. Palmer also sent a letter the next day confirming Halvonik's discharge and requesting a complete refund. Joint Stipulation of Facts in Initial Decision, PTO 00973, PTO 00996 (p. 24) at ¶ 40. Palmer followed up with another letter dated June 12, 1993 demanding the return of the fee she paid and her disclosure materials. Id. at ¶ 41.
In late July 1993, Halvonik sent Palmer a $500 check with a letter explaining:
I [sic] reference to your recent request for a refund of money you paid for a patent application. I am enclosing a check for $500 based on the original filing fee paid less my hourly rate ($90) times hours spent on the project.
I feel this is fair as it is based on the time I spent writing two drafts of the application as well as time on the phone with you in the first ...