Commissioner of Patents and Trademarks
Patent and Trademark Office (P.T.O.)
IN RE REFUSAL OF ASSIGNMENT BRANCH TO RECORD
ATTORNEY'S LIEN
July 26, 1988
Garold E. Bramblett, Jr.
Parmelee, Bollinger & Bramblett
James E. Denny
Deputy Assistant Commissioner for Patents
ON PETITION
*1 This is a
decision on petition, filed April 11, 1988, requesting exercise of the
supervisory authority of the Commissioner to direct Assignment Branch to record
an attorney's lien.
Petitioner, on January
14, 1988, filed a request with the Assignment Branch to record an attorney's
lien of $13,974.64 against one (1) patent application. Assignment Branch has
refused to record attorney's liens. Petitioner asserts that attorney's liens
are recordable pursuant to 37 C.F.R. 1.331.
PAST AND PRESENT RULES
There have been rules
concerning the recording of interests in patents or patent applications since
at least 1836. As time passes and responsible officials change, the rules get
changed sporadically.
In 1878, Rule 99, one of
the rules regarding recordation of assignments and other papers, read:
Letters, copies of
assignments, or ex parte statements in relation to assignments are not proper
matter for record. (Emphasis added.)
The Rules of Practice
were changed in the following year and what had been Rule 99 was transformed
into Rule 204 reading:
No instrument will be
recorded which does not, in the judgment of the commissioner [sic], amount to
an assignment, grant, mortgage, lien, incumbrance, or license, or affect the
title of the patent or invention to which it relates. (Emphasis added.)
This was the first time that
"lien" appeared in the rules of practice, but, unfortunately, the
rules document did not contain any explanation of what was meant or intended by
"lien." No counterpart to the Federal Register existed at the time
and all we have to consult for "legislative history" is the comment
of Commissioner Paine that the revised rules in 1879 were "designed to be
in strict accordance with the revised statutes relating to the grant of patents
for invention." [FN1] The present rules (codified in 37 C.F.R.) contain a
counterpart to the "lien" rule. Today's "rule" is 37 C.F.R.
1.331(b) stating:
No instrument will be
recorded which is not in the English language and which does not amount to
anassignment, grant, mortgage, lien, incumbrance, or license, or which does not
affect the title of the patent or invention to which it relates, and which does
not identify the patent or application to which it relates, except as ordered
by the Commissioner.
CASE PRECEDENT
On February 25, 1905,
Commissioner Allen ruled in In re Clark, 1905 C.D. 77, that an attorney's lien
in relation to a patent matter should not be recorded as:
"It is not thought
that this rule [the 1904 version of 37 C.F.R. 1.331(b);
see below] was ever meant to permit the recording of such instruments as the
present one, which is a mere ex parte affidavit that the inventor is indebted
to him for services rendered. To permit such ex parte affidavits to be recorded
might quickly become the means of harassing inventors by casting unjust clouds
upon their titles. It has not been the practice to record such instruments and
no reason is seen now for instituting such practice.
*2 It is held
that the word 'lien' in Rule 198 does not refer to an ex parte statement or
affidavit by the beneficiary under the alleged lien." (Emphasis added.)
Rule 198, in effect at
the time of Commissioner Allen's ruling, read:
No instruments will be
recorded which is not in the English language and which does not, in the
judgment of the Commissioner, amount to an assignment, grant, mortgage, lien,
incumbrance, or license, or which does not affect the title of the patent or
invention to which it relates. Such instrument should identify the patent by
date and number; or, if the invention be unpatented, the name of the inventor,
the serial number, and date of the application should be stated.
There is a close
relationship between the language of Rule 198 and present- day 37 C.F.R.
1.331(b). Because such a close language relationship exists between Rule 198
and 37 C.F.R. 1.331(b), the policy declared by Commissioner Allen in In re Clark, supra, is applicable
today, absent a change in policy or law.
ATTORNEY'S LIENS
There are two types of
attorney's liens--the retaining lien and the charging lien. A retaining lien
applies to documents belonging to a client in the possession of the attorney
who has an equitable right to retain those documents until the client has paid
the attorney for his services (which may be for matters in addition to those
that gave rise to the possession of the particular documents). A charging lien
arises from a litigable matter wherein the attorney is authorized by the client
to institute legal proceedings on the client's behalf and applies only to the
proceeds coming about from a judgment in that litigation. It is apparent that
the attorney's lien sought to be recorded is a retaining lien and is not a
charging lien.
Over 250 years ago, Lord
Chancellor Talbot commented in Ex parte Bush, 7 Viner's Abr. (1734),
The attorney hath a
lien upon the papers in the same manner against assignees as against the
bankrupt, and though it does not arise by an express contract or agreement, yet
it is as effectual, being an implied contract by law.
We are told that "[t]he common-law
retaining lien is a passive lien which cannot accurately be enforced through
legal proceedings but rest wholly upon the right to retain possession until the
bill is paid. Brauer v. Hotel Associates, Inc., 40 NJ 415, 192 A2d 831" in
7 AmJur2d, Attorney at Law § 315,
footnote 42 (1980). In the main text of §
315, it is stated:
An attorney's general
or retaining lien has its roots in the common law, is founded on general
principles of justice, does not depend on an express agreement, and is
effectuated through the exercise of the inherent power of the courts over the
relationship between attorneys and their clients. (footnote omitted.)
The Second Circuit stated
in Everett, Clarke & Benedict v. Alpha Portland Cement Co., 225 F. 931 (2d
Cir.1915):
*3 An attorney's
general or retaining lien is a common-law lien, which has its origins in the
inherent power of courts over the relations between attorneys and their
clients. The power which the courts have summarily to enforce the performance
by the attorney of his duties toward his client enables the court to protect
the rights of the attorney as against the client. The lien is one which the
courts have long recognized as protected.
In the same case, the
court observed also that:
The lien on the papers
is a mere passive lien, without any right to actively enforce it. It is a mere
right to retain.
Moreover, "[a] retaining
lien is complete and effective without notice to anyone. (footnote
omitted.)." 7A C.J.S. Attorney and Client § 366 (1980). And, "[g]enerally a retaining lien cannot be
actively enforced, although, under some circumstances, such liens may be enforced
as an incident to a proceeding brought for another purpose." 7A C.J.S.
Attorney and Client § 390 (1980).
"A retaining lien
cannot be actively enforced except as an incident to a proceeding brought for
another purpose. (footnote citing C.J.S.)." De La Paz v. Coastal Petroleum
Transport Co., 136 F.Supp. 928, 930 (S.D.N.Y.1955).
Since a retaining lien
never affects the right of ownership--but only the right of possession--a
retaining lien is an insufficient interest in a patent or application to warrant
recordation. The retaining lien exists regardless of recordation and stays in
place until discharged. An attorney's lien (a retaining lien) cannot
"affect the title of the patent or invention to which it relates."
Moreover, "notice is not required to protect the [retaining] lien against
assignment by the client or attachment by the client's creditors. (Footnote
omitted.)" 7 AmJur2d, Attorneys at Law §
319 (1980). There is no reason to record such a lien.
CONCLUSION
Accordingly, no error is seen to exist in
the action of Assignment Branch in denying recordation of the attorney's lien.
The attorney's lien
submitted for recording is being returned herewith.
Attachment: Attorney's
Lien
FN1. Note both the disjunctive nature and the discretionary nature
of the rule. With respect to the latter, the Commissioner may adjudge if an
instrument is proper for recording. With respect to the former, the instrument
has to either (1) amount to an assignment, grant, mortgage, lien, incumbrance,
or license or (2) affect the title of the patent or invention to which it
relates. Perhaps the "or" before "license" in the rule was
merely intended to emphasize the alternative nature of the documents available
for recordation.
8 U.S.P.Q.2d 1446
END OF DOCUMENT