Pretext Investigations: an Ethical Dilemma for Ip Attorneys
| Publication year | 2014 |
| Pages | 41 |
| Citation | Vol. 43 No. 6 Pg. 41 |
Intellectual Property Law
Pretext Investigations: An Ethical Dilemma for IP Attorneys
By Rachel L. Carnaggio
Intellectual Property Law articles are sponsored by the CBA Intellectual Property Section. They provide information of interest to intellectual property attorneys who advise clients on protecting and exploiting various forms of intellectual property in the marketplace.
Coordinating Editors
K Kalan, Denver, Administrative Patent Judge—(720) 480-1500, kmkalan@yahoo.com; William F. Vobach, Denver, of HolzerlPLaw, PC—(720) 204-5673, bvobach@holzeriplaw.com
About the Author
Rachel L. Carnaggio is a registered patent attorney engaged in patent and trademark prosecution and portfolio management with the intellectual property law firm HolzerlPLaw, PC—(720) 204-3234, rcarnaggio@holzeriplaw.com.
This article addresses the existing ethical dilemma for a Colorado attorney involved in misrepresentation or nondisclosure when gathering pre-filing evidence in compliance with Rule 11. Such conduct may violate the Colorado Rules of Professional Conduct and calls for definitive guidance.
The Colorado Rules of Professional Conduct (Rules) place limitations on pretexting (covert investigations) for intellectual property (IP) attorneys, as well as for attorneys in other practice areas. A pretexting subcommittee of the Colorado Supreme Court Standing Committee on the Colorado Rules of Professional Conduct proposed rule changes to the Standing Committee in an effort to provide guidance in pretexting. The Standing Committee voted against recommending any amendments; however, it voted in favor of submitting the subcommittee's research and reports to the Court, where they have waited for more than a year for review. This article summarizes the existing quandary for IP attorneys, how Colorado and other jurisdictions have addressed pretexting, and the pretexting subcommittee's efforts.
The Ethical Dilemma
Pretext investigations generally involve nondisclosure or misrepresentation to a suspected wrongdoer to obtain evidence that cannot be obtained by other means. To comply with Rule 11 and the heightened pleading standard set forth in Ashcroft v. Iqbal[1] and Bell Atlantic Corp. v. Twombly,[2] misrepresentation or nondisclosure in certain pre-filing investigations may be essential. However, Rule 8.4(c) prohibits attorney involvement in "dishonesty, fraud, deceit, or misrepresentation." Because there are no Colorado attorney disciplinary cases to guide a private lawyer's involvement in pretexting in pre-filing investigations, an ethical dilemma arises for attorneys advising clients or engaging investigators. In some cases, a lawyer considering a pretexting investigation must weigh zealous client advocacy and compliance with Rule 11 against compliance with Rule 8.4 at the potential expense of the client.
IP Cases
When one thinks of a covert investigation, some examples that come to mind include undercover operations in law enforcement or use of testers in discrimination cases. However, pretext investigations may be necessary in IP cases. This is why the CBA IP Section approached the Colorado Supreme Court Standing Committee with concerns about attorney involvement in the practice of pretexting.
In IP practice, attorneys sometimes investigate potentially unfair business practices by use of an undercover agent posing as a member of the general public engaging in ordinary business transactions with a suspected infringer. Such investigatory tactics are specifically illustrated in Apple Corps Ltd., MPL v. Int'l Collectors Soc'y.[3] The plaintiffs in Apple sued to enjoin a marketer and distributor of collectors' stamps from selling postage stamps featuring copyrighted images of The Beatles.[4] A consent order enjoined sale of some stamps but allowed sale of stamps featuring John Lennon's name and image pursuant to a licensing agreement.[5] The plaintiffs could determine compliance with the consent order only by having investigators directly call a hotline that required a specific club membership, pose as consumers, and order the enjoined stamps.[6] Had the investigators disclosed their identity and reason for calling, they would not have been able to determine the ordinary course of business practice of the defendants.
Similarly, in Gidatex v. Campaniello Imports, Ltd.,[7] a trademark infringement and unfair competition case, plaintiff's counsel had to hire investigators to pose as interior designers to prove that defendants were luring customers with signs and ads bearing plaintiff's "Seporiti Italia" trademark.[8] Defendants' showrooms and warehouses were open only to "the trade." As the court pointed out, "It would be difficult, if not impossible, to prove a theory of 'palming off without the ability to record oral sales representations made to consumers."[9]
As shown in these cases, verification of infringement may require direct contact with a target that would not sell the product to someone acting on behalf of the competitor. Accordingly, the IP attorney may be forced to hire an investigator who conceals his or her identity and reason for purchasing a product to obtain the necessary pre-filing evidence to comply with Rule 11.
Acts of misrepresentation or dishonesty, even by a third party, sound the ethics alarm. In particular, Rule 8.4(c) places restrictions on such case preparation by prohibiting attorney involvement in "dishonesty, fraud, deceit or misrepresentation." Faced with limitations on meeting evidentiary and procedural burdens, a Colorado IP attorney is at a disadvantage. Ultimately, these restrictions can diminish the value of a client's IP portfolio.
Recognizing that pretexting may be a necessary investigatory tool in the IP practice, the IP Section sought clarity from the Colorado Supreme Court Standing Committee as to whether such nondisclosure or misrepresentation constitutes ethical violations.
The In re Pautler Opinion
The IP Section's inquiry gave rise to the formation of a pretexting subcommittee.[10] The objective of the pretexting subcommittee was to analyze the impact of the Rules of Professional Conduct-specifically Rules 4.1, 4.2, 4.3, 5.3, and 8.4(c)—on the practice of pretexting. Early in its deliberations, the subcommittee expressed concern over the Colorado Supreme Court's position in In re Pautler,[11] which addresses attorney involvement in deceptive conduct. The Pautler case involved direct misrepresentation by a district attorney to an alleged murder suspect. The Court in Pautler affirmed a ruling that the district attorney had violated Rules 4.3 and 8.4(c) when he posed as a public defender to persuade the suspect to surrender.[12]
Even though the district attorney had good reason for his misrepresentation, the Court professed its concern for the reputation of the legal profession and denounced any practices involving deceptive conduct. The Court declared, "[w]e stand resolute against any suggestion that licensed attorneys in our state may deceive or lie or misrepresent, regardless of their reasons for doing so."[13]
Although the Court in Pautler focused on the direct action taken by the district attorney, it also suggested that any attorney involvement in deceptive practices is prohibited.[14] For the IP attorney, this broad interpretation of the rule implicates indirect involvement in an investigation to obtain evidence of infringement. For more insight into how to address pretexting, the subcommittee looked to other jurisdictions.
Pretexting in Other Jurisdictions
Most jurisdictions have yet to address the ethical questions surrounding pretexting. The subcommittee identified seventeen jurisdictions where the respective bars have addressed the issue i n amendments to the jurisdiction's rules of professional conduct, comments to the rules, or ethics opinions (collectively, bar rules).[15] In addition, the courts in a handful of jurisdictions have addressed pretexting in court opinions. However, the bar rules and court opinions provide no uniformity in their conclusions.
Bar Rules
Although most states that have addressed the issue do not permit direct participation, some permit advisement by either all attorneys (Michigan, North Dakota, Oregon, Virginia, and Wisconsin) or government attorneys only (Alabama, Missouri, and Florida).[16] At least ten states have a rule, a comment, or an ethics...
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