Can a Virginia lawyer who practices only patent law before the USPTO form a partnership or share fees with a non-lawyer registered patent agent?

Plain-English summary

The opinion addresses a Virginia lawyer who, after retiring from the U.S. Patent and Trademark Office, is considering joining a firm owned by a non-lawyer registered patent agent, either as a patent attorney sharing fees with the agent or as a registered patent agent himself. Under either option, the firm would practice solely patent law before the USPTO. The question is whether Rule 5.4, which protects the professional independence of the lawyer, prohibits the arrangement.

The committee explains that Rule 5.4(b) bars a lawyer from forming a partnership with a non-lawyer where any of the partnership's activities consist of the practice of law, and Rule 5.4(a) bars sharing legal fees with a non-lawyer. But in the specific case of patent practice, the committee concludes those rules are preempted by the Supremacy Clause and the federal regulations governing practice before the USPTO. Citing Sperry v. Florida, it reasons that a state may not impose licensing conditions on activity sanctioned by a federal license that Congress did not contemplate.

The committee reads the federal regulations (then in 37 C.F.R. Part 10, now Part 11) to define "practitioner" to include both registered patent attorneys and agents, to allow lawyer and non-lawyer practitioners to form a partnership so long as its activities consist solely of patent practice before the USPTO (former 37 C.F.R. §10.49), and to permit a practitioner to share fees with a non-practitioner (former §10.48). It concludes that the requestor may join the non-lawyer patent agent's practice, either as an active Virginia lawyer or as an associate member of the Virginia State Bar, as long as the practice is devoted solely to patent law before the USPTO.

In practice

Under the Virginia rules as they stood when the opinion issued, the committee holds that Rule 5.4(a) and (b) would ordinarily bar a lawyer from sharing fees with or forming a partnership with a non-lawyer, but that for patent practice these rules are preempted by federal law under the Supremacy Clause and Sperry v. Florida. The opinion holds that the federal patent regulations permit lawyer and non-lawyer "practitioners" to form a partnership and share fees so long as the practice consists solely of patent law before the USPTO, and concludes the lawyer may join the non-lawyer patent agent's firm in that narrow setting. The opinion is limited to patent practice before the USPTO and does not authorize non-lawyer partnerships or fee sharing in a general law practice. (Editorial note in the opinion: the governing regulations are now found in 37 C.F.R. Part 11.)

Common questions

Q: Doesn't Rule 5.4 forbid a lawyer from partnering with a non-lawyer?

A: Generally yes. The opinion confirms Rule 5.4(b) bars partnering and Rule 5.4(a) bars sharing fees with a non-lawyer, but it concludes those rules are preempted by federal law for patent practice before the USPTO.

Q: Why can a patent lawyer share fees with a non-lawyer patent agent?

A: The opinion concludes that, under the Supremacy Clause and Sperry v. Florida, federal patent regulations control practice before the USPTO; those regulations define lawyers and agents alike as "practitioners" and permit partnerships and fee sharing among them, preempting Rule 5.4 in this setting.

Q: Does this allow non-lawyer partnerships in a general practice?

A: No. The opinion limits its conclusion to a practice devoted solely to patent law before the USPTO; outside that federal sphere, Rule 5.4's prohibitions still apply.

Background and rules framework

The opinion interprets Rule 5.4 of the Virginia Rules of Professional Conduct (Model Rule 5.4), specifically Rule 5.4(a) (sharing legal fees with a non-lawyer) and Rule 5.4(b) (forming a partnership with a non-lawyer for the practice of law). It applies the Supremacy Clause and the federal regulations governing practice before the USPTO (then 37 C.F.R. Part 10, now Part 11, including former §§10.48 and 10.49) and the preemption holding of Sperry v. Florida.

Citations and references

Rules of Professional Conduct:

• Model Rule 5.4 / Va. Rule 5.4(a), (b) (professional independence; fee sharing and partnership with non-lawyers)

Statutes and regulations:

• U.S. Const. art. VI (Supremacy Clause)
• 37 C.F.R. Part 10 (now Part 11), including former §§10.1, 10.48, 10.49 (practice before the USPTO; practitioner partnerships and fee sharing)

Cases:

• Sperry v. Florida ex rel. Florida Bar, 373 U.S. 379 (1963), federal license preempts state practice restrictions

See also

• ABA Formal Op. 464: Fee Division With a Lawyer Who Shares Fees With Nonlawyers
• ABA Formal Op. 91-360: Nonlawyer Partnerships and Extrajurisdictional Effect
• VSB Ethics Op. 1856: Scope of Practice for a Foreign Lawyer in Virginia

Source

• Landing page: https://vsb.org/Site/about/rules-regulations/leo-opinions.aspx
• Original PDF: https://www.vsb.org/common/Uploaded%20files/LEOs/1843.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Committee Opinion
April 16, 2008
Editorial Note: The relevant regulations are now found in 37 C.F.R. Part 11.
LEGAL ETHICS OPINION 1843

WHETHER A MEMBER OF THE
VIRGINIA STATE BAR WHO
PRACTICES PATENT LAW CAN BE A
PARTNER WITH A NON-LAWYER
REGISTERED PATENT AGENT?

This hypothetical involves a Virginia licensed lawyer who has maintained associate
status during the course of his employment with the United States Patent and Trademark
Office (“USPTO”). He has now retired and is considering two different options as he
contemplates the practice of patent law with a firm owned by a non-lawyer registered
patent agent. The questions presented involve whether or not he can be employed by the
firm as a patent attorney and would, therefore, be sharing legal fees with a non-lawyer
registered patent agent. In the alternative, could he maintain associate status and be
employed as a registered patent agent? Under either scenario, the firm would be solely
engaged in the practice of patent law before the USPTO.
Under Rule 5.4(b) 1, a lawyer cannot form a partnership with a non-lawyer; however, in
the specific case of a patent lawyer, that rule is pre-empted by the Supremacy Clause 2
and 37 C.F.R. §10, which deal with representation of others before the USPTO 3.
The U.S. Supreme Court has held that “[a] State may not enforce licensing
requirements which, though valid in the absence of federal regulation, give ‘the State’s
licensing board a virtual power of review over the federal determination that a person or
agency is qualified and entitled to perform certain functions, or which impose upon the
performance of activity sanctioned by federal license additional conditions not
contemplated by Congress.” Sperry v. Florida ex rel. Florida Bar, 373 U.S. 379, 385
(1963). Therefore, this legal authority leads to the conclusion that the Virginia Rules of
Professional Conduct are preempted by the federal regulations as they pertain to the
specific practice of patent law before the USPTO.

1

Rule 5.4 Professional Independence Of A Lawyer
(b) A lawyer shall not form a partnership with a nonlawyer if any of the activities of the
partnership consist of the practice of law.

2

Article Six of the Constitution of the United States in pertinent part: “[t]his Constitution, and the laws of
the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made,
under the authority of the United States, shall be the supreme law of the land; and the judges in every state
shall be bound thereby, any thing in the Constitution or laws of any state to the contrary notwithstanding. “

3

As part of the definitions under 37 C.F.R. §10.1, the code states:
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.

Committee Opinion
April 16, 2008
Editorial Note: The relevant regulations are now found in 37 C.F.R. Part 11.
The C.F.R. that regulates practice before the USPTO regulates forming a partnership or
sharing fees between practitioners.
A practitioner is defined in 37 C.F.R. §10.1 (r):
Practitioner means (1) an attorney or agent registered to practice before
the Office in patent cases or (2) an individual authorized under 5 U.S.C.
500(b) or otherwise as provided by this subchapter, to practice before the
Office in trademark cases or other non-patent cases.
Thus, while Rule 5.4(a) and (b) 4 prohibit a lawyer from forming a partnership or
sharing legal fees with a non-lawyer, 37 CFR §10.49 allows the formation of a
partnership among lawyer and non-lawyer “practitioners” as long as the activities of that
partnership consist solely of the practice of patent law before the USPTO.
Finally, in dealing with the sharing of legal fees in a practice, 37 C.F.R. §10.48 permits
a lawyer/practitioner to share legal fees with a non-practitioner.
Thus, the federal regulations permit forming partnerships and sharing fees between
attorneys and registered patent agents to the extent the shared fees arise from the practice
of patent law before the USPTO. As a result, the requestor can join the practice of a nonlawyer patent agent either as a registered active Virginia lawyer or an associate member
of the Virginia State Bar, as long as that practice is devoted solely to patent law before
the USPTO.
This opinion is advisory only, and not binding on any court or tribunal.
Committee Opinion
April 16, 2008
4

RULE 5.4

Professional Independence Of A Lawyer

(a) A lawyer or law firm shall not share legal fees with a nonlawyer, except that:
(1) an agreement by a lawyer with the lawyer's firm, partner, or associate may provide for the payment
of money, over a reasonable period of time after the lawyer's death, to the lawyer's estate or to one or
more specified persons;
(2) a lawyer who undertakes to complete unfinished legal business of a deceased, disabled, or
disappeared lawyer may pay to the estate or other representative of that lawyer that portion of the total
compensation that fairly represents the services rendered by the deceased, disabled or disappeared
lawyer;
(3) a lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even
though the plan is based in whole or in part on a profit-sharing arrangement; and
(4) a lawyer may accept discounted payment of his fee from a credit card company on behalf of a client.
(b) A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist
of the practice of law.

Committee Opinion
April 16, 2008
Editorial Note: The relevant regulations are now found in 37 C.F.R. Part 11.
Editorial Note: The relevant regulations are now found in 37 C.F.R. Part 11.