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Rule 1 and Rule 4 – Competence and Quality of Service – advising clients about applying in foreign jurisdictions

Last month we considered what ethical obligations should be considered when a client or potential client asks a licensee to do the least amount of work for the least cost in order to make their patent or trademark become a reality. The analysis explored a licensee’s obligation to inquire into and tailor their advice to a client’s particular needs and business strategy, and in some cases, the need to decline to act if the client attempts to instruct a licensee to engage in conduct contrary to their professional and/or ethical standards.  

This month, we consider a similar scenario, focussing on a novice client inquiring in which other jurisdictions (if any) they should make applications. We again consider how to manage a client’s expectations in light of what the client hopes to accomplish with their patent or trademark, their business plan and their budget.  

The Scenario

A client has retained a licensee to assist with a trademark application. The client is a novice with respect to intellectual property and is wondering in how many jurisdictions they should apply. The client has the means to apply in many jurisdictions and is looking for strategic advice. 

The Rules

Part 1 of the Code (Competence) 

Rule 1(2) 

An agent fails to meet standards of professional competence if (a) there are deficiencies in  

(i)   …  

(ii)   their attention to the interests of clients 

Part 4 of the Code (Quality of Service)  

Rule 4(1) 

The agent must give the client competent advice and service based on a sufficient knowledge of the relevant facts, an adequate consideration of the applicable law and the agent’s own experience and expertise.   

Rule 4(2) 

The agent’s advice must be open and transparent and must clearly disclose what the agent honestly thinks about the merits of the matter at issue and the likely results.  

Commentary to Rule 4(2) 

Occasionally, an agent must be firm with a client. Firmness, without rudeness, is not a violation of the rule. In communicating with the client, the agent may disagree with the client’s perspective or may have concerns about the client’s position on a matter and may give advice that will not please the client, which may legitimately require firm and animated discussion with the client. The agent must not keep the client in the dark about matters they know to be relevant to the retainer.  

Rule 4(3) 

If it becomes apparent to the agent that the client has misunderstood or misconceived the agent’s position or what is really involved, the agent must use reasonable efforts to explain their advice and recommendations to the client.  

Rule 4(5) 

An agent must take reasonable steps to advise the client of the cost of seeking or obtaining intellectual property protection, on the recommendation of the agent, in Canada or elsewhere. 

CPATA’s Guidance

In order to provide competent, quality services, licensees need to understand their client’s goals. In terms of providing advice about applying in foreign jurisdictions, a licensee will need to take the time to appreciate what the client hopes to achieve with the protection of their IP. They need to understand aspects of the client’s business, such as where the client hopes to operate and where their competition may be. Part of providing competent services means not only providing advice but tailoring that advice appropriately in light of the client’s goals and circumstances. Licensees should be familiar with their client’s business model, strategy, resources, and long-term plan in order to tailor their advice accordingly.  

Additionally, licensees must take the time to explain to clients their options – there may be a preferred path, but there also may be other options available. The Code provides that licensees need to take reasonable efforts to ensure that they explain their advice and recommendations to their clients. This communication needs to be ongoing throughout the agent-client relationship and should be responsive to any changes in the client’s circumstances and/or relevant law or policy.  

There may be times when a licensee needs to be firm about which steps are required. Part of providing quality services means that, in the event the licensee disagrees with the client about how to move forward, the licensee needs to still ensure that the client understands their advice and recommendations. The Code encourages licensees to be frank and candid with their clients about matters they know are relevant to their retainer. A smart step is to document all advice given and instructions taken, particularly in the event there Is a future disagreement between a licensee and client.  

Essentially, clients need to be put in a position to pursue the best option available to them considering the totality of their circumstances, and based on making fully informed decisions. Licensees have an ethical obligation explain to their client the various options available to them and to ensure that the client understands and appreciates the pros and cons of each option. Licensees must provide their best advice based on the options available to their client in consideration of their client’s interests, which the licensee must ensure they canvass. It is a best practice to document discussions with clients, and to follow up with clients to ensure they understand. 

Are you a Licensee with a Question about your Professional Obligations? Contact CPATA.

We invite you to contact us with your ethics questions online. Through the Ethics Inquiry process, CPATA’s professional conduct experts are available to help interpret the Code as part of the process of risk-assessment and ethical analysis.