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When an invention disclosure submission crosses the desk of an in-house intellectual property attorney, the next step is often to determine if the product is patentable and, if it is, whether a patent application should be filed. But sometimes there’s another consideration—patent application quotas for legal departments. For one former in-house patent attorney from cosmetics company L’Oréal USA Inc., this was an added consideration that allegedly got him fired.

Performance metrics for in-house counsel around patent applications aren’t as rare as some might expect, which may raise the question of how to balance quotas with professional ethical obligations, according to in-house and outside IP counsel.

In 2014, L’Oréal SA had an annual global quota of 500 patent applications and a quota of 40 patent applications for its U.S. research division in Clark, New Jersey, according to a 2015 lawsuit filed by Steven Trzaska, the company’s former vice president and head of patents and business development. The whistleblower lawsuit, filed in the U.S. District Court for the District of New Jersey, claimed that Trzaska was fired after advising his superiors that he would not, for the sake of meeting the quota, violate his ethical obligations as an attorney by filing applications for products that were not patentable.

The suit, which after being dismissed in October 2015, was given new life recently when the U.S. Court of Appeals for the Third Circuit reinstated the case, claimed that Trzaska and his colleagues were not only implicitly instructed to disregard professional obligations in order to meet the quota, but also were threatened with termination for not meeting the demand. “[Trzaska's] filing of patent applications for inventions which were not patentable, as urged by L’Oréal, would have necessitated his violation of those regulations governing practice of patent attorneys … and like rules governing the conduct of attorneys licensed in Pennsylvania [where he's admitted to practice law],” Trzaska’s complaint read.

L’Oréal and a representative for Trzaska did not immediately respond to requests for comment Thursday on the lawsuit or patent quotas.

Generally speaking, it’s not surprising that some companies establish productivity goals for in-house patent professionals, said Mark Ringes, vice president and assistant general counsel at International Business Machines Corp., and leader of its IP team. “In any area where you’re trying to produce large quantities of goods, whether it’s an asset like a patent or a car off an assembly line, it’s not atypical to put in productivity requirements,” he said. “But along with that comes a certain level of quality, and there are ethical obligations to make sure you don’t commit fraud on the patent office. From my perspective, those override any other requirement, including productivity requirements.”

“I don’t think it’s unreasonable to set productivity requirements because you need to drive people to do their best and meet corporate goals,” Ringes added. “But if you don’t have the culture in the company where an employee can raise their hand, that’s a bigger problem.”

At IBM, Ringes said, targets are set for patent professionals, but he expects them to point out if there are issues with patent quality. If that were to hypothetically happen, he said, the response would likely be to first investigate to make sure the concern is valid, then possibly adjust the target “to be fair to the professionals” and try to identify the underlying problem.

While quotas may be common for in-house attorneys, the scenario described in the L’Oréal lawsuit probably is not typical, said David Arthur, associate general patent counsel at Xerox Corp., whose opinions do not represent those of the company. “I do not think the issue specifically described by Mr. Trzaska is common,” Arthur said in an email to Corporate Counsel. “Patent application filing quotas are common, but most in-house attorneys facing such quotas have more than enough potentially patentable inventions from which to choose.”

Arthur added that along with ethical rules that relate to filing patent applications, there are also obligations to represent the company. “While ethical rules may generally prohibit attorneys from filing a patent application for which there is no basis for patentability, another ethics factor I would expect the court to consider is the attorney’s ethical obligation to zealously represent his client (the company),” he wrote. “As part of that ethical obligation of zealous representation, a patent attorney may be called upon to prepare and file a patent application as long as there is some basis upon which to argue patentability. In my opinion, the attorney can refuse on ethical grounds to file the patent application only if there is no reasonable basis upon which to assert patentability.”

Whether in-house counsel are faced with patent application quotas may largely depend on where a company is in its life cycle, said Hogene Choi, a partner focused on intellectual property matters at Baker Botts. A company just starting out, for instance, may be very budget-conscious and only file patent applications on the most important innovations, she said. But as a company matures, Choi explained, it may want to show value with a larger IP portfolio, which can “become an impetus to file more patent applications.”

Choi added that at some companies, meeting quotas can simply mean managing outside counsel to satisfy certain targets. In other settings, though, in-house counsel may have to, themselves, meet the quotas, which can understandably “create some pressure,” she said.

Ravi Mohan, an associate in firm Rutan & Tucker’s IP group, agreed that a quota can create some strain for in-house attorneys. “Saying: ‘Hey, you need to file 30 applications, we’ve only got 20 and we have a week left in the quarter,’ that’s going to create a certain amount of pressure on you to come up with inventions,” he said.

What’s more common in Mohan’s experience, however, are metrics that focus on the quality of the patents as opposed to the number of patent applications filed in a given period of time. “More and more, work is being pulled in-house. And these in-house departments are being valued quantitatively,” he said. “On the IP side, though, I have heard it’s qualitative more often than quantitative metrics, where you say—we really want quality patents.”

When an invention disclosure submission crosses the desk of an in-house intellectual property attorney, the next step is often to determine if the product is patentable and, if it is, whether a patent application should be filed. But sometimes there’s another consideration—patent application quotas for legal departments. For one former in-house patent attorney from cosmetics company L’Oréal USA Inc. , this was an added consideration that allegedly got him fired.

Performance metrics for in-house counsel around patent applications aren’t as rare as some might expect, which may raise the question of how to balance quotas with professional ethical obligations, according to in-house and outside IP counsel.

In 2014, L’Oréal SA had an annual global quota of 500 patent applications and a quota of 40 patent applications for its U.S. research division in Clark, New Jersey, according to a 2015 lawsuit filed by Steven Trzaska, the company’s former vice president and head of patents and business development. The whistleblower lawsuit, filed in the U.S. District Court for the District of New Jersey, claimed that Trzaska was fired after advising his superiors that he would not, for the sake of meeting the quota, violate his ethical obligations as an attorney by filing applications for products that were not patentable.

The suit, which after being dismissed in October 2015, was given new life recently when the U.S. Court of Appeals for the Third Circuit reinstated the case, claimed that Trzaska and his colleagues were not only implicitly instructed to disregard professional obligations in order to meet the quota, but also were threatened with termination for not meeting the demand. “[Trzaska's] filing of patent applications for inventions which were not patentable, as urged by L’Oréal, would have necessitated his violation of those regulations governing practice of patent attorneys … and like rules governing the conduct of attorneys licensed in Pennsylvania [where he's admitted to practice law],” Trzaska’s complaint read.

L’Oréal and a representative for Trzaska did not immediately respond to requests for comment Thursday on the lawsuit or patent quotas.

Generally speaking, it’s not surprising that some companies establish productivity goals for in-house patent professionals, said Mark Ringes, vice president and assistant general counsel at International Business Machines Corp., and leader of its IP team. “In any area where you’re trying to produce large quantities of goods, whether it’s an asset like a patent or a car off an assembly line, it’s not atypical to put in productivity requirements,” he said. “But along with that comes a certain level of quality, and there are ethical obligations to make sure you don’t commit fraud on the patent office. From my perspective, those override any other requirement, including productivity requirements.”

“I don’t think it’s unreasonable to set productivity requirements because you need to drive people to do their best and meet corporate goals,” Ringes added. “But if you don’t have the culture in the company where an employee can raise their hand, that’s a bigger problem.”

At IBM, Ringes said, targets are set for patent professionals, but he expects them to point out if there are issues with patent quality. If that were to hypothetically happen, he said, the response would likely be to first investigate to make sure the concern is valid, then possibly adjust the target “to be fair to the professionals” and try to identify the underlying problem.

While quotas may be common for in-house attorneys, the scenario described in the L’Oréal lawsuit probably is not typical, said David Arthur, associate general patent counsel at Xerox Corp., whose opinions do not represent those of the company. “I do not think the issue specifically described by Mr. Trzaska is common,” Arthur said in an email to Corporate Counsel. “Patent application filing quotas are common, but most in-house attorneys facing such quotas have more than enough potentially patentable inventions from which to choose.”

Arthur added that along with ethical rules that relate to filing patent applications, there are also obligations to represent the company. “While ethical rules may generally prohibit attorneys from filing a patent application for which there is no basis for patentability, another ethics factor I would expect the court to consider is the attorney’s ethical obligation to zealously represent his client (the company),” he wrote. “As part of that ethical obligation of zealous representation, a patent attorney may be called upon to prepare and file a patent application as long as there is some basis upon which to argue patentability. In my opinion, the attorney can refuse on ethical grounds to file the patent application only if there is no reasonable basis upon which to assert patentability.”

Whether in-house counsel are faced with patent application quotas may largely depend on where a company is in its life cycle, said Hogene Choi, a partner focused on intellectual property matters at Baker Botts . A company just starting out, for instance, may be very budget-conscious and only file patent applications on the most important innovations, she said. But as a company matures, Choi explained, it may want to show value with a larger IP portfolio, which can “become an impetus to file more patent applications.”

Choi added that at some companies, meeting quotas can simply mean managing outside counsel to satisfy certain targets. In other settings, though, in-house counsel may have to, themselves, meet the quotas, which can understandably “create some pressure,” she said.

Ravi Mohan, an associate in firm Rutan & Tucker ‘s IP group, agreed that a quota can create some strain for in-house attorneys. “Saying: ‘Hey, you need to file 30 applications, we’ve only got 20 and we have a week left in the quarter,’ that’s going to create a certain amount of pressure on you to come up with inventions,” he said.

What’s more common in Mohan’s experience, however, are metrics that focus on the quality of the patents as opposed to the number of patent applications filed in a given period of time. “More and more, work is being pulled in-house. And these in-house departments are being valued quantitatively,” he said. “On the IP side, though, I have heard it’s qualitative more often than quantitative metrics, where you say—we really want quality patents.”