Vestal v. Treasury (Fed. Cir. 2021)
This is not a patent case, but it is strange enough to need some thought. Sarah Vestal was an IRS employee. In 2018, the IRS planned to suspend her based upon “discourteous and unprofessional conduct.” In preparing her defense, Vestal sent the Record from a Taxpayer’s File to her private attorney. That record included private information that Vestal was not permitted to share outside the office. She was then fired as a consequence of sharing the information with her attorney. On appeal, the Federal Circuit has affirmed:
Ms. Vestal intentionally disclosed taxpayer information to an unauthorized person for her own benefit.
The writing of the decision is interesting (or perhaps odd) because it appears to treat IRS confidentiality as “sacrosanct,” but not attorney-client communication. Recognize here that the IRS might have permitted her to disclose some aspects of the case to her attorney — but only after redaction and approval.
This type of issue is important and relevant to anyone operating in a confidential environment (such as almost every company) who might need to privately consult an attorney.
I’ll bet all the patent judges are waiting with baited breath for the Scotus to finally issue an opinion.,
Also OT – but one that Night Writer may find to be an interesting spin to the “tech lemming” effects of anti-patent propaganda:
link to zdnet.com
This is the holy grail that people have been working towards for 70 years and probably this isn’t very close.
OT, but one of the most pro-patent patent news article contributors to IPWatchdog today made the following lead-off admission;
“It seems non-practicing entity (NPE) semiconductor/chip litigation has really come to dominate both the Patent Trial and Appeal Board (PTAB) and the district courts’ dockets this past year. “
What is your point, Paul?
Is this one of those “enforcing patent rights MUST BE the bad” type of things from you?
When is that an “admission”?
Besides the prior denials by some on both blog sites that this is occurring, it is actually related to the attorney-client issue of this blog. With this trend most inventors in patent litigation will be past or present employees of companies that sold their patents to a PAE to sue on. What kind of attorney-client relationship is there between an inventor being deposed in a patent suit filed by a professional patent assertion organization that bought up his or her patents and others from the inventors former employer? Will the PAE attorneys, for example, protect the deposed inventor from IC accusations, violation of their employee agreements to aid in enforcement of their patents, assignor estoppel, or the inadvertent disclosure of company trade secrets, or pay for an attorney to protect the inventor? The answers are all clearly no, as far as I am aware.
Pardon Potential rePeat….
Paul, that’s some serious dust-k1cking there.
I would hardly consider Mr. Stroud to be “one of the most pro-patent patent news article contributors to IPWatchdog.”
Stroud…? Of Unified Patents…?
That is more than simply wrong – that’s Paul portraying the opposite of reality.
For shame.
Has any court anywhere ever treated attorney-client communications as “sacrosanct”? I don’t think so. There are even quite a few circumstances where attorney-client communications have no privilege at all or are even required to be disclosed.
This is akin to a patent examiner sending an unpublished application to his or her counsel (in violation of 35 usc 122). I can’t imagine most agencies voluntarily sharing info— redacted or otherwise. They would have likely fought through discovery.
The real question is how they found out— there is no expectation of privacy on a government system, and if it was shared via the same, privilege may have been waived.
Disclosure of tax data is a serious matter in the IRS. Unless you have a business purpose you can’t even look at tax data that’s not assigned to you. Willful disclosure or unauthorized access is at minimum termination and at worse criminal charges. (there’s a list of things that lead to immediate termination, when I was at the IRS we called it the 10 deadly sins). This is why the ruling talks at length about willfulness it was one of the employee’s defenses that her actions weren’t willful.
link to irs.gov
If anyone’s curious like me, you can find out quite a lot about this plaintiff from Googling her name. For example, it seems like her specialty at the IRS was taxation of businesses in the cannabis industry.
link to arcannabis.org
Also, interesting that Plager only concurred without a separate opinion.
IRS confidentiality is “sacrosanct” because its the law. Unauthorized disclosure or access of tax information are 1203 violations ( fire able offenses) for IRS employees (including among other things failing to file a timely tax return). If you read the case you’ll noticed they go into great deal about “willfulness” the language which separates 1203 violations from honest mistakes.
link to law.cornell.edu
link to irs.gov
At least (now) she wont be charged with violation of the CFAA.
Does the calculus change if the information was material and discovery insufficient as part of the process in which she was involved? Would not her interest in due process attenuate her duty of strict confidentiality down to a reasonable assurance of confidentiality? (i.e. the privilege)….
LOL@CFAA. This case sort of proves the exact point that, if the goal is preventing misuse of sensitive info, Congress already knows very well how to do that.
It’s not really clear, but it seems like she made this disclosure completely outside whatever discovery process was going on. Had it been in discovery, I’m sure they could have worked something out with redactions etc. assuming the info really was material. The court noted that she failed to seek any accommodation from the IRS beforehand. So the implication is that she likely would have received one had it been sought.
“ So the implication is that she likely would have received one had it been sought.”
That may be AN implication, but pragmatic reality is that she would not only have been entirely denied, that any access would have been clamped down upon (and her ‘punishment’ made more severe).
Why would there be any other pragmatic result expected?
I can’t speak from any personal experience, but this kind of issue must come up on a fairly regular basis in the federal civil service, so one would think there’s some reasonable way of addressing it that doesn’t involve flagrant confidentiality violations.
Or at the very least, will require several years of expensive litigation to gain access to redacted copies, then several more years to fight all of the bogus redactions #ProcessAsPunishment
I have no doubt that there is “process as punishment” in play.
One possible lesson though: recognize this AHEAD OF TIME and do not violate the process to court that ‘punishment.’
Knowingly doing something “against the process” is simply f00lhardy – it is not as if this person did not understand that she worked IN a bureaucracy, after all.
Ideally yes, that would be the best course of action.
But in the real world, it won’t work that way. In the real world, a mid-grade bureaucrat can’t fund the years of “process” required to force the agency to cough up the required evidence. Nor will contingency fee attorneys be eager to take a case in which the plaintiff can’t provide any actual evidence up front and, best case, will require years of work before they get paid.
I’m not sure this is a desirable outcome from a societal point of view.
I hear you and would further your point that this is NOT a desirable outcome from a societal point of view, but that is the real world trade-off that we have.
Yes, if the process “svcks,” one needs to try to change that process before needing that change.
Bureaucracy has its inertia – society has to deal with that.
The IRS/MSPB and the CAFC all seem to have disregarded the fact that the attorney was obligated to keep the information confidential pursuant to attorney-client privilege/ethical obligations. That seems to be at least a mitigating factor suggesting some punishment less drastic that termination would have been appropriate.
I am not sure that such ‘secondary’ considerations overcome a strict (and established) process – not should it.
It does serve though as a reminder that the time to challenge (to change) a process is before one may need to avail oneself of that process.
I don’t get how the privilege/confidentiality aspect helps that much. Those things are in place to protect the client, who is the plaintiff here, not a third-party taxpayer. If the plaintiff had been inclined, she could have authorized her lawyer to make further disclosure of the taxpayer info. (Of course, the lawyer, if s/he had any sense at all, would refuse, because such a request involves committing a felony.) The taxpayer’s confidentiality can’t be at the mercy of the plaintiff’s decision—based on her own convenience—to waive confidentiality/privilege.
> The IRS/MSPB and the CAFC all seem to have disregarded the fact that
> the attorney was obligated to keep the information confidential pursuant
> to attorney-client privilege/ethical obligations
You are correct, they did disregard that fact, but that’s because that fact is legally irrelevant. The relevant provision of the Internal Revenue Code (26 USC 6103) doesn’t provide an exception here. The IRS employee wasn’t allowed to unilaterally and willfully turn over confidential information about a private taxpayer to her personal attorney. As with any kind of secret or classified government information, if she needed to disclose it to her lawyer, she needed to notify the government so they could redact sensitive information before disclosure. She didn’t do that here, and her attorney was absolutely not authorized to receive confidential information about a private taxpayer. This is not even a close call; the employee was properly discharged.
The IRS treats that rule as sacrosanct, as it must, to maintain the public’s trust that confidential financial information they submit with their tax returns won’t be misused.
Well stated LR.
Yes LR is saying it about right.
This is a thinker.
“In 2018, the IRS planned to suspend her based upon “discourteous and unprofessional conduct.””
Anything analogous to how applicants are treated by a few (fortunately, very few) of the examiners at the USPTO?
Perhaps a nod to ‘different behavior in different forums,’ but I can count on one hand the number of times that an examiner has been discourteous (and of course, I have never been discourteous).
While not always on the ball, and even sometimes persisting in errant views, there has almost always been decorum in the official channels.
When the examiner misquoted my claims in order to reject them (twice) at least he was courteous in doing it.
It is not uncommon for examiners to “re-write” claims when rejecting them, including ignoring particular claim language or dismissing other claim language as being directed to “intended use”.
I hear you.
The MPEP on “intended use” is poorly written, and it is indeed often a wasted half cycle of prosecution setting the examiner straight on the fact that she must include all of the claim elements (as properly claimed) in her legal analysis.
Quite in fact, years upon years ago now, I would have to routinely chastise 6 on his errant view that he could examine the claims without even bothering to read the specification (in his false bravado that he could treat the claims as he wanted to). Sure, this had a slightly different take than the point you bring up here, but it goes to the same sense of the bureaucrat ‘in her fiefdom’ having to be corrected.
I hear you too, NOIP.
I will say that in certain circumstances (and in selected fora), courtesy can go a long way.
But it is a craven mistake to think that courtesy is always appropriate.
Especially when courtesy is worn like a mask, obfuscating ill intent and purposeful misinformation. Or, as John Maynard Keynes put it (paraphrased): when one should be assaulting the unthinking.
Over 44 years I never had a discourteous patent examiner, even in interviews. [I did hear a few stories about a few famously discourteous patent attorneys.]
How long has it been since you prosecuted Paul?
Not sure that those 44 years reflect the fact that you gave up your ability to practice before the patent office – what is it, some 12 years ago, now?
I don’t understand the combative patent prosecutors.
How can that be a good strategy? My own experiences, particularly in art areas where I’m representing a large filer and am repeatedly having the same examiners assigned to my cases, say that you catch more flies with honey.
The past 15 years of my career has solely been in patent prosecution, and I’ve usually had a large docket. In all those cases, I’ve had an examiner be truly discourteous twice on the phone (one of which was actually a SPE who used some uncouth four letter words), and once in writing.
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