Michelle Lee, Acting as Director but not “Acting Director”

By Dennis Crouch

When Michelle Lee joined the USPTO in 2012, she took an interesting title – Director of the Silicon Valley Patent Office. With the resignation of both David Kappos (USPTO Director) and Theresa Rea (USPTO Deputy Director), Lee is the only remaining titled “Director” within the USPTO. There has been a growing expectation that she would soon shift from her West-Coast focus and take over operations of the full USPTO. Although the position of USPTO Director requires Senate confirmation, the Director of Commerce has the ability to shift the personnel who effectively control that position.

This morning, the Commerce Department announced that Michelle Lee will be the new Deputy Under Secretary of Commerce for Intellectual Property effective, January 13, 2014. Because there is no current USPTO Director she will be in charge until a new Director is nominated by the President and approved by the Senate.

Director Michelle Lee has a strong background in intellectual property, beginning with her multiple degrees from MIT in computer science and electrical engineering and a J.D. from Stanford Law School where she was a law review editor. Prior to law school, she worked in MIT’s Artificial Intelligence labs and also in HP’s research labs. She clerked both in the Northern District of California and for Judge Paul Michel at the Federal Circuit. She then worked for a decade in top Silicon Valley law firms, including Fenwick & West and Keker & Van Nest and then joined Google where she worked for a decade as head of their patent team and deputy general counsel. In the past, Lee has worked closely with Colleen Chien who is now spearheading the White House patent initiatives. Lee is seen as an effective manager and a visionary willing to take on major challenges. Like Kappos, I have always found Lee to be open and ready to hear and respond to reasoned input. There is some trepidation (or enthusiasm, depending upon your perspective) that she will strongly advocate Google’s anti-patent stance. I suspect, however, that the result will be pushing for higher quality examination that better ensures clarity.

Congratulations to Michelle Lee!

Lee’s appointment does have a genuine statutory problem. In particular, the statute requires that a Deputy Director be appointed by the Secretary of Commerce “upon nomination by the [USPTO] Director.” 35 U.S.C. § 3. Because there is no Director, there could be no such nomination. One reason why there is no Director is that position requires Senate approval (as required by the Constitution), and the President’s approach here appears to be an attempted end-run around that process. The DoC press release includes the following statement: “Upon assuming her role as USPTO Deputy Director, Lee will perform the functions and duties of the USPTO Director, a position that is currently vacant. In accordance with statutory law, she will assume the title of ‘Acting Director’ once President Obama nominates a Director.” The final sentence of this is unclear to me, but the PTO confirmed that their statement is correct, she will only be acting as director but not officially Acting Director. This is apparently an attempt to avoid the statutory and Constitutional requirements mentioned above. I think it has the complete opposite result because the statute requires that the Deputy Director “act in the capacity of the Director in the event of the absence or incapacity of the Director.” Noted patent attorney Hal Wegner comments: “Why would a person of heretofore spotless reputation and noted achievement accept an appointment in violation of the strict statutory wording that the appointment is only ‘upon nomination by the Director,’ 35 USC § 3(b)(1), at a time when there is no Director.” USPTO’s chief communications officer Todd Elmer clarified to me that PTO’s Commissioner of Patents Peggy Focarino apparently nominated Michelle Lee who was then selected by the Secretary of Commerce. Since Focarino has been handling all the duties of the director, then the PTO has reasoned that Focarino has the power to nominate under the statute.

John Cabeca will take-over as director of the SV patent office.

Director Michelle Lee: A Rough Start

By Dennis Crouch

First, let me give my endorsement: I admire Director Michelle Lee and believe that she will be an excellent Deputy Director of the USPTO as well as Acting Director. She is extremely well qualified both in terms of education and experience; she is well respected in the highest levels of governments as well as by business leaders and on-the-ground innovators; and she is ready to work hard to improve the Patent Office and the US Patent System.

That said, Director Lee has not begun her tenure well – seemingly because of her willingness to go along with plans set forth by those in the White House in terms of both (1) the questionable process of her appointment and (2) an initial secret and private roundtable discussion.

Improper Appointment: Yesterday, we discussed the appointment of Director Lee as Deputy Director without proper statutory authority. In particular, the statute is fairly clear that no Deputy Director can be appointed in the absence of a Director. 35 U.S.C. § 3(b)(1). Further, an odd feature of the appointment was the caveat that she will not be titled “Acting Director” of the Agency even though she will be “Acting as Director” and even though the same statute provides that the Deputy Director should fill that role in the absence or incapacity of a Director.

The limits on the Directorship appointments are not merely statutory. Rather, they are in place to maintain an important check on executive authority. Special authority flows from the PTO Director because the Director is appointed by the President and approved by the Senate. See U.S. Constitution Article II, Section 2, Clause 2 (requiring “Advice and Consent of the Senate”).

Now, the reality here is that these critiques are largely academic in that: (1) if put up for a vote in the Senate, Director Lee would very likely be approved based upon her qualifications that I discussed above; (2) any legal challenge to her nomination will likely be moot because a Senate-Approved Director is likely to be in office within a few months – well before pleadings would be complete on any challenge to Director Lee’s legal authority. However, the comparisons to Dwight Schrute and his role as assistant to the regional manager.

Secret Exclusionary Meeting: Within hours of her announcement as Deputy Director, Director Lee and White House Patent Reform Coordinator Colleen Chien spearheaded a roundtable discussion with a select group of invited guests put forward by the heavily Democratic leaning “Business Forward” community. Business Forward does not lobby, but instead “mak[es] it easier for … business leaders from across America to advise Washington on how to create jobs and accelerate our economic recovery.” The meeting was designated as “off the record” by the PTO and barred press (including Patently-O) from attending as well as leaders from the IPO and the AIPLA. USPTO Spokesman indicated that the meeting was a “normal” and usual event: “Yesterday’s meeting with a group of seasoned patent litigators was part of a normal series of discussions USPTO has facilitated to solicit views on patent reform proposals from various segments of our user community. As legislation moves on to the Senate, we expect to continue to host such normal meetings with various parts of the IP community.

Now, I do not have a problem with the PTO Director and White House having private meetings, but it does look bad that Director Lee’s first information-gathering discussion is with a private hand-selected group of operatives whose result will likely work to set her vision for patent reforms in ways that cannot be rebutted. Directors Kappos and Rea both pushed strongly for public discussion and my hope is that Director Lee will continue that important trend.

Director Michelle Lee

The White House has announced President Obama’s plans to nominate Michelle Lee for the position of Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.  Although Lee is already the de facto Director of the office, this move has important political implications because it will help to better ensure both USPTO autonomy and USPTO influence within the Beltway.  Congratulations to Michelle Lee and the Patent Office on this important move forward.

It was almost one year ago that Michelle Lee was appointed as deputy director and de facto director.  At the time, I praised the selection of Lee, but questioned both the legality and the wisdom of appointing a prominent deputy director while leaving the slot of director still vacant.   Because of legal limitations, Lee has not be identified as the “Acting Director” but only “acting as Director.”

Part of the willingness of the White House to now appoint Lee may have come from the country’s new Chief Technology Office Megan Smith who is a former Google executive. (Lee led Google’s patent strategy for a decade).

Up to now, Lee has largely followed the lead set by former Director Kappos and Acting Director Rea. The unanswered question is whether the new role will now embolden and empower Lee to shift USPTO policies in a new direction.

 

Congratulations to Director Michelle Lee

by Dennis Crouch

The U.S. Senate has now confirmed President Obama’s nomination of Michelle Lee as Undersecretary of Commerce and Director of the USPTO.  Congratulations to Director Lee on this expected but long awaited final step to filling the post left by David Kappos more than two years ago.  Lee has been with the PTO since 2012 and was previously Google’s chief patent counsel.

We will see Director Lee staying the course that she has already set with a focus on patent quality and efficient operations.  The larger and ongoing battles will be fought over patent litigation reform and the role of our post grant review system.  Lee is the first female director of the agency, whose top three leaders are now all women (with Peggy Focarino as Commissioner of Patents and Mary Boney Denison as Commissioner of Trademarks).

I very much look forward to working with Director Lee and her team at the USPTO. As part of this, we’re hosting a patent quality summit at the USPTO on March 25-26, 2015. [http://www.uspto.gov/patent/initiatives/patent-quality-summit]

Lee will likely be given latitude in naming her deputy director. Hal Wegner – very often correct in his insight – suggests two potential candidates: Russ Slifer (Director of the USPTO Denver Office) and Christal Sheppard (Director of the USPTO Detroit Office).  Slifer and Sheppard are current USPTO executives who have spent most of their careers outside the agency.

Hearing for Director Michelle Lee Nomination

It has now been 24 months since the USPTO has been led by a Senate confirmed director and, for the past year Michelle Lee has been in the limbo position as being de facto head of the USPTO without actually being named director or acting director.  In October 2014, President Obama finally nominated Lee to take over as Director of the USPTO and Undersecretary of Commerce.  Although a first confirmation hearing was held in 2014, Senators agreed to delay a confirmation vote until after the Republicans took over this term.

Acting quickly, new Republican chair of the Senate Judiciary Committee Chuck Grassley has acted quickly to schedule a new hearing for January 21 (with Senator Cornyn scheduled to preside). Barring some unforeseen complications, I expect that Lee will be confirmed as director forthwith despite the new Republican control of the Senate.  The hearing will also focus on Daniel Marti who has been nominated as the White House Intellectual Property Enforcement Coordinator — the so called IP Enforcement Czar.  That role began with Victoria Espinel in 2009 and focuses primarily on international counterfeiting and copyright enforcement.

As I wrote in December: It is Time to Confirm Michelle Lee.

 

Michelle Lee Resigns as PTO Director

USPTO Director Michelle Lee has announced her resignation — noting that “It has been the professional experience of a lifetime [and] a true privilege serving our country by supporting what I believe to be some of America’s greatest heroes—our inventors and entrepreneurs.”  The resignation appears to be effective immediately. Prior to joining the USPTO, Lee was chief patent counsel for Google, and I expect that Lee will return to high-level industry position.

Lee will be known as a stabilizing force – managing the agency during these tumultuous post-AIA and post-ALICE years.  Although critics suggest that she is not sufficiently pro-patent-property-rights, the PTO has continued to issue a record-number of patents each year.  Although the timing is a surprise, Lee was an Obama appointee and the departure itself is not a surprise.

There has been no word from the White House or Commerce Department on a successor.  It is unclear to me at this point whether Tony Scardino (current acting deputy director) or Drew Hirshfeld (current Commissioner of Patents) will be tapped as Acting Director.

Major Crossover Move: Michelle Lee Staying on as PTO Director?

The Hill and others are reporting that USPTO Director Michelle Lee will stay on as PTO Director under President Trump.  No official statement yet (perhaps because PTO Chief Communications officer Patrick Ross resigned yesterday).

 

 

Director Michelle Lee: Confirmation Hearing

For the past year, USPTO Deputy Director Michelle Lee’s status has been in-limbo.  Although she has been acting as director of the USPTO, the law did not allow her to be identified as the acting director.  During this time, the Obama administration informally floated several potential directorship nominees. However, none of those made the political cut.  Finally, in October 2014, the White Housenominated Lee to move up from Deputy Director to Director.  That position also comes with the title of Undersecretary of Commerce.

The Democrats in the Senate appear to be hoping to move quickly before Republicans take control in January.

 

PTO Director Michelle Lee?

undersecretaryWith conflicting media reports and no statement from the USPTO or Department of Commerce, we are left guessing as to whether Michelle Lee continues-on as USPTO Director and Undersecretary of Commerce for Intellectual Property.  The Commerce Department leadership has been substantially filled – but the IP position remains blank.  My request for clarification from the office have also been denied.   I have also submitted a FOIA request, but that process tends to be slow.  We will likely have to wait for the Confirmation of Wilbur Ross as Commerce Secretary before stakeholders are informed of the state-of-affairs.

Meanwhile, Hal Wegner has called for Michelle Lee’s resignation in an ascorbic ascerbic letter titled “Draining the Swamp: Your Resignation as PTO Director.”  I see Wegner’s letters as stirring the pot rather than offering any genuine path forward.  Repeating what I wrote last week:

I want to give my congratulations and thanks to Michelle Lee, Russ Slifer, and other members of PTO Leadership.  The past five years have been a time of tremendous shifting in the patent system led by the legislature (the AIA of 2011) and the Supreme Court (Alice/Mayo).  PTO Leadership has offered a stabilizing force with a constant push toward an efficient and high quality system.  Many patentees were saved by by the PTO’s intentionally narrow reading of Alice and Mayo and the long-complaint-of backlog of pending cases is substantially reduced.  These days I hear two major competing complaints: (1) the PTO continues to issue too many invalid patents and (2) the PTAB is too tough on patentees.  It will be interesting to see where we arrive four years from now.

If I were a patentee, I would certainly have great concern that the next director may be far worse.

wegnerlee

Michelle K. Lee is the Director of the United States Patent and Trademark Office

After a long wait, the PTO has finally responded to my question of “Who is the PTO Director”:

[T]he Agency is responding that Michelle K. Lee is the Director of the United States Patent and Trademark Office and Anthony P. Scardino
is the Acting Deputy Director of the United States Patent and Trademark Office.

The letter:

uspto-foia-response

I still do not sufficiently understand  DC politics to grasp why the Dir. Lee’s position was not public for the past 50+ days, but I am glad that we may now return to some semblance of normalcy in relations between the USPTO and the public.

Director Lee: Next Step is to Focus on Patent Quality Initiatives

by Dennis Crouch

In her confirmation hearings on January 21, Michelle Lee reported to the Senate that both the USPTO and the Courts have taken significant steps in addressing problems in the patent system following enactment of the AIA. However, Lee supports further “balanced” statutory reform to particularly address patent litigation abuses.  However, Lee was unwilling to take a stance on any particular reform, such as the automatic-fee-shifting  that was a central aspect of the Goodlatte patent reform bill in 2014.  Republicans now control the Senate, and thus Republican support is a necessary element of the confirmation hearings.  However, it appears that Lee will garner full support from the committee. A letter sent the same-day to senate leaders signed by 200+ entities also calls for balance and moderation in any patent reforms. [Inventing America Patent Letter]

Lee did take more of a stand in her speech at the Brookings Institute on the 22nd in explaining her major top priority of enhancing the quality of patents issued by the USPTO to reduce the cost associated with issuing patents that should not have issued.  As part of that goal, the agency will soon announce a set of proposed quality initiatives and look for input from stakeholders.  In addition, Director Lee has appointed Valencia Martin Wallace as the first Deputy Commissioner for Patent Quality. Martin Wallace was already an Assistant Deputy Commissioner focused on Electrical Disciplines after rising through the ranks of the PTO.

PTO Director Lee

Politico reports today that PTO Director Michelle Lee is “in the running to head up the White House Office of Science and Technology Policy” known as OSTP. [LINK]  Lee’s Obama-Holdover status suggests to me that OSTP’s policy-making role will be substantially downgraded under President Trump as compared to that of the Obama Administration when the office was headed by John Holdren. However, the move would also confirm a comparative business forward position.  The OSTP Director also now holds an official seat of the new Office of American Innovation headed by Jared Kushner.

According to reports, Commerce Secretary Wilbur Ross has interviewed several replacement candidates for PTO Director.

 

Remarks by Director Michelle K. Lee at the 2016 AIPLA Luncheon

USPTO Director Michelle Lee offered a set of Remarks at the October 28, 2016 AIPLA Luncheon.  As a presidential appointee, Director Lee is likely nearing the end of her term as USPTO Director.  Although the likely election of fellow Democrat Hillary Clinton suggests a smooth transition that could extend her term beyond January 2017, I expect that she will step-down prior to that point and that Deputy Director Russ Slifer will step-up as Acting Director.

The following are a few snippets from her speech:

Thank you, Denise, for the introduction.  And, good afternoon, everyone.  It’s a real pleasure to be here with you today. I always look forward to the AIPLA annual meeting. In fact, it is the third time I’ve had the honor to speak at this conference. I’m reminded of the first time I spoke at AIPLA, the mid-winter conference in Phoenix, AZ in January 2014. It was literally just a few weeks after I had moved from California to Washington and became acting head of the USPTO. At that conference you all welcomed me to my new role and we began our work together to strengthen and protect the intellectual property system that we know is so critical to our country’s continued economic success.

Almost three years have passed since that meeting, and I find myself honored and humbled every single day to serve in this role and to be a part of an amazing team at the USPTO. I feel it every time I’m at an international conference, seated behind a flag of the United States on the table in front of me, reflecting on how I’m a child of immigrant parents representing the United States of America.  And I feel it today, standing before you, reflecting on just how far the USPTO has come during this Administration.

Today, I’d like to share with you my views of the state of the United States Patent and Trademark Office and how this situates us to meet our future challenges. Back in January 2009, when our President was first sworn into office, the USPTO’s patent application backlog and pendency numbers were at all-time highs. Today, both our backlog and pendencies are now lower than they’ve been in more than a decade, and they continue to go down. That is hardly the only success story. But it’s emblematic of how much the USPTO has charged forward the last eight years, and how strongly it is positioned to face future challenges. This has been a team effort, with incredible work done by my predecessors, Congressional cooperation, the incredibly dedicated and talented staff at the USPTO, and all of you.

Together, we have put the Agency in a spot where we are ready to build on our successes. Today, we are financially more secure thanks to the America Invents Act, a milestone of this Administration, which gave us, among other things, fee setting authority. Additionally, we are more customer-service oriented and more responsive to stakeholder input than ever before. We’ve constantly welcomed—in fact solicited—feedback and input, and are willing to refine and improve where needed. We’ve had more RFC’s, Proposed Rules, and roundtables than ever before–and thank you for your input and patience responding to each. Whether you gave feedback on our EPQI, our 101 guidance, our PTAB implementation and refinements, and/or our transparency of patent ownership proposal, your input has been valuable.

We’ve also brought a broader range of services to support American innovators where and when needed, including: Through four regional offices across the country and over a dozen IP attaches across the globe. And, we’ve worked to provide you with more access to examiner interviews by training and promoting their benefits internally at the USPTO and externally, leading to an increase of 232% more interviewing hours in just eight years.

Finally, and importantly, the USPTO’s relationships with all of its partners is healthier and stronger than ever before–that’s with our users, our employees, our unions, Congress, and within the Administration. I want to take a brief moment on this topic, because I really do believe it is key to the Agency’s success – past and future. Thinking back to even just 10 years ago [under Jon Dudas], the relationship with our users was nowhere near as collaborative, transparent, or productive as it is today. The Agency often didn’t seek much public input on examiner guidance or implementation rules, and interviews weren’t encouraged as they are today. Together, we have changed that dynamic.

Second, we’ve strengthened our working relationship with our employees. All told, we have enjoyed some of the highest rankings in the Partnership for Public Service’s list of Best Places to Work in the Federal Government. And we all know, an engaged workforce produces better work product and services for all of you. Over the last eight years, our attrition rate has reduced significantly to the point where we compete favorably with some top companies in the private sector. Also, we’ve developed a productive relationship with our unions, allowing us to make better and faster improvements in important areas such as our production count system, patent quality, and our telework program.

We have also maintained a healthy working relationship with Congress on both policy proposals and operational issues. From the passage of AIA, to the Defend Trade Secrets Act, to technical assistance on various legislative proposals, we have engaged with our colleagues on the Hill in impactful ways and the USPTO’s voice is a respected one.

Finally, the USPTO is effectively fulfilling its role as principal advisor to the President and Administration on IP policy. I’ve been pleased with the confidence the President and the Secretary of Commerce have shown my team and I, allowing us to pursue policies and programs in the best interest of our innovators. All of this: the greater financial security, the increased customer service orientation and responsiveness, and  the better relationships with all of our stakeholders, has enabled us to make real progress on our priorities, and positions us for even greater success going forward.

There is strong evidence of this in a number of important areas, including patent backlog and pendencies, quality and policy. During this Administration, we have: Reduced the backlog of unexamined patent applications by ~30%, despite an average ~4% year-over-year increase in filings. Reduced our first action pendency by ~38% to 16.2 months, and reduced total pendency by ~25% to 25.3 months. This is due to numerous actions taken by the USPTO leadership team and my predecessors, and the hard work of our examining corps, and we will continue to do more.

Armed with greater finances and a shrinking backlog, we embarked on an unprecedented effort to enhance the quality of patents – a core goal of the Agency. There is a cost to society when the USPTO issues a patent that we should not issue, just as there is a cost to society when we don’t issue a patent that should issue. And just as there is a cost to society when there is a patent in the system that properly issued, but that may no longer be valid due to changes in the case law. Recognizing this, we have enhanced the quality of patents in our system, both before they leave our office through our Enhanced Patent Quality Initiative (led by a new Deputy Commissioner and a newly created department within the Patents organization solely focused on this effort); and after the patents return to the office through our PTAB and other post grant review proceedings (which double check the Office’s work and allow reconsideration in light of evolving case law or newly discovered prior art).

Addressing the second prong first, the new PTAB proceedings have significantly changed the patent landscape. With over 5,000 PTAB petitions now filed, we have one of the busiest dockets in the country. These proceedings are meeting our Congressional mandate of providing a faster, more cost efficient quality check on the patents in the system. With extensive input from all of you, we have worked hard to implement and conduct these proceedings as fairly and efficiently as possible. That’s why I asked my team to engage the public in a series of listening tours that led to a set of “quick fixes” in 2015 and then more substantive revised rules last April. That’s also why we took it upon ourselves to assess the frequency of motions to amend and the reasons for their grants or denial.  We’re applying your input to identify where we can do better. These PTAB proceedings have proven themselves a valuable check on patent quality, particularly in the later part of a patent’s lifecycle.

At this point, it makes sense to bring greater resources to bear if there are questions about a patent’s validity. The economics are different at the beginning of a patent’s lifecycle. The value of a patent is often not fully known at time of filing (perhaps due to the nascency of the technology, industry and/or market), and the time and resources afforded during examination are typically limited. Innovation isn’t served if the USPTO strives to issue very expensive, “bullet-proof” patents after many years of examination. Extensive time and expense would mean that innovators would file too few patent applications, given finite budgets. The purpose of the patent system—to incentivize disclosures to advance the progress of science and the useful arts—would be defeated because too few disclosures would be made. If over time the industry and the market determine that a piece of patented technology is valuable and the public believes it is not valid under current law or newly discovered art, then there is an economic incentive to expend greater resources to test the validity of the patent. And a panel of technically trained judges steeped in patent law is well-suited to perform this double-check quickly and efficiently.  In short, to best incentivize innovation. The USPTO needs to issue IP rights that are as certain, reliable and affordable as they can reasonably be, and offer post-grant proceedings that quickly, accurately and cost-effectively test the validity of certain patents proven to be of economic importance if questions of validity arise.

With all of that said, it is essential that these post-grant proceedings are properly calibrated so that they provide a quality check but do not bar deserving patentees from enforcing their patent rights. It’s why some protections in the AIA are so important, such as restrictions on timing of challenges, thresholds petitioners must meet for institution, and strict estoppel provisions. It’s also why the Agency is committed to revising our rules as many times as needed so these proceedings are as fair and effective as possible within our Congressional mandate. It’s why it is critical, within this framework, the USPTO issue the very best quality patents possible. Patents that are issued correctly in accordance with the law, that are clear providing notice to the public of the patent’s boundaries, and that are issued consistently across the Patent Examination Corps. And, it’s why I launched the Enhanced Patent Quality Initiative in 2015, so patent owners can have greater confidence and certainty of their rights in this new environment. Today, we’ve got about a dozen initiatives underway that, we believe, will meaningfully move the needle on enhancing patent quality. This includes making sure we’re getting the most relevant prior art before our examiners as early as possible by: leveraging technology, making prior art cited in our PTAB proceedings available to the examiner handling a related pending child application, and transitioning our entire patent examination corps from the decades old, antiquated U.S. Patent Classification System to the updated, increasingly global Cooperative Patent Classification System. It also includes drilling down on best practices (such as clarity of the record) during examination coupled with targeted training. Developing new and better ways to measure our progress, like our Master Review Form and new Quality Metrics. And, providing a new after-final procedure that offers applicants the opportunity to make a presentation before a panel and receive a detailed write-up of the panel’s decision that  might resolve an issue without going to appeal, or even result in the application being allowed.

So, this is what we’re doing at a high level. But I’d like to share more specifics about one of our flagship programs—our “Clarity of the Record Initiative”–and some of the great progress we have been making on our Clarity of the Record pilot program. The goal of this program is to develop best practices on how much detail to include in certain key parts of the prosecution record, for example: Interview summaries, or reasons for allowance, or construction of 112(f) limitations. Regarding interview summaries: How many times have you reviewed a file history, noted the patent rejected and then seen the patent allowed after an examiner interview with minimal or no changes to the claims and little or no explanation for the allowance? In this pilot, we worked to provide more detailed summaries including the substance of the examiner’s position, details of any agreement reached, and a description of next steps following the interview. After the pilot concluded, we measured 22 data points focused on clarity, and found an average of 15% improvement in clarity between the pilot examiners and a control group.

On reasons for allowance: How many times have you reviewed a prosecution history, and there is nothing in the record to indicate why the claims were allowed by the examiner? Because it is at the discretion of the individual examiner to set forth reasons for allowance, those reasons have not always been included in every Notice of Allowance. As part of this pilot, participants were trained on setting forth reasons for allowance in every Notice of Allowance. At the conclusion of the pilot, we found a 25% improvement in the clarity of reasons for allowance between the pilot examiners and a control group. Through the pilot, we also found the following practices significantly improved overall clarity addressing each independent claim separately, particularly identifying the applicant’s persuasive arguments (wherever they may be in the record), and identifying the specific allowable subject matter of the claim rather than merely reciting the entire claim as the basis for allowance. This pilot also helped us review the best practices around claim interpretation.

On claim interpretation:  How many times have you seen a prosecution record where there was clearly an issue about how a claim was interpreted, but the record was devoid of any explanation of the claim’s interpretation? In the pilot, the examiners were given training on explicitly setting forth key claim interpretations to minimize ambiguities. For example: Explaining all Section 112(f) presumptions and whether the presumptions were overcome, identifying on the record the structure in the specification that performs the function, and when a prior art reference is used to reject multiple claims, clearly addressing specific limitations in each claim that provide the basis for the rejection.

With our trainings on interview summaries, reasons for allowance and claim interpretations, we saw a statistically significant improvement in clarity when examiners used these best practices. Perhaps the most telling indicator of progress from this pilot is that when these pilot examiners were examining applications not included in the pilot program, they continued to apply the pilot’s best practices. This is a strong indication of the success of our training. Also, the clarity of the record initiative furthers the goal of compact prosecution by encouraging the applicant to rebut the examiner’s on-the-record position promptly and directly if there is disagreement. In short, we are already taking steps to clarify the record and you will see our examiners doing so increasingly over time.

Of course, patent quality also means applying the law accurately and clearly even in areas of the law that are evolving. Including, for example, the 101 jurisprudence on what is patent eligible subject matter. As many of you know, we’ve spent a fair amount of effort on this in recent years. Following major court rulings, we’ve revised our examination guidance, with input from all of you, multiple times and trained our examiners on the new guidance. Based upon input from our stakeholders, we also introduced training focused on clear drafting of 101 rejections and subsequent responses. And, we just announced in a Federal Register Notice two roundtables focused exclusively on the topic of patent eligible subject matter. At the first roundtable, we will discuss potential updates to our examination guidance, and at the second roundtable, we will discuss the impact of the current 101 jurisprudence on innovation, what changes might be considered to further support innovation, and whether such changes are best achieved legislatively, judicially or administratively. We thought it would be helpful to begin the public discussion, to create a record of where there is agreement or disagreement and what, if any, need for improvement. We welcome your participation on this important and complex issue.

As I hope you can see from this quick run-down of our initiatives, we are very excited about EPQI! It is an ambitious effort that is yielding results now and will yield many more in the long run. To learn more about our EPQI progress to date, please join us— mark your calendars—on December 13, at the USPTO, where we will spend a good part of the day sharing details of the results of each of the dozen or so EPQI.  We think you will like what you hear.

Turning now to some of our policy and other accomplishments over the course of this Administration, thanks to the AIA, we can now engage more directly with innovators—through our regional patent offices in Detroit, Denver, Silicon Valley, and Dallas. As you know, I started my tenure in public service as the Director of the Silicon Valley Regional Office. Having had the opportunity to help define the vision of these Offices, and stand up three of the four regional offices, I am very proud of this legacy to our IP system that will endure for generations to come. I’ve always said that, one day when my daughter is old enough, I can point to the Silicon Valley Regional Office in our hometown and say, “Your mom had a hand in opening that office.” And I’d feel very proud about my contribution to our community and society for that. Through these offices, we powerfully expand our ability to educate regional innovators about intellectual property and help small and large businesses and inventors directly access a wider range of services offered by the USPTO.

Additionally, one of the great privileges serving as head of the America’s Innovation Agency is that it is my job to increase opportunities and awareness about STEM, invention and intellectual property and, to me, this means across all geographic regions of this great country of ours and across all demographics. For example, when fewer than 15% of U.S. based inventors listed on a patent are women, it’s clear that we are leaving valuable inventive talent behind. This is something we cannot afford, especially as our companies cannot hire the technical talent they need, and  they are asking Congress to change our immigration laws to provide more flexibility in our visa and immigration system to ensure we can hire the best talent here in the U.S. We have the power to change this. We’ve called this our “All in STEM” campaign—and, true to the complex nature of the problem—it’s a multifaceted approach, including increasing awareness of the issue;

Getting girls interested in science, invention and IP early through efforts like our Girl Scout IP Patch and retaining and supporting women in STEM fields by mentoring, training and simply highlighting the female success stories through social media and inventors baseball trading cards for distribution to our school-aged children, so all our kids can see themselves as inventors! It’s not just a social imperative, it’s an economic imperative as we look compete in an increasingly global and competitive environment. 

And, it is no less an economic imperative to ensure that intellectual property beyond patents is properly calibrated to support creativity and entrepreneurship. We’ve advocated for significant modernizations of copyright law, beginning with our Green and White Papers on Copyright Policy, Creativity, and Innovation in the Digital Economy, where we made in the White Paper legislative recommendations on reforms to statutory damages for copyrights. We completed two historic copyright treaties and sent ratification packages to Congress—One on facilitating access to published works by the visually impaired, and another to expand copyrights for actors in audiovisual works.

On Trademarks, we’ve taken steps to improve the efficiency of our operations by adopting policies to encourage electronic filings of trademark applications which permitted fee reductions; and introducing the first major overhaul of rules at the Trademark Trial and Appeal Board since 2007, and I was pleased to recently join the President in the Oval Office when he signed the Defend Trade Secrets Act, which created a new federal civil cause of action for trade secrets This provided much needed, additional protections to innovators of today, in an environment where confidential business information can be quickly transported or emailed over state—or international—lines. While modern trade secret protection is essential, we are mindful that inventors need to be able to have the choice to instead disclose their invention in exchange for the exclusivity guaranteed by a patent—through reliable patent protection here and abroad.

As many of you know, there’s an entire department at the USPTO devoted to this very mission, complemented by IP attachés stationed in about a dozen countries across the globe. With this team, I have frequently represented the USPTO abroad, helping to ensure that a strong and equitable IP system does not stop at our nation’s borders.  One such trip—to China in 2015—stands out in my mind, both because of the importance of promoting strong IP rights in the second largest economy in the world, and because I experienced, on a personal level, the depth of opportunity offered by our country. As I articulated our positions on these critical IP policy issues with the Vice Premier in Zhongnanhai, Beijing, the central headquarters for the Chinese government, I thought for a moment of my parents back home in the Bay Area. When they bravely left their homeland in China to move to the United States to build a new life, did they ever imagine their daughter would one day be in such a meeting, in such a role? They understood America is the land for those willing to work hard and embrace its values.

I’ve had the honor and privilege of having many great opportunities over the last three years while leading the USPTO, and, I’ve capitalized on those opportunities for the benefit of innovators because, each and every day, I’ve been able to count on an amazing team of public servants at the USPTO working hard to best serve all of you. I firmly believe that the United States Patent and Trademark Office is healthy, well-functioning and poised to successfully handle whatever challenges and opportunities lie ahead.

Our issues are important, complex and nuanced. And while not everyone will always agree with all that the Agency does, we are well prepared to work together and with all of you to accomplish our top priorities and successfully address the challenges ahead. So, thank you for all your help. And thank you for all I know you will continue to do to ensure that our greatest inventions are yet to come.

Director Michelle Lee: Moving toward Patent Clarity

The following is a post from Under Secretary of Commerce for Intellectual Property and Director of the USPTO Michelle K. Lee and was published on the PTO Director’s blog

Patent quality is central to fulfilling a core mission of the USPTO, which as stated in the Constitution, is to “promote the Progress of Science and useful Arts.” It is critically important that the USPTO issue patents that are both correct and clear. Historically, our primary focus has been on correctness, but the evolving patent landscape has challenged us to increase our focus on clarity.

 Patents of the highest quality can help to stimulate and promote efficient licensing, research and development, and future innovation without resorting to needless high-cost court proceedings. Through correctness and clarity, such patents better enable potential users of patented technologies to make informed decisions on how to avoid infringement, whether to seek a license, and/or when to settle or litigate a patent dispute. Patent owners also benefit from having clear notice on the boundaries of their patent rights. After and after successfully reducing the backlog of unexamined patent applications, our agency is redoubling its focus on quality. 

 We asked for your help on how we can best improve quality—and you responded. Since announcing the Enhanced Patent Quality Initiative earlier this year, we received over 1,200 comments and extensive feedback during our first-ever Patent Quality Summit and roadshows, as well as invaluable direct feedback from our examining corps. This feedback has been tremendously helpful in shaping the direction of our efforts. And with this background, I’m pleased to highlight some of our initial programs under the Enhanced Patent Quality Initiative. 

 First, we are preparing to launch a Clarity of the Record Pilot, under which examiners will include as part of the prosecution record definitions of key terms, important claim constructions, and more detailed reasons for the allowance and rejection of claims. Based on the information we learn from this pilot, we plan to develop best examiner and applicant practices for enhancing the clarity of the record.

 We also will be launching a new wave of Clarity of the Record Training in the coming months emphasizing the benefits and importance of making the record clear and how to achieve greater clarity. Recently, we provided examiners with training on functional claiming and putting statements in the record when the examiner invokes 35 U.S.C. 112(f), which interprets claims under the broadest reasonable interpretation standard and secures a complete and enabled disclosure for a claimed invention. Training for the upcoming year includes an assessment of a fully described invention under 35 U.S.C. 112(a) and best practices for explaining indefiniteness rejections under 35 U.S.C. 112(b).

 Second, we are Transforming Our Review Data Capture Process to ensure that reviews of an examiner’s work product by someone in the USPTO will follow the same process and access the same facets of examination. Historically, we have had many different types of quality reviews including supervisory patent examiner reviews of junior examiners and quality assurance team reviews of randomly selected examiner work product. Sometimes the factors reviewed by each differed, and the degree to which the review results were recorded. With only a portion of these review results recorded and different criteria captured in those recordings, the data gathered was not as complete, useful, or voluminous as it could have been. As a result, the USPTO has been able to identify statistically significant trends only on a corps-wide basis, but not at the technology center, art unit, or examiner levels. We are working to unify the review process for all reviewers and systematically record the same and all review results through an online form, called the “master review form,” which we intend to share with the public. 

 What are the implications of this new process and new form? This new process will give us the ability to collect and analyze a much greater volume of data from reviews that we were already doing, but that were not previously captured in a centralized, unified way. As we roll out this new review process the amount of data we collect will significantly increase anywhere from three to five times. This will allow us to use big data analytic techniques to identify more detailed trends across the agency based upon statistically significant data including at the technology center, art unit, and even examiner levels. Also, this new process will give us better insight into not just whether the law was applied correctly, but whether the reasons for an examiner’s actions were spelled out in the record clearly and whether there is an omission of a certain type of rejection. For example, for an obvious rejection we are considering not only whether a proper obvious rejection was made, but whether the elements identified in the prior art were mapped onto the claims, whether there are statements in the record explaining the rejection, and whether those statements are clear.

 The end result will be the (1) ability to provide more targeted and relevant training to our examiners with much greater precision, (2) increased consistency in work product across the entire examination corps, and (3) greater transparency in how the USPTO evaluates examiners’ work product. You can read more about these and our many other initiatives, such as our Automated Pre-examination Search pilot and Post Grant Outcomes, which incorporates insight from our Patent Trial and Appeal Board and other proceedings back into the examination process on our new Enhanced Patent Quality Initiative page on our website.

 Finally, let me close by emphasizing that our Enhanced Patent Quality Initiative is not a “one-and-done” effort. Coming from the private sector, I know that any company that produces a truly top quality product has focused on quality for years, if not decades. The USPTO is committed to no less. The programs presented here are just a start. My goal in establishing a brand new department within the USPTO was to focus exclusively on patent quality and the newly created executive level position of Deputy Commissioner for Patent Quality will ensure enhanced quality now, and into the future. With your input we intend to identify additional ways we can enhance patent quality as defined by our patent quality pillars of excellence in work products, excellence in measuring patent quality, and excellence in customer service.

 To that end, we will continue our stakeholder outreach and feedback collection efforts in various ways, such as our monthly Patent Quality Chat webinars. The next Patent Quality Chat webinar on November 10 will focus on the programs presented in this blog and our other quality initiatives. I encourage you to join in regularly to our Patent Quality Chats and visit the Enhanced Patent Quality Initiative page on our website for more information.  The website provides recordings of previous Quality Chats as well as upcoming topics for discussion. We are eager to hear from you about our Enhanced Patent Quality Initiative, so please continue to provide your feedback to WorldClassPatentQuality@uspto.gov(link sends e-mail).  Thank you for collaborating with us on this exciting and important initiative!

 

Remarks By Director Michelle K. Lee at the George Washington University School of Law

The following is an excerpt from PTO Director Michelle Lee’s keynote address today, at George Washington University Law School. Read the full remarks here.- DC

How do we continue to incentivize … incredible innovations? First, we must ensure that the USPTO issues the highest quality patents as quickly and efficiently as possible. This means, at a minimum, continuing to bring down our backlog and pendency so that good ideas can be patented quickly. Which is why I am proud to report that we’ve reduced our backlog of unexamined patent applications by almost 30 percent from its peak in January 2009, despite a 32 percent increase in applications over this time period. Our so-called first action pendencies – that measure the time from filing an application to the time of obtaining an initial decision from the examiner— are down by 43 percent—from 28 months in 2011 to 16 months today. Our total pendencies – the time from filing an application to the time of obtaining a final office action, such as an allowance—are down by 26 percent—from 35 months in 2010 to 26 months today. Our backlog of Ex Parte Appeals – that’s not AIA proceedings, but our internal appeal process to the Board after the examiner issues her decision – has also gone down. We have reduced our inventory of ex parte appeals by 45 percent from a high of about 26,000 in 2012 to about 15,000 today. And, we have reduced the average pendency for appeals by 30 percent from 28 months in 2016 to 19 months today. In short, our backlog and pendencies are now lower than they’ve been in more than a decade, and they will continue to go down. Simply stated, this means more inventors are obtaining more patents more quickly. . . .

We constantly welcome—in fact, we solicit—feedback and input. And we have shown that we are willing to refine and improve as many times as needed. For example, we’ve provided applicants with more access to examiner interviews more than doubling the number of interview hours in just eight years. We’ve had more RFC’s, Proposed Rules, and public roundtables than ever before – including on such topics as our Enhanced Patent Quality Initiative, our 101 guidance, and our Patent Trial and Appeal Board proceedings. We’ve also brought a broader range of services to support American innovators where and when needed, including through four regional offices across the country, and through over a dozen IP attaches across the globe. For those of you who may not know, our attaches in China, the EU, India, Brazil, and other locations help U.S. innovators obtain and enforce IP rights outside the US, and also help advocate for improved IP laws outside the U.S. . . .

Examining patents quickly and efficiently is only part of the job. The public relies on us to issue quality patents. Today, we have about a dozen programs underway that we believe will meaningfully improve patent quality. These include programs for making sure we’re getting the most relevant prior art before our examiners as early as possible by making prior art cited in our PTAB proceedings available to examiners handling related applications, and transitioning all our examiners from the decades old, antiquated U.S. Patent Classification System to the updated, increasingly global Cooperative Patent Classification System. Developing best practices such as for enhancing the clarity of the record. And developing new and better ways to measure our progress. For example, with our Master Review Form, we are now processing twice as many reviews, and capturing data not only about the correctness of our actions, but also about the clarity of our actions. This helps us identify trends, and helps us pinpoint very specific areas for training. Finally, and, importantly, for the first time in 40 years, we are doing a comprehensive review of the amount of time our examiners need to do their work in light of the many recent changes within the patent system. We are already seeing measurable and statistically significant results in our patent quality efforts even in the short amount of time since we began the Enhanced Patent Quality Initiative. And you can look forward to more improvements in the future. In sum, the USPTO is operating well, and is issuing more, higher quality patents than ever. …

What work lies ahead? Our top priority today is to make sure the Patent Trial and Appeal Board’s AIA proceedings are as effective and as fair as possible–within our Congressional mandate. Now is the right time to examine and make any needed reforms to these proceedings, because we have five years of data and experience to guide us. …

Let’s take a look at where we are with the AIA trials today. We have shared regular updates on the number of cases and the results of those cases, but we want to break down the numbers even further so that everyone has the facts, as there have been many numbers cited – some of which are accurate, some of which are not.

Slide 1 Revised

This waterfall slide is our attempt to present even more data in a more accessible and transparent format. According to waterfall slide data, which shows the status of every petition filed since beginning of AIA, of those petitions that have reached some sort of final disposition (i.e., are not pending), about one third of all petitions are denied institution and do not go to trial; about one third of all petitions settle either before or after the decision to institute; and only about one third of all petitions ever reach final written decision. It is only at that point of reaching final written decision is it relevant to talk about the patentability or unpatentability of the claims of a patent. And, at that point, it is true that 66 percent of petitions will find all instituted claims of the patent unpatentable, 17 percent of petitions will find all instituted claims of the patent patentable, and an additional 17 percent will have mixed results (some instituted claims will be found to be patentable and some will be found to be unpatentable). So statements that “all” or 95 percent or even 80 percent of patents are found unpatentable are not supported by the data and do not account for prior disposition by settlement or by denial of institution.

Slide 2 Revised

Drilling down further on the institution rate, here is some helpful data from the years the AIA trials have been in effect. As you can see, the institution rate in our proceedings has been steadily declining from a high of 87 percent in the beginning, to about two thirds today. These are the numbers, and these are the facts. Now, our stakeholders have understandably asked how the rates of unpatentability in AIA proceedings, reflect on the quality of all of the other patents we’ve issued. . . . [T]here are almost 2.8 million patents in force. Incredible. Of those 2.8 million about 4,000 patents have been challenged in AIA trials. This represents less than 0.2 percent of the patents currently in force. …

As I have said many times in the past, the USPTO is constantly looking for ways to make the AIA trials as effective and as fair as possible within our Congressional mandate.  And we welcome your suggestions and ideas, the more specific, the better. To this end, we’ve set up a mailbox where you can submit your ideas at PTABProceduralReformInitiative@uspto.gov. This is an early opportunity to provide input. Your feedback here will help form the basis for our recommendations to the administration on next steps.

In fact, we have already heard from a number of you regarding a number of issues. As discussed:

  1. Multiple petitions, and how best to curb abusive practices.
  2. Whether to provide other opportunities to amend claims later in the proceedings when patent owners may have a better sense of where their claims stand,
  3. Whether to reevaluate our claim construction standards in view of new data and experiences, and
  4. How to best incorporate the findings and legal conclusions of prior proceedings at the USPTO, including examination and other post-grant proceedings, as well as, importantly, proceedings conducted in the federal courts.
  5. What considerations should go into a decision to institute, for example, how can we better take into account considerations such as the interests of justice, economic factors, and hardship.
  6. As to decisions to institute, whether there should be additional review of institution and termination decisions—and by whom.
  7.  When and how to permit parties to join proceedings.
  8. When and under what circumstances might it be appropriate to extend the length of the proceedings beyond 12 months and what impact would extensions have on litigations before, not only the Board, but district courts. . . .

[W]e are [also] streamlining the way the Board identifies and designates opinions as precedential, with the goal of designating more opinions precedential. Why? Because doing so 1). Improves the consistency across panels of the Board, and 2). Provides greater notice to the public to help you make better informed decisions on how to manage your Board proceedings. . . .

Fees: Finally, we are also proposing increases to our AIA trial fees. . . . We believe, as many of you do, that these proceedings should be self-funded. I commend our team for making thoughtful initial cost projections and for recommending revisions to ensure that these proceedings are fully self-funded. There is much to do on AIA proceedings, patent quality, and in many other areas, and I promise you that we are working diligently, with a sense of purpose, every day.

In closing, we all want what’s best for this country’s inventors, innovators and entrepreneurs. Because it is through their efforts that our country remains at the forefront – economically and globally. Simply stated—and I think President Trump and Secretary Ross would agree—we want the United States to out-innovate and out-perform our global competitors, producing new jobs and new technologies and new industries that benefit all Americans, including individual inventors and those in our small businesses and startups. Let’s not forget that the modest businesses and unknown inventors of today may become the largest and most well-known drivers of our economy tomorrow. To make that happen, Congress, the courts, the administration (especially the USPTO), and even all of you here today, must all work together to make sure the system envisioned by our Founding Fathers lives up to its purpose to promote innovation. You have the commitment of the entire USPTO team that we will play our part to ensure that we continue to incentivize the kind of innovations that make our lives better and safer And that put men and women—like Mr. Iver Anderson with his lead-free solder—in the National Inventors Hall of Fame. Our future depends upon it. Thank you.

Director Lee: IP is a Necessary Key Piece of President-Elect Trump’s Promised Economic Growth and Job Creation

Today, USPTO Director provided her first Post-Election speech that includes some thoughts on IP policy after Obama.

I believe the incoming administration must and will continue our effort to promote innovation fueled by a strong and robust IP system. Support for IP in the United States has a long history of bipartisanship, and there’s no reason to imagine that changing with a new president and a new Congress, both of whom have economic growth as a top priority. . . .

I’m optimistic the incoming administration will share our appreciation of the importance of intellectual property as a driver of economic growth. As I look ahead, I foresee legislative patent reform changes will continue to be discussed in Congress, though those conversations will likely occur later in the term after some of the other priorities including filling a Supreme Court vacancy, immigration and tax reform are addressed, and any legislative patent reform will likely be more targeted, rather than the comprehensive reforms we’ve seen in prior Congresses. I would hope any legislative proposal will take into account the numerous positive changes that have occurred recently in the patent system including: through the courts, including on attorneys fees, pleading requirements and discovery limits, and at the USPTO through the PTAB and the agency’s efforts to improve the quality of patents in our system. As far as issues, I predict legislative discussions may include venue reform and possibly changes to Section 101 and PTAB. On venue, with nearly half of the patent cases filed in 2015 filed in a single district out of 94 federal judicial districts, it is easy for critics to contend that plaintiffs seek out this district preferentially for the wrong reasons. And the mere perception that there are advantages to be gained by forum-shopping challenges the public’s faith in the patent system. So there will be continuing pressure for legislative (and likely judicial) action on the issue of venue. The scope of any legislative reform remains is to be determined, but I predict that the focus will be on more targeted, rather than comprehensive reform as we saw these past couple Congresses. Further, I anticipate that the USPTO’s work across the globe to ensure that other countries have strong IP protections adequate enforcement mechanisms and remedies, and appropriate technology transfer (or licensing and competition) policies, will continue in the next Administration particularly in such countries as China and others. This is a President-elect that has promised economic growth and job creation in our country, and IP will necessarily be a key piece to achieving that goal. . . .

I firmly believe that the USPTO is healthy, well-functioning and poised to successfully handle whatever challenges and opportunities lie ahead.  . . . When President Obama was inaugurated in 2009, his focus was on leading this nation’s recovery from the Great Recession. One of his first acts was to ask the Smithsonian to provide for display in the Oval Office some patent models that demonstrated past American innovation that led to new jobs and new industries. The president said that throughout our history, Americans solved problems through innovation and IP. He wanted to see reminders of that every day as he encountered the challenges he faced. The Smithsonian provided him with three models: Samuel Morse’s telegraph (1849),  John Peer’s gear cutter (1874), and Henry Williams’ steamboat wheel (1877). As I stood behind the President in the Oval Office earlier this year when he signed the Defend Trade Secrets Act, I couldn’t help but notice those three models along the wall to my left—still there almost eight years later—and feel extraordinarily humbled and honored. I feel that same honor and humility today standing before all of you and reflecting on just how much we have accomplished under this administration.  I’ve been fortunate to lead the USPTO at a time when intellectual property issues have been front and center on the consciousness of the American public and President and to have had the opportunity to help guide the direction in a small way. My hope is that the President-elect keeps the patent models from Morse, Peer and Williams in his office as a reminder of the importance of intellectual property to the economic prosperity that I know he wants for our country.

Read the full remarks here.