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.
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.
by Dennis Crouch