Building a Better Patent System Together

Deputy Under Secretary of Commerce for Intellectual Property and USPTO Deputy Director Michelle K. Lee

Managing IP -- U.S. Patent Forum 2014

Washington, D.C., March 25, 2014

Remarks as Prepared for Delivery

Thank you for the kind introduction, James, and for inviting me to speak today. I'm a big fan of Managing IP, which truly is a global IP resource, and one that I have come to value a great deal over the years. And to everyone here with us today, good morning.

I'm very impressed with the conference you are having today, focused on intellectual property and particular patents. As a child, I experienced the power and benefits of intellectual property in many ways. My parents were immigrants, drawn across the Pacific Ocean by the promise of the American Dream. My father was an engineer, and so too were all the dads on the street where I grew up, in the Silicon Valley.

They worked for tech companies, small and large, often founded by a single person or small team who created an invention, patented it, and used that patent to help obtain venture capital funding and bring the invention to the marketplace. Some of the companies succeeded. Some did not. But for those that did, they created good jobs and, in some cases, new products and services that changed the world and our way of life.

Seeing that process up close and personal growing up-the virtuous cycle of invention and intellectual property protection and innovation-and how that allowed individuals and communities to together build products, services, and companies with the potential to change the world-made a lasting impression on me. I wanted to contribute, and enable others to contribute, to the innovation. It's why I studied electrical engineering and computer science at M.I.T., and later intellectual property law at Stanford, with the goal of representing innovative companies.

While working at M.I.T.'s Artificial Intelligence Laboratory and Hewlett-Packard's Research Labs as a computer programmer, I witnessed innovation at its creation. It was an exciting experience I'll never forget, and one that still informs my work to this day. Later, as an attorney, I worked as the head of patents and patent strategy for a then-small company that grew into a Fortune 500 corporation in the span of eight short years. Along the way, my team and I built the company's patent portfolio from a few handful of patents to over 10,500, using many of the services offered by the USPTO.

Through my experiences as an in-house corporate counsel and, before that, a law firm partner in a Silicon Valley law firm representing a wide range of innovators from an individual inventor to Fortune 500 technology companies, I came to understand and practice many areas of intellectual property law and almost every aspect of patent law-including prosecuting patents, asserting patents, defending against patent infringement, and licensing, buying and selling patents. I understand and appreciate, from a business perspective, the important value and uses of intellectual property for innovators and for the growth of our businesses and economy.

More recently, during my service on the USPTO's Patent Public Advisory Committee and a year as the agency's first Silicon Valley satellite office director, I saw and experienced firsthand the impressive talent of the USPTO team, and that a diverse group of stakeholders (from solo inventors to large and small companies in a wide range of technology areas) can work together with government to accomplish common good. Consider, for a moment, the good news story about the selection of our new Silicon Valley satellite office space in San Jose.

I was head of the Silicon Valley office and tasked with finding a permanent location for the satellite office at a time of sequestration and much political gridlock in Washington. In this environment, the city of San Jose and the state of California-with the enthusiastic support of the local innovation community and the California congressional delegation-stepped up to the plate and helped the USPTO by offering space for our permanent office in San Jose City Hall. When businesses, innovators, and members of Congress join with city and state governments to look to a federal agency and say, "We want you in our community, and we're willing to provide you the space to work," you know you're doing something right-that you are contributing something of value to the community.

And so we are, in the Silicon Valley and across the country. We're building a better patent system together-all of us-because we want to encourage and empower the innovation that fuels our nation's continued economic prosperity. Every one of us in the business of intellectual property shares a common conviction that our patent system is too important to treat lightly or hastily. We have to find that balance, or sweet spot, where our patent laws and processes provide the strong protection innovators need, without the kind of red tape, delays, or frivolous litigation that stifles innovation. Achieving that balance isn't the task of any one person, agency, or group of stakeholders. In a government of the people, by the people, for the people, we all have a vital role to play in improving our patent system and finding that balance.

Since our nation's Constitution was first drafted, debated, and eventually adopted-granting to innovators that "exclusive right" to writings and discoveries enshrined in Article I, Section 8-generations of Americans have been hard at work building, inventing, and innovating for the benefit of all. That hard work has necessarily included efforts to ensure that our patent laws and system keep up with the pace of American innovation-no small task for a country that put a man on the moon, created the Internet, and pioneered such revolutionary technologies as lasers, smartphones, and artificial hearts.

Two and a half years ago, in a rare moment of bi-partisanship and common purpose, the most recent of those efforts came to fruition when Congress passed, and President Obama signed into law, the Leahy-Smith America Invents Act. Since then, we have come a long way toward ensuring that our patent laws and system are suited to the needs of a global innovation leader. Today, we have post-grant patent review proceedings that offer faster and less expensive alternatives to litigation in federal courts, a first-inventor-to-file regime, fee setting authority, satellite offices in all four continental time zones, and much more. But of course, the reforms to our patent system didn't stop there, because even a high-performance engine still needs some fine-tuning to stay running at top pace.

In June of last year, President Obama announced five executive actions and seven legislative recommendations to build upon the strong foundation of the AIA reforms. You've likely followed our updates on those executive actions, four of which are led by the USPTO. Those include:

  • exploring greater transparency of patent ownership information;
  • providing new, targeted training for patent examiners to scrutinize certain types of patent claims (functional claims) that may be overly broad and to increase patent clarity;
  • offering new educational resources for Main Street technology users and others to help them respond to claims of infringement; and
  • expanding our already extensive public outreach efforts and empirical research.

With help and input from our stakeholder community, we've made great progress on these executive actions. You can see a summary of those accomplishments on each of the executive actions and new ones on the USPTO website. And just last month at the White House, the White House, Department of Commerce, and the USPTO jointly announced three new executive actions designed to further advance this next round of innovative improvements to our patent system.

With our first new executive action, the USPTO will make it easier for companies, experts, and the general public to provide more relevant prior art to the USPTO so its examiners may use it in evaluating patent applications to help issue the best quality patents possible.

Specifically, we are:

  • refining our existing third-party submission program,
  • exploring other ways for the public to submit prior art, and
  • updating our guidance and training for examiners to more effectively use crowd-sourced prior art.

To this end, coming up on April 10th at the USPTO, we are hosting a roundtable with the innovation community to gain insights on how our agency can better leverage crowdsourcing techniques to find prior art so our examiners can make the most informed judgments possible about patentability. You can see from a blog post I wrote on March 13th on the USPTO website that more than a dozen corporations and associations have already expressed a willingness to help advance our shared goal of increasing examiners' access to the best prior art possible. I'm pleased to see that some of those organizations are represented here today. The administration is grateful to the many stakeholders who are answering this call to help us build a better patent system together. And we hope that others of you here today will consider joining in this effort as we together leverage the power of crowdsourcing prior art to strengthen our patent system.

The second new executive action is aimed at expanding our Patent Examiner Technical Training Program, which ensures experts in industry and academia can provide relevant technical training and experience to patent examiners. The USPTO has long recognized the importance of ensuring that patent examiners are fully versed in the latest advances in their technological fields. Under this program your technical experts could come to the USPTO, or eventually a local satellite office, to give perhaps an hour long presentation on his/her topic of expertise.

Most likely, this is a presentation that your expert has given before to colleagues or at conferences. Yet, the willingness to provide this same presentation to our examiners (which could be webcast nationwide to all examiners who examine in that technology area) is tremendously helpful and can be done so at relatively little cost and effort to those good enough to volunteer, especially as our satellite offices get up and running. With the public's help-with the help of you and your companies-the USPTO can ensure more and regular training across all technological disciplines through this examiner training program to the benefit of all.

While we're on the topic of our satellite offices, I'd like to highlight how the USPTO is using these offices to provide better services to you. In addition to increasing the USPTO's ability to hire the most talented IP professionals across the country to handle your matters (and I mean both examiners and Patent Trial and Appeal Board judges), the satellite offices play an extremely important and indispensable role in the ability of our agency to provide outreach and education to all of our stakeholders, and not simply those fortunate enough to be located near the D.C. area or who have budget to travel to the D.C. area.

In addition these offices will eventually be able to offer the opportunity to participate in Patent Trial and Appeals Board proceedings and examiner interviews locally (either with a live person and/or with a person or persons available via a secure video-link). We believe this more convenient access to many of our services will make a big difference particularly to smaller companies and individual inventors, but also to larger companies. In short, the potential of the satellite offices to help the USPTO achieve its mission is a subject about which I'm extremely passionate and familiar, after my experience as the first Silicon Valley office director. I will work hard as Deputy Director to ensure that we harness their potential to the fullest, and welcome your input on how we can best utilize these offices for the benefit of you and your clients.

Let's turn back to the third (and final) new executive action. Due to the complexity and legal nature of IP rights, under-resourced independent inventors, start-ups, and small businesses sometimes struggle with filing and prosecuting patent applications. The USPTO will help by providing dedicated resources to pro se applicants who lack legal representation, and we'll work with our partners through a full-time pro bono coordinator that we will hire to expand the existing pro bono program to all 50 states. We will be looking for volunteers from the IP bar to support this program, and we hope you will consider contributing. As you all know, assistance from the USPTO or from a patent attorney can be critical in preparing the necessary documents to help ensure that, if an invention is patentable, a quality patent is issued as expeditiously as possible. The dual public/private structure of these assistance programs is another excellent example of that cooperation I mentioned in the beginning of my remarks, and a recognition that building a better patent system together isn't just about stakeholder engagement; it's about stakeholder empowerment, and we can work together to achieve this goal.

These executive actions are examples administrative steps being taken by the USPTO in collaboration with our stakeholders to strengthen our patent system. But, as many of you know, the USPTO is also working with our stakeholders, as well as members of Congress and our colleagues within the administration, to help advance some legislative reforms designed ensure a strong and balanced patent system that encourages innovation and not litigation.

Our active engagement with the House and Senate on their patent reform efforts is focused on three areas-increasing transparency, helping Main Street technology users, and streamlining patent litigation costs. On the topic of transparency, the USPTO has proposed new rules in this area. The House and Senate bills also have included provisions that would increase requirements to update this type of information. We are seeking public input on our proposed rules, and we've extended the written comment period to April 25th. We also are hosting a second public hearing on the proposed rules tomorrow in San Francisco. This hearing will be webcast live on the USPTO website.

Let me just make clear that these proposed rules are exactly as the name says, proposed. As with all of our proposed rules, we welcome and solicit your input. What we do will be guided by your input. So, please help us do our job better by letting us know your thoughts. Next, when I say helping Main Street technology users, I'm referring to so-called "customer stays." We're focused on ensuring that downstream users of technology are protected from potentially abusive litigation. Lastly, on the subject of streamlining patent litigation costs, we would like to see some improvements and incentives to reduce the costs in what is already a very expensive process.

The key in all of these areas is striking the right balance, one that protects the rights of intellectual property owners while ensuring innovators are investing, as President Obama said in his State of the Union remarks, in innovation, not litigation. We are committed to working together with Congress and our stakeholders on these important issues to create a stronger and more balanced patent system for our country now and in the long run. We owe the American people no less.

In another area where the USPTO and our stakeholder community have opportunities to share information and work together is on our Patent Trial and Appeals Board proceedings. I am pleased to announce that our Patent Trial and Appeal Board, which currently stands at 181 judges across four continental time zones, is about to embark on a nationwide stakeholder outreach. Specifically, we are planning to host a series of roundtables across the country focused on the AIA trial proceedings-inter partes review and covered business method review. The roundtables will begin on April 15th and run until May 8th. We will visit eight major cities-Alexandria, New York City, Chicago, Detroit, Silicon Valley, Seattle, Dallas, and Denver. These roundtables will provide an opportunity for stakeholders and USPTO administrative patent judges to discuss the new AIA trials, lessons learned, and never before released statistics. Likewise, they will offer ample opportunities for stakeholders to share input about their experiences with the trials. Because our Board's work with the new trials is providing another option to district court litigation for patent owners and alleged infringers to resolve disputes about patent rights earlier and more efficiently than in the past, we want to ensure that all of you understand the operation of our trials and that we collect input about them from you.

Turning from our domestic initiatives to some of our international initiatives, since I know Managing IP's readership is international, I just want to update you on a few of our key international initiatives. Just as we're building a better patent system at home, we must and are continuing to do so globally with our international partners-including the World Intellectual Property Organization. We congratulate Director General Francis Gurry of WIPO, who was recently reelected to another six-year term as the head of that important body. My team and I very much look forward to working with Director General Gurry and his team on a number of important matters across the full spectrum of intellectual property.

We will continue to promote patent law harmonization, continuing our dialogue with several partner offices on remaining areas of divergence, and also moving, in partnership with our counterpart IP offices, to streamline filing requirements and reduce duplicative paperwork burdens. More specifically, we'll continue advancing the Global Dossier to ensure a one-stop shop for you and your clients to file and manage a global portfolio of patent applications while the patent offices optimize work sharing and collaboration.

We are also making great progress in adopting the Cooperative Patent Classification system we launched in January 2013 in partnership with the European Patent Office. CPC is a common, internationally compatible classification system for technical documents used in the patent examination and granting processes, that provides a more comprehensive search of prior art and increased opportunities for work sharing than the current U.S. Patent Classification System. We began training our examiners in the new system last November and CPC will be fully implemented in January 2015. We expect that the CPC eventually be used by more than 45 patent offices worldwide so are glad to have been a leader (with the EPO) in this international harmonization effort.

Turning closer to home, I'd like to provide you with one, final, quick update regarding the USPTO's workforce. Our nationwide workforce is the best it's ever been. A little over a week ago, we celebrated our agency's #1 ranking by the Partnership for Public Service as the Best Place to Work in the Federal Government, out of more than 300 agency subcomponents. I am proud to share that we have seen a rapid and dramatic rise in those rankings in a short period of time, from 172nd place in 2007 to #1 today. I firmly believe that a satisfied and engaged workforce leads to better service and quality for the users of our services.

While this is a tremendous accomplishment, no one at the USPTO-least of all myself-believes this is a time to rest on our laurels. Our work has never been more important, and we have a lot of important priorities to accomplish over the next few years, but we are operating from a good starting position. I hope this gives you a sense of the numerous and tremendous efforts we have underway at the agency. I want to thank you for your time and attention today, and for everything you do-in a number of ways, large and small-to help, strengthen this great patent system of ours together. My team and I look forward to working with you.

Thank you.