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Remarks to the New York Law School

Under Secretary of Commerce for IP & Director of the USPTO David Kappos

Friday March 26, 2010

New York Law School

Let me start by thanking New York Law School and Professor Webbink for putting this event together. 

I’m very pleased to have the opportunity to be here. In fact, I have a history with NYLS. I helped develop the project that became Peer to Patent. So I’d like to spend some time talking about that program as well as some of the other things we’re up to at the USPTO, and I’ll take your questions on P2P or any other IP issues.

But first, I’d like to speak about an issue that has taken on critical importance—the increasing vitality of IP in our global economy. 

As we move into the second decade of the 21st century, it has become increasingly clear that innovation is the only sustainable source of competitive advantage for world economies. And since intellectual property is the engine that drives innovation, it follows that the businesses and innovators that use IP most effectively will flourish.

And the distance between innovation and marketplace is shrinking. Said another way, innovation is moving more quickly from creation to manufacture. This trend is irreversible. The result is that IP is the critical vehicle for innovators and businesses to capture value as ideas move to the marketplace. 

In this way, IP is fast becoming the global currency of innovation. The great news is that all of you in the room can play a critical role in the evolution of that currency.  

At the same time, labor arbitrage will become less the driver of where manufacture occurs. Instead, firms will hire in places where they can find the most talented workers and the best IP protection. This shift will reflect a new dynamic; marketplace success will be less about lowest-cost manufacturing, and more about who will be innovating the products and services firms produce.  

So, let’s start with an IP area of particular concern to us at the USPTO: copyright protection. As a civics reminder, the role of the Under Secretary of Commerce for IP—my role—is to advise the president and the administration on all areas of IP. In this capacity, our team is devoting major energy to copyright issues in the digital age. Specifically, the USPTO is working within the Commerce Department and the administration to help shape policy affecting copyright policy in the broadband era. Let’s take an example.

As the U.S. expands its broadband infrastructure, we are working with colleagues throughout the administration to ensure that broadband in the U.S. is used solely for legal purposes. The FCC recently released its comprehensive national broadband plan to Congress. It is also working on a proceeding to determine the scope of network neutrality, and the administration is expecting to file comments in that proceeding. The USPTO, of course, will be playing an important role in helping to craft the administration’s position on this topic.

In addition, the USPTO, in cooperation with the National Telecommunications and Information Administration [NTIA], is convening a series of consultations on the topic. The output of the consultations will be used to formulate policy recommendations on copyright for the digital age.

Of course, any Internet 3.0 strategy requires that attention be paid to several areas. It requires developing technology that prevents illegal content from flowing on the Internet. It requires the aggressive prosecution of egregious, professional infringers. It also balanced IP policy that makes appropriate exceptions and exemptions where called for. You see, improving copyright exceptions while establishing and enforcing strong intellectual property rights are complementary rather than contradictory tasks. So, the USPTO will engage both domestically and with our trading partners to ensure the proper policy balance is struck around copyright and all other forms of IP rights.

Turning now to patents, our job at the USPTO starts with providing quality and timely access to patent rights for innovators. Right now, it takes far too long for innovators to get patents. Average total pendency—from application to final action—is nearly three years. As applications sit in the queue, the goods and services they are meant to protect cannot come to market, and new jobs are not created. And as we’re working to drive down the application backlog and reduce pendency, we need to make sure we’re issuing high quality patents and denying insufficient applications where appropriate. The need to produce quality patents is critical to the economic function of the patent system. Quality issuances provide certainty in the market and allow businesses and innovators to make informed and timely decisions on product and service development. So, we’re working to address the systemic problems at the USPTO to improve quality. 

As an example, one of my very first priorities at the USPTO was to reform the outdated count system. The count system is the means by which we incentivize and measure patent examiners. It had not been updated in over a generation. We commissioned a joint labor-management task force to reengineer the system. Within two months, we completed this effort and implemented the new system last month. Specifically, the changes give examiners more time for a first action on the merits, and time for examiner-initiated interviews. This recognizes the fact that examiner-applicant communication is vital to issuing high quality patents, and to ensuring that only high quality patents issue. Better communication and more time for examination mean the new system will allow examiners to get it right the first time. The new count system also reduces the credit given for multiple continuing applications which can impact pendency and backlog. 

And beyond the count system, we’re looking at more new and innovative solutions to quality problems. One very exciting plan was pioneered right here at New York Law School. That idea became the Peer to Patent Pilot. I’d like to spend a moment on the function of the pilot and its design for those who are new to its workings. 

Peer to Patent is about quality and efficiency. It is a collaborative tool that allows applicants to submit their applications for peer review through the Web. The program allows for the use of innovative collaborative techniques in the review of patent applications. 

Once an application is submitted, members of the public may then proffer relevant prior art that will inform the ultimate decision of the examiner. The pilot was designed to increase the quality of issuances by giving examiners better access to prior art of all kind, but especially non-patent literature. Better access to art means better quality examination. 

To encourage participation during the pilot, applications in the program were moved to the front of the applicant queue at the USPTO once their application received a submission of art. With that as background, I’d like to discuss some of the lessons we learned from the pilot, and some of the successes we’ve seen. 

To begin, I’d like to thank the law students and faculty in this room, and at NYLS generally, who participated and helped make the project a reality. NYLS students led the way in Web development and feedback, participated in the process of proffering art and comments, managed publicity and even oversaw submissions and filtered content. 

As a result of these efforts, we saw some significant successes come from the pilot. The P2P website received thousands of hits and over 600 pieces of art submitted on the 189 applications that received submissions. The program reached people in hundreds of countries worldwide and both IP Australia and the JPO were inspired by the success of P2P to run similar pilots. With these successes come lessons learned too. To make sure we learn them, we’re now carefully evaluating the applications involved in the pilot. We want to be sure that we have a clear picture from which to improve the system when we are able to operationalize it at the USPTO. 

The obvious way to conduct an evaluation is to simply compare the overall population of applications at the USPTO to the P2P applications, and compare differences in their characteristics, such as; geographical origin, nature of the inventors and assignees, technology subclasses, and number of claims, to name a few. 

For me, that type of analysis is a start, but not good enough. So, I’ve asked the USPTO’s new chief economist Stuart Graham to select a sample of non-P2P applications that closely mirror P2P applications in order to do a “like with like” comparison. This analysis will give us a “control” group that should provide better insight into the “added” effect of P2P above what we would expect in the “normal” examination process. 

And as we work to examine the results of the pilot in an unbiased way, there are some clear lessons and challenges we’ll need to address to run another pilot or fully launch a peer-to-patent program. While there was great interest in P2P—it is clear that scaling-up the program will be an undertaking. Encouraging applicant participation in the program, for example, will require on-going effort. Many businesses are reluctant to comment on others’ patent applications for fear of willful infringement accusations by patentees. 

On the other hand, there has been much interest in the Peer to Patent program from innovators and university tech transfer offices that deal with emerging technologies. Many tech transfer offices have said that P2P can help them to make early decisions about going through with a potentially costly patent prosecution. 

University R & D often involves “embryonic” technology. Searching to determine patentability and market value of IP related to emerging tech areas can be quite difficult and expensive. One major value of peer to patent is its ability to inform emerging technology areas. 

Tech transfer offices and private sector firms that deal with emerging technologies may therefore be major beneficiaries of P2P. The program allows them to rely on P2P contributors to collect and report information about their applications and then use the information to make an investment decision based on the expected value of the potential patent.

At a higher level, this point provides a valuable insight. It teaches us that as we move forward we should be looking to apply P2P to arts and technologies where it will have the maximum benefit. Ensuring maximum exposure for peer-to-patent supplied prior art can be a great value to the innovation community, but it highlights another interesting challenge. That is, how to get people involved as “volunteers” who submit art. While we received over 600 submissions of art, there were 37 applications in the pilot that did not receive a single submission.  

There are a couple of potentially interesting solutions. Let’s borrow one from the “open innovation” model that shares so many parallels with the P2P framework. An open innovation model is one that relies on a distributed set of innovators to participate in building a complex technology. We know that a patent application is like a complex technology in that many independent pieces of knowledge are required to make a quality final product. 

You all probably know examples of “open source” innovation in software that relies upon a distributed set of volunteer “knowledge possessors” who each bring together different parts of the programming puzzle to make a complex program. Researchers who have looked into the problem of how to get programmers involved in collaborative open source projects agree that prestige is an important incentive since volunteer programmers are often known to one another. 

We may borrow from this example with regard to P2P. One can envision a scenario where groups of technical professionals—who are known to one another—may enjoy a competitive round of submitting the best prior art, or possibly demonstrating why a colleague’s innovation is patentable—or not. 

And while on the one hand, the solution may be in small groups of technical folks who know each other, in other classes of art, the solution could be quite opposite. If, for example, the P2P program was expanded dramatically, the expansion would create a market incentive for companies to invest in submitting prior art on their competitors applications. 

At a minimum, the Peer to Patent Pilot presented interesting and tantalizing results. As the patent system becomes increasingly vital to the competitive advantage of American business, it is our duty, at the USPTO and in the IP, legal, and academic communities, to push for innovative solutions to the problems facing our patent system. 

With that in mind, I’d like to have a conversation and take your suggestions for the future of P2P, and I’d like to take your questions or hear your suggestions on any other IP related topic.

Thank you.

United States Patent and Trademark Office
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Last Modified: 12/13/2012 3:45:17 PM