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The America Invents Act and a Global Call for Harmonization

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

October 17, 2011

5th Transatlantic Market Conference

 “The America Invents Act and a Global Call for Harmonization”

Remarks as prepared for delivery

Good morning everybody. I want to thank Petra Pissulla, Director of the Draefer Foundation—as well as the Sigram Schindler Foundation and the German Chamber of Commerce—for inviting the United States Patent and Trademark Office to participate in this year’s conference on Capitol Hill. And I’m glad to see that so many of you took the time out of your schedules to participate in today’s discussion focused on building global intellectual property (IP) and patenting standards. Having spent most of my professional career in the IP field, I’ll be the first to admit that patents haven’t always been the sexiest of topics.

But, even if passage of our country’s brand new patent reform law isn’t enough to make IP the subject of dinner table conversation everywhere. I’d like you to all pause and take note of what’s around you: From the microphones in this room, to the smart phones in your pockets— products you interact with in your daily lives are all built from patented component technologies that sought protection at the United States Patent and Trademark Office. So no longer is intellectual property a topic reserved for highly technical or specialized scientific and legal circles. IP now permeates all fields of interest, all layers of society and all parts of our daily lives.

Now this is especially important to note because, all of us stand at an important crossroads in each of our countries, and respective industries, economic evolution. Determined to accelerate recovery and growth from a global recession, we represent governments and businesses that strive on a daily basis to do more while working with limited resources. Germany and the United States also represent some of the world’s strongest and resilient businesses and markets.  So while we all work to improve the economic outlook for our countries, we must remain grounded in realizing the essential truth: That technology and innovation will write the next chapter of global growth and social progress.

And as we bear witness to the awe-inspiring progress of technology—at a pace never before seen in any previous generation—protecting those technologies with clear, consistent and dependable patent rights is fundamental to disseminating scientific know-how—affording society the opportunity to build upon and advance from one breakthrough to the next. The cardinal prominence of the “patent” right was codified into law at early moments in both of our nations’ births—as it was deemed essential for society to promote the progress of science by granting inventors the exclusive rights to their discoveries for limited periods of time. 

The grand bargain embodied in the patent system is a bargain between thinkers, researchers, technologists, visionaries, scientists—and the rest of society. It’s a bargain providing incentives to innovate, in exchange for dedicating those innovations to the corpus of human knowledge, and to the benefit of all mankind in perpetuity. Not a bad deal for Germany, not a bad deal for the U.S., not a bad a deal for mankind!

By disclosing the knowledge behind an invention, for the entire world to build upon, each generation stands on the platform created by the previous generation, leveraging yesterday’s inventions to develop tomorrow’s innovation. Without the incentives offered by patent protection, there would be little motivation for anyone to share their new idea for the laser or the microprocessor, with the rest of the world. And arguably, plenty of incentives not to share. The laser alone has spawned whole industries, through multiple uses and multiple follow-on breakthroughs. And follow-on advancement of technologies like the laser continues to create high-growth job sectors, to this day.

That is why today’s forum is vital.  Because, as we seek to strengthen our respective patent and trademark systems to promote the development of new industries and new jobs, the conversations we have here today will not only allow us to identify barriers that impede innovation and business growth; they will also empower us to annunciate a clarion call to collectively build an IP infrastructure for a globalized world.

Now let me take a moment to outline why this remains a policy goal for the USPTO, our Administration, and the IP community writ large. We live in a world where information and commerce increasingly reach far beyond any of our borders. And as technological advances present new opportunities, they also present new challenges. As innovators seek to open markets abroad—whatever abroad may mean for them—it is imperative that the international patent system provide a cost-effective way to obtain reliable patent rights in multiple jurisdictions.  Moreover, as new technologies increasingly become a part of everyday life—from computers to mobile phones to life-saving drugs—they are also becoming more cross-disciplinary. Great new products have one foot in nano-tech, another in software, and another in biology. These kinetic realities demand intelligent engagement and a smarter infrastructure to keep up.

And the public must have confidence that the patent system is sufficiently modernized and nimble to strike the right balance between incentives to innovate and access to those new innovations.  We have a unique opportunity, right now, to meet these challenges. Because while the dynamics of our economic landscape may be shifting, the importance of IP rights is not. From the Euro-zone to the United States, to Southeast Asia—patents are the premiere global currency for creating value for services and products, for innovators in all of our countries.

But if we don’t keep up with a technological and commercial system that moves ideas & products across borders with increasing speed in a flatter world—we risk devaluing that currency. To be clear, patent laws are stuck well back in the last century because our systems are so varied and our laws are fundamentally different. As a result, patent offices around the world are repeating the same work done by other countries, ultimately wasting billions of dollars a year, clogging the pendency pipeline and leaving the patent system, ironically, as the laggard among commercial legal regimes. 

The stress on our systems not only stifles our operational abilities as we stare at alarming patent backlog rates, it also impedes our ability to grow new jobs, compete in burgeoning markets, and fertilize new products and services that address modern social challenges. But by affirmatively working together, we can say no to those impediments.

No longer will we ignore new economic realities and the role the patent system plays in them. No longer will our economies be shackled by the chains of patent backlogs. A 21st century imperative demands that we work together to, harmonize our IP infrastructures, and place our patent systems on a much more common footing. This allows us to engage in a conversation about best practices for all nations, developing and developed, in building a gold standard that protects and optimizes technological progress. That is why we are here today.

It’s also especially fitting that just this past summer, I was in Brussels and then Munich, with many of your colleagues from the German Embassy and patent office to discuss the critical importance of patent law harmonization. And as discussed, part of the urgency in better managing the collective challenges our global IP system faces lays in moving beyond approaches that have failed in the past. When having conversations over a decade ago, among patent offices to tackle these very challenges impacting the global innovation and business communities, we learned that taking into account the perspectives of developing countries is essential to establishing priorities for any conversation regarding building international patent norms. We must learn why each of us considers a specific approach to be a best practice worthy of inclusion in a global gold standard IP system in order to gain a better understanding of our needs, our concerns, and our flexibilities.

Worldwide, there is broad agreement that the public gains when the world’s experts in areas of science and technology disclose their advances in a manner that seeds new ideas, prompts new approaches, and teaches the public exactly what has come before. That is why I hope we can address hot topics in patenting, including standards of what is patentable or not, the scope of enforcing IP protections to prevent theft or counterfeiting, and  definitions of prior-art—a term we used to reference what technologies already exist in the public domain. These matters should be debated so we have a precise understanding of the perspectives behind our varying policies and their impacts on efficiencies in our offices.

Discussions should consider submissions of prior-art from third parties, and what laws best promote full disclosure of an idea, and the maximum dissemination of information. Discussions should also consider ways 21st century technology, such as the internet, can be brought to bear on the patent review process to product clearer and more consistent patent protections that promote both innovation and the dissemination of technical information.

But let me be clear: patent law harmonization is not about imposing the will of our country, your country, or any particular group of countries onto another—nor is it about challenging patent sovereignty in our IP ecosystem. Ladies and gentleman, a discussion about harmonization is an effort aimed at relieving burdens that are wearing out all of your IP systems—and indeed slowing down the growth of your businesses.

That’s why multilateral agreements like the Patent Cooperation Treaty, and bilateral relationships through a program known as the Patent Prosecution Highway (PPH) are so vital. When an inventor’s patent application is being processed in multiple regions of the world, these work-sharing systems enable offices to utilize one another’s search and examination results—thereby avoiding duplication of work and expediting the process of review; while at the same time boosting the quality of a patent—as multiple perspectives are brought to bear on the review of a single application. Not only do these programs have proven success rates, but they save many millions of dollars of applicant expense, tens of thousands of examiner hours, and millions of dollars between patent offices, annually.

More than 8,000 applications will have made their way through the US PPH by the end of this Fiscal Year, allowing us to expand our target goal to about 16,000 next year.  And as we speak, the USPTO has delegations working with our counterparts in Germany and elsewhere to firm up new parameters and new agreements to streamline work-sharing procedures further, vis-à-vis a new iteration of PPH that we refer to as PPH 2.0. So in short, what these larger conversations regarding harmonization allow us to do is pour fuel on the work-sharing fire.

The success of PCT and PPH gives us a chance to hold a critical lens up to standards for how patents are examined, and envision a system where administrative protocols are ironed out and backlogs no longer keep us up at night. If we can eliminate redundant work, and free up resources for higher quality patent reviews, we ultimately generate the economic lift that comes from moving ideas to the market place more efficiently.

Now no one expects that it will be quick or easy to reach substantive harmonization conclusions. But the leaders of the IP world need to own our role in the international business community. The Council of the European Union recently took a critical harmonization step forward through the creation of a single patent system—one that would replace the status quo of individually validated and enforceable rights in each country in Europe. While the new rules are still in the process of adoption, the USPTO applauds the EU’s leadership in streamlining and strengthening its IP architecture. Not only will this reduce patenting costs for all countries, but it will allow technologies and products your businesses advance to retain enforcement IP protections faster, with more clarity, and with more consistency.  

Inspired by the success of the EU, the United States undertook a step of our own in conjunction with the Asia-Pacific Economic Cooperation forum, organizing a conference on substantive harmonization of March of this year, just a few miles away, in Alexandria, VA. We then took the call for action to London, and a month later engaged our European partners on judicial elements of harmonization in Brussels. And then in June we followed up with the world’s largest patent offices in Tokyo and subsequently in July held talks in Munich, including the German, Dutch, UK and French patent offices, along with the EPO and JPO. So it’s fair to say the United States is serious about getting harmonization done. And we’re acting with urgency. That’s why our delegations were in Munich just last week outlining an agreement for the PPH2.0 work-sharing program I mentioned a moment ago. Fundamentally, we believe there is clarity on this: from patent office to patent office, the will to enhance our collaborative capacity exists and the will to finally harmonize our patent laws exists.

And let me assure you that the United States will continue to do its part. In a truly historic moment, one month ago, President Obama signed sweeping patent reform legislation into law in the US, re-engineering the United States the IP system from the ground up. Making it easier for business, inventors, and entrepreneurs to grow their products and services, and contribute to economic growth. While the USPTO is faced with a variety of challenges in implementing various provisions of the new law, known as the America Invents Act, it gives me great pleasure to stand before you today and state with conviction that we are up to  the challenge, and well underway to meet it.

An implementation coordinator and working groups are working on a staged, rigorous and transparent implementation process, involving extensive outreach and input from the public stakeholder community. The new law represents a major step towards transforming our patent laws to account for the stresses and expectations of a fast-moving 21st century global economy. We encourage our user community to be a part of the implementation process that will span the course of 18 months, by regularly visiting and commenting at www.uspto.gov/americainventsact.

The groundbreaking new US Patent law has already begun enhancing our patent system by offering greater certainty about patent rights, faster examination times, discounts for small businesses and alternatives to expensive litigation when patent rights are disputed. In fact, the new law will embody the most sweeping reforms to the US patent system in 175 years, and offers the world the first and only truly 21st century patent system.

At its core, this legislation: transitions the U.S. from a focus on what inventors do in secret, to a focus on what they do to make their inventions available to the public by disclosure or sale of a product. That in turn marks a powerful shift—the first in any patent system on the planet—to transparency, clarity, and collaboration. Imperatives that have already become mandates for 21st century businesses.

The AIA has also enabled the USPTO to offer patent applicants a fast track tool, under which the patent examination process will be completed within 12 months – or 3 times faster than previous wait times. Getting a key patent can be critical to an entrepreneur hoping to raise capital and grow their business, with 76% of startups reporting that venture capital investors consider patents when they make funding decisions.

The Track 1 program became available to the public 10 days after the new law was enacted and has already proven to be incredibly popular with our user community. As of the end FY2011—which drew to a close just a few days after the program started—we received 853 applications, with more than 171 already submitted in FY2012.

Prioritized examinations and other parts of the new patent reform law will help operationally, but the AIA is ultimately a recognition on the part of the PTO that we live in an age where technological change can occur in the blink of an eye. So, the larger mandate is to create a smart, agile and nuanced Patent and Trademark architecture that can adapt to evolving business needs and leverage modern tools to address them.

Ultimately, the move engineered by AIA to a more efficient and reliable American patent system, through provisions like First to File and a more protective grace-period, builds a pro-business and pro-collaboration environment—allowing the academic community to couple its efforts with the business community by allowing IP to bring clarity to an asset. This not only boosts interactions between inventors and investors, but it more swiftly drives breakthroughs in the lab, to delivery in the marketplace. When scientists at universities can work together, and can work confidently with your industries and your businesses—with patent laws enhancing collaboration rather than impeding it—everyone wins. As such, enactment of the America Invents Act has been a tremendous down payment on the aggressive jobs agenda President Obama has laid out for the United States. Speeding the delivery of innovative goods and services to society actively spurs development and growth—and is a direct byproduct of the AIA. 

That’s why our new grace period, which ensures an innovator can pursue funding and partners without losing patent rights, is so important. And it’s why our new grace period, which encourages joint research projects and encourages commercialization at university research, is so important. And that’s why the European IP community, and Germany in particular, also needs to strengthen the reliability it brings to its patent, by giving universities and businesses, small and large, the benefit of a grace period for patent filings. Not only will this bring global IP discussions fully in line with the disclosure policy that underlies the patent system philosophically, but it also helps steer us toward a harmonized patent processing gold standard, that the entire world can enjoy. America’s move to transition to a more efficient and predictable First To File system demonstrated clear American leadership in the global IP dialogue.

A reciprocating move on the European side to do its part through enactment of a pro-innovation grace period like we have just put in place, will empower entrepreneurs to innovate, market products, and export to all corners of the globe. And to be clear, the US has completed our essential reforms not as part of an international negotiation, or to gain leverage in a quid-pro-quo bargain, but because it is the right thing to do. We’d like to now work with our European partners in the same spirit.

The AIA is anchored in the desire to more effectively match the rate & pace of the patenting process to the rate & pace of invention, and the rate & pace of commercialization. But in saying this we realize there is a difference between invention and innovation—the latter is an economically relevant version of the former. So, the goal of the new America Invents Act is to create not just the simplest possible patent system, or the most precise patent system, but rather the most innovation-friendly & innovator-friendly patent system that reduces costs, levels the playing field businesses small & large, and spurs economic growth. Moreover, this major legislation will boost productivity by enabling greater cross-border work-sharing between the USPTO and other patent offices. Indeed, it has given the United States the world’s first and only 21st Century patent system.

By meeting with our Asian and European partners, and by reforming our own IP system—the USPTO has demonstrated a strong conviction to ensure that the 21st century IP dialogue is a global one. We hope this stands as an example of renewed US stewardship, globally, for economic and social opportunities for people, everywhere. This in turn puts the onus on the world’s IP leaders to decide whether we want to enhance and accelerate progress.  I believe we owe it to all of our countries’ citizens to continue moving forward with discussions aimed at optimizing our global patent system. We owe them an end to excuses. We owe them an end to stalemate. We owe them leadership and success.

That’s why I look forward to a thoughtful dialogue global patent harmonization. Discussions that will empower us to build a system that incubates great ideas, offers the highest quality reviews, swiftly brings the best products to the marketplace, benefits innovators and governments alike, and writes the next chapter of economic growth for us all. I urge that we begin the process of patent law harmonization anew, now.  I urge us all to search for common ground. I urge us all to let best global policy and best practices be our guide. 

Thank you.

United States Patent and Trademark Office
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Last Modified: 12/7/2011 9:27:06 AM