ABA-IPL - 29th IP Law Conference Luncheon Keynote Address

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

ABA-IPL - 29th IP Law Conference Luncheon Keynote Address
Arlington, VA, April 4, 2014

Remarks as Prepared for Delivery

Thank you. And to everyone here today, good afternoon. It's a true pleasure and honor to be your lunch time speaker. Many of you know that the USPTO works with Invent Now to host the National Inventors Hall of Fame, which recognizes our nation's top inventors who exemplify the best spirit of innovation and entrepreneurship. On May 21st, we will be recognizing the pioneering work of inventors such as Ashok Gadgil. A physicist at Lawrence Berkeley National Lab, Ashok invented and patented a water-disinfecting device that uses ultra-violet light to kill the kinds of deadly, disease-causing pathogens that claim over three million lives a year in underdeveloped parts of the world.

Powered by a mere 60 watts of energy that can be provided by a small battery or solar panel, a single unit provides safe drinking water for about two thousand people at a rate of four gallons per minute without the need for additional pumps or a pressurized water-delivery system. That's the kind of innovation we sought to reward with our 2012 Patents for Humanity pilot program, which recognized businesses, inventors, nonprofits and universities that leverage their intellectual property portfolio to tackle global humanitarian challenges.

At a February event at the White House we announced we will be adopting Patents for Humanity as an annual program. Yesterday the Federal Register announced our call for nominations in five areas: Medicine, Nutrition, Sanitation, Household Energy, and Living Standards. Winners receive a certificate to accelerate select matters before the USPTO and are awarded at a ceremony. We'll be accepting nominations starting April 15th, so please help spread the word. The kind of life-saving invention by Ashok and our Patents for Humanity winners reminds us that it isn't just inventors, entrepreneurs, examiners, and patent attorneys who benefit from patented inventions on a daily basis, but countless millions around the world for whom these inventions can sometimes mean the difference between life and death.

As a child, I experienced the power and benefits of innovation and intellectual property in more modest but still profound ways. As some of you already know, 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 served 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 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.

They include:

o exploring greater transparency of patent ownership information;

o 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;

o empowering Main Street businesses and others with information to help them respond to claims of infringement; and

o expanding our already extensive public outreach engagement and empirical research.

With your help and input, we've made great progress on these executive actions. You can see a summary at USPTO.gov. And just last month, 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 the first new executive action, the USPTO will make it easier for companies, experts, and the general public to provide more relevant prior art, at time of examination, not after issuance, to our examiners so they can issue the best quality patents possible.

Specifically, we are:

o refining our existing third-party submission program,

o exploring other ways for the public to submit prior art, and

o updating our guidance and training for examiners to more effectively use crowd-sourced prior art.

To this end, on April 10th, we're engaging with the innovation community at a public roundtable at our headquarters in Alexandria to gain insights on how our agency can better leverage prior-art crowdsourcing so our examiners can make the most informed judgments possible about patentability. To learn more about and hopefully participate in that roundtable, please visit USPTO.gov.

The second new executive action is aimed at expanding our Patent Examiner Technical Training Program, which enables experts in industry and academia to engage with patent examiners by providing relevant technical training. 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 technical experts can come to the USPTO, or eventually one of our four satellite offices, to give a presentation on his or 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 can be webcast nationwide to all examiners who examine in that technology area) is tremendously helpful and can be done so at relatively low cost to those who volunteer, especially as our satellite offices get up and running in Detroit, Denver, Silicon Valley and Dallas. This is another example of how, with your help, we can work together to ensure more training across all technological disciplines throughout our examination corps for the benefit of all. And, while we are on the topic of satellite offices, I'd like to highlight how we are using these offices to provide better service to you.

In addition to improving 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 role in our ability to provide outreach and education to all of our stakeholders, and not simply those fortunate enough to be located in the DC area or who have budget to travel to the DC area.

We also envision our satellite offices as a place where examiners can provide "best practice" training to the local IP bar to improve the quality of applications submitted and where the public can provide input on how to improve our policies, programs and procedures. These offices will also eventually offer the opportunity to participate in Patent Trial and Appeal Board proceedings and examiner interviews, either in person or via a secure video-link with an examiner elsewhere. We believe this kind of improved engagement with the USPTO 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.

Under the third (and final) new executive action, the USPTO will engage with our partners in the private sector to expand the existing pro bono patent assistance program to all 50 states, providing dedicated resources and true innovator empowerment to pro se applicants who lack legal representation. 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. We'll be looking for volunteers from the IP bar to support this program, and we hope some of you will consider contributing.

Now, altogether, these seven executive actions are administrative steps being taken by the USPTO in collaboration with you, our stakeholders, to strengthen our patent system.

But, as many of you know, the USPTO is also actively engaging with our stakeholders, members of Congress, and our colleagues within the Administration to help advance some legislative reforms designed to ensure a strong and balanced patent system that encourages innovation, 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 to require disclosure of patent ownership information. The House and Senate bills also have included provisions that would increase requirements to update this type of information. We're seeking public input on these proposed rules, and we've extended the written comment period to April 25th. We hosted two public roundtables on the proposed rules last month, one in Alexandria and one just last week in San Francisco. Let me make clear that these proposed rules are exactly that: proposed. As with any proposed rules, we not only welcome your input; what we do will be guided by it as well. It's what building a better IP system together is all about.

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 off-the-shelf technology are protected from potentially abusive litigation.

And 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 and protracted process.

The key in all of these areas is striking the right balance, one that protects the rights of IP owners while ensuring that innovators are investing, as President Obama said in his State of the Union remarks, in innovation, not costly and needless litigation. We are committed to working 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.

Another area where the USPTO and our stakeholders can work together is on the new Patent Trial and Appeal Board proceedings brought about by the America Invents Act. Specifically, we are planning to host 8 roundtables nationwide focused on the AIA trial proceedings -- inter partes review and covered business method review. The roundtables will start April 15th and run until May 8th.

We will visit: Alexandria, New York City, Chicago, Detroit, Silicon Valley, Seattle, Dallas, and Denver - you can already see how we are using the locations of our satellite offices to better engage with our stakeholders nationwide. These roundtables will provide an opportunity for stakeholders and USPTO administrative patent judges from our Patent Trial and Appeal Board to discuss the new AIA trials, share lessons learned and discuss never-before-released statistics on the AIA trials.

Also, the roundtable will offer opportunities for stakeholders to share input about their experiences with the trials. Because our Board's work with the new trials is allowing patent owners and alleged infringers to resolve disputes about patent rights earlier and more efficiently than in the past, we want to ensure that you understand the operation of our trials and hear about your experiences with them.

That sums up some of the highlights on the patent front. But we're hard at work in all areas of IP, including trademarks and copyrights, and I'll cover some of our efforts there as well.

On the trademark front, on April 11th, we'll be hosting a roundtable at the USPTO campus on the topic of post-registration amendments to identifications of goods and services based on technology changes. After an extended period of Request for Comments, the roundtable will give USPTO officials and stakeholders a chance to further discuss concerns and suggestions regarding this potential change.

I'm also happy to announce that we'll again be hosting the National Trademark Expo in October. The Expo, held at our campus in Alexandria, helps educate the public on the value and importance of trademarks in our culture, and to our economy. In 2012, our Expo attracted more than 17,000 visitors (from companies, to applicants and would-be applicants, and school children of all ages), and we expect an even greater number this year! If you'd like to exhibit or know a good candidate, please note the deadline for applying is May 16th.

Let me also briefly mention some important work we've been doing on copyright policy. In July 2013, the Commerce Department (with significant leadership and input from the USPTO) published its Green Paper on Copyright Policy, Creativity, and Innovation in the Digital Environment. The Green Paper represents the most thorough and comprehensive analysis of digital copyright policy issued by any administration since 1995, and is meant to advance productive discussions on a set of issues that we identified as ripe for further work.

This past month, we hosted a public discussion on improving the operation of the notice and takedown system under the Digital Millennium Copyright Act, with the goal of identifying best practices and achieving voluntary agreements.

Other upcoming topics for public discussion involve:

o the legal framework for the creation of remixes,

o the relevance of the first sale doctrine in the digital environment, and

o the appropriate calibration of statutory damages.

Stay tuned for more information on the dates, times, and locations of these public discussions. The input you provide will help the USPTO, the Department of Commerce, and the Administration work with Congress to maintain a balanced and effective copyright system that continues to empower the creators of copyrighted works while at the same time preserving the innovative power of the Internet and the free flow of information.

Also, as many of you know, a review of the Copyright Act's provisions is on the Congressional radar, so we'll be working with the Copyright Office and key Members of Congress as they consider possible changes on a number of topics, including some that were addressed in the Green Paper.

Before we wrap up, I'd like to provide you with two, final, quick updates regarding the USPTO's workforce and budget situation.

A few weeks ago, we celebrated our agency's Partnership for Public Service ranking as the Best Place to Work in the Federal Government, out of more than 300 agency subcomponents. This capped a dramatic rise for our agency, from 172nd place in 2007 to #1 today. This is good news for our stakeholder and user communities, because a satisfied and engaged workforce leads to better service and quality. All of this is to say, we're operating from a good starting position, but we still have a lot of important work to do, and we recognize that our nation's continuing economic recovery depends upon it.

Finally, on the budget front, for 2014, the outlook is good. In January, Congress passed a $1 trillion Omnibus Appropriations bill. This means that the federal government, including the USPTO, will not be subject to sequestration in 2014 as we were this past year. The appropriation provides the USPTO with the $3.024 billion in spending authority we requested for fiscal year 2014, which is the amount we estimate we'll collect in fees during the year. Put another way, if we collect all the fees we predicted we would collect, and we spend all that we budgeted for, all the fees you pay us will be used to provide services to you and support our shared innovation ecosystem.

With the Fiscal Year 2015 budget we just submitted to Congress, we'll be able to continue reducing patent application pendency and aligning the backlog of unexamined applications with increased manpower by Fiscal Year 2018. The new budget also supports our ability to hire more patent and trademark examiners and to provide our examiners with the modernized IT tools they need to do their jobs more efficiently and effectively.

I hope this gives you a sense of the numerous and tremendous efforts we have underway at the Agency and the state of its operations. Our focus has been, and will remain, on working with you to continually improve our patent system and the services we provide to you.

Together, with each of us contributing is ways that make sense, we can help build better IP system. It won't always be easy, and we may not always agree on every point, but the end result of our collaborations will be an intellectual property and innovation system that excites the imagination of our children, and gives every would-be innovator the tools he or she needs to think big, experiment, and create life-changing products that get to the global marketplace faster and more efficiently than ever before.

We owe ourselves and the American people no less. Thank you for your time and attention today. I look forward to working together with you, and I'd be glad to take a few questions.