Global Trends in IP Protection: A U.S. Perspective

Remarks of Jon Dudas
Under Secretary of Commerce for IP & Director of the USPTO
Global Forum on Intellectual Property Protection and Innovation
Beijing, China
March 27, 2007


Thank you, Mike. Good morning, Tian Lipu, Makoto Nakijima, and honored guests from both industry and government. It is a pleasure to be here again in Beijing -- especially in the beginning of spring.

I want to thank our hosts from the U.S. Chamber, and the China Council for the Promotion of International Trade for organizing this Global Forum.

Importance of IP Worldwide

Protecting intellectual property promotes innovation and fosters wealth creation in our countries.

President Hu Jintao has emphasized the development of IP to move China from a labor-intensive, resource-dependent economy to one that's knowledge-based and innovation-driven.

China's leaders recognize the need to strengthen IP creation, utilization, management, and protection, so that China's IP can move from labs and research centers to the marketplace.

In his 2006 State of the Union Speech, U.S. President George W. Bush announced the American Competitiveness Initiative -- to help foster American innovation and competitiveness in the global economy.

A key provision of President Bush's initiative is maintaining an environment that encourages entrepreneurship and protects IP.

Clearly, the growing importance of IP is an international phenomenon -- as also evidenced by the number of patent applications being filed now.

According to the World Intellectual Property Organization, the number of applications filed worldwide in 1985 was 884,400. By 2004, the amount had almost doubled to reach 1.6 million.

WIPO also reports that the average rate of increase in patent filings since 1995 has been 4.75 percent each year. During the same time, the average annual growth in world GDP has been 5.6 percent. This underscores the strong correlation between economic activity and innovation.

Two IP Challenges Around the World

So, this forum in Beijing comes at a critical time - when our world leaders and many others are talking about IP, and IP offices around the world are facing greater challenges.

I would like to focus on two of our major challenges, and what IP offices throughout the world are doing to address them.

First, patent offices around the world are experiencing dramatic growth in patent application filings.

While the movement toward greater IP protection and filings creates new opportunities, it also presents challenges for IP rights holders and governments alike.

Second, as you know, our companies are facing growing rates of counterfeiting and piracy . This IP theft is particularly affecting our small- and medium-sized businesses, which are the backbone of many of our economies.

Growing Number of Patent Applications

Let's look first at the increased number of patent application filings around the world.

As Commissioner Tian said, one of the fastest growing patent offices in the world is right here in Beijing -- the State Intellectual Property Office.

Other offices are also growing exponentially. Fiscal year 2006 was a record-breaking year for the USPTO.

We had a record of more than 440,000 patent applications filed, and we broke other records too in terms of improving our patent quality, efficiency, e-filing, and hiring and training patent examiners.

One of the main challenges for us is managing this record-breaking volume of applications in a timely and quality manner.

Unfortunately, we also have a pending backlog of more than 700,000 patent applications awaiting first-office action. The time from when an application enters our Office until we issue a decision now averages more than 31 months.

Solutions to Growing Filings

To address the growth in patent applications and pendency, we hired more than 1,000 new patent examiners in FY '05. We hired 1,200 new examiners in FY '06, and we plan to hire another 1,200 in FY '07.

But we know that hiring alone will not solve the problem.

We as IP offices must find ways to reduce redundancies in our international patent system, which are actually contributing to our increasing workloads.

We must explore opportunities to more efficiently and effectively share search-and-examination work.

And we must continue our efforts to harmonize laws and practices.

Together, we can:

Do a better job on examination;

Reduce costs and complexities for innovators to make sure they obtain protection for their valuable IP assets more effectively and efficiently; and ultimately, improve the competitiveness of our economies.

Work Sharing

One of the most direct ways we have found to reduce the inefficiencies of the international patent system is for offices to leverage the work already done by another office. This is also known as "work sharing."

To give you some idea about the potential effects of work sharing, consider that about 50 percent of all applications filed at my office were filed somewhere else first.

This means that in about half of the 440,000 applications we received last year alone, another office may have already searched and examined 220,000 of them.

If we include our backlog, it could be another 350,000 applications that have already examined.

Recognizing this duplication, the USPTO, the Japan Patent Office, and the European Patent Office have been meeting regularly in Trilateral Office meetings about it.

Our joint studies have shown that sharing search-and-examination work among our offices could significantly contribute to our efficiency. This would in turn help our offices improve patent quality.

But work sharing should not be confined to the Trilateral Offices alone. All offices -- large and small -- can and should benefit from it.

The USPTO and our Trilateral partners are exploring several possible mechanisms for optimizing work sharing.

One is the "Patent Prosecution Highway" pilot that the USPTO and the Japan Patent Office are doing.

Briefly, under the "Patent Prosecution Highway," an applicant can request accelerated examination in the office of second filing when one or more claims have been allowed in a priority application filed in and examined by the office of first filing.

The results so far are promising, and we look forward to continuing this successful pilot.

Another concept we are exploring is something we are calling SHARE-Strategic Handling of Applications for Rapid Examination.

Under this approach, a patent office would give priority to examining applications for which it was the office of first filing. The office would wait to examine applications for which it is the office of second filing - until search-and-examination results are available from the other office.

This approach would work well with the "Patent Prosecution Highway" framework, and we think it would maximize the value of work sharing.

Besides our work with the Trilateral offices, the USPTO is also pursuing cooperative relationships with other offices including the State Intellectual Property Office here in Beijing.

Commissioner Tian Lipu and I signed a work plan of strategic cooperation to further deepen our cooperative relationship and to find ways to deal with the growth challenges of our offices.

Our plan included an USPTO-SIPO examiner exchange program, which we have completed. By hosting SIPO patent examiners, and sending USPTO examiners to SIPO, we have been able to exchange information and compare our best work tools and methods.

At the USPTO, we believe such exchanges will enhance confidence among our offices and will significantly improve efficiencies for everyone, to the benefit of all patent applicants.


But ultimately, the effectiveness of work sharing is limited by our differences in national law and practice.

In other words -- even though one office may have searched and examined an application, current differences in national law may mean that what one office considers "prior art" is different from what another considers "prior art."

Harmonization of patent law would help us reduce or eliminate these differences and allow all offices to better leverage work done by others.

A substantive patent law harmonization agreement would also establish "best practices" for the international patent system. This would lead not only to greater cooperation among offices, but to better promotion of innovation, improved patent quality, and reduced costs for inventors around the world.

As you may know, the United States, Japan, Australia, Canada, New Zealand, and the European Patent Office Member States, among others, are discussing harmonization of prior art-related provisions in Group B+ meetings. Singapore and Korea have also been invited as observers to these meetings.

We have reached agreement on several very important issues, but there is still a lot more to be done.

In September of last year, Group B+ took an important step in agreeing to an aggressive work plan, and I am hopeful it will result in a final agreement this year.

As part of this important process, the current text being considered by Group B+ calls for a system in which a patent is awarded to the first-to-file under certain specified conditions, when there are two competing applications from inventors. The United States supports this text.

A related issue is the work being done on harmonizing patent application formats.

In response to many requests from industries that we streamline patent application format standards worldwide, we in the Trilateral offices are working on an initiative that would permit an applicant to prepare a single application that could be accepted by multiple offices.

A standard format would not only simplify procedures and reduce costs for applicants. It would also greatly improve our offices' processing of applications, and facilitate work-sharing as we all continually refine our e-filing tools.

We in the Trilateral Offices plan to pilot the standard application format later this year, and our hope is that if it proves successful, that it would be adopted by other offices around the world.

In summary, many IP offices around the world, including the USPTO, increasingly see work sharing and harmonization as viable solutions to our challenge of increasing patent filings.

Problem of IP Theft

This brings me to the last trend I'd like to discuss: While the number of patent applications around the world is on the rise, piracy and counterfeiting are also on the rise.

Internationally, problems run the gamut from rampant piracy of movies and software - to counterfeiting of consumer goods, electrical equipment, automotive parts, and pharmaceuticals.

IP theft particularly hurts small and medium-sized enterprises, which are a driving force for economic development throughout the world.

IP Theft Solutions

At the USPTO, we believe that greater cooperation among countries and public awareness will help us in eradicating this huge problem.

Many of you have heard of our STOP initiative, launched by President Bush in 2004. STOP (Strategy Targeting Organized Piracy) is a joint effort of nine federal agencies dealing with IP to crack down on counterfeit and pirated products around the world.

Under STOP, the USPTO is expanding our technical assistance and training programs to help other countries improve their IP protection.

For example, we have established a Global Intellectual Property Academy to bring foreign government IP officials and leaders to the United States to network and learn about best practices from each other, and to learn more about IP protection and enforcement strategies.

Another successful initiative which the USPTO is expanding is our IPR attaché program. As you may know, the USPTO posted our first IP attaché in Beijing in 2004.

This position proved so successful that we added another expert to the embassy in Beijing, and we will post one in Guangzhou later this year. We have also added attaches to our embassies in Brazil, India, Egypt, and Thailand.

The USPTO and the Department of Commerce are also leading an intensive domestic communications campaign to educate U.S. businesses on protecting their own intellectual property in the United States and abroad.

This campaign includes holding conferences in cities around our country, staffing a hotline, and offering a website with "IP toolkits" to help American businesses understand the IP regimes in other countries.

I know that the Chinese government has embarked on similar efforts -- including establishing 50 IPR centers around the country where rights holders can call with questions about IP problems.

We applaud such actions and hope they continue.


I appreciate the opportunity to talk about global IP trends, opportunities, and challenges with you.

We can all agree that effective and efficient IP protection and enforcement are essential to promoting innovation and economic competitiveness - for our independent inventors, our businesses, and for all of our citizens.

And I am confident that through mutually beneficial cooperation, we will continue to address IP issues together.

Thank you.