Keynote Address to Los Angeles Intellectual Property Law Association Spring Seminar

Acting Under Secretary of Commerce for IP and Acting USPTO Director Teresa Stanek Rea

LAIPLA Spring Seminar

June 7, 2013

Remarks as Prepared for Delivery

Thank you, Georgann! It is a pleasure to be in Las Vegas, speaking to an audience of such distinguished IP practitioners. I also want to thank LAIPLA President Monica Scheetz for hosting this wonderful event. In keeping with LAIPLA's focus on diversity and change this year, let me congratulate Monica on being the first woman to lead this great organization, and Vice President Marsha Mullin who will be the second.

As the head of an agency with women in all of the top posts-myself, Commissioner for Patents Peggy Focarino, Commissioner for Trademarks Debbie Cohn, and Director of External Affairs Shira Perlmutter-I am very proud of the great strides women have made in the field of IP law and leadership. As you know, the USPTO continues to engage our stakeholders through roundtables, educational opportunities, and other special initiatives. We appreciate the opportunity to continue our efforts here at your spring seminar, with such a diverse and talented group of participants. What I would like to do now is update you on a wide range of USPTO efforts that are meant to support our nation's innovators and IP practitioners in a variety of important ways.

When President Obama took office, he made overhaul of the patent system one of his top priorities, because he recognized the key role that new innovations and ideas play in creating jobs, stimulating the economy, and ensuring our place as the global leader of innovation. If there was any doubt about that, it was dispelled by last year's Commerce Department report, Intellectual Property and the U.S. Economy: Industries in Focus, which revealed that IP-intensive industries in 2010 accounted for nearly 35 percent of our nation's gross domestic product and more than 60 percent of our exports. They also accounted for 21.1 million jobs-27.7 percent of jobs in the economy. Impressive numbers.

To those of us at the USPTO, they highlighted the importance of implementing the America Invents Act (AIA) and a number of other new initiatives as expeditiously and effectively as possible. And with the last of the provisions put into effect this March, now is a good time to take stock of some of the major effects the AIA has had on patent prosecution.

First Inventor to File

First Inventor to File, as you know, went into effect on March 16-representing a huge step forward in harmonizing our patent laws with other leading nations. This provision not only simplifies the determination of prior art in different ways but also makes prior art more objective. It:

  • Eliminates the geographic restriction on sales and uses; a sale or use anywhere in the world may qualify as prior art.
  • Eliminates use of secret sales as prior art, making prior art objectively identifiable.
  • Treats a U.S. patent or published patent application as prior art as early as the filing date of the foreign priority application.
  • This overturns the Hilmer doctrine and introduces art previously unavailable under the first-to-invent system.

We are providing First Inventor to File training to more than 8,500 examiners and supervisors using a staged approach with training sessions running through the fall. These training materials are available on our AIA micro site.

Third Party Submissions

A second key provision of the AIA relates to third party submissions. Thanks to the new law, third parties can submit relevant materials to help examiners determine whether an invention is patentable. Third-party submission of prior art allows the USPTO to tap directly into the U.S. innovation community.

Since this provision went into effect on September 16 of last year through May 24 of this year, we received 772 submissions across the spectrum of our Technology Centers. The office has examined nearly 65 applications containing third-party submissions, and in about 22 percent of those cases, made a rejection based on the art provided in the submission.

One initiative to facilitate third-party submissions is the recently launched social network Ask Patents by Stack Exchange, in which subject-matter experts volunteer to suggest prior art for given applications. Subject matter experts can also offer their input on the proposed value of suggestions from others. We are pleased with the overall number of submissions to date.

Supplemental Examination

Another change that went into effect on September 16 of last year was the addition of supplemental examinations, which allow patent owners to present information believed to be relevant to the patent for the USPTO to consider, reconsider, or correct. A patent owner may use supplemental examination to forestall a subsequent inequitable conduct challenge to the enforceability of the patent during litigation.

To date, 22 supplemental examination requests have been filed. Of these, 15 have been afforded filing dates as of May 14. Of the 15 with filing dates as of May 14, four are in progress; 11 have been completed with seven reexaminations to be ordered as a substantial new question of patentability affecting at least one claim was raised; and four reexaminations were not ordered.

New Trial Proceedings

And of course, three new trial proceedings for issued patents went into effect last year as well-inter partes review, post-grant review, and covered business method (CBM) review. They are heard by our new Patent Trial and Appeal Board, or PTAB, which replaced the old Board of Patent Appeals and Interferences on the same day the new trial proceedings went into effect. These proceedings are far less expensive than litigation and faster as well.

Our implementation of these new proceedings is timely, because the U.S. courts have been quite active in further defining and fine-tuning the standards for patent eligibility (101), obviousness (103), and clarity, adequate written description, and enablement (112). We are really pleased with the inter partes and CBM submission rates to date, which are on pace with our forecasted rate. As of May 28, there were 284 submissions - 258 IPRs and 26 CBMs.

These submissions represent a variety of technologies, with the majority-about 70 percent-in the electrical/computer field, followed by mechanical, chemical, bio/pharma, and design. As of May 28, 95 AIA trials have been instituted (84 IPR, 11 CBM), with 10 denials (7 IPR, 3 CBM) and one IPR joinder. There have also been seven IPR settlements. The majority of challenged patents-about 80 percent-are currently or previously subject to district court litigation.

I should add that the size of our Patent Trial and Appeal Board doubled from 2010 to 2013, and it is still growing; as of May 28, it had a total of 167 judges. These judges are helping with disposal of appeals and have begun the process of shrinking the backlog, which remains slightly over 26,000.

Ethics Rules

Along with new trial proceedings and new judges, we have new ethics rules known as the USPTO Rules of Professional Conduct.

Designed to make life easier for the more than 41,000 practitioners who interact with our agency, they are based upon the ABA's Model Rules of Professional Conduct. The ethics rules are the first major update since 1985 and reflect the rules in place in 49 states and D.C. In promulgating these rules, we spent a great deal of time reaching out to stakeholders in the IP community to balance the need of applicants.

Our team of attorneys and staff in the Office of Enrollment and Discipline (OED) has also been busy keeping up with the changes in patent law. Specifically, the registration exam for patent attorneys and agents has been updated four times in the past two years to reflect Supreme Court decisions, other relevant case law, and the Leahy Smith America Invents Act (AIA).

The latest update was released on April 2 of this year. It includes the final provisions of the AIA, such as First Inventor to File. Our entire OED team is committed to ensuring that current and future practitioners are equipped with the tools essential to keeping America's innovation engine running.

Track One

Another exciting program is our Track One program-an expedited review process that, for a fee, allows an applicant to receive a prioritized examination completed in, on average, 12 months. As of May 29, the average time from petition grant to first action was 60 days, with an average of 176 days from petition grant to final disposition. This is truly a good story, and we expect the number of applications undergoing prioritized examination to increase as more applicants take advantage of our new 75 percent micro-entity discount that went into effect March 19.

Backlogs and Pendency

Thanks to the AIA and the hard work of our examiners, our backlog of unexamined patent applications is still steadily declining and currently stands at around 596,000-a 20 percent reduction since 2009 despite an increase in filings each year of about 5 percent. As of the end of April, first action pendency was on average 18.7 months and total pendency was on average 30.6 months. This compares to the fiscal year 2013 goals of 17.3 and 29.6 months, respectively. Additionally, forward looking first action pendency for an action filed at the end of April 2013 is 16.6 months, which represents an estimate of the average number of months it would take to complete a first office action under the current and projected workload levels and resource levels for an application filed today.

RCE Backlog

Note that just as we have been working to reduce our application backlog, our RCE backlog has grown significantly-currently about 108,000, up from 14,620 at the end of fiscal year 2009. Some steps we have taken to address the backlog: Quick Path IDS (QPIDS) and After Final Consideration Program (AFCP).

We just launched After Final Consideration Program (AFCP) 2.0 on May 19. Like the original AFCP, AFCP 2.0 authorizes additional time for examiners to search and/or consider responses after final rejection. Under AFCP 2.0, examiners will also use the additional time to schedule and conduct an interview to discuss the results of their search and/or consideration with you, if your response does not place the application in condition for allowance. This way, you will benefit from the additional search and consideration afforded by the pilot, even when the results do not lead to allowance. In addition, we made adjustments to the RCE credit given to an examiner until September 30, 2013.

Further, in partnership with our Patent Public Advisory Committee, we recently held public roundtables on RCEs in Santa Clara, California; Dallas; New York City; Alexandria, Virginia; and Chicago. We are seeking to better understand the root causes for filing RCEs and plan to use the information gathered during the public events and a request for comments to design additional programs and initiatives aimed at reducing filings and the RCE backlog.

PPH / CPC / Global Dossier

Finally, I would like to offer a quick update on some of our international developments that will affect IP practice worldwide. The Patent Prosecution Highway is one of the most successful international efforts we have seen in recent years. This initiative allows applicants around the world to obtain higher-quality patents faster and more cost-effectively.

When two offices are part of the PPH, an applicant receiving an indication from an office of earlier examination that at least one claim is allowable may request that an office of later examination fast track the examination of corresponding claims in applications filed there. We recently signed PPH agreements with the patent offices of the Philippines and Portugal, bringing our total number of PPH partnerships to 26, a real win for patent applicants and businesses in all of the countries served by those offices.

Let me mention another initiative as well. This year the USPTO and the European Patent Office launched the Cooperative Patent Classification (CPC) system, a project that incorporates the best classification practices from both offices. The CPC enables patent examiners and patent system users worldwide to conduct more efficient prior art searches and, compared to the current U.S. Patent Classification System, targeted searches with more focused results. It is expected to lead to enhanced efficiency by reducing unnecessary duplication of work. Revisions to the CPC will be made by both offices on a regular basis, allowing for a rapid response to filing trends and emerging technologies.

And just this week we announced the launch of a new pilot in which the Korean IP Office, or KIPO, will be the first foreign patent office to classify some of its patent documents using the CPC. For the pilot, KIPO will apply the CPC classification to patent documents in particular technologies for which filings have been especially active at KIPO. We will work with KIPO to identify these technologies.

Finally, the Global Dossier initiative is one of the most promising near-term initiatives of the IP5, a forum comprised of the five largest IP offices in the world-the USPTO, EPO, Japan, Korea, and China-which met just this week in Cupertino, California. This was the sixth meeting of the IP5 and the first hosted by the USPTO since the forum began in 2007. During my discussions this week with the other office heads, we renewed our commitment to develop the Global Dossier, which is meant to be a one-stop shop at which patent applicants can manage a global portfolio of applications. From filing through prosecution, the Global Dossier offers a single portal at which examiners can view the work results of other offices for work-sharing purposes-contributing to patent quality worldwide.

My IP5 counterparts and I also endorsed the development of a work plan for the IP5 Patent Harmonization Experts Panel and agreed to adopt the Global Classification Initiative, a new system of harmonized patent classification. And we agreed to adopt an IP5 Patent Information (PI) policy, pursuant to which each of the offices will work towards providing the public with free and open access to patent data. Through our efforts in classification, work-sharing, and legal harmonization, the IP5 is truly leading the world in addressing the full gamut of IP challenges and I am certain we will succeed in meeting them all in the end.

Patents for Humanity

Being part of global economy entails participating in a global community and allows us to bring the power of innovation to bear on some of the world's greatest problems. This was very much the spirit behind the 12-month Patents for Humanity program we launched in February 2012 as a pilot, to reward companies that bring life-saving technologies to under-served regions of the world. Patents for Humanity is a voluntary awards competition for patent owners and licensees who apply their patented technology to address humanitarian needs in four categories: medical technology, food and nutrition, clean technology, and information technology.

We held the awards ceremony April 11 on Capitol Hill, with Senate Judiciary Committee Chairman Leahy, Deputy Secretary of Commerce Blank, and Special Assistant to the President Gayle Smith representing the White House. The winners received certificates for accelerated processing of select matters at the USPTO.

The program creates a powerful tool for businesses to expedite handling of their most important matters and help validate technology in the market-leading to quicker and more efficient investment decisions. The program seeks to recognize businesses of all shapes and sizes. Businesses are finding unique and creative ways to reach people in the developing world with sustainable solutions. Highlighting success stories of humanitarian engagement that are compatible with business interests and strong patent rights demonstrates how businesses can effectively contribute to solutions while maintaining commercial markets.

Consider Nokero, short for "no kerosene," a company started in June 2010 by inventor Steve Katsaros. Nokero develops solar energy products that generate light and heat. Working with local partners, Nokero manufactures and distributes affordable and efficient solar lighting sources to more than 100 countries, including many in Africa, where little or no electricity is available. Nokero's innovative distribution system empowers local entrepreneurs to sell their products, creating a sustainable business model that improves local communities and economies.

Sproxil, another startup and Patents for Humanity award recipient, confronts the problem of counterfeit drugs. More than 700,000 people die annually from fake tuberculosis and malaria medicines alone. This problem primarily afflicts developing countries, which lack the infrastructure for rigorous brand and quality control of medications. Victims of counterfeit drugs return to hospitals again and again, incurring repeated costs for illnesses that should be cured on the first visit.

Sproxil's Mobile Product Authentication (MPA) solution allows consumers to verify a drug's authenticity by sending the label's one-time-use code in a free mobile phone text message. Sproxil's servers indicate whether the drug is genuine; if fake, a hotline number is provided to report it. The system is currently available in Nigeria, India, Ghana, and across East Africa. Sproxil works closely with governmental regulatory agencies to raise public awareness about the dangers of counterfeit drugs while providing innovative solutions to consumers.

These stories and many others confirm something we already know: that independent inventors and small businesses are a vital part of moving innovation forward. Patents for Humanity emphasizes our responsibility to find ways to use IP to solve the most pertinent issues and global challenges facing mankind. By recognizing and rewarding the ideas and actions of innovators large and small, we draw attention to the issues we face as a species while continuing to advance toward a better world for all.


At the end of the day, partnerships, quality service, and frequent stakeholder engagement and input are what make the USPTO a successful agency. We plan to build on that success in the months and years ahead to ensure that we are doing everything humanly possible to help our nation's inventors, innovators, and entrepreneurs thrive and prosper in the 21st century global economy.

Thank you so much for your time and attention today. I look forward to answering your questions during the panel discussion.

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