Managing IP U.S. Patent Forum 2013

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

March 19, 2013

Managing IP U.S. Patent Forum 2013

Remarks as Prepared for Delivery

Thank you for that kind introduction, James. What a pleasure it is to be back for your second annual U.S. Patent Forum! Just like last year, you and your team have assembled a very impressive agenda. I hope everyone has found their way to the coffee station so you are fueled up and ready for a rewarding day! I must say, while it is an honor to serve as acting director, it is also a challenge to keep pace with everything Dave Kappos put in motion at the USPTO.

We continue full steam ahead on all of our initiatives, thanks to our hard-working employees and to the inspiring leadership of our senior management team. We have been fairly busy just this past week. I am curious whether you scheduled this date on purpose, James, because I have to note that we are at a particularly historic moment for the U.S. Patent and Trademark Office. Just this past Saturday we completed our implementation of the America Invents Act, when our first-inventor-to-file rules went into effect.

We view this transition to a first-inventor-to-file system as an essential feature of our patent reform. The transition allows us to simplify the process of acquiring rights while maintaining a critical grace period that protects innovators. The new system will reduce legal costs and improve fairness, objectivity, and transparency, while supporting U.S. innovators large and small as they acquire venture capital, begin manufacturing their innovations, and seek out new markets at home and abroad.

With this transition, our patent law is harmonized with the rest of the world's industrial leaders. We continue, of course, to push for a harmonized grace period around the world to match what we have in place here. And as of today, for the first time in U.S. history, the Patent and Trademark Office can set its own fees, rather than implementing ones crafted by Congress. This will allow us to hire and retain a quality workforce that can continue reducing the current patent application backlog, decrease patent pendency, and improve patent quality.

Flexibility in fee-setting also benefits individual inventors and small entrepreneurial enterprises. For example, we can now offer a 50 percent reduction for small entities and a 75 percent reduction for micro-entities in our Track One program. I just mentioned our unexamined patent application backlog; the number is in flux, but we anticipate being able to officially announce a below-600,000 total very soon. Keep in mind that at the beginning of 2009 the backlog exceeded 750,000. We have managed a 20 percent reduction despite a steady increase in filings each year of about 5 percent.

As you know, we have been aggressive in recruiting and hiring top-notch patent examiners and now have more than 7,800 on board. We are slowing down our hiring now, as we approach that "sweet spot" where pending applications coincide with the amount of time and attention our examiners must give to each application. And let me give credit to our Patent Trial and Appeal Board Chief Judge James Smith for the work he has done to increase the number of PTAB judges. In the last 18 months or so, he reviewed nearly 1,300 employment applications. He whittled that list down through a lot of hard work, which resulted in more than 70 stellar new judges joining us. Still more are on the way.

It is critical for us to have these new judges, because not only do they help us reduce proceedings pre-dating the implementation of our America Invents Act proceedings last September, but those new proceedings require three-judge panels. Chief Judge Smith set a really, really high-quality bar in his hiring process. To be honest, I told him I was not sure he could find enough candidates to meet his standards. But he did, and I applaud him for it. These new judges are the cream of the crop.

They are also hard at work responding to the many new requests for inter partes review and covered business method patent review. As of Friday, we had received 164 inter partes submissions and 15 covered business method patent submissions. Some requests have been rejected, but most that have been reviewed have moved forward into the trial process. A few have been settled by the parties involved. So far we consider the process a great success.

Some of the judges participating in these proceedings are already at work in our four new satellite office locations. We have twelve judges on board at our permanent facility in Detroit, the Elijah J. McCoy USPTO Satellite Office. And we have more in our other three locations. Three judges began work two weeks ago at our temporary office space in Lakewood, Colorado, joining two already there; four judges started work yesterday at our temporary location in Dallas; and another six judges will start work next month in Menlo Park, California, when we open our temporary office there. We have selected permanent space in Dallas and Denver, with occupancy expected next year. We are still scouting the best permanent location in Silicon Valley and have narrowed the search to San Jose, Santa Clara, Sunnyvale, and Mountain View.

And speaking of Silicon Valley, we know that a lot of patent discussion is occurring there on one topic in particular, software patents. You may know that we recently created a new partnership with the software community, appropriately named the Software Partnership. We held our first public event at Stanford University and a second one at NYU. You can view the recordings of those listening sessions on our website.

We of course have a long history of such subject-matter partnerships at the USPTO, including in an area of particular interest to me, biotech. In January we hosted two other partnership meetings at our Alexandria headquarters, one on medical devices and the other on additive manufacturing, also called 3-D printing. At our Software Partnership events, a terrific cross section of impressive stakeholders offered us their feedback and ideas on some key topics. These include establishing clear boundaries for claims that use functional language, preparation of patent applications by employing certain claiming techniques, and future discussion topics for the Software Partnership. We welcomed that feedback and others we have been receiving directly from you in written form as we explore ways to enhance the quality of software patents. Our original deadline for submission of comments was last Friday, but we have extended it a month, to April 15. So now you have two things to cram for that day, getting your software-patent comments to us and getting your 2012 tax return to the IRS!

It is important to note that this inquiry is but a part of the USPTO's ongoing focus on improving patent quality across technologies. Over the last four years we have strengthened examination guidelines, revised our examination count system, and worked more closely with stakeholders to better educate our examiners in the latest technology advancements. And of course the America Invents Act has given us even more tools to continue our focus on patent quality. For example, in September we implemented the AIA provision that allows any third party to submit prior art. In our effort to encourage submissions, we consulted on a private-sector initiative called "Ask Patents," hosted by Stack Exchange, which crowd-sources prior art searches. The submissions resulting from these efforts will help ensure that our examiners have the very best prior art before them as they conduct their examinations.

I am particularly interested in another topic that we have received comments on, an examination of requirements for disclosing real parties in interest (RPI). Updating our RPI requirements can provide several benefits. It can improve the marketplace for innovation by reducing gamesmanship in litigation strategies. It can also improve the operations of the USPTO. For example, it would better enable our Patent Trial and Appeal Board to identify potential conflicts of interest and alert the board to potential statutory bars to the proceeding.

Along those lines, we have proposed that the petitioner must certify at the time of filing a petition that he or she is not estopped from requesting an inter partes or post grant review of the patent. In turn, we further proposed that the patent owner may file a preliminary patent owner response within two months from the docketing date of the petition, setting forth reasons why no inter partes review or post grant review should be instituted. We received a lot of substantive comments on the topic of real-party-in-interest action and are reviewing them now. So stay tuned!

You know, it can be easy sometimes, as we work on these narrow but important topics, to overlook the bigger picture of what our mission is at the USPTO. That mission, to state it simply, is to promote U.S. innovation. In June we will be doing just that with the first-ever Innovation Expo. Modeled on our successful Trademark Expo, the Innovation Expo will engage audiences, exhibitors, and participants in a conversation about innovation-what drives it and how it shapes and changes America and our world. It will showcase the latest patented, cutting edge technologies that have made significant impacts on our quality of life; offer interactive experiences for audiences of all ages; and demonstrate the role of intellectual property in protecting and promoting innovation.

We are proud to be collaborating with the Smithsonian Institution on the Innovation Expo. Part of our work with the Smithsonian is the development of an "Innovation Pavilion," a permanent showcase of educational programs and exhibits about American innovation. The pavilion will also serve as a forum for public discussions, symposia, workshops, and recognition ceremonies related to American innovation, highlighting the vital role patents play in supporting that innovation. The pavilion will be housed at the Smithsonian's Arts and Industries (A&I) Building in Washington, D.C., after the historic building's re-opening in 2014.

Finally, let me draw your attention to our groundbreaking Patents for Humanity initiative, a pilot program designed to encourage the use of patented technology to address humanitarian challenges. It recently won the National IP and Technology Transfer Policy Award from the non-profit Licensing Executives Society International (LESI). We launched Patents for Humanity in February 2012 as part of a series of Obama administration initiatives to promote game-changing innovations to solve long-standing development changes.

Entrants competed in four categories: medical technology, food and nutrition, clean technology, and information technology. You can find all of their innovations profiled on USPTO.GOV. We know there has been a lot of interest in which entries will win. I am happy to tell you that we will be announcing those very, very soon. So again, stay tuned!

Thank you again for your time and attention. I know I have covered a lot of ground this morning, but it really only grazes the surface of everything the hard-working and talented people at the USPTO are doing every day to promote intellectual property and innovation, as we work to grow our economy, create jobs, and drive exports. And thank you for the important work that you do on behalf of innovators, as a critical participant in the IP ecosystem. We are here to serve you, to help you do your jobs better so you can serve your clients better.

Enjoy the rest of the conference!