The Intellectual Property Owners Association's (IPO) 2020 Virtual Annual Meeting
Director of the U.S. Patent and Trademark Office Andrei Iancu
September 15, 2020
Hello, and thank you, IPO, for bringing us together. I wish we could be meeting in person as in years past, but I am thankful for the thousands of patents awarded over the decades that make it possible for us to meet virtually.
I hope you are staying safe and healthy. Even in these difficult times, the United States Patent and Trademark Office (USPTO) is running smoothly. Before the pandemic, 56% of USPTO employees worked from home full time, and another 31% worked from home at least one day a week. Our popular telework program made us uniquely well-positioned to pivot to full-time telework for all employees with little difficulty.
We are all learning a lot from the pandemic—and like all pandemics in the past, it is changing the structure of our society. It is also ushering in a new era of invention and innovation, in spite of the hardship and suffering.
The USPTO is currently in “Phase 1,” so our buildings are still closed to the public. Most of our employees continue to work from home and are encouraged to do so to the maximum extent possible. We are moving cautiously and following the guidelines and mandates of our federal, state, and local governments. We will move forward to the next phase only when we are confident of the safety of our employees and customers.
In the meantime, our employees are as committed as ever to our mission of fostering innovation and economic competitiveness. They continue to work with the utmost diligence and professionalism. I couldn’t be more proud of them, especially those with school-age children. But working remotely is certainly not a panacea, and we look forward to the day when we are back together in the office.
The USPTO’s response to the COVID-19 crisis has included a variety of initiatives designed to help our customers. To support filers impacted by the crisis, we have waived petition fees in certain situations, extended the time to file certain fees and meet certain deadlines, and we have allowed all documents and applications—including plant patent applications—to be filed electronically.
We also instituted a COVID-19 Prioritized Examination Pilot Program. It waives the fees for prioritized examination for small or micro entities whose applications cover a product or process that is subject to FDA approval, for use in the prevention and/or treatment of COVID-19. We aim to reach final disposition of these prioritized applications in this program within six months.
We also created a new USPTO IP marketplace platform called “Patents 4 Partnerships,” to facilitate contacts between patent owners who want to license their inventions and potential licensees. It is our hope that Patents 4 Partnerships will accelerate the commercialization of products and technologies to address the current health crisis. The data in the platform includes U.S. patents and published U.S. patent applications related to COVID-19 that have been identified as “available for licensing” by their owners.
For our latest COVID-related initiatives, I encourage everyone to keep an eye on our COVID-19 Response Resource Center. It is now on our website to assist the public with accessing all of our COVID-19 initiatives and programs.
Despite our efforts to spur innovation during the pandemic, there has been a decrease in some filings as a result of the lockdowns. Based on our experience in previous economic downturns, we expected this would happen.
Patent applications are a lagging indicator of economic activity because of the innovation lag that occurs between the completion of research to the conception of a new idea or product, to the creation of an invention, and to the application for a patent.
Through the end of August, serialized patent filings are 0.1% above fiscal year 2019 filings for the same time period. This might sound promising, but it is below plan. Before the pandemic we expected that serialized filings would increase by 2.5% this year. We saw strong improvement over the previous year through February. However, since March, filings have been in decline. Further, RCE filings are currently 10.4% below fiscal year 2019 through the end of August. These declines accelerated during the second half of this fiscal year and are expected to continue into next year.
There have also been recent decreases in patent renewals. For the months of May through August, maintenance fee collections were 4.1% lower—or $19.5 million less than projected. Looking back during previous periods of economic uncertainty, renewal rates typically drop for a short period but then bounce back. We expect that will hold true now, but we’ve never had a period of time quite like this.
Nonetheless, there is good news to report on the innovation front: Small and micro entity patent filings are at a historic high, with more than 112,000 filed during the first 11 months of fiscal year 2020.
While patent filings are a lagging indicator, Trademark applications are more closely correlated with current economic activity, and they tend to follow the S&P 500 index. This year, Trademark filings at the USPTO have exhibited a healthy V-shape recovery, where the front edge of the “V” represents a precipitous decline caused by the pandemic, and the trailing edge of the “V” represents a rapid bounce back to normalcy. It is moving in parallel with the general economic recovery we are experiencing as a nation.
Through the end of August 2020, trademark filings are 3.2% above filings for the same period last year and are slightly higher than we expected. In fact, August 2020 is our biggest filing month yet, with 76,400 classes. We should see more than 700,000 classes for the year.
This is all good news. However, trademark renewals have been lower than expected, and we now project a decrease in collection of $12.3 million. As the mix of filers shifts more towards pro se, one-time filers, and foreign filers, we expect lower trademarks renewal rates in the future.
Despite the pandemic-related challenges, the USPTO has remained focused and operations have been smooth. Through all the metrics we have put in place over the years, we know that our examiners are as productive as ever.
Plus, we have continued our work to improve the IP ecosystem. Among other things, we are clarifying patent subject matter eligibility and balancing post-grant proceedings at the PTAB. In fact, given the economic downturn and the global competitive challenges we face as a nation, we are doing more than ever before to boost innovation in America.
Turning to Section 101 of the Patent code (patentable subject matter), as most of you know, we issued new guidance last year that synthesizes the relevant case law and provides a clear analytical framework. By increasing the clarity of examination and decreasing uncertainty, the results have been remarkable. For example, a recent statistical report from our Chief Economist found that uncertainty decreased by 44% in the first year since our guidance. The report’s findings make it crystal clear that in proceedings at the USPTO our 101 guidance works very well, and it successfully addresses the confusion that existed for years in this important area of patent law.
Turning now to the PTAB, we have made many changes over the past three years to bring post-grant proceedings within balance. Among other things, we have worked to close loopholes that allowed repeated post-grant challenges to patents. IPRs and PGRs were meant to be a cheaper, faster alternative to District Court litigation. They were not meant to create more expensive, prolonged, and duplicative litigation. By reducing multiple bites at the apple, these changes have worked remarkably well and have brought much-needed balance to our post-grant proceedings. They have helped return the U.S. patent system to the top levels of worldwide rankings.
We have made many other substantive changes too, such as a consistent claim construction standard, a more robust amendment process, and much more. Let me highlight a couple of non-substantive new programs that have quickly become popular. PTAB’s Fast-Track Appeals Pilot Program allows appellants to have their ex parte appeals advanced out of turn and expedited. We have so far received 48 petitions and granted 45 of them.
PTAB also recently launched the Legal Experience and Advancement Program—known as LEAP—to facilitate the much-needed training of newer practitioners and help groom the next generation of highly skilled IP lawyers. Under this program, junior practitioners can receive up to an additional 15 minutes to argue a case. Plus, LEAP offers training not found elsewhere. Newer lawyers, for example, have the opportunity to refer back to senior lawyers on standby during an oral hearing, providing more confidence for both the junior lawyers and their clients. Newer lawyers can also receive training directly from PTAB judges about effective oral argument techniques and skills. The USPTO is heavily invested in the success of America’s IP law community, and we embrace the opportunity to help.
In a similar vein, this summer the USPTO released an update to our 2019 report on U.S. women inventors. The new report updates the previous findings based on a review of an additional nearly one million issued patents and three years of new data, and it provides further insights into the participation of women in America’s IP systems.
The report’s numerous findings show that more women are entering and staying active in the patent system than ever before. The number of patents with at least one woman inventor increased from 20.7% in 2016 to 21.9% by the end of 2019. The “Women Inventor Rate”—the share of U.S. inventors receiving patents who are women—increased from 12.1% in 2016 to 12.8% in 2019. These numbers show that efforts to increase the participation of women in the innovation and IP ecosystem continue to yield results. But much more is needed still.
In order to retain our nation’s edge as a global innovation leader, we need even broader participation in patenting. That’s why the USPTO has made outreach to underrepresented groups a top priority. Last week, we held the inaugural meeting for the National Council for Expanding American Innovation. Chaired by Secretary of Commerce Wilbur Ross, the council is comprised of top leaders from academia, industry, and government. The mission of the council is to help us develop a national strategy that will provide a long-term comprehensive plan for our country’s continued success as a worldwide innovation leader. This is no idle exercise. Recent studies show that by harnessing the creative talent of all Americans, we could quadruple the number of inventors and increase the overall level of U.S. GDP per capita by up to 4.4%.
In addition to working with industry and academia to expand participation in the innovation ecosystem, we will also continue highlighting the accomplishments of past and present women inventors, and inventors from other underrepresented groups, to inspire and grow more of those future innovators. We must all work together to grow a powerfully diverse innovation ecosystem and fuel our economy for decades.
All of these initiatives will help us build the strongest IP system possible. We owe the inventors and entrepreneurs of this world no less. IPO plays a critically important role in all of these efforts, and I want to thank you all for your leadership, engagement, and guidance.
Thank you for your dedication and commitment to IP, and thank you to IPO for inviting me to be part once again of your annual meeting.