Remarks by Director Michelle K. Lee at America Invents Act Fifth Anniversary Event

Director of the USPTO Michelle K. Lee

September 21, 2016, 3:05 p.m.

Rayburn Building

AIA 5th Anniversary Event

Remarks as Prepared for Delivery

Thank you, Louis, and good afternoon, everyone. Congressman Smith, welcome. We’re delighted to have you here. In fact we wouldn’t be here, if not for you and Senator Leahy—for your visionary co-authorship of the Act that bears your names, and for your legislative leadership in getting it passed. It was a truly historic achievement, and I want to thank you again for everything you did to make it possible. I also want to acknowledge and thank the American Intellectual Property Law Association for co-sponsoring this AIA 5th Anniversary with us. And I welcome Bob Stoll, former USPTO Commissioner for Patents, and Mike Kirk, former Executive Director of AIPLA, who are both speaking on behalf of AIPLA today. Finally, I want thank Dave Kappos, my predecessor at USPTO who helped with the passage of the AIA and welcome my fellow panelists Bob Armitage, Jessica Matthews, and Kevin Rhodes. Bob, as many of you know, played a key role in getting the AIA passed and was recently inducted into the IP Hall of Fame for his decades-long advocacy of legislation to modernize the U.S. patent system. So congratulations, Bob!  There are others here today, like the USPTO’s Director of Governmental Affairs Dana Colarulli, who worked tirelessly behind the scenes to ensure the AIA’s passage. Thank you, all. It seems like a thing of the past to hear of a bill passing Congress with strong bi-partisan support and receiving the president’s swift signature, but the AIA did exactly that. That success belongs as much to you as anyone.

We’ll have a chance later in the program to talk in greater detail about some of the far-reaching changes brought about by the AIA, but let me briefly highlight a few—which are depicted in the visuals around the room today. I’ll start with the one near and dear to my heart, and that’s our regional offices. AIA called for creation of three such offices. Instead we created four—in Dallas, Denver, Detroit, and the Silicon Valley. In fact, it was the opportunity to lead the Silicon Valley office that brought me to the USPTO and public service. So, you could say, I wouldn’t even be here without the AIA. Nor would there be the full complement of talented examiners and judges on hand in each location now, tirelessly delivering on the AIA’s promise to provide key USPTO resources and outreach in the heart of our nation’s most innovative regions. Those offices are saving inventors and entrepreneurs a lot of money by allowing them to do business with our agency closer to where they live and work, rather than here in the nation’s capital. As a former patent attorney who lived and worked on the West Coast, I can tell you that makes a real difference for a lot of people. I always say, there is nothing but upside to these regional offices – for our stakeholders and for the Agency.

The AIA also created a new Patent Trial and Appeal Board and new post-grant proceedings to provide a faster, lower cost alternative to district court litigation to test the validity of a patent. Since its inception, the Board received ~5,500 petitions for its new post-grant proceedings–that’s more than 3x number expected. And the Board did this without missing single statutory deadline, while also maintaining a respectable affirmance rate before the U.S. Court of Appeals for the Federal Circuit. The PTAB proceedings are helping to ensure that the patents in our system are the ones that should be; and those that should not, are not. With a total of over 270 judges—123 of them added since the Board’s inception—the Agency is faithfully meeting Congress’s mandate  And, importantly, looks forward to continuing to do so through further well-reasoned rulings and enhancements to our proceedings to make them even more fair and effective within our statutory authority. That’s a success story, not just for patent stakeholders but also the quality of our patents more broadly in our system.

We have also addressed the issue of patent quality more directly, through an Enhanced Patent Quality Initiative, made possible by the fee-setting authority in the AIA. Building upon the previous good work at the Agency, this Initiative is one of the most extensive and ambitious quality initiatives in recent memory – looking at all ways to enhance patent quality from big to small, from IT improvements to changes in examination processes and procedures, from the way we measure patent quality to how we identify the best prior art. Through this Initiative, we have launched almost a dozen, programs designed to improve the quality of the patents we issue – before, during and after examination, all designed to make sure the Agency issues patents both accurately and clearly, all for the benefit of American innovators.  Other benefits of our greater financial stability enabled by the AIA’s fee-setting authority has been the USPTO’s ability to weather government shutdowns, improve our IT systems, and lower our backlog of patent applications and reduce pendencies.

Let me be precise here. Due in large part to the ability to hire more patent examiners for our nationwide workforce, we’ve been able to reduce our backlog of newly filed patent applications by 28% from its all-time high in January 2009 to the present, despite an average ~4% year over year increase in filings.  That is significant and we are well on our way to reducing our backlog further and hitting our optimal target by 2019. Fee setting authority is a critical component in allowing us to function well and, in my hearing before the HJC last week I asked Congress to reauthorize our fee setting authority. Which means the fruits of American innovation are getting to the global marketplace faster, accelerating the virtuous cycle of innovation and job creation that powers our economy.

And, all of this could not be more timely. As during the period the Agency has been diligently implementing the AIA mandated changes, the value that patents and IP more broadly contribute to our national economy has increased. So it’s important that we get this right! Highlighting the importance of IP to our economy, today, in conjunction with our partners within the Department of Commerce, we released a report on IP-intensive industries showing that IP directly and indirectly supported 45.5M jobs, nearly 1/3 of all U.S. employment. That’s an increase of more than six million jobs since 2010! At the same time, the share of our national GDP attributable to IP-intensive industries increased from 34.8 % to 38.2% over the same time. What this suggests, to me, is that our laws and our economy are moving in the right direction when it comes to IP. And I don’t expect that trend to change any time soon, because one of the more beneficial, but perhaps unintended, changes brought about by the AIA—from my perspective—is that it has created a more truly open and dynamic patent system.

As those of us who have worked in science know, closed systems have hard boundaries through which little information is exchanged. Open systems, in contrast, continuously exchange feedback with their environments. They analyze that feedback, adjust internal systems as needed to achieve the system’s goals, and then transmit necessary information back out to the environment. That kind of accessibility and agility is indispensable in today’s fast-paced environment, and it’s likewise indispensable to our patent system.

As President Obama said after signing the AIA into law, and I quote, “We should be helping American companies compete and sell their products all over the world. We should be making it easier and faster to turn new ideas into new jobs and new businesses. And we should knock down any barriers that stand in the way.” To do that most effectively, we need an open system with the full and active involvement of the innovators and entrepreneurs who use our nation’s patent system the most. And during the past five years, we’ve had that—through AIA “roadshows” around the country initiated by then-Director Kappos, the numerous, public patent quality summits I launched, to countless calls for public comment in the Federal Register and more. And through our four regional offices and the strong partnerships we have built within those local innovation ecosystems, the patent system continues to open even more.

I have said before on several occasions, that the American public is our primary stakeholder, because every American citizen has a stake in our patent system. And thanks to the Leahy-Smith America Invents Act, we are not only succeeding in today’s global innovation economy; we’re leading it. That doesn’t mean we’re perfect, nor that we should rest on our laurels. The rapid pace of American innovation and the demands it can place on our IP laws and institutions means that we will need to continue to lean forward and to anticipate the need for further changes as they arise. But thanks to the America Invents Act, and all of you here today who made it possible, we are well ahead of where we were 5 years ago, and much better positioned for the future. Thank you again, and I’m looking forward to a great panel discussion.