Remarks by Director Michelle K. Lee at the Consumer Electronics Show

Consumer Electronics Show

Director of the U.S. Patent and Trademark Office Michelle K. Lee

Remarks as Prepared for Delivery (abt 12.5 mins.)

January 8, 2016 @ 10:15 a.m.

Las Vegas Convention Center, Las Vegas, NV

Good morning, everyone!  Thank you, Michael for that kind introduction. I’m told this is the first time that an Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office has spoken at a Consumer Electronics Show. Sorry it’s taken us so long, but I am very honored and excited to be here to engage with CTA and all of this show’s attendees. The USPTO is so directly connected with all that you do. Indeed, we are America’s Innovation Agency. Every day we strive to ensure our government is embracing an agenda and adopting policies and programs that embolden innovation through intellectual property. In many ways, this conference reflects, perhaps now more than ever, how intellectual property, in all its forms, plays a central role in innovation.

Indeed, CES has a long and storied history, previewing scores of innovations for nearly 50 years. It also exemplifies how technology and innovation transform our everyday lives. And, behind those transformations lies a grand bargain struck by our founding fathers: providing incentives to innovate through exclusive protection for inventions through intellectual property rights, in exchange for dedicating the knowledge behind those inventions to the benefit of society.

Consider, for a moment, the trajectory and growth of this show, and how it corresponds with the growth of innovation across the United States. Back in 1967, at the very first Consumer Electronics Show, there were about 17,500 attendees wandering the aisles. Today, nearly 50 years later, I’m told there are nearly 10 times that number. As the scale of attendees has increased, so too has the number and complexity of the innovations.

At the time of that first conference, a future Noble Prize winner and future inductee into the National Inventors Hall of Fame, Jack Kilby and a team from Texas Instruments, introduced the world to the handheld calculator. This year, we see breakout sessions on drones, driverless cars, virtual reality and 3D printing. Back in 1967, intellectual property policy was hardly front-page news. Presidents didn’t bring it up in their State of the Union addresses. And, intellectual property law was generally considered a “niche” specialty, reserved to the province of a small group of specialist lawyers.

Today, intellectual property is front and center. We see headline news on multi-billion dollar patent acquisitions, and lawsuits. Intellectual property issues are increasingly discussed in boardrooms. The case law has recently been evolving with numerous rulings from the Supreme Court. And of course, Congress passed a transformative piece of legislation in 2011 in the form of the America Invents Act. With the spike in innovation, we have seen a corresponding change in the very fabric of our nation’s economy.

Fifty years ago, a company’s most valuable assets were typically their tangible assets: the factory, equipment and inventory that generated their profits.  Today, the most valuable assets of many of our most valuable companies are their intangible assets – its designs, brand, algorithms and processes – protected by intellectual property rights.  According to one study, the entire U.S. economy today relies on some form of IP, IP-intensive industries support at least 40 million jobs, or more than a quarter of all U.S. jobs, they also contribute more than 5 trillion dollars, or more than a third, of our gross domestic product.

A paper just issued by one of the USPTO’s Edison Scholars, a program supported by the White House, further underscores the importance of patents to startups and small businesses.  It presents causal evidence that patents help startups grow, create jobs, facilitate access to capital and generate follow-on innovations. For the small businesses and individual inventors that fill, not just the booths and the corridors of this global conference, but the streets and office buildings of Las Vegas, Silicon Valley, Silicon Alley and other regions of innovation, I imagine this data simply confirms the reality that many of you live and breathe each day.

So, the times have certainly changed.  Intellectual property is, and will continue to be a driving force of our economy, and one of the more important public policy issues influencing the future economic health of our nation. And the IP system as a whole is experiencing significant change, reflecting changes from the courts and administrative agencies including the USPTO, as well as the tremendous advances in science and technology that our IP system needs to keep up with.

Consequently, it’s no surprise CTA chose to host this panel today. We, at the USPTO, are actively working to ensure that we do everything we can to strengthen our intellectual property system. Whether it is opening four regional offices to ensure that for the first time in history we can bring resources closer to the communities that need them, or whether it’s reducing the patent backlog, we remain committed to improving our IP system so that it continues to incentivize the world’s greatest innovations. Part of this effort, in particular, means working with Congress on patent litigation reform.

When our Founding Fathers provided for intellectual property protection in the Constitution itself, they foresaw the need for balance. Exclusive protection of an invention for a limited period of time to encourage the spread of scientific knowledge to “promote the progress of science and the useful arts.” It’s that balance that we’re working with Congress and stakeholders to achieve in patent litigation reform.

This administration supports legislation designed to (1) curtail abusive patent litigation tactics, while also and importantly, (2) preserving the ability of holders of legitimate patent rights to enforce when needed. Statutory reform, when targeted, balanced, and meaningful, can help curtail patent litigation abuse while also preserving legitimate enforcement. We understand that certain actions only Congress can take to change our intellectual property system. We’re also aware there are a number of pressing issues for Congress to deal with, but we remain hopeful as we enter the second session of this Congress, as these issues continue to be important ones for American innovators.

But, while Congress considers legislative reform, and while the Courts continue to develop the case law on patent issues through rulings, the USPTO is not standing still. We’re doing all that we can to further strengthen our patent system by:  Improving the quality of the patents we issue and providing a faster and lower cost alternative to district court litigation to test the validity of a patent.

First, patent quality. Now I suspect that, had the head of the USPTO spoken here at CES in 1967, he might not have emphasized the clarity of patent claims- at least not in the manner we are today. But, in a time where businesses are formed with the sole goal of buying patents (sometimes with a preference for broader and vaguer claims) for the singular purpose of asserting them against whole industries, it is incumbent on the USPTO to issue the very best quality patents possible.

I’m an electrical engineer and computer scientist by training. And every computer scientist can appreciate the need for precision and clarity when creating a new program. I bring the same mindset to the USPTO. That means I appreciate and believe it’s critical that the USPTO issue patents that are both correct and clear. The USPTO has a top notch, highly trained and skilled workforce that functions every day to ensure that our agency issues high quality patents. Since the USPTO’s inception, it has always worked hard to issue patents accurately. Now, we want to pay extra attention to make sure we are creating a record that is clear.

Issuing patents that have both correct claims and clear records will help to ensure that we are issuing strong patents that will both withstand future challenges, and provide notice to all on what the patent covers. Through a series of new initiatives and a number of quality training efforts at USPTO, we are working on embracing and scaling best practices for developing a clearer record. This is just one example of a dozen or so initiatives we have underway to enhance the quality of the patents we issue.  In layman’s terms, this latter initiative aims, for example, to ensure that the patent prosecution record will more clearly articulate what the patent covers and what it does not.

If I’m a budding entrepreneur with a booth in Eureka Park and I want to innovate in a space where my competitor holds a patent, I need to know: What is the scope of that patented technology? Should I seek to license? Can I design around it and how?, or Should I proactively challenge the validity of the patent or some of its claims?

If every exhibitor here at CES has a clearer understanding of the scope of her claims and those of her competitors, precious research and development dollars can be spent more efficiently by focusing on new innovations, not needless litigation. Conversely, patent claims whose boundaries lack clarity enable abusive patent litigation, while introducing uncertainty and inefficiency into the innovation ecosystem. Quality is key to any well-functioning patent system, and the USPTO is committed to issuing the highest quality patents possible, now and in the long run.

Second, as required by the America Invents Act, the USPTO has successfully established the Patent Trial and Appeal Board, or “PTAB.”  With PTAB’s inception, we made real the vision of the Congress and the administration, in providing a faster and lower-cost alternative to district court litigation to confirm the quality of issued patents. When you look at the time to claim construction in Federal Courts or the sheer cost of Federal Litigation, we do the job in a fraction of the time and at less than half the cost.  Not surprisingly, based on the number of filings, the PTAB has proved popular. To date, almost 4,000 AIA petitions have been filed; that’s more than three times expected. Despite this higher than expected number, we have made all of the strict statutory deadlines, which ensures that—as Congress intended—these proceedings remain speedy. Simply put, we are proud of the work of the PTAB as it continues to, deliver on the expectations set forth in the America Invents Act. 

Of course, just as with our patent examination process, we’re never satisfied, and always seeking ways to improve. Last August, we published a proposed set of rule changes for our PTAB proceedings and sought public comment. The deadline for comments ended not too long ago, and we aim to announce the results of our review of these comments as soon as possible. At the USPTO, we are committed to working with our stakeholders through rule-making to ensure that the PTAB proceedings are as effective and fair as possible. And we will improve and refine these proceedings as many times as needed where there is consensus and provided it is within our Congressional mandate. Our work is never done, and each day we work to make the processes and procedures even better.

So again, I’m grateful that CTA invited me here to speak today. There’s nothing like being surrounded by the future of innovation. Knowing that IP—not just patents, but copyrights, trademarks, and trade secrets—can be found in so many of those innovations on display is fantastic. And of course, I find myself wondering who has that next breakthrough, like Jack Kilby 50 years ago and what further innovations our future holds.

Every day, I am reminded that I serve as a steward of the grand bargain our founding fathers set forth in our Constitution-- protecting invention while promoting innovation through Intellectual Property. This is my mission and my charge, and that of every one of my almost 13,000 employees.

Now I’d like you to enjoy the upcoming panel, titled:  What’s Next for Patents Promoting Innovation and Preventing Abuse, that CTA has assembled here, including outstanding panelists: Congressman Darrell Issa, himself a patent holder, former Chairman of CTA, and current House Judiciary IP Subcommittee Chairman, and distinguished members from the IP bar and industry, Laurie Self, Lee Cheng, Kate Doerksen and Bryan Menell.

I look forward to hearing what these panelists have to say and thank you for your time and attention.

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