Remarks by Director Michelle K. Lee at the Patent Public Advisory Committee (PPAC) Quarterly Meeting

USPTO Director Michelle K. Lee

Patent Public Advisory Committee (PPAC) Quarterly Meeting

GIPA (Madison East – 2nd Floor)

Thursday, May 4, 2017, 9 a.m. – 3:05 p.m.

Thank you and good morning, everyone. On behalf of the United States Patent and Trademark Office, welcome to today’s quarterly meeting of the Patent Public Advisory Committee. This continuing, collaborative working relationship between the USPTO and PPAC is more important than ever. The committee’s insights and guidance, on a number of issues, has been extremely helpful, and will continue to be as we write a new chapter of the agency’s history under a new administration.

As you can see from today’s agenda, we have a full program scheduled to bring you up to date on the latest and most pressing issues that we are facing as an agency. But, right now, I want to take this opportunity to speak with you about what we can do to support you, our innovators.  I want you to hear and understand that this agency exists to serve you. From individual inventors and small businesses to universities, from startups to our largest and most sophisticated companies. We exist to serve all sectors: from bio-tech to high tech, from industries creating plant patents to those creating design patents. And, of course, we exist to serve the American people and the entire innovation economy.

It is my firm belief that we best serve all of our stakeholders in three important ways: 1). by ensuring that we issue the highest quality patents and trademarks. 2). by ensuring that we issue those patents as quickly and efficiently as possible, and 3). by ensuring that we do all of this for the lowest possible cost to our filers.

Let’s break this down.

First, quality. As you’ve heard me say many times over the past few years, patent quality is a top priority. At every stage of the patent process we are committed, 100 percent, to providing the best work product and services possible. We understand that higher quality patents provide patent owners with more valuable and more certain patent rights,  which help attract more investment dollars, enabling the creation of more products and more services that increase the quality of our lives while also creating more economic growth and jobs for our country.

So I want you to know that we are committed to issuing the best quality patents possible so that patent owners get the accurate and clear patents they deserve. Fulfilling this commitment is a continuous process — one that requires consistent investments in training, tools, resources, and leaders who will build and implement a quality process that will endure well into the future. While there is more to be done, I think we are well on our way.

Second, our goal to issue patents quickly and efficiently. I am proud to report that we have reduced our backlog by almost 30 percent, from an all-time high in January 2009. We have brought down our first action pendency from 28 months in 2011 to 16 months today. We have brought down total final pendency from 35 months in 2010 to 26 months today. And we will continue to drive those numbers down further. We are also working diligently to ensure that every application conforms to our Patent Term Adjustment requirements. We want our inventors to have a consistent experience in terms of pendency, across all art units, for all of our applicants. 

Third, low cost. We understand that our inventors do not have unlimited funds. A dollar spent on one part of your business is a dollar less to spend on another part. So we take our use of your fees and  our ability to set your fees very seriously.

Over the past two years, we have cut nearly $400 million in planned expenditures for FY 2016 and 2017 so that we can continue to focus resources on examination of your patent applications. We are using the president’s executive orders on reorganizing government as another opportunity to review which activities of our agency are “mission critical” and which can be consolidated, streamlined, or eliminated. Many of you have asked what that means for hiring. We are looking at our entire agency to make sure that every employee and every new hire is engaged in or supporting mission critical endeavors. As you know,  to reduce costs, we are also taking a fresh look at the regulatory burdens that we place on our filers. Due to the president’s executive orders on regulatory reform, we are giving even greater attention to: how to make the agency more customer friendly, how to make our paperwork less cumbersome, and where to cut back or scale back regulations that no longer support our mission.

In addition to having a representative on the Department of Commerce Task Force on Regulatory Reform, we have put in place our own Working Group to review and identify regulations that are outdated or unduly burdensome. We welcome any suggestions you may have and, of course, we won’t be removing any regulations without seeking your input. Changing gears for a moment, in terms of the substance of the USPTO’s fee rule, although it is not final, I can tell you that the proposed fee increases are modest. They were carefully considered, and reconsidered, and reconsidered again based upon your input and PPAC’s input. Being sensitive to the impact a fee increase might have on smaller entities, and recognizing the critical role individual inventors and small businesses play in our country’s continued economic health, we even investigated if we could exempt them from any increases. Unfortunately, we are prevented from doing so by statute. However, eligible small and micro entities can take advantage of the 50 percent and 75 percent discounts, respectively, not to mention our pro bono or pro se services. Further, we provide small and micro entity discounts for hundreds of our fees, and that number only increases in this fee rule.

There is one exception to the modest fee increase and that is in the area of PTAB fees. We believe that there should be full cost recovery for all costs associated with PTAB trials as they were intended to be under AIA. We have done a good job over the past several years ensuring that our fees generally covered costs. But we do need to raise PTAB trial fees to ensure these trials are self-funded going forward.

Finally, while we are on the topic of PTAB. As you know, Congress mandated the USPTO to implement PTAB trials to give the public a faster, less expensive way to test the validity of a patent than district court litigation. We’ve been hearing that these proceedings are a source of great concern to a number of stakeholders in our patent community. Through the PTAB Procedural Reform Initiative, I, and other leaders from throughout the agency, are working together to review the trial procedures from top to bottom. The purpose of this review is to ensure that the proceedings are as effective and fair as possible, to both petitioners and patent owners. Why now? With five years of experience, we can better evaluate potential changes based on a wider range of user experiences and we have significantly more data to identify trends. We welcome hearing your input on what’s working, what’s not and how we can do better including on such issues as multiple petitions, motions to amend, decisions to institute and claim construction. Please take the time to give us feedback about our PTAB trial procedures on these and any other topics. We have set up a mailbox to receive suggestions, and we check it daily. The address is: We will use your feedback to help shape our proposals and to make recommendations to the new administration.

So I hope that has been a helpful overview of where the agency is today on a variety of issues. There are many other important topics that you will also have an opportunity to learn about today:

Andy Faile and his team will update you on Patent Operations; Nick Oettinger from the Office of General Counsel will update you on the Agency’s Working Group on Regulatory Reform; Frank Murphy and Tony Scardino will provide a finance and budget update; Shira Perlmutter and Mark Powell will provide an international update; John Owens, David Landrith, and Debbie Stephens will provide IT Update and a status of Patents End-to-End; David Ruschke and Scott Boalick will talk more about PTAB; and Valencia Martin Wallace will talk more about our efforts to continue to enhance patent quality.

So, again, thank you.

If there is anything that I or we can do as an agency to better serve you, please let me know, and please let PPAC know.

Now I would like to turn it over to Valencia Martin-Wallace to start today’s discussions.