Remarks by Director Michelle K. Lee at the Trilateral Heads of Office and Industry Meeting

March 30, 2017

Trilateral Heads of Office and Industry Meeting

Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office 

Michelle K. Lee

Remarks as Prepared for Delivery

March 29, 2017

Seville, Spain

Good morning, everyone. It’s an honor to be here today and to participate in my third Trilateral Conference.  Before I begin, I’d like to thank President Battistelli and his team for their tireless work in preparing for our meetings this week. I’d also like to thank the Industry Trilateral for their continued feedback and support on the many Trilateral and IP5 projects. As always, we’re very busy at the United States Patent and Trademark Office.  I’d like to cover two areas that I believe will be of interest to you: (1) Our 2016 Performance and Accountability Report, which was released earlier this year; and (2) Updates on our work on improving patent quality.

First, as to our patent filings, our utility, plant, and reissue filings increased more than 5 percent in fiscal year 2016 to over 650,000 applications. This continues the trend in the United States of increasing patent applications. In fact, it represents an almost 50 percent increase in the number of applications that we received just 10 years ago. Similarly, our patent grants have shown a dramatic increase. We issued approximately 335,000 patents in 2016—almost double the amount that we issued 10 years ago. At the same time, we continue to make great strides in reducing the unexamined patent application inventory, decreasing it by almost 3 percent from last year and 29 percent from its peak in 2008. We’re also happy to report that we continue to reduce our average total pendency from 26.6 months in fiscal year 2015 to 25.3 months in fiscal year 2016. This pendency is down 22 percent from just a few years ago. Credit is due to the wonderful team we have in place at the USPTO, including our incredible group of over 8,100 highly trained, technical patent examiners. I also credit the USPTO’s Nationwide Workforce Program, which utilizes regional offices, telework, and other innovative measures to attract, hire, and retain highly skilled, experienced IP professionals from all over the United States, not simply those who live in in and around our capitol.

Turning to our “post-grant” procedures, as you know, since 2012, under the America Invents Act or AIA, our Patent Trial and Appeal Board or “PTAB,” has been accepting petitions for post-grant review of patents. In FY2016, the PTAB received more than 1,500 petitions under the AIA. And since 2012, we have received over 6,000. We believe the large number of petitions is due to the fact that (1) our administrative trials are faster and less expensive than litigation in the federal district courts and (2) our judges are experts in both law and technology. In addition to our patent trials, our judges decided over 13,000 “ex parte” appeals in fiscal year 2016. These are appeals of the patentability decisions made by our examiners. The decisions by our administrative judges are reviewed in our federal courts, and I am proud to report our decisions are affirmed more than 80 percent  of the time by our very expert and engaged reviewing court, the United States Court of Appeals for the Federal Circuit. That said, the agency continues to welcome input and feedback on how we can make these relatively new proceedings even more efficient, effective, and fair within our Congressional mandate.

Turning to our international activities, we’re happy to report that we have expanded our Patent Prosecution Highway footprint in Latin America.  And, as you may know, we launched a PPH with INPI-Brazil in January, 2016 and INPI-Argentina earlier this month. The Brazilian PPH was the result of several years of discussions with our counterparts at both their office and within the Brazilian government.  The program runs until January 2018, and we’re hoping that we can soon begin discussions about extending it and broadening the scope of the arrangement. Currently, a PPH request can be filed in the United States for all areas of technology, but Brazil limits PPH requests to applications for oil and gas technologies that are filed in that country on or after January 11, 2013.  Even with those restrictions, Brazil’s IP office has so far received 36 PPH petitions, and of those, 10 have resulted in issued patents. To put that into perspective, the Brazilian IP Office has issued at least 10 patents within three years or less of their filing date. This is a sharp improvement from their historic 12 to 15 year pendency.

Turning next to patent quality. You may recall that in 2015, I launched the USPTO’s Enhanced Patent Quality Initiative, or EPQI. Under EPQI, we currently have about a dozen initiatives underway that we believe have meaningfully improved patent quality. Some of the areas of focus under EPQI are: Increasing the clarity of the patent record to include greater written explanations of (1) the reasons for allowance, and (2) the examiner’s claim interpretations;  Getting the most relevant prior art before our examiners as early as possible by taking advantage of state-of-the-art, AI search technology;  And measuring more data points on the quality of our work product — in fact, three to five times more data points; Let me share a bit more about a couple of those efforts.

The goal of our Clarity of the Record pilot, conducted last year, was to identify best practices on how much detail to include in certain key parts of the prosecution record, such as interview summaries, reasons for allowance, and claim constructions. We trained pilot examiners on previously identified best practices and encouraged them to identify additional best practices for enhancing clarity.  We then measured 22 data points focused on clarity in interview summaries, and found an average 15 percent improvement in the clarity of the pilot examiners compared to a control group. At the conclusion of the pilot program, we found a 25 percent improvement in the clarity of reasons for allowance by the pilot examiners compared to a control group. There was a statistically significant improvement in clarity when examiners used the best practices for interview summaries, reasons for allowance, and claim interpretations. Perhaps the most telling indicator of success is that when these pilot examiners were examining applications not included in the pilot program, they continued to apply the pilot’s best practices.

We also conducted a Post Grant Outcomes Pilot program to ensure that our patent examiners have all pertinent information — especially information from related AIA trials — easily available, for the purpose of issuing the highest quality patents possible and enhancing patent quality overall. During the pilot, examiners were notified by email about related AIA trials. Survey results showed that pilot examiners subsequently referred to art cited in the AIA trial for 44 percent of related cases.  In view of these results, the USPTO implemented an IT upgrade to the examiners’ desktop application viewers, which allows all examiners to have automatic access to the contents of related AIA trials.

Finally, we know that stakeholder collaboration from around the country — and indeed, from around the world — is vital to ensuring that our patent quality programs continue to move forward and grow. For that reason we held a Patent Quality conference this past December. It brought together approximately 6,000 stakeholders — 295 in-person and 5,702 online — from all parts of the patent community. At the conference, we shared detailed results from various programs of the Enhanced Patent Quality Initiative and other patent quality initiatives, heard the views of practitioners and different industry representatives on patent quality in the USPTO, heard from a number of distinguished jurists on the impact of patent quality on the courts, heard how international collaborations with our foreign counterpart offices are improving the quality of issued patents, and discussed what applicants can do to help improve patent quality. Stakeholder input is vital in our efforts to improve quality, so we hope to continue to hold events like the Patent Quality Conference to ensure that your voices are heard.

Needless to say, this past year has been a very busy one at the USPTO, and I hope that this update has given you a glimpse at some of the progress we have made on our top activities and initiatives. With that, I’d like to close by thanking EPO and BusinessEurope for hosting today’s meeting. I look forward to today’s very informative discussions.