Remarks by Michelle K. Lee at Fourth Annual Managing IP U.S. Patent Forum


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

March 18, 2015

Four Seasons Hotel, Washington, D.C.

Remarks as Prepared For Delivery

Good morning, everyone. Thank you, Michael, for that introduction, and for affording me the honor of speaking once again at Managing IP’s U.S. Patent Forum--this year as the agency’s Director. A lot has happened since I addressed you a year ago. It’s been a very busy year, but also a very productive one. And a lot is on our near-term horizon as well.

What I would like to talk about this morning are some of the ways that we’re working with all of you to foster innovation, competitiveness, and economic growth through

  • Excellence in operations;
  • Excellence in output; and
  • Excellence in customer service.

I’m sure some of you have heard of our Enhanced Patent Quality Initiative.  But, I want to take this opportunity to talk a little further about it, because it’s something my team and I are very excited about. Now, I know I’m hardly the first USPTO leader to emphasize quality as a priority. And I certainly won’t be the last. But for too long, due to uncertain budgetary conditions and limited financial resources, the USPTO has had to make do with less. That is no longer the case. Thanks to the America Invents Act, the USPTO is now in a historically healthy financial position. Further, we’ve made significant strides in reducing—and will continue to reduce—our patent pendencies and backlogs.  So, for the first time in a long time, the USPTO doesn’t just have to make do. We can focus more than ever on building a world-class patent quality system for American entrepreneurs and innovators.

We all know that intellectual property plays a critical role in incentivizing innovation. I know this through my experiences as an engineer, a Silicon Valley law firm partner advising innovative companies on their IP issues, and an in-house counsel for a young company that grew into a multinational corporation. I understand, from a business perspective, the critical value patents can have for a company, as well as the cost to society when a patent issues that should not have. That’s why Commissioner for Patents Peggy Focarino and I launched the Enhanced Patent Quality Initiative. If you didn’t see our Federal Register notice that published on February 5, I encourage you to read it. You can find a link on our website. This new initiative is built around three core elements:

  • Excellence in prosecution services;
  • Excellence in customer service; and
  • Excellence in quality measurement.

And we have introduced six proposals in support of these core elements. As just a single example of these proposals, we are considering whether to offer an automated pre-search for every application before an examiner picks up the case. That way, the examiner can be in possession of a baseline of art to start examination, which he or she will supplement by conducting his or her own search. A pre-search thus will expand the information routinely available to examiners, since today, one is done only upon examiner request on a case-by-case basis. Bottom line:  We’re taking a hard look at patent quality from every angle and brainstorming paths to improvement. And we’re also taking engagement to an entirely new level. We are of course seeking written comments, which are due May 6.

But I want to take a moment to encourage all of you to attend, whether in person or via webinar, our 2-day Patent Quality Summit at the USPTO on March 25 and 26. We’re encouraging participation from patent prosecutors and litigators, patent owners and inventors, licensees, business leaders, and of course our own patent examiners. Really, we’re looking to hear from anyone who has a stake in our patent system, which—if you think about it—is everyone. This is, of course, not meant to be a one-and-done event. We recognize that, as with any company that produces a truly top quality product, the focus on quality must be pervasive throughout the organization and long-term.  There are few quick and easy fixes.  Hence, our Enhanced Patent Quality Initiative is an ongoing priority for the agency.

There’s no better sign of that than the new senior executive position Commissioner Focarino and I created, a Deputy Commissioner for Patent Quality. That person’s sole job is to focus on the USPTO’s patent quality efforts, now and into the future. We chose for that position Ms. Valencia Martin-Wallace, an electrical engineer with more than 20 years’ experience in the office as an examiner, TC Director, and Assistant Deputy Commissioner for Patent Operations. She is doing an outstanding job helping us keep our eye on the ball when it comes to quality improvements.

But as the agenda for today’s meeting shows, what matters isn’t just the quality of patents we will be issuing, but also patents already issued. I understand you have a panel later this morning on our Patent Trial and Appeal Board, and PTAB Judge Michael Tierney will be on that panel. I want to take a moment to express my admiration for the work he and all of the PTAB judges are doing to stay on top of a greater-than-expected demand for the AIA authorized trials. As of just last week, the PTAB had received more than 2,600 inter partes review filings and more than 300 covered business method filings.  It’s pretty clear why these proceedings have proven so popular.  The intent of Congress was to provide a faster and more affordable means to challenge issued patents. And the numbers reveal that is exactly what is happening. The PTAB is issuing a claim construction—by way of our decision to institute—in a mere 6 months.  Compare that to the pace of the so-called Rocket Docket, the Eastern District of Virginia, where the parties will find the process taking about 12 months, or in other federal courts where the proceedings can drag on for 3 years or more.

I would also like to note that we were pleased with the Federal Circuit’s recent ruling in Cuozzo Speed Technologies, which endorsed the rulemaking process the USPTO underwent to implement our PTAB trial procedures. While the agency could not give every commenter all of what he or she wanted, I think it fair to say that the process was a model of transparency and public engagement, and the Cuozzo decision confirmed that the USPTO followed Congressional intent.

But, because we recognize the significant role these PTAB proceedings play in the patent landscape, we don’t claim we have created a perfect system on our first try. That’s why, promptly after being sworn into my previous position as Deputy Director, I asked my team to reach out to all of you through a series of roadshows and a public comment period. I wanted to hear from you what we are doing right, and what we could do better in our relatively new AIA trials. We’ll be issuing very soon, as interim rules, what we’re calling “quick fixes” based upon public feedback as well as suggestions from our own judges. Later this year, you’ll see from us a second package of proposed rules, to address more challenging changes. We’ll be conducting another series of roadshows later this year to engage directly with you on these proposed rules, and will seek written feedback as well.  Let me be clear that the agency is open to considering changes to ensure the most effective and fair AIA trials possible in compliance with our legislative mandate. We aim to implement final rules by the end of this year.

But there’s more we’re doing to improve the quality of patents and agency operations and the overall functioning of our patent system. When I testified earlier this year before the Senate Judiciary Committee—actually, both times I testified before them—I was asked if, given the changing patent landscape over the last year, I still felt patent reform legislation was necessary. The answer is yes. But any legislative changes to our patent system must take into account changes that have already occurred in the courts and administratively, including at the USPTO. Everyone has a role to play in achieving meaningful and balanced improvements to our patent system: the courts, Congress, the USPTO, and the public.  

We have all seen how active the Supreme Court has been recently, in particular with the decisions in Alice Corp., Myriad and Mayo. As you may know, in December we issued new examination guidance on subject matter eligibility under § 101, based on valuable feedback we received from the public through written comments and at multiple public meetings. This guidance is the latest–but not necessarily the last–iteration of our ongoing implementation of these Supreme Court decisions. This guidance incorporates principles emphasized in Alice Corp. and provides more details than did our initial examination instructions issued immediately after the Alice Corp. decision. The guidance also reflects a significant change from the examination guidance previously issued in response to Myriad and Mayo. We hosted a public outreach forum on the interim guidance in January, and we will sought additional stakeholder feedback to further refine the guidance.

Of course, our actions on empowering our examiners to perform at their best haven’t been limited to responding to court decisions. When I spoke here last year, I mentioned a number of administrative actions we were undertaking, as part of President Obama’s intention to strengthen, quote, “the quality and accessibility of the patent system.” Let me take a moment to highlight one of our many success stories from the past year. I’m pleased to report that we were able to significantly expand our Patent Examiner Technical Training Program. That’s the program in which we make scientists, engineers, and academics available to our examiners, to keep them up to speed on the latest technologies and advancements. We’ve made it easier than ever for experts to participate. As a result, last year we more than doubled the number of training events while tripling the time examiners spend in technical training. Volunteers have helped us train our examiners on everything from stem cells to robotics, from petroleum to golf ball designs. So we’re grateful for those who have volunteered. If you or your employer is interested in doing so, please let us know. Details on how can be found out on our website.

Another initiative that will benefit not just examiners, but everyone in this room—from patent prosecutors and litigators to researchers and academics—is our embrace of Big Data Analytics and Open Data. This reflects the ethos that permeated my time in Silicon Valley, and I’m pleased to see it present here in Washington as well. The Obama administration has aggressively made government data more open and accessible to the public, and that is particularly important for agencies like ours, which house a treasure trove of data. We’re moving forward on ways to better disclose and disseminate that data, and making better use of it ourselves. For example, we’re seeking to make more accessible our patent application information, known as PAIR, and our PTAB decisions and orders. We’ve already received some great input from our stakeholders at a roundtable discussion we had in December, on what data would be most useful to release. But, as we advance our Open Data initiative, we welcome your ongoing input and feedback.

Our focus on harnessing Big Data is being applied internally, but the impact of our Open Data initiative will be felt globally. And that’s fitting, because we all know that innovation, more than ever before, is global. It’s about engaging in the marketplace in Boston as well as the marketplace in Bangkok.  Our 21st Century economy knows no borders. But borders still matter when it comes to intellectual property law and practice. And that’s why the agency is focused on efforts to harmonize our IP procedures and rules. Two weeks ago I was in Yokohama, Japan, for a meeting with my counterparts from the European Patent Office and Japan’s patent office.  The meeting was a nice precursor for the upcoming IP5 Summit, which includes the patent office heads of Korea, China, Japan, the European Union, and the U.S. The Chinese patent office will be hosting the IP5 Summit this May in Suzhou. China is an area of particular focus to the USPTO because that market is so important to many of our stakeholders. Which is why I co-chair, along with the U.S. Trade Representative, the IP Working Group for the U.S.-China Joint Commission on Commerce and Trade.  While in China I’ll be attending a series of meetings in Beijing with key officials as well as U.S. IP stakeholders.  

Another important development in harmonization was our country’s recent ratification of the Hague Agreement concerning the international registration of industrial designs. This is a critically important development for American businesses and entrepreneurs. When this treaty goes into effect on May 13, any U.S. applicant pursuing protection for industrial designs in multiple jurisdictions under the Hague Agreement will be able to file a single application either with the USPTO or with WIPO. The USPTO will be issuing new rules for how to file under the Hague Agreement soon.  These rules will give you all the information you need to register a design in more than 60 territories with one filing. 

Let me conclude by highlighting two things on our near-term horizon that should be of great interest to you.  I just mentioned that one enabler of our activity and public engagement has been the recent achievement of some financial stability due to our fee-setting authority granted by the AIA. Many of you likely participated in that fee-setting process a couple of years ago. Well, we’re not too far from revisiting our fees. We’ll want to hear from you about what is working with our fees, and what changes you would recommend.  The services we provide that are funded by those fees all tie back to our mission of advancing American innovation.  

And the other action we’ll be taking soon is the naming of a new Deputy Director. For the last year I’ve been wearing two hats, if you will. I’ve been very grateful to serve, but I know firsthand now how beneficial it is to have both a Director and a Deputy Director. There’s more than enough work for two people, believe me! Commerce Secretary Penny Pritzker and I have focused intently on identifying the perfect individual for this position, someone who from Day One can join with me and the rest of the agency’s leadership in promoting intellectual property and advancing innovation. So we’ll be announcing soon the appointment of a new Deputy Director. I’m confident you’ll be happy with our choice, but no one will be happier than me! So that’s a quick update on some of the critical initiatives underway at the USPTO. Every one ties back to our commitment to

  • Excellence in operations,
  • Excellence in output, and
  • Excellence in customer service.

We can only accomplish those goals through close collaboration with all of you. So let’s continue this conversation throughout today’s conference and into the future. Thank you once again for having me here today, and enjoy the rest of the conference.