Remarks by Michelle K. Lee at NYIPLA

USPTO Deputy Director Michelle K. Lee

March 27, 2015, 12:25 p.m., Waldorf-Astoria

NYIPLA “Day of the Dinner” Luncheon CLE Program

Remarks as Prepared for Delivery

Thank you, Charles, and good afternoon, everyone. It’s a pleasure to be here. I’m especially excited about this meeting of NYIPLA, because of the award my distinguished colleague, Patent Trial and Appeal Board Chief Judge James Smith, will be receiving today. I’m also excited to hear from today’s other panelists. The “Changing Patent Landscape” is a particularly appropriate subject, because, let’s face it: the landscape is changing. And for good reason. It has to change because the technology underlying our patent landscape is constantly changing, and changing rapidly.  

Consider, for example, that when the doors of this Waldorf-Astoria opened in 1931, President Hoover called it “the measure of our nation’s growth in power.” An impressive building with 47 floors, it was, at the time, the tallest and largest hotel in the whole world. Fast-forward to today, and there are 39 hotels around the world that are taller than the Waldorf-Astoria (but that’s okay, because I still like this one best!). The engineering advances in the last century truly boggle the mind. And there are so many other amazing advances we’ve witnessed, just in our own lifetimes: from the Internet, to the mobile devices in your pockets, to the Hubble telescope identifying a salt-water ocean under the ice of Jupiter’s largest moon, to say nothing of the many life-saving devices and procedures invented since the 1930s.The pace of innovation has been staggering, and it has, in turn, triggered a great deal of focus and attention on our nation’s IP system, and on patent law especially.

When I graduated from Stanford, the Federal Circuit was still relatively new, and patent law was the province of a handful of specialists who practiced in patent boutiques, not general practice law firms. Patents received little scrutiny from higher courts and generalist lawyers, much less the media or the public at large. But today, they are very much in the public spotlight, the subject of: articles in Vanity Fair and episodes of This American Life, sweeping legislation like the Leahy-Smith America Invents Act, and a series of seven administrative actions issued by the White House.

They are also at the heart of proposed legislation on Capitol Hill, such as the Innovation Act. When I testified earlier this year before the Senate Judiciary Committee, I was asked whether, given the changing patent landscape over the last year, I still felt patent reform legislation was necessary. This is an important question to be asking ourselves. But even though a lot has changed on the patent landscape—and is still changing—the answer remains yes.  The courts, particularly the Supreme Court, have issued several recent decisions that have altered the landscape further.  Some decisions—such as Alice Corp., Myriad, and Mayo,—go to the core of what is patent eligible subject matter. Others—such as Octane and Highmark—address more case management issues in patent litigation. And of course there is the TEVA ruling which I anticipate will have major impact on patent litigation. Some of these issues, particularly the award of attorneys’ fees to prevailing parties, are also the subject of legislative proposals. The fact that the courts and Congress are addressing some of the same issues is not necessarily a bad  thing, because the conversation about how to build a better patent system should not be confined to just one way of improving the system—whether legislative, judicial, executive, or otherwise. All of us have a role to play in making our patent system the best it can be, and that's why it's so important that we all listen to each other and embrace positive change from wherever they may come.  While Congress and the Courts are doing their part, it's essential that the rest of us do our part too.

On our end, we, at the USPTO recently launched the Enhanced Patent Quality Initiative. If you didn’t see our Federal Register notice that published on February 5th, 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. Bottom line: We’re taking a hard look at patent quality from every angle and brainstorming paths to improvement. We’re encouraging participation from patent prosecutors and litigators, patent owners and inventors, licensees and 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 all of us.

We just held a 2-day Quality Summit at the PTO yesterday and the day before, where we had a tremendously productive conversation on ways the PTO can further enhance patent quality. To share some of the ideas discussed, we considered:

  • (1) whether the PTO should create a mechanism for an applicant to request our Quality Assurance team to review an examiner’s Office action during prosecution.
  • (2) whether an automated pre-examination search should be required for all applications before an examiner begins examination. And, if so, whether such results should be provided to the applicant with an opportunity to amend the claims before the examiner begins substantive examination.
  • (3) And whether the PTO should require greater clarity and completeness of the record, for example, by requiring examiners to record: their claim constructions, further details of any interviews, and/or their reasons for allowance.

We also spent considerable time sharing with the public how we currently measure patent quality and soliciting feedback on how we can do better. 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 in the 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 the USPTO’s long-term commitment to quality than our establishment of , a Deputy Commissioner for Patent Quality. This 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’s doing an outstanding job, helping us keep our eye on the ball when it comes to quality improvements.

And that’s not all we’ve been doing. Earlier, I mentioned some of the Supreme Court’s recent subject matter eligibility decisions. As you may know, in December, we issued new examination guidance on subject matter eligibility under § 101. This guidance is the latest–but not necessarily the last–iteration of our ongoing implementation of these Supreme Court decisions. The changes were triggered by the feedback we solicited and received from the public, as well as refinements necessitated by Alice Corp.

We were pleased to hear from a diverse group of stakeholders. We carefully considered input from the public and our patent examiners as well as changes to the case law before issuing our updated guidance. Then, in January, we hosted a public roundtable to discuss the new guidance and provided a period for public comment, which just closed. We now are in the process of reviewing the comments to determine appropriate next steps. Given the changes that are occurring in 101 jurisprudence, we will continue to solicit stakeholder feedback and monitor the case law developments to ensure that we faithfully apply the laws as enacted by Congress and interpreted by the Courts.

Another way we are addressing quality, albeit after a patent issues, is through our new Patent Trial and Appeal Board administrative trial proceedings.  The Patent Trial and Appeal Board has been quite busy meeting a greater-than-expected demand for the trials. As of mid-March, the Board had received more than 2,600 inter partes reviews and more than 300 covered business method filings. It’s pretty clear why these proceedings have proven so popular (at least if popularity is based upon number of filings). The intent of Congress was to provide a faster and more affordable means to test the validity of issued patents. And the numbers reveal that is exactly what is happening.  The Board is issuing claim constructions (by way of decisions to institute) in a mere six months. Compare that to the pace of the so-called “Rocket Docket,” the Eastern District of Virginia, where the process takes about 12 months, or in other federal courts, where the proceedings can drag on for three 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 that 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 to have created a perfect system on our first try. That’s why, promptly after being sworn in as Deputy Director more than a year ago, 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 what we were 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 on public feedback as well as suggestions from our judges. One of our quick-fix changes will nearly double the number of pages for a motion to amend.   Another will nearly double the number of pages for a petitioner’s reply brief.  Judges are starting to affect these page increases now through scheduling orders. That is because we want to bring improvements to you as quickly as possible, even before our interim rule package publishes.

Later this year, we’ll release a second package of proposed rules, to address more challenging changes. We are considering whether to further modify the motion to amend process, adjust the evidence that can be provided in the patent owner preliminary response, and clarify the claim construction standard applied in expired patents. We also are considering adjustments to the scope of additional discovery, how to handle multiple proceedings before the Office involving the same patent, and whether the parties should be required to make a certification with their filings similar to a Rule 11 certification in district court litigation. We’ll be conducting another series of roadshows later this year to engage directly with you on these proposed rules, and we’ll 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. After hearing from interested members of the public—which will hopefully include many of you here today—and carefully considering your feedback, we aim to implement final rules by the end of this year.

But our charge from this Administration has been to improve not just the quality of the patent system, but its accessibility as well. So let me turn briefly to a few things we’re doing here. First, we are working hard to ensure robust patent pro bono programs are available in every state, including New York, to help under-resourced innovators . I am pleased that the New York Volunteer Lawyers for the Arts just expanded its program to include New Jersey and Connecticut, thereby making help available to under-resourced businesses and inventors in three Eastern coast states. If you are interested in volunteering to represent an under-resourced inventor or small business before the Office, please submit your name through our website. It’s a good way to fulfull your pro bono requirement.

Second, on June 9, the PTO is co-hosting a Future of Urban Innovation Summit with Columbia University. At this first-of-its kind event, I’ll be joined by Commerce Secretary Penny Pritzker and a number of other top thinkers, and we’ll explore how we can continue working with innovators and entrepreneurs to promote innovation, and in turn economic growth, not only in New York City but more globaly. Columbia University is a leader in supporting innovation through its programs, and I’m very pleased to be partnering with them on this important summit.

So let me conclude by saying that if you’ve heard a recurring theme in what I’ve said today, it’s that we all have a role to play in continuing to improve our patent system. It’s a system that has served our nation remarkably well for over 200 years. In fact, the 225th anniversary of the first Patent Act is just a couple of weeks away, on April 10th. That Patent Act was the first of many subsequent improvements to our “patent landscape” that have continued right up to this day. As the newly confirmed Director of the United States Patent and Trademark Office, I look forward to working with all of you to continue shaping that landscape together, for the benefit of American entrepreneurs and innovators well into the future.

Thank you, and best wishes to everyone in NYIPLA for another great year.