Remarks as prepared for delivery
Derrick Brent, Deputy Under Secretary of Commerce for
Intellectual Property and Deputy Director of the USPTO
PTAB Boardside Chat
December 15, 2022
I have enjoyed a career that has spanned every branch of the federal government, private practice, corporate practice, nonprofit work, and academia. I have also practiced law in various disciplines, starting with intellectual property (IP) and adding in civil rights and constitutional law, to name a few. I’d like to talk about a few moments along my path that really stand out as career-defining moments.
I clerked for the Honorable Algenon Marbley, Chief Judge of the District Court for the Southern District of Ohio. Chief Judge Marbley spoke at my swearing-in ceremony, a testament to a lifelong mentorship relationship with him.
I joined the USPTO as deputy director as the office was reopening and the U.S. was defining a new way of working in light of the pandemic. When the pandemic began, 86% of our workforce participated in a telework program to some degree – and we were able to pivot to maximum telework quickly and efficiently. As one of the early leaders on telework programs, we’ve built on our experience to provide as much flexibility to our employees as possible.
Currently, 96% are teleworking to some degree, and 85% are full-time. We have updated equipment in some of our conference rooms to ensure that hybrid meetings are effective for those on campus and those teleworking. We have ensured that all on-site events have an option for virtual attendance. We have created centrally managed hoteling offices for teleworking employees that have given up their offices to ensure that employees have a clean, well-equipped office when needed. We are continuing to look for ways to ensure employees stay connected in the hybrid environment, such as engagement events.
The results of the Campus and Telework Plans Survey indicates a very positive effect from the enhanced telework options in terms of retention. 70% of respondents indicated they are probably or much more likely to stay with the USPTO as a long-term career. Somewhat related, many respondents indicated their retirement plans had not changed, but even more indicated they would retire later rather than earlier due to the two-year period of working from home.
The Patent Trial and Appeal Board (PTAB) makes the news . . . a lot, and the administration is considering several refinements to America Invents Act (AIA) trials. There have been several Requests for Comments (RFC) issued on topics like director review, internal decision circulation, and, as we will talk about later today, practice before the USPTO and PTAB. Additionally, the agency has sought input on Fintiv and discretionary denials.
So, what can stakeholders expect in the coming months? For AIA proceedings, visit the PTAB statistics webpage and latest Fiscal Year (FY) End of Year Outcome Roundup, where you’ll find stats for the last fiscal year (FY2022). For example, if looking at outcomes by claims challenged in AIA petitions:
36% = denied institution
26% = found unpatentable in Final Written Decisions (FWD)
25% = challenged but no FWD (e.g., settled)
Rest = upheld in FWDs (8%), disclaimed (4%), or case was dismissed (1%).
Here are the outcomes of ex parte appeals of examiner decisions:
55.5% = affirmed
9.3% = affirmed in part
34.3% = reversed
<1% = dismissed or remands
Although institution rates have fluctuated a bit over the years, they have generally hovered at about two thirds. Looking at petition outcomes overall, over the years: one third resulted in denied institution, one third settled or ended without an FWD, and one third go to an FWD only after a reasonable likelihood is found at the denied institution (DI) stage in an inter partes review (IPR).
As policies have changed on discretionary denials over the years, we’ve seen practitioners learning and adapting, e.g., regarding Fintiv, serial petitions, parallel petitions, 35 U.S. § 325(d), and related guidance memos. For example, NHK/Fintiv denials peaked in FY21 Q2 and dropped significantly afterwards. The USPTO’s guidance on using stipulations appears to have led to an increase in stipulation filings and a significant decrease in Fintiv denials. Most cases today do not address Fintiv.
On June 21, 2022 there was a guidance memo on interim procedures as it relates to AIA proceedings with co-pending parallel district court litigation—stay tuned for more, but in the meantime: PTAB will no longer discretionarily deny institution under Fintiv based on parallel International Trade Commission (ITC) proceedings. Reasons include that ITC can’t invalidate claims of a patent, and invalidity rulings are not binding on USPTO or district court and ITC cannot conclusively resolve patent validity. Doing so doesn’t resolve any conflicts between PTAB and district court.
PTAB will not discretionarily deny institution under Fintiv if a petitioner files what we call a Sotera stipulation. I.e., a petitioner will not pursue in district court the same grounds or any grounds it reasonably could have raised in petition. Reasons include: mitigates concerns about potentially conflicting decisions and duplicative efforts.
PTAB will not discretionarily deny institution under Fintiv if the record at institution stage presents compelling merits of unpatentability. This means that evidence, if unrebutted in trial, would plainly lead to a conclusion that one or more claims are unpatentable by a preponderance of evidence (POE). More than the “reasonable likelihood” and the “more likely than not” standards for institution of an IPR or post grant review (PGR).
Reasons for compelling merits consideration include attempts to balance competing concerns of (i) avoiding potentially conflicting outcomes and overburdening patent owners (PO) with (ii) strengthening the patent system by eliminating weak patents, if at issue. This is consistent with authority from Congress to revisit issued patents. The patent system and the public good benefit from instituting compelling unpatentability challenges—PTAB proceeding will go forward if court case settles or doesn’t resolve patentability question, which is often the case.
Proximity to trial will not alone outweigh these compelling merits. Scheduled trial dates are unreliable and often change. Instead, PTAB will look at the most recent statistics on median time-to-trial for civil actions in the relevant district court. PTAB also will consider the number of cases before the judge as well as the speed to trial in other cases before the judge.
Here are some stats since the director review (DR) process began after the Arthrex decision in June 2021, through December 6 of this year. The director has received 224 requests, 120 requests from limited remands, 90 requests from recent FWD, 210 completed, 205 fully resolved and five director review grants from party requests. In total, 15 were granted, five from party requests (one pending), 10 sua sponte (four pending with director; one denied; two remanded to original panel and decided; three remanded to original panel and pending). Alternatively, 190 were denied, one withdrawn, 14 dismissed, and 14 pending (not yet subject to a DR grant, denial, withdrawal, or dismissal).
The request for comment period for DR, Precedential Opinion Panel (POP) review, and internal circulation and review of PTAB decisions closed on October 19, 2022. USPTO is now carefully considering and evaluating feedback from the over 4,300 stakeholders that submitted responses to the request for comments. Though the sizable number of comments stems from a large number of duplicative comments provided by individual stakeholders, all comments are greatly appreciated and will be reviewed for good ideas.
After consideration of all input we received from stakeholders, USPTO intends to move forward with formalizing these processes through notice-and-comment rulemaking, and the public will have another opportunity to comment after we publish proposed rules. We also will likely make revisions before we formalize. For example, in light of comments received from the public and the director’s own experience reviewing Board decisions, the director is rethinking the most impactful use of her time, with an eye to making the process sustainable. Thus, the director is considering using director review as an opportunity to provide clarity and guidance to the public and PTAB on the most important issues.
For simple error correction, on the other hand, the director is considering the idea of evolving the functions of POP or creating a different mechanism to address any error correction. Stay tuned. In the meantime, under interim DR and POP processes right now,
Director Vidal “strongly encourages parties to provide a priority-ranked list of issues being raised.”
Issues that may warrant review by the director include: issues that involve an intervening change in the law or USPTO procedures or guidance; material errors of fact or law in the PTAB decision; matters that the PTAB misapprehended or overlooked; novel issues of law or policy; issues on which PTAB panel decisions are split; issues of particular importance to the office or patent community; inconsistencies with office procedures, guidance, or decisions.
POP is used to establish binding agency authority concerning major policy or procedural issues, or other issues of exceptional importance. For example, POP may be used to address constitutional questions; important issues regarding statutes, rules, regulations; important issues regarding binding or precedential case law; issues of broad applicability to the Board. It also may be used to resolve conflicts between board decisions, promote certainty and consistency, or rehear any case it determines warrants attention. Thus, right now, POP is less likely to take a case simply to address an error by a panel, but director review might, e.g., to remand to original panel with instructions (e.g., as seen in recent grant orders).
The Biden Administration’s Department of Commerce (DOC), under Secretary Gina Raimondo and USPTO Director Kathi Vidal, is advancing a number of initiatives to stimulate invention and entrepreneurship from all segments of the population, with a focus on increasing participation from historically under-represented groups. I want to share a few initiatives and ways our stakeholders can assist with strengthening these initiatives and our intellectual property system. The USPTO is always looking for more ways to maximize our IP ecosystem to help innovative, energetic, and creative minds drive positive change. USPTO regional office teams collaborate with women-led organizations at the local, state, and national level, including DOC Women’s Business Centers, the Society for Women Engineers, ChIPs, and many more to host inspirational and educational programming highlighting the benefits of IP protection, and IP’s critical importance to business development.
For example, in fiscal year 2022, the regional offices conducted 605 IP training events. IP trainings received 122,546 registrations, a 36% increase over FY21. Separately, the regional offices met one-on-one with 759 IP stakeholders to understand their challenges navigating the IP system. 633 (83%) of these meetings were with small or non-traditional IP stakeholders. 137 (18%) of these meetings were with women, minority, or veteran owned businesses.
The USPTO also launched a new webpage providing a centralized location for information on the USPTO’s efforts to broaden participation in innovation. Advancing inclusive innovation is crucial for American business owners, entrepreneurs, and independent inventors. It ensures that more stakeholders have the resources necessary to succeed and to participate in our innovation economy.
The page features some of the many USPTO initiatives that advance equity in innovation, offering information on the Council for Inclusive Innovation (CI2), partnerships with organizations such as the National Inventors Hall of Fame and the National Academy of Inventors, and annual and special events such as Invention-Con and our Women’s Entrepreneurship Symposium. The new webpage also provides access to many of the USPTO’s free resources for inventors and entrepreneurs. This page will serve as a resource for stakeholders, helping them stay up to date on the USPTO’s efforts and empowering them to get involved.
USPTO continues to expand CI2 with the addition of several new co-vice chairs, government leaders who can bring the energy and resources of their agencies to the fore in a streamlined approach. CI2 has been hard at work on new initiatives to bolster participation in innovation, including invention, entrepreneurship, and creativity. CI2 council members—who include leaders in industry, academia, government, and non-profit organizations—worked with CI2 working group members to develop initiatives to improve our innovation economy and strengthen American competitiveness.
These new initiatives include the following programs and activities:
Innovation internship program - Designed to teach our youth the value of innovation and protecting innovation with intellectual property. To encourage a more inclusive pipeline of talent, these paid internships at our agency provide hands-on job training to community college and university students.
First-time filer expedited examination petition - A new fast-track program that will provide expedited examination and early indication of patentability for first-time micro entity filers. The fast-track program will include additional support for filings in the program, including training as a prerequisite to participation in the program.
Expansion of free legal services - By expanding access to free (or “pro bono”) legal services, we can assist more under resourced innovators protect their ideas and bring them to market.
The USPTO is expanding both its Law School Clinic Certification Program (to include five additional law schools) and its support of regional patent pro bono programs, including the launch of the PTAB pro bono program and TTAB Pro Bono Clearinghouse Program. Whereas in the past, the regional programs have struggled and needed to be rebuilt, the USPTO’s focus and support has created stability over the past six months including seamlessly transitioning the Pennsylvania program to new leadership. The evidence shows that if we meet people where they are, we will bring more people into the innovation ecosystem. Whereas between 12% and 13% of U.S. named inventors are women, 41% of those who benefit from our patent pro bono services are women. 30% identify as African American or Black, 14% as Hispanic American, 5.6% as Asian American or Pacific Islander, and 1.5% as Native American.
Community outreach campaign – The USPTO will pilot a volunteer program that will leverage our nationwide workforce as a powerful tool for educating local communities on the importance of IP, with the goal of increasing IP literacy and participation in the innovation ecosystem across our nation’s full population. Volunteer employees will engage with new audiences on the importance of protecting ideas and brands to help foster new businesses and economic activity.
Additionally, the USPTO is expanding its engagement with the National Inventor’s Hall of Fame to scale Camp Invention and their after-school programs so we reach and teach more children throughout every region of the country. We have taught almost 250,000 children so far this year and are working to reach many more. The director is engaging directly with state leadership and schools on expansions.
Recently, Director Vidal was appointed as a Federal Co-Chair of the National Advisory Council on Innovation & Entrepreneurship (NACIE). NACIE is a federal advisory committee managed by the U.S. Economic Development Administration’s Office of Innovation and Entrepreneurship. Committee members are working to identify and recommend solutions aimed at perpetuating the innovation economy—including growing a skilled STEM workforce and removing barriers for entrepreneurs ushering innovative technologies into the market—while also facilitating federal dialogue amongst the innovation, entrepreneurship, and workforce development communities.
The Small Business Administration (SBA) has signed a memorandum of understanding (MOU) with our agency. The USPTO and SBA have long worked to serve Americans interested in protecting their intellectual property (IP) and bringing their innovations to market. Recently, the two agencies took the next step to formalize and expand our collaborative efforts through this MOU. This agreement will help the SBA and the USPTO work together to turn IP into jobs, benefitting innovators and their communities across the nation. In addition to identifying existing training and educational programs, the agencies will also develop high-quality trainings and conduct community-based outreach to meet innovators where they are. This MOU is the culmination of several years of ongoing conversation between the two agencies.
Last month, (November 2022) the USPTO and the Department of Commerce launched Women’s Entrepreneurship (WE), a community-focused, collaborative, and creative initiative to inspire women and tap their potential to meaningfully increase equity, job creation, and economic prosperity. The new initiative kicked off in concert with Women’s Entrepreneurship Day and President Biden’s recent proclamation naming November 2022 as National Entrepreneurship Month.
Almost 700 individuals participated in the launch either in person or virtually. With this important initiative, our goal is to increase the number of women-led businesses to bolster jobs, consumer choice, and our economic prosperity. The time is now to put women's entrepreneurship into overdrive, and we are excited to launch this valuable initiative to shift it into gear. While women represent the fastest growing category of entrepreneurs worldwide, they are less likely to be able to secure the capital and the intellectual property protections they need to attract investment and become sustainable. Further, women are severely underrepresented as business owners compared to men.
According to the U.S. Census Bureau’s Annual Business Survey (ABS), men have an ownership stake in about 80% of U.S. businesses and a majority ownership share in 63% of U.S. businesses. Meanwhile, women hold an ownership stake in about 37% of U.S. businesses, but only had a majority share in 21% of businesses.
WE will build on efforts across the private sector and government to inspire and support start-ups and aspiring women entrepreneurs, connecting them with each other, with support, and with sources for funding. WE includes a new online hub for aspiring women entrepreneurs to obtain key information on how to get started, identifying and protecting their intellectual property, options for securing funding, and building and maintaining a network. With a welcome message from Secretary Raimondo, information on upcoming discussions and events, rotating videos featuring tips from successful women entrepreneurs, and key information and resources, the WE hub aggregates this important information in an easy-to-digest format. WE will include USPTO’s Women’s Entrepreneurship Symposium series to be hosted in March 2023.