Securing America's Innovation Future: Challenges & Progress for the Intellectual Property System

Remarks As Prepared

Securing America's Innovation Future: Challenges & Progress for the Intellectual Property System

Under Secretary Kappos

Tuesday, December 14, 2010

Columbia University

Introduction & Agency Overview

Good morning. Let me start by thanking our hosts from Columbia University for putting together this great event.

As we move farther into the second decade of the 21st Century, it has become increasingly clear that innovation is the key driver of long-term economic growth and sustainable competitive advantage for United States businesses.

In fact, technological innovation is linked to three-quarters of America's post-WW II growth rate. Two innovation-linked factors-capital investment and increased efficiency-represent 2.5 percentage points -- roughly 70 percent -- of the 3.4 percent average annual growth rate achieved since the 1940's.

Invention, innovation, and the diffusion of resulting technology benefit consumers not only by creating efficiency and improving health and lifestyle, but also by creating economic opportunity and better, higher-paying jobs.

In fact, since 1990, the average compensation per employee in innovation-intensive sectors increased 50 percent-nearly two and one-half times the national average.

By providing IP protection in the form of patents and trademarks, the USPTO plays a key role in fostering the innovation that drives job creation, investment in new technology, and economic recovery, and in promoting and supporting the Obama administration's priorities.

Today, I'd like to speak about the many programs, initiatives and process improvements we're working on to increase efficiency at the office and reduce the time it takes to get a patent. I'd also like to spend a little time discussing some of the key policy areas the USPTO is interested in.

21st Century Tech Transfer

And since we're here at one of the country's great academic institutions-Columbia University-I thought I'd start with a note on technology transfer and university R & D.

Research conducted at American universities fosters innovation, ensures economic opportunity, and creates American jobs. American universities are becoming more nuanced and strategic in their role as pillars of technology diffusion.

At the USPTO, the Department of Commerce, and across the Administration-we're committed to ensuring the best environment for successful R & D outcomes from our nation's universities.

And we're focused on turning the great ideas from federally funded research in universities and federal labs into new businesses and products.

To help improve our processes, the Department of Commerce recently hosted five University Innovation Forums to explore ways to increase and accelerate commercialization of university R & D.

The Innovation Forums were a great success and served as extremely useful mechanisms through which to engage stakeholders driving commercialization of federally-funded research in the United States. In fact, the forums generated over 400 recommendations.

And, in addition to the forums, a RFI was conducted and promoted by The National Economic Council and The White House Office of Science and Technology Policy that generated over 200 responses regarding university commercialization and Proof of Concept Centers.

Some of the most common topics/recommendations included:

  • Establishing appropriate metrics for gauging commercialization success
  • Recognizing and rewarding success for commercialization endeavors
  • Building a Public Online Repository for federally-funded research
  • Expanding SBIR and STTR Programs to include earlier and later stage funding
  • Addressing Tax incentives for early stage startup investment
  • Supporting Immigrant Entrepreneurs who create U.S. jobs

Based on the input, it is clear there is much work to be done and that continued dialogue between senior government leadership, industry, and top university researchers and officials can help lead to improved practices and more and better innovation and commercialization at all levels.

We recognize the important roles these various stakeholders play in our nation's economy. We are committed to continued engagement with them to enhance the partnerships necessary to ensure success in cultivating strategic and mutually beneficial alliances.

Humanitarian IP

USPTO is also seeking methods to incentivize the creation and wider distribution of technologies that address humanitarian needs. Under a proposed pilot program, patent holders who make their technology available for humanitarian purposes would be eligible for a voucher entitling them to an accelerated re-examination of a patent.

Among the technologies which address humanitarian needs that would be eligible for the program are treatments for tropical diseases, diagnostic medical tools, crops with higher yields or better nutritional value, and treatments for sanitation or clean water.

Participants could qualify for the proposed pilot by making their patented technologies available to impoverished populations for humanitarian use, or by making their patented technologies available to researchers who are developing technologies that address humanitarian needs.

Fast-track re-examination of a patent is a valuable incentive for entities to distribute humanitarian technologies through licensing or other means and our hope is that this new program will incentivize innovators to develop technologies that will benefit those in need.

The USPTO seeks cooperation with industry, government, the humanitarian aid community, academic researchers, and the public to create a successful program. This is the first step in a broader effort to develop business-friendly strategies that encourage inventions to address humanitarian needs.

USPTO Operations

And while we aspire to use the IP system to responsibly get to better outcomes for the public at large, we are well aware that it all starts with providing timely access to high quality patents and trademarks.

During the last decade, patent and trademark filings have increased significantly in the United States and indeed throughout most of the world.

Currently, the USPTO has a backlog of more than 700,000 patent applications. And, although we have shaved 22,000 off that backlog in the last few months -- it still takes far too long-on average about three years-to get a patent. These delays in issuing patents create uncertainty in IP rights and stall the delivery of innovative goods and services to market.

And we have set a goal of reducing pendency periods by nearly 50% in the next 5 years - Specifically, our goal is to reduce first action pendency to 10 months - and overall average pendency to 20 months - by 2015, and with adequate funding and staffing we should be able to meet those goals.

We're committed to reducing the time it takes to get a patent issued and to improving patent quality by finding win-win scenarios that benefit both the Agency and the applicant community, by gaining efficiencies across operations, reforming our processes and tools in sensible, studied ways and by adopting business leadership discipline including using the best metrics to measure success.

Initiative & Program Highlights

I'd like to highlight some of the USPTO's recent initiatives, and specifically, some of the acceleration programs we've implemented to help applicants get patent protection quicker.

These initiatives are part of USPTO's efforts to provide more examination options that enable applicants to prioritize their applications, and the USPTO's workload, to meet the needs and demands of the marketplace.

The USPTO's Green Technology Pilot Program which allows inventors to accelerate applications in certain technologies is a great example of a win-win scenario for USPTO applicants and for the public at large.

The Green Technology Pilot Program helps accelerate the development and deployment of green technology, create green jobs and promote U.S. competitiveness in this vital sector. But as with any acceleration initiative, the program is applicant initiated and we need you to use it for it to work.

Currently, the average time between the approval of a green technology petition and the first action on an application accepted into the program is just 49 days. In several cases, patent applications in the green technology program have been issued within a year of the filing date.

Meanwhile, our expansion of Project Exchange gives all applicants with multiple filings greater control over the priority in which their applications are examined. The program incents applicants to withdraw unexamined applications that are no longer important to them by providing acceleration for another application.

Project Exchange offers another win-win. In this case, applicants win by gaining critical acceleration for important innovation and the Agency benefits from less critical applications being withdrawn from our workload.

And earlier this year, we proposed a new patent examination initiative that would provide applicants even greater control over examination speed.

The "Three-Track" program aims to complete processing within 12 months for those applications most important to applicants. The USPTO hopes to implement the revised "Three-Track" initiative, revised in view of many comments received from the global innovation community, in 2011.

And while we're working on examination acceleration initiatives, we're also working on process efficiencies to bring down average pendency times across the Agency generally.

Pre-first Action Interview program

The USPTO's Pre-First Action Interview Pilot Program has increased examiner - applicant communication early in the process, improved quality and reduced the time it takes for participants to get a patent.

Under the program, participants are permitted to conduct an interview with the examiner after reviewing a Pre-Interview Communication providing the results of a prior art search conducted by the examiner. The program allows applicants and examiners to get more quickly to patentable subject matter, decrease actions per disposal and ensure the highest quality of review.


And we're working with our international partners to improve so-called "worksharing" processes as well.

Worksharing significantly increases the efficiency and effectiveness of search and examination. We believe that work sharing can have a significant impact on backlog.

The USPTO has implemented the Patent Prosecution Highway (PPH) with 14 other patent offices worldwide and we've set the goal of doubling PPH cases year over year for three consecutive years.

I'm pleased to report that we reached, and exceeded, the 4000 PPH entry goal this year, meaning that in one year we more than doubled the throughput of the PPH over all previous years combined. And we'll be looking to double that number to 8,000 this financial year, and double it again the year after that.

And savvy applicants are using worksharing for a reason. PPH applications have proven to take significantly less time to prosecute than non-PPH applications. When using PPH, actions per disposal drop from 2.4 to 1.9 on average for PPH cases and the overall allowance rate jumps from 45% to 92%.

And it's another win-win from an Agency perspective. Using the PPH process increases the sharing and re-use of information (especially critical search and examination results) between the USPTO and our partner offices reducing workload and driving down wait times.

Patent Cooperation Treaty

We have also made some significant improvements to our PCT processing.

We are now mailing 81% of PCT Chapter 1 reports by 16 months from priority, and over 90% by 18 months.

We cut the processing time in issuing the national phase filing receipt by 25%, with the goal to reduce the time by another 35% by the end of this FY.

We also recently renegotiated the contracts with our PCT contractors to align their quality more directly with the quality expected of our examiners and to provide appropriate training.

Earlier in the year, the USPTO, EPO and JPO (Trilateral Offices) agreed to expand PPH on a pilot basis to include Patent Cooperation Treaty ("PCT") work products (search and examination results).

This expansion has dramatically increased the number of applications eligible for PPH processing.

Tools and Process

And while we're pleased with the gains we've seen from enhanced worksharing operations, we're still hard at work designing a brand new IT infrastructure and re-engineering the patent workflow from start to finish.

IT is a mission-critical enabler for every USPTO business function. The productivity of patent and trademark operations is directly correlated to the performance of their IT systems, which are in dire need of modernization.

To accomplish its objectives, the USPTO is engaged in an aggressive, multi-year effort to upgrade our IT infrastructure. We're updating our IT processes, stabilizing our aging data centers and networks, and evolving to web-based virtualized computing technologies.

The USPTO has also begun an effort to re-engineer the entire patent examination process from the time an application is filed all the way through to the granting of a patent.

This effort is a necessary companion to upgrading and redesigning the IT infrastructure, and allows innovative redesign of the examination process supported by state-of-the-art automated work flow capabilities.

To ensure we build the most effective system, we're engaged with our employees (examiners and technical support) and first-line supervisors who will be the drivers of the re-engineering process.

The re-engineering project due dates will be linked to those of the end-to-end IT initiative such that the IT system is built to implement the functionality of the re-engineered process.

We have also already started the process to move our Trademark IT infrastructure into a "cloud" computing environment which will improve the stability, availability, and performance of the systems that support trademark examination and public access to Trademark Office information.

As I mentioned at the outset, as important as efficiencies and automation are, we aren't going to succeed on automation and efficiencies alone. The work that USPTO examiners perform is some of the most complex and difficult engineering analysis and legal work in the world. That's why the USPTO must hire, train, and retain a highly skilled and diverse workforce.

I encourage interested students and experienced practitioners in this room to consider applying for examination and other positions in the Agency. We're always looking for top talent.

Experienced IP Professionals

Further to this topic, I'd like to focus for a moment on some of the things we're doing differently in the way we hire.

Several months ago we began hiring examiners into our "IP Experienced" program. This hiring model places more emphasis on recruiting candidates with significant IP experience, such as registered patent attorneys and patent agents, former examiners, as well as skilled technologists having experience with the USPTO as inventors.

While continuing to draw candidates from our traditional sources, including graduating engineers and scientists and programmers from great schools like Columbia, the USPTO expects that hiring experienced IP professionals will assist in developing a balanced workforce, a lower attrition rate, and a faster transition to productivity for new hires.

Recruiting candidates with significant IP experience will also lead to a reduced training burden and increased ability to examine applications much sooner than an inexperienced new hire.

And we look forward to announcing more exciting changes. In fact, we'll be announcing another exciting project designed to recruit the best talent around the country. Stay tuned for that announcement later this week.

IP Community Improvements

I'd like to conclude with a note on communication and transparency. Many think of communications as information flowing out from the Agency to the public. While that is of course critically important, we're also putting an emphasis on intake of information from our stakeholders.

In fact, we are implementing improvements that originated within the IP community. And while many of these changes are "small" process changes-when taken in aggregate, they create substantial new efficiencies.

Let's take the example of defective oaths in reissue applications. We've heard from the applicant community that the problem is causing undue delays and we've heard some suggestions on how to fix it.

Our patent team is looking at several options that would allow the USPTO to give a higher priority to reissue applications and to improve the review of reissue applications for compliance with the unique requirements of the reissue statute. This is an example of a low-cost, high yield fix that was born in the applicant community.

And we're working in a number of ways to increase the flow of communication between the USPTO and the applicant community-that's communication in both directions.

Blogs: I am blogging weekly on the "Directors Forum" blog which can be accessed on our Web site,, and we've recently begun sending the Director's blog out via Google Feedburner so anyone can subscribe and receive it automatically.

Feedback Channels: We've implemented "Feedback Channels" to solicit public input on initiatives like the Green Tech and Three Track program and we've received a lot of helpful feedback.

Social Media: We've established a presence on Facebook and Twitter to engage the public and the intellectual property community directly and provide real-time information.

Patents Dashboard: Several months ago we launched an online "dashboard" to communicate Agency data and performance metrics on patent pendency and other key patents measurements in a clear and understandable way-and in real time, and we update this data monthly. If you haven't had the opportunity to do so, please take a look at the new dashboard on our Web site. And I encourage you to visit our inline subscription center at and sign up to receive some or all of our online alerts, news releases, weekly blogs and publications.

Closing Remarks

I've spent some time today detailing a number of our initiatives underway at USPTO. To get the complete picture, I hope you'll review the USPTO's recently released 2010-2015 Strategic Plan. The five-year Plan outlines a focused, specific set of goals and the steps we will take to reach those goals. I urge all of you to visit our website and read it.

We will use the USPTO 2010-2015 Strategic Plan as a management tool to help us track our progress in meeting each element of the Plan. The Plan includes a Balanced Scorecard-a detailed chart showing how each of our various initiatives supports a strategic goal.

So, through the programs outlined in the Plan-some of which I've discussed here today-and through the tireless work of our examining corps, we will focus our efforts more effectively, reduce pendency, bring the backlog down and foster innovation critical to the economic and social well-being of the United States.

I want to thank Columbia University for having me here today. I'd now like to open up the floor for questions or comments.

Thank you.