The Reinvention of the US Patent System – an Interview with David Kappos, Director of the United States Patent and Trademark Office (USPTO)

On September 16, President Obama signed into law the Leahy-Smith America Invents Act. The law represents the most significant overhaul of the US Patent Act since 1952 and seeks to help American entrepreneurs and businesses bring their inventions to market sooner, thus helping to accelerate the creation of urgently needed new jobs. bridges spoke with David Kappos, director of the US Patent and Trademark Office.
 



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By Caroline Adenberger

bridges vol. 32, December 2011 / Feature Articles


On September 16, President Obama signed into law the Leahy-Smith America Invents Act (HR 1249; AIA), after Congress had passed the act with strong bipartisan support – a rather rare event these days on Capitol Hill. The law represents the most significant overhaul of the Patent Act since 1952 and seeks to help American entrepreneurs and businesses bring their inventions to market sooner, thus helping to accelerate the creation of urgently needed new jobs. 


 

David Kappos, http://uspto.gov
David Kappos

David Kappos, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO), an agency of the US Department of Commerce, recently said at a conference that “despite ideological differences across political spectrums, the thirst for innovation is unquenchable.” Patents play a prominent role in the landscape of US innovation, with patent applications having tripled in the last two decades, from about 176,000 in 1990 to over 500,000 in 2011.

Some of the most significant aspects of the patent reform include: 

• Shift from “First-to-Invent” to “First-to-File”
• Establishment of a fast-track option for processing patents within 12 months
• Additional resources for the USPTO to reduce the current patent backlog and to significantly reduce waiting time
• Reduction of court litigation by creating a post-patent review process and a patent-challenging system that provides alternatives to costly litigation 
• Increasing the ability of American inventors to protect their intellectual property (IP) abroad via harmonization, which also makes it easier for entrepreneurs to simultaneously market products in the US and for export abroad. 

bridges had the opportunity to speak with David Kappos, director of the USPTO, about the recent reform and its implications.

bridges: When you took office in 2009, you were faced with a backlog of more than 750,000 unexamined patent applications at USPTO. Reducing this backlog was one of the goals you set for the agency. How much have you progressed so far, and which other organizational reform measures have you implemented to date?

David Kappos: Thanks for giving me this chance to address your readers across Europe and around the world. The global patent community holds the key to unleashing technology’s full potential.

Since the beginning of my tenure, we’ve pushed for a variety of measures to reduce the backlog in patent applications. Our efforts have been yielding fruit, as the patent backlog has been reduced from over 750,000 patent applications when I took office to under 670,000 at the end of October 2011, despite a 4 percent increase in filings last year.

Examiner hiring is a critical part of our efforts. Patent applications have risen significantly over the last decade without hiring keeping pace. Over the past two years we’ve hired 1,116 examiners and plan to add another thousand or more this year.

But hiring alone is not enough. The USPTO has also given all of its patent examiners detailed interview training to improve communication between applicants and examiners and to encourage examiners to hold interviews earlier in the application process so that issues can be identified in the front end of reviewing an application. This not only encourages applicants and the examiners to engage in a stronger dialogue, which improves the understanding of a patent application, but the interview training has expanded the examining corps knowledge of procedural and legal topics. By encouraging a more open dialogue, the quality and efficiency of examination has improved.

We also instituted the Clearing the Oldest Patent Applications (COPA) program to act on the oldest applications sitting in the backlog. Of 312,759 applications that had been in the pipeline for 16 months or longer, 239,346 applications (77 percent) have been completed through the COPA effort. This puts the USPTO on track to meet our goal of guaranteeing a first action on all applications within 10 months by 2015. We will continue to push aggressively to reduce the backlog even further in order to unlock the untold number of jobs and innovations idling in the pipeline.

 


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bridges: The shift from a “First-to-Invent” to a “First-to-File” patent system is undoubtedly the biggest reform measure of the recently passed America Invents Act. Why did the US adhere to the “First-to-Invent” system for so long, and what do the details of the new “First-Inventor-to-File” system look like?

David Kappos: Making significant change to an established system is always hard, even when the change has clear benefits. And this change does benefit everyone. In the past, inventors have been lulled into a false sense of security that they could prove themselves the first to invent. But when the inevitable challenge came, small businesses found themselves outgunned in complex and costly legal procedures, struggling to assemble arcane evidence, spending half a million dollars or more trying to prove they were the rightful inventor – and still losing in the vast majority of challenges. The new first-to-file system gives these entities a simpler, more objective, and more transparent system for determining patent priority, helping ensure that independent inventors and small entities have greater access to their rightful claims to patents and are able to navigate the patent system on a more equitable footing with larger enterprises.

Despite the challenge in any transition of this magnitude, the US adopted first-to-file because the benefits of harmonization are worth the effort. As our economies are increasingly globalized, businesses can no longer afford to sort through a conflicting morass of rules and regulations at each national border. We’re pleased that harmonization talks with our European and Pacific partners have gone so well, and we hope that they’ll follow suit in making needed changes at their end.

First inventor to file is the same as first-to-file. The name “first inventor to file” emphasizes that only an inventor may file a patent application. This prevents an employee, assistant, or other person with access to your technology from stealing the idea and receiving a patent on it. European systems have similar provisions.

The primary difference between the US and European systems is the one-year grace period. This key feature of US law protects an inventor who discloses an invention within one year of patent filing. The grace period creates an exception for what constitutes “prior art,” and thus makes it easier for an inventor to promote, fund, and market new technologies. The grace period also benefits universities by allowing time for researchers to publish and tech transfer offices to determine the economic value of innovations, without destroying the right to seek patent protection. As we harmonize our patent systems, it’s critical to provide inventors around the world with the same flexibility.

bridges: According to the recent OECD STI Scoreboard, the worldwide quality of patents has fallen sharply over the past two decades, about 20 percent between 1990 and 2010. How does the US address the issue of quality assurance, while also maintaining a reasonable average processing time?

David Kappos: While speed and certainty are essential to a well-functioning US Patent & Trademark Office , patent quality is the conditio sine qua non of any fit-for-purpose patent system. We are all deeply committed to ensuring high patent quality, although it is not simple to measure.

Since 2006, the USPTO has conducted a semiannual External Quality Survey administered to practitioners and inventors who have had the most contact with the USPTO during the prior year. Stakeholder perception of overall examination quality is currently the highest it has been since the inception of the survey. The levels achieved were the most positive ratings the USPTO had achieved and represented significant changes from previous years.

In addition to our External Quality Survey, the USPTO has shown consistent improvement in each of the measures for which baseline data are available, including a variety of work-product audits, global USPTO application-related data, and an internal quality survey; in addition, we are showing progress toward meeting our goals and targets.

In 2011, the agency adopted a multifaceted, holistic approach to measuring examination quality based on a USPTO-PPAC initiative in which the public aided in identifying indications of quality and worked with the agency to refine these indications into measurable factors. The resulting metrics are found on our Web site at: http://www.uspto.gov/patents/init_events/patentquality.jsp.

What is needed but, to our knowledge, does not yet exist, is a clear basis for meaningful quality comparisons between patent offices. That is why global harmonization conversations are helpful for measuring – and thereby improving – patent quality, as they enable all of us to more precisely understand the opportunities and limits of work sharing. And paying attention to those aspects of our patent laws can reap the largest dividends from harmonization.

bridges: Small- and medium-sized enterprises (SMEs) are the growth engine for the economy and are essential for job creation, creating two out of three jobs in the US. President Obama announced that the USPTO, together with the National Science Foundation and the Small Business Association, will pilot a program to assist recipients of Small Business Innovation Research (SBIR) grants in utilizing USPTO's resources. Can you share more details of the program design with us?

David Kappos: I’ll start with some background for your readers. For many small innovative companies, the ability to grow, hire new employees, and compete effectively in the global marketplace hinges upon securing patent and trademark protection. Patents, especially, have become increasingly vital to securing the financing and investment needed to build and scale businesses. Small Business Innovation Research (SBIR) encourages domestic small businesses to engage in Federal research, development, and commercialization through a competitive awards-based program that enables small businesses to explore their technological potential and provides the incentive to profit from commercialization. Since 1982 there have been 91,526 Phase I awards and 35,920 Phase II awards to 19,756 SBIR awardees who have produced 80,370 issued patents, completed 1,517 merger and acquisition (M&A) deals, and founded 2,028 Venture Capital-funded firms.

The USPTO SBIR Pilot Program you mentioned will provide comprehensive IP support to grant recipients from NSF through the SBIR program. Since its launch in October 2011, USPTO has provided educational services through its Global Intellectual Property Academy (GIPA), which offers monthly webinars covering a broad array of IP topics. USPTO has also provided its new IP Awareness Assessment tool to its first group of 20 awardees. The IP Awareness Assessment tool was developed in collaboration with the National Institute of Standards and Technology’s (NIST) Hollings Manufacturing Extension Partnership (MEP) to help inventors and companies assess their IP strategies. The USPTO will continue to work with SBIR grant recipients to refine the program and provide additional services.

bridges: Another program you initiated is the “Green Tech Pilot Program,” which offers an expedited examination process free of cost for inventors of “environmentally conscious technologies.” Can you tell us a bit more about the pilot program and its results? Will it be continued?

David Kappos: Our Green Technology Pilot Program has been a tremendous success. As of November 21, 2011, we had accepted 2,802 petitions to enter the program; and these have already resulted in 676 granted patents. Currently, the average time between granting of a green technology petition and first office action on its merits is just 68 days. In many instances, applicants have had their green technology inventions patented less than a year from their application filing date.

USPTO is proud to play a role in accelerating environmentally conscious technologies in emerging fields like alternative fuels, clean energy, and green technology. By advancing a commitment to building a more sustainable energy future, the agency is able to spur additional innovation and promote green-collar jobs that provide our world with alternatives to harmful energy practices.

The program is currently scheduled to run through December 31, 2011, or until 3,000 petitions have been accepted, whichever occurs first. Going forward, USPTO will evaluate ways to continue advancing the President’s commitment to growing the green economy.

bridges: While some services are offered by the USPTO at no cost, other patent fees have been increased as a result of the America Invents Act. For the first time in history, USPTO can now access all the fees it collects to recover the costs of the provided services. How will the additional revenue generated by these fees be used by the USPTO?

David Kappos: This legislation enables us to bring online the additional resources needed to further combat the backlog of patent applications, which represent an untold number of innovations idling in the pipeline. As I mentioned earlier, the patent backlog has been reduced from over 750,000 patent applications to fewer than 670,000, despite a 4 percent increase in filings. But additional resources provided in the law are allowing us to reduce that number even further and even faster – unclogging the backlog and regaining jobs lost in the recession.

Before the ink of the President’s signature was even dry, we began aggressively implementing this mandate by hiring new examiners, instituting new processes, and modernizing our IT infrastructure. None of this would be possible without the revenue changes in the AIA. These changes will take time to implement, so we’re also looking at more immediate improvements. To alleviate an average wait time of almost three years for patent protection, we have already begun offering inventors an opportunity to have important patents reviewed in one-third the time with a new fast-track option that aims for a 12-month turnaround. The Track 1 prioritized examination provision allows the USPTO to move with urgency when necessary and bring the next generation of ingenuity to the marketplace even faster.

And our users are already taking advantage of this tool to grow their companies. As of the end FY2011 – only a few a few days after the program started – we received 850 applications, with another 546 in the queue for FY2012 as of November 17. And 753 of these applications have already been granted prioritized status.

bridges: The America Invents Act also allows the USPTO to establish a new in-house review process for challenging granted patents, which will be cheaper and faster than court litigation. Can you share more details on how this will be implemented?

David Kappos: The new post-grant review process for challenging granted patents will be conducted at our Patent Trial and Appeal Board (PTAB). The Board is composed of Federal judges who work exclusively on patent matters at USPTO. By resolving disputes about patent rights earlier, more efficiently, and at lower cost, we will add greater certainty to, and cultivate greater confidence in, the American patent system.

The specific rules and procedures for conducting post-grant reviews are not provided by the statute. As with many other AIA provisions, USPTO is in the process of developing a rules package governing post-grant review. Over the next 10 months, we’ll flesh out the details of how this new procedure will work.

Essential to our effort is input from the public, especially the patent community. We need feedback on every aspect of the new rules, so we can craft procedures that fairly and efficiently address the needs of the entire community. I urge everyone to participate in this process through the input mechanisms on our AIA site at: http://www.uspto.gov/AmericaInventsAct

bridges: The USPTO is headquartered in Alexandria, Virginia, just a few metro stations from the White House and Capitol Hill. How do you ensure that your agency doesn’t lose touch with inventors from all over America, often located in more remote rural areas, who are dependent on your service?

David Kappos:  The spirit of innovation is woven throughout our history. The story of our nation’s growth has been written by the daring drive of independent inventors and entrepreneurs who are willing to roll the dice on a great idea. This country was founded by pioneers who developed new ways to cope with an unfamiliar environment, who cured disease and connected a country, who led the world into the age of flight, and who now transcend global borders through the power of information technology.

America’s thriving independent inventor community is one of our nation’s greatest resources, and USPTO has worked hard to stay connected with that. We have assistance programs at USPTO aimed specifically at helping independent inventors and small businesses with the unique challenges they face. We publish a bimonthly newsletter with stories for and about independent inventors. And we travel all over the country to talk to inventors at conferences, roadshows, workshops, and other events. You can find a guide to our independent inventor assistance on our Web site at: http://www.uspto.gov/inventors/independent/index.jsp

We’re working even more to assist those throughout the country in need of legal assistance to get the expertise and guidance necessary to prosecuting a patent, the cost of which is sometimes a barrier in and of itself. We launched a pilot pro bono program earlier this year in Minneapolis, Minnesota, and by expanding our reach we can establish partnerships with local bar associations regionally to construct new networks of support.

Finally, the AIA authorizes us to open three satellite offices around the country over the next three years. We plan to open the first satellite office in Detroit, Michigan, in 2012, and are working to select other locations using the process prescribed by Congress in the new law. These offices will give USPTO a permanent presence around the country, helping us connect even better with our vast inventor community.

bridges: The harmonization of international patent laws to increase efficiency and speed up patent processing for applicants seeking protection in multiple jurisdictions has been under discussion for many years. What is your take on this multilateral effort, and what actions has the USPTO undertaken in this context?

David Kappos: Harmonization is a defining issue for 21st century patent systems. With such varied IP systems, innovators and patent offices around the world have to repeat the same work time and time again, ultimately wasting billions of dollars a year and clogging the pendency pipeline while devaluing the currency of innovation. We can’t afford this drain on the innovation economy.

To devise real solutions that cut down work-flow redundancies, we must collaborate. And to truly enable the global innovation system to flourish, we need to take concrete steps to harmonize our substantive patent laws. Greater harmonization is essential to the efficient functioning of our respective patent systems and bears the potential to unleash millions of jobs, driving real growth for all of our economies.

I’m encouraged by the great progress made over the past year. Our talks with our European counterparts and others at IP5 in Japan this summer, at the trilaterals in Paris in November, and elsewhere have been very productive. Our Patent Prosecution Highway (PPH) pilot program for work sharing has yielded great results and has been extended for another two years. More than 8,000 applications have already made their way through the PPH pipelines, enhancing the efficiency and quality of patent examination through global collaboration. The Cooperative Patent Classification (CPC) work is also bearing fruit.

The Council of the European Union even took a critical harmonization step of its own recently through the creation of a single patent system – one that would replace the status quo of individually validated and enforceable rights in each country. And now the EU stands at the threshold of adopting a new patent court, enabling patent disputes to be decided region-wide in a single venue. While the new system is still in the process of being adopted, the USPTO applauds the EU’s leadership in streamlining and strengthening its IP architecture. Not only will this reduce patenting costs for all countries, but it represents a step towards greater harmonization generally.

We’ve already begun seriously engaging with the ideal of an improved global patent system by identifying areas of the law in which further coordination and development across jurisdictions would be helpful.

But the leaders of the IP world need to truly own our role and must continue to engage the international business community in making the case for why a global economy requires a global innovation architecture to sustain it. If we can eliminate repeated work and free up resources for inventors, patent offices, and courts, we will ultimately generate the economic lift that comes from moving ideas to the marketplace more efficiently.

bridges: How does the roadmap for USPTO look over the next few months in terms of implementing the America Invents Act, and where do you anticipate the greatest challenges?

David Kappos: Implementing the AIA will require dedication and focus over the next 18 months to two years. The law has more than a dozen major changes that directly impact USPTO, including several new procedures at the Patent Trial and Appeal Board, fee setting authority, changes to filing priority and the definition of prior art, and new methods for public submissions on any patent application. Any one of these changes would entail a substantial effort. The sheer tonnage of these provisions will certainly be a challenge to implement, but the USPTO is up to the challenge.

As we develop the rules to implement the many new provisions of the AIA, the public’s input is vital. We’ve got working groups going under the leadership of a chief implementation coordinator, and we're receiving tremendous input from the IP community. We recognize that the USPTO cannot implement this law singlehandedly. The innovation community must work together to implement our country’s new patent law. Again, I urge everyone to participate in this process through the input mechanisms on our AIA site:                                 http://www.uspto.gov/AmericaInventsAct

Through judicious rule making, thoughtful guidelines, and policy-based interpretations of the new laws in the courts, we can animate the AIA with the balance and stability that are essential to strong business growth. And when we are done, our new patent laws will streamline processes that optimize patent quality and will minimize the barriers to research, development, and growth that have plagued businesses in this economic climate for far too long.  In its totality, the America Invents Act fosters a nimble and strong IP infrastructure for our country, allowing businesses to grow and technologies to flourish by leveraging inventive efforts with the fulcrum of a US patent – the currency of innovation in this 21st century.

 

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The above article is based on an interview with David Kappos that was conducted November 28, 2011, by the Office of Science & Technology at the Embassy of Austria in Washington, DC. Kappos currently serves as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. Before being nominated to his position by President Barack Obama in 2009, Kappos served as vice president and assistant general counsel for intellectual property at IBM, where he directed IBM’s worldwide intellectual property operations.

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