Modern Times Legal Patent Blog

USPTO BPAI holds software claim patent-ineligible under Bilski

Mark Nowotarski (@patentbuzz on Twitter) posted a link today to what he described as the first post-Bilski BPAI rejection under 35 U.S.C. sec. 101 (holding the method, software and "computer apparatus" claims patent ineligible) in Ex parte Proudler (Appeal 2009-006599, Application 10/643,306).

After reading the decision and reviewing the claims, what most caught my attention was claim 43, which read as follows:

43. A computer program stored on computer readable media for instructing a programmable computer to implement a method of controlling the processing of data, wherein the data comprises a plurality of usage rules for a plurality of data items, the programmable computer being programmed to apply individualised usage rules to each of the data items based on a measurement of integrity of a computing entity towhich the data items are to be made available, the computer program permitting instantiation of the data items at the computing entity only if the integrity of the computing entity complies with the individualised usage rulesassociated with said data items.

This claim is a bit unusual in that it claimed "a computer program stored on computer readable media" rather than "a computer-readable medium storing a computer program (or software code)," though it is not clear that this semantic difference influenced the ruling.

Interestingly, the Examiner had rejected the claims under section 103 (obviousness) rather than section 101, but the Board acted on its own initiative in crafting the section 101 rejection. In rejecting claim 43, the Board reasoned as follows:

In like manner, independent claim 43 recites in its preamble a direct recitation to a computer program that is said to be stored on a computer readable “media”. Besides falling within our earlier analysis, the manner in which this claim is recited in its preamble encompasses signals per se based upon the correlation of this claim to the signals associated with the Internet at page 4 of the “Summary of the Invention” in the principal Brief on appeal as well as its reference to the teachings of the signaling embodiment associated with networks, including the Internet, at Specification page 11 beginning at line 19. Thus, this claim is directed to include communications media. As such, this claim is inclusive of transitory signaling embodiments, which are proscribed by the early-noted case law. The media of this claim include transitory embodiments, such as to comprise signals per se. Note also the analysis provided by Subject Matter Eligibility of Computer Readable Media, 1351 Off. Gaz. Pat. Office 212 (Feb. 23, 2010).

Note that the recitation of the computer readable media in this claim was insufficient to pull this claim from the Bilski-forbidden domain of abstract ideas, as it appeared that inclusion of language in the specification suggesting that the software code can be embodied in a transitory state in communications media poisoned claim 43 by sweeping that environment within the scope of the claim.

Perhaps the Applicant, HP, will appeal the ruling to the federal circuit, though right now in view of this ruling and the USPTO's Subject Matter Eligibility Guidelines (and unless the invention only includes software/signals in a transitory state), prudence may suggest specifying (by definition in the specification) that the storage of the computer program on the computer-readable medium is non-transitory to avoid the hatchet of the enhanced abstract-idea preclusion wrought by Bilski. The USPTO's Subject Matter Eligibility Guidelines suggest that one can amend the claims after filing to specify the "non-transitory" nature of the software/data storage, though one would likely be on the firmest foundation for making that amendment if that language is in the specification when the application is filed.

Near-knockout: 10 takeaways from the Supreme Court's Bilski decision

The US Supreme Court finally issued it's long-awaited decision in decision in Bilski v. Kappos earlier today. If this case was a World Cup match, I would say that the opinion represented a shot off the crossbar in terms of very nearly knocking off business-method patents. Nevertheless, opportunities for scoring a business-method patent appear to remain possible in at least some contexts. 

The Court's decision was fractured, wherein Justice Kennedy wrote for the court in an opinion that only earned three full concurrences with Scalia joining parts of the opinion to form a majority for those parts. Justices Stevens and Breyer wrote separate concurring opinions.

Everyone expected that the majority opinion would be authored by departing Justice Stevens as his final decision, and it appears likely that the Court had earlier imagined that his opinion would collect majority approval; so it was a surprise, to me at least, that (a) Stevens' strike would have put the ball squarely in the net to knock out business method patents, though (b) his opinion fell one vote shy of a majority and therefore did not yield controlling law. Nevertheless, I urge you to read the entirety of the Stevens concurrence, as I expect it may provide a lasting influence on the continued development of caselaw in this realm.

The Court's decision resolved little, though here is what we can discern:

1. The Federal Circuit's "machine or transformation" test is a "useful and important" standard for evaluating the patent eligibility of a process, though the Federal Circuit erred in using it as an exclusive test (Slip Op. at 8).
2. 35 U.S.C. 101 does not categorically exclude business methods from patent eligibility--recognizing that at least some methods of doing business may be patent eligible (Slip Op. at 10).
3. The Court rejected Bilski's claims (directed to methods for hedging risks in commodity transactions) under section 101 on the ground that they represent abstract ideas (Slip Op. at 13); though as Justice Stevens correctly notes in his concurrence (Slip Op. at 25), "[t]he Court . . . never provides a satisfying account of what constitutes an unpatentable abstract idea."
4. Bilski's claims were deemed "abstract" (representing "the concept of hedging") (Slip Op. at 15) notwithstanding that they specified initiating transactions between a commodity provider and consumers and between the commodity provider and market participants and also specified that price is determined by real-world variables, such as weather conditions; in his concurrence (Slip Op. at 24), Justice Stevens suggests that the majority construes these components as "mere 'token postsolution components,'" which are deemed insufficient to save the claim from the forbidden territory of patent-ineligible abstraction.
5. The Court approvingly cites its earlier decision in Parker v. Flook, 437 U. S. 584 (1978), holding "Flook stands for the proposition that the prohibition against patenting abstract ideas 'cannot be circumvented by attempting to limit the use of the formula to a particular technological environment' or adding 'insignificant postsolution activity'" (Slip Op. at 14 and 15).
6. No indications of any new "safe harbors" for patenting processes were readily evident.
7. Justice Stevens (joined by Justices Ginsberg, Breyer, and Sotomayor--i.e., one vote shy of a majority) wrote that "[t]he wiser course would have been to hold that . . . business methods are not patentable" (Slip Op. at 18); citing the grant of patent power in Art. I, Sec. 8, Cl. 8 in the US Constitution (granting Congress the power to "promote the Progress of . . . useful Arts"), Stevens further asserts that business methods cannot be deemed to qualify as "useful Arts" as that term should be understood in view of its historical context (Slip Op. at 38-40).
8. Justice Stevens and his plurality of four suggest that it would be comical to render any of the following sorts of processes patent-eligible:  "a process for training a dog, a series of dance steps, a method of shooting a basketball, maybe even words, stories, or songs if framed as the steps of typing letters or uttering sounds" (Slip Op. at 29); though those who follow patents closely recognize that many US patents have issued in recent years covering processes very similar to what he here characterizes as "comical"; Breyer also piles on, citing a lampoon of "ridiculous" and "absurd" patents such as a "method of training janitors to dust and vacuum using video displays," a "system for toilet reservations," and a "method of using color-coded bracelets to designate dating status in order to limit 'the embarrassment of rejection'" (Slip Op. at 70-71)
9. In his concurrence, Stevens also appears to base his opinion, at least in part on "serious doubts about whether patents are necessary to encourage business innovation" in view of the competing and conflicting interests of promoting innovation and not unduly limiting the freedom of others via patents (Slip Op. at 57).
10. The Court provides no direct (or even indirect) ruling on software patents or patents directed to anything other than processes; consequently, the Court's decision does not in any way appear to me to restrict the ability of inventors patent software (when framed, for example, as a computer-readable medium storing software code); and I accordingly believe that software remains safe for patenting (at least when framed as a product if not as a process) in the United States; not as clear is the potential impact on inventions relating to medical diagnostic techniques, such as that at issue in Mayo v. Prometheus.

 

Still no Bilski decision from the US Supreme Court

Everyone with any interest in patents on business methods or software has been eagerly awaiting the decision of the US Supreme Court in the Bilski case.  The Court issued at least a half dozen decisions today and still no Bilski.  So we now have just one decision day left in the Supreme Court's term--Monday (unless the Court adds another decision day for later in the week), and the widely held expectation is that the Court will not put off any decisions until next term.

Where can you watch for the near-real-time news?   Tune in to SCOTUS blog on Monday morning.

Still waiting - 10 expectations for Bilski and patent eligibility

Sorry for my long absence from this blog. This past month was the busiest that Modern Times Legal has seen since opening shop almost three years ago; and the practice has been non-stop busy since at least December of last year, so count my experience as one small data point for increasing economic recovery. Nevertheless, I will try hard to accelerate my posting, as I still have dozens of ideas for what I think will be interesting posts.

My last post cited rumors that the Supreme Court's decision in the Bilski case was imminent. As the decision still has not issued, those rumors were false. Nevertheless, what can we derive from this remarkably long wait for the Supreme Court's decision?

1. The Supreme Court Justices may be strongly divided as to the patent eligibility of business methods and, potentially, computer software.
2. Nevertheles, the Supreme Court's decision will almost certainly issue within the next month, as the Court's current term wraps to a close.
3. The Supreme Court very likely will not simply affirm the Federal Circuit's "machine or transformation" test, unless they have four votes to affirm and another justice finally wears down (this strikes me as unlikely). As more time passes, the likelihood that the Court's Bilski decision will shake up the standard increases. In recent patent cases, the Supreme Court has not been shy about reversing and scolding the Federal; and I do not expect that disposition to change here.
4. Accepting that we will have a new standard, I pin the odds at only slightly more likely than not that the Supreme Court will broaden (or relax) the standard of patent eligibility, as opposed to closing the door even further on the patentability of business methods and software. 
5. I expect that the Supreme Court is dissatisfied with the Federal Circuit's test but is having a very hard time generating an alternative test (that will satisfy five Justices); consequently, the likelihood of having a full majority opinion may be decreasing, which may result in a more limited decision that can secure the votes of five Justices.
6. The Supreme Court Justices are a smart group, and they have very smart clerks; so I am optimistic that the expected new standard will be well reasoned, though it may well be controversial.
7. What the Court lacks, though, is practical experience with patents as well as extensive expertise in science and engineering; so the risk is that they may not appreciate all of the real-world nuances and ramifications, and they may have a hard time appreciating that there is no clear distinction between tangible and intangible ideas (ideas when put to practical use always have some physical manifestation, whether in computer memory or in the human brain); so facile determinations based on concepts of "tangibility," though superficially attractive, are ultimately likely to be highly arbitrary and artificial.
8. What I expect the Court will find and appreciate, however, is that even if one takes a static view toward the standards patent eligibility over time, largely abstract processes have long been patentable, as evidenced by Samuel Morse's patent for Morse Code issued more than a century and a half ago, a point the majority of the Federal Circuit appeared to conveniently ignore.
9. The Court will appreciate the increasing importance of software and other more-abstract concepts to the American economy, and they will appreciate the risks and dangers of disrupting existing expectations too much; so I think it unlikely that most software, for example, will be barred from patent eligibility.
10. Finally, to the extent that a safe harbor can be counted on, the integral tie-in of actors, elements and/or phenomena outside of a computer and outside the human mind are likely to be the safest bet in terms of providing solid footing for patent eligibility.

My advice to clients with pending business-method and software-related applications has mostly been to wait for the decision before responding to outstanding Office Actions where feasible and, for those who are planning to file, to just file a provisional application now and wait for the Bilski decision before filing the non-provisional, though these decisions always hinge upon a host of considerations based on the client's particular circumstances.

I will certainly provide my thoughts when the decision issues. Subscribe to the RSS or email feed for this blog to receive notice when that post goes up.

Supreme Court Bilski decision imminent?

"Gossip is that the Supreme Court will be issuing its Bilski decision this
week," reported patent commentator Greg Aharonian in his Patent News email newsletter this morning. Similar rumors have been passed along from a number of sources and commentators over the past week. To my knowledge, however, neither Aharonian nor anyone else has cited a source for this rumor, and few would have first-hand knowledge outside the Justices and their clerks.

In its underlying 2008 Bilski decision, The US Court of Appeals for the Federal Circuit dramatically limited the patent eligibility of software and business methods, requiring that such a method either (a) be tied to a particular machine or apparatus (suggesting that a general purpose computer does not qualify as a "particular machine or apparatus") or (b) transform a particular article into a different state or thing.

Whether the Supreme Court's decision comes next week or next month, we likely will not need to wait much longer. The Supreme Court's term closes in less than three months--on June 28th, so we can expect the decision in less than three months in any case; and few patent cases are more important in terms of shaping the contours of patent law in the years ahead.

Though patent applicants who have a tangible, real-world element to their processes are likely to remain on safe ground, the holding established by the Federal Circuit's decision called into question the validity many purer software patents. The Supreme Court, however, has not been shy about reversing and castigating the Federal Circuit' in recent years. Notwithstanding challenging questions posed by some of the Justices in the oral argument for this case back in November, it is hard to predict where the chips will fall when the Justices and their clerks hash out these issues behind closed doors.

Watch for this issue to unfold soon. 

Slideshow: 'Understanding And Obtaining Patents And Managing Costs'

Below are the slides from a presentation on patents that I made to a joint meeting of the New England Sections of the American Ceramic Society and the International Microelectronics and Packaging Society in Marlborough, Massachusetts on March 24, 2010.

The slides are not entirely self-explanatory, so please feel free to contact me if you wish to further discuss any of these topics. 

Understanding And Obtaining Patents And Managing Costs

Other IP Blogs

Steve Nipper, long-time patent-attorney blogger at the Invent Blog, recently published an excellent list of IP bloggers. Many on that list are already in my RSS feed, though I have bookmarked his page to further explore some that are new to me.  IP law (patent law in particular) is fast changing and dynamic; and these blogs provide excellent resources for new ideas and staying current.

Fortunately, patent law, particularly among small firms, remains a collegial profession; so I am happy to share the spotlight. Moreover, I by no means attempt to be all-encompassing with this blog; patent law is far to vast a field for such an approach to be practical.  Rather, I tend to pick up shiny stones here and there where I think I have worthwhile insights to contributes by way of a blog post (and my growing list of topics for blogging topics tends to expand far faster than the posting pace I can realistically maintain). And if I can condense my thoughts into 140 characters or less, I tend to instead post to Twitter. So I encourage all readers to check out these other blogs to round out your perspective and sources.

Finally, I thank Steve for the honor of being included in his list.

Understanding Patent Claims

The aspect of a patent application that I most often need to explain to an inventor is the claim section.  In an issued patent, the claims will appear at the end of the text and are usually preceded with a phrase, such as "I/we claim . . ."  Most patents include a variety of claims.

Those claims that do not refer to another claim (such as claim 1, below) are "independent claims," while those that refer to another claim (reading, for example, "The method of claim 1, wherein . . . " or "The method of claim 1, further comprising . . .") and then specify something more are "dependent claims."  The dependent claims accordingly incorporate the subject matter of the referenced claim and add something else to render the dependent claim at least somewhat narrower than the claim from which it depends.

Let's look at the following example set of claims directed to a brick-making process (please indulge me in accepting that the examiner finds them to novel and non-obvious) to illustrate these points:

I claim:

1.  A method for making a brick, comprising:

a) packing a composition including clay; and

b) heating the packed composition. 

2.  The method of claim 1, wherein the clay includes kaolin.

3.  The method of claim 1, wherein the composition further includes lime.

4.  The method of claim 1, wherein the packed composition is heated to a temperature of at least 1,000 deg. C.

5.  The method of claim 5, further comprising:

c) holding the packed composition at 1,000 deg. C for at least an hour; and then

d) cooling the packed composition at a rate no greater than 50 deg. C per hour.  

Assume we have 15 more claims in the form of additional method claims and product claims.

An inventor's first reaction upon reviewing the claims may be to object that he/she does not want to be limited to using kaolin and wants to cover processes in which the brick is fired at a temperature below 1,000 deg. C. If, for example another party (let's call them Pirate Brick) uses the inventor's process but substitutes another type of clay for kaolin, then Pirate will not literally infringe claim 2. That's a problem, right?  Not necessarily. Assuming the patent issues, Pirate Brick need only infringe one of the claims in the patent to be found liable for patent infringement. Claim 1 does not specify any particular type of clay, so it may well cover Pirate Brick's process even if they use a different type of clay. If Pirate infringes claim 1 (or any of the other claims), they infringe the patent regardless of how many other claims Pirate may circumvent.

So why bother to include all of these narrower dependent claims if claim 1 is going to ensnare the most infringers? The answer is that a claim need not only be infringed by Pirate, the validity of the claim must also be upheld as valid. When the patent issues, the claims have a presumption of validity. Though, when you allege patent infringement against Pirate Brick, you can assume they will pay their lawyers a boatload of money to turn over every leaf to find additional prior art that was not considered by the examiner in an effort to invalidate your claims.

If Pirate Brick finds a good reference that covers a brick-making process closely on point to the inventor's process, Pirate may be able to invalidate claim 1 and some of the other claims. But if the brick was fired at a lower temperature or quenched at a faster rate in the earlier process, then claim 5 may still be upheld; and if Pirate Brick uses the temperature profile specified in claim 5, Pirate may still infringe the patent (via claim 5) even though they can invalidate claim 1.

Accordingly, each dependent claim can be viewed as a "fall-back" position in case our independent claim is too broad and accordingly held to be non-patentable or invalid. Pirate Brick may have an easier time invalidating claim 1 because it is so broad, though chances are that we can still distinguish the invention from whatever earlier processes Pirate may uncover based on at least one of the fall-back positions provided by the narrower dependent claims. If so, then the narrower dependent claims may survive; and hopefully Pirate will still infringe one of those surviving claims.

Consequently, I try to draft the claims to cover a range of broad and narrower embodiments, wherein different claims include different features that may help to differentiate the prior art, known or unknown (or satisfy other patentability requirements, such as enablement). Predicting which features will resonate with the examiner and help to establish patentability may also be difficult to forecast. If the examiner, for example, will only allow claims limited to the inclusion of kaolin, then we can evaluate whether to accept claims limited to kaolin or we can continue to argue or appeal in pursuit of broader claims. And that evaluation can be made at each stage of examination.

If the broadest claims are patentable and unassailable, then we may not need to worry about any of the narrower dependent claims (and whether they include very narrow limitations, such as requiring an imprint of Tickle-Me-Elmo riding a bicycle and drinking a bottle of Coca-Cola on a face of the brick), though in most cases, it is advantageous to keep narrower claims (assuming they are not ridiculous like the above Tickle-Me-Elmo example) to provide a second line of defense in case there is prior art (uncovered either during examination or in a post-grant challenge) that would force us to narrow our scope to remain novel and non-obvious over the prior art.

The ultimate compilation of claims will represent a balance of all of these considerations. And, of course, if you wish to discuss how your invention might be claimed, feel free to contact me to explore whether there may be a fit between your company/institution and Modern Times Legal. The above example, of course, is provided only for discussion and any actual legal advice regarding patent claims requires establishment of an attorney-client engagement and familiarity with the particulars of your invention.

USPTO Goes Wiki

USPTO Director David Kappos is on a role. On his Director's Blog today, he writes about his ideas for taking the Manual of Patent Examination Procedure (i.e., what might be viewed as the bible for US patent examination) open source. Perhaps we all can soon become co-authors of a much more dynamic MPEP.

I provided a couple comments on the blog, in particular advocating for including links for case citations to the actual court decisions, preferably in citation-friendly form to perhaps avoid the need to pay extortionate fees to obtain recognizable citations to the decisions from our nation's courts. I also commented on how I liked the intriguing interplay and juxtaposition both (a) between the proprietary rights of patents and open-sourced knowledge and (b) between the government and the people. Sounds like great fodder for a compelling article in Wired, no?

David Kappos Talks About His Initiatives to Change US Patent Practice

A Surprise Encounter with the USPTO Director

This past Friday, the Boston Patent Law Association provided me (above left) with a special treat--an opportunity to join USPTO Director David Kappos (above right) for breakfast across the street and a few doors down from my office. But what really surprised me was when Director Kappos approached a colleague and me from behind to introduce himself and initiate a friendly chat. We had not previously met; Director Kappos was just being himself--remarkably open and cordial.

While President Obama has been criticized for a number of failings in his first term, I try to reserve my judgment to the areas I know well. The functioning of the USPTO is one such arena, and here Obama hit a home run when he appointed David Kappos as USPTO Director. He clearly knows the patent system from all perspectives, and he is an exceptional listener. He asked to hear our thoughts, and he clearly valued our opinions. He seemed more than happy to chat with us for all the time he had available.

Promoting Uniform and Compact Prosecution 

One of the first questions I asked Director Kappos, after noting the great variability in examination standards across USPTO art groups, was whether he had ideas for promoting better uniformity and consistency across examiners, particularly in some art groups with very low allowance rates. Without pause or prompting, Director Kappos reflected on the story of the examiner who refused to enter an Amendment due to a mistake with a period at the end of a sentence (I urge you to read the story, originally posted by Greg Aharoninan and commented upon here by a USPTO examiner, if you haven't already). In his own words, Director David Kappos emphasized that this type of examiner behavior is "garbage," and he is determined to try to stamp it out.

Director Kappos noted that changing the culture, aligning priorities and establishing consistency across an institution as big as the USPTO were big challenges. While others might gravitate to a top-down approach, his approach is bottom-up. "You start where the action is, and that's with the examiners." Accordingly, Director Kappos regularly meets with examiners face-to-face and often one-to-one. If my conversation with David Kappos is representative, I am confident that each of these conversations produces a wealth of bi-directional sharing of information and understanding. In addition to establishing these personal connections with examiners, Director Kappos indicated that he is working to provide much more training and guidance to examiners. Likewise, Director Kappos reported that his approach with managers is to focus on how they can best help the examiners and to encourage managers to mentor examiners in achieving "compact prosecution" (i.e., quickly and proactively getting to the heart of issues in examination and thereby streamlining prosecution). Moreover, by further increasing the skills of examiners, he believes they are more likely to stay around and not leave the USPTO.

Director Kappos also noted that the feedback that he is receiving from applicants and their attorneys indicate that these efforts are starting to bear fruit. In particular, he noted that he has already received word of appreciation from many attorneys who have surprisingly received telephone calls from examiners proactively reaching out to try to resolve patentability issues. At one point, Director Kappos specifically commented that "it is our job to help." Words like these are refreshing, as we have not seen that level of top-down commitment to customer service at the USPTO in nearly a decade.

Patent-Term Adjustments under Wyeth

The recent decision from the US Court of Appeals for the Federal Circuit in Wyeth v. Kappos changed the way the USPTO calculates patent term adjustments. Professor Dennis Crouch recently outlined the calculation algorithms and the process for requesting recalculation from the USPTO on his PatentlyO blog, so I will not rehash those topics here.

Director Kappos confirmed that the USPTO is accepting requests for patent-term adjustments under Wyeth; and no fee or petition is required, just a worksheet. You need not even calculate the numbers yourself; just ask the USPTO to do it for you. Interestingly, Director Kappos noted that he considers it to be an "open question" as to whether the USPTO can help patentees who did not file a request for adjustment and are now past the 180-day window post grant for requesting adjustment. He suggested that he thinks the USPTO lacks jurisdiction, though some in the audience offered suggestions for different bases of authority for stretching this limit, and Director Kappos indicated that he would continue to review the issue in view of those suggestions. Nevertheless, in view of the doubts as to whether a remedy can be granted by the USPTO more than 180 days after patent issuance, Kappos emphasized that it is critical that you make some sort of filing to request adjustment before expiration of the 180-day window if you want a review and possible adjustment of the term calculation for recently issued patents.

Director Kappos has indicated that he expects that the USPTO software for calculating patent term adjustments will be reconfigured to accord with the Wyeth decision by March 2, 2010. With delays from the time of issue fee payment to grant, patent term may be correctly calculated by the USPTO at the time of grant if you can wait another couple weeks to pay an issue fee (and you may even be in the clear in terms of a correctly calculated patent term adjustment with an issue fee paid today if the lag from issue-fee payment to patent issuance is more than a month). In the end, you need to talk with your counsel to find out if you should file a request for patent term adjustment on any recently issued / soon issuing patents.

A Five-Year Strategic Plan That Will "Actually Get Executed"

Director Kappos also reported that he is working on a new comprehensive five-year strategic plan for the USPTO. He acknowledged that his plan is not very different from the strategic plan of the previous administration, including objectives, such as decreasing pendency, increasing quality, exercising global IP leadership, and engaging with the applicant community. The difference, Kappos reported, is that he intends for it to be executed, as he intends to produce an extremely detailed slate of initiatives and deliverables, which will be made public.

"Coming from industry, I'm used to strategic plans that actually get executed," said Kappos. With accountability built in, he expects his plan will make some people uncomfortable. Names will go on the chart, pegged to scheduled deliverables; and they'll see yellow and red on the chart when dates are not met.

Increasing the US Patent Allowance Rate

I reported previously on this blog about Director Kappos's efforts to change the "rejection mentality" at the USPTO, a mentality that produced the plunging patent allowance rate at the USPTO. Further acknowledging the perverse incentives for examiners under the previous administration, Kappos noted that examination results were naturally skewed under a system in which if you (as an examiner) allow applications "bad things happen"; while if you reject, "nothing bad happens." The early results from Kappos's initiatives, which will include changes to the examiner "count system," already show an increase of multiple percentage points in the US patent allowance rate.

Director Kappos further reported that the increase has been reported to be as high as 5.4%, though it may be closer to 3% if you include Requests for Continued Examination (RCE's). My understanding is that RCE's have previously been counted as non-allowances in calculations of USPTO allowance rates, and I include them when I calculate my own track record. Consequently, I believe that the ~3% increase in allowances is the proper metric. Moreover, Kappos suggested that he believes that the allowance rate "will probably go up more with the new count system," as examiners are incentivized to actively engage with applicants. For the long term, Kappos stated, "I would like to see the allowance rate go up and to see quality go up at the same time."

Examiner Interviews

Director Kappos reported that the USPTO's Pre-First-Action Interview Pilot Program has thus far worked "extremely well." Kappos further stated that "first-action allowance is up something like 600%" under this pilot program. Accordingly, you can use these pre-first-action interviews to obtain patents much more quickly and efficiently. The Pilot Program is still only offered in a very limited number of art units at the USPTO; however, Kappos's pride over the success of the program suggests that it may eventually become available to all applicants (if and when that happens, I will certainly report it on this blog).

Director Kappos also wants examiners to reach out to applicants at all times in the process, including before first actions, after "final" actions, after notices of appeal, etc. Further regarding interviews, Director Kappos directed us to a resource of which I was not previously aware: the USPTO Examiner Interview Training Course Materials, which are available on the USPTO website and which I believe will be likewise quite helpful to prosecuting attorneys. Director Kappos indicated that he intends to post all examiner training materials to the public. Bravo! Part of the USPTO's mission is to disseminate knowledge; so it is great to see Director Kappos finally advancing this goal (unfortunately, I forgot to ask him why the USPTO still does not provide downloadable PDF copies of US patents, though he answered that question indirectly when he discussed not being able to upgrade the USPTO's IT infrastructure due to insufficient funding from Congress, as is further discussed below).

Green Technology Accelerated Examination

I posted earlier on the USPTO's accelerated patent examination program for "green" technologies, so I will not rehash the details here. Though Director Kappos indicated that about 600 requests for participation have thus far been filed against a cap of 3,000. Director Kappos also explained that the cap was imposed because the examiners' union was concerned that examiners might be overloaded if there was a flood of participants.

I asked Director Kappos whether he expected the program to be renewed so that applicants who file now could be eligible to participate. Director Kappos noted that the reason why the program was targeted only to already-filed applications was that he was concerned about changing applicant behavior, which I interpret to mean that he suspected that applicants may shift the target or focus of patent applications toward green applications to bolster their likelihood of being accepted into the program. That suspicion seems not unreasonable given the comparative risks and burden of the standard accelerated examination program requiring an Examination Support Document. Nevertheless, Director Kappos indicated that if they reach the 3,000-participant cap, then a forward extension of the program (accepting later filed applications) is certainly possible.

"Bump and Dump"

Commenting on the USPTO's "Bump and Dump" program, officially cited under the less-catchy moniker, "Patent Application Backlog Reduction Stimulus Plan," Director Kappos indicated that he was positively surprised that about "fifty-ish" small-entity applicants have thus far abandoned a patent application to subject another of their applications to accelerated examination under "bump and dump." This comment suggests that the USPTO never expected this program to have a particularly significant impact. And if you search "bump and dump," you will find some off-color definitions (I am not sure who first associated it with the USPTO's program), though it appears the name has firmly attached to this USPTO initiative both outside and inside the USPTO.

Ideas for Delayed Examination and Different Examination Tracks 

Director Kappos pointed out that a delayed examination framework (as is available, for example, in Japan and Canada) would present an effective means of weeding out patent applications that are no longer of interest when examination begins without wasting examination resources. Currently, a US applicant pays filing, search and examination fess up front at or near the time the application is filed, so there typically is little motivation for an applicant to proactively abandon an application. If the applicant can wait until a later date (two years perhaps?) to pay the search and examination fee, Director Kappos indicated that 10-20% of filed patent applications would go abandoned on account of applicants' failure to later pay those fees. Director Kappos noted, however, that a delayed examination procedure was no more than an idea at this point and is not (yet) being pursued by way of USPTO rule-making.

Additionally, Director Kappos pitched the idea of establishing a three-track examination structure, wherein "queue one" would be for applicants who want a patent within a year and who are willing to pay higher fees; "queue three" would be super slow--like the PCT he said (though this comment confused me as a PCT Search Report is at least supposed to be issued 18 months after the earliest filing date, which is often faster than the USPTO issues a first action on US applications); finally, applications in the middle track would be processed just like the bulk of applications now are processed. Again, Director Kappos indicated that this framework was only an idea at this stage, though he commented that it "would not be that hard to do."

Patent Prosecution Highway and Cooperation Between Patent Offices

The Patent Prosecution Highway (PPH) refers to a series of agreements between the USPTO and foreign patent offices for fast-track examination (in my limited experience, the PPH track has not been particularly fast and one can obtain most of the same benefits via the filing of Information Disclosure Statements citing foreign prosecution). Director Kappos indicated that the average number of Office Actions for an application in the PPH is 1.7, while the average among all applications is 2.7 office actions, though I think it is reasonable to expect such a difference based simply on the fact that another examiner already held the claims to be allowable (i.e., the claims are more likely to be objectively patentable merely by virtue of the allowance of a foreign counterpart application).

Director Kappos stated that he wanted to "back up" from the PPH focus on allowances in foreign counterpart applications. Director Kappos indicated that he is not as interested in allowances as he is in the initial search report and office action. As is to be expected, the USPTO will conduct its own examination, though US examiners can surely benefit in many cases from seeing a foreign examiner's search report and interpretations. I agree with this assessment (analogously, if a new client transfers in a case to me for which the previous attorney provided at least an initial draft of the application, I certainly want to see what ideas the other attorney had for claims and leverage as much of his/her work as I can use to fit within my own framework). That approach just makes sense from an efficiency perspective.

To facilitate taking advantage of the efficiencies of leveraging the work of foreign examiners on counterpart applications, Director Kappos signaled an intent to build the familiarity and trust between US examiners and European and Japanese examiners that will facilitate information sharing between examiners in the different offices and the resulting examination efficiencies and potential quality enhancements.

Patent Reform Legislation

Commenting on Senate Bill 515, the Patent Reform Act of 2009, Director Kappos indicated that, in his opinion, the bill--while not a panacea and not his favorite piece of legislation--is good legislation, on balance. Kappos indicated that he believes it resolves some major harmonization issues, including first-to-file. He also likes the "rationalized" post-grant reexamination provisions, and he thinks the damages language is the best compromise we are going to get.

From the audience, however, David Boundy pointed out that the redefinitions of prior art under the amendments to 35 U.S.C. 102 to accord with a first-to-file priority framework would significantly weaken existing prior-art grace periods with respect to pre-filing disclosures made by anyone other than the inventors. Director Kappos indicated that he had not heard this concern before but indicated that he would reread the text from this perspective.

The Bad News:  USPTO Funding

The "really bad news" according to Kappos, however, is the USPTO's dire funding situation. With congressional appropriations capped to match last year's reduced revenues, the USPTO now faces expropriation of excess applicant fees and an inability to use those fees to pay for much-needed upgrades in IT infrastructure and examiner hiring. Due to this lack of funding, Kappos is now scrambling to put the brakes on new USPTO programs.

Kappos indicated that the appropriators and the administration "get" that this is a serious problem and want to help, though securing a funding increase through the legislative molasses is not easy. Meanwhile, the USPTO is losing 35 people per month and cannot replace them. As a consequence, US patent pendency is going to increase again this year for those who do not /cannot take advantage of the various accelerated examination platforms.

Finally, I encourage any of you with an interest in US patent practice (and surely you have a strong interest if you read this far) to take advantage of any opportunity you may find to meet or listen to David Kappos. As long as this post was, I only captured a smattering of the wealth of ideas and insights he so graciously shared. My own patent practice will certainly be smarter for having benefited from those insights.