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Robert J. Sayre
Robert J. Sayre
Cambridge, MA,
United States

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David Kappos Talks About His Initiatives to Change US Patent Practice

  
  
  
  

by Robert J. Sayre

robert sayre and david kappos

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.

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