As President-Elect Donald Trump continues to assemble his cabinet and administration, one of the most important selections he can make is the next director of the U.S. Patent and Trademark Office. Considering the complexity and magnitude of some of the issues defining the IP landscape right now, it’s clear the next USPTO director will shape the future of America’s role in the world as a global leader and hub for innovation. In shaping that future, the next Director must tackle four key challenges.
Managing the surge of inter partes review proceedings
Since the enactment of the American Invents Act in 2011, one of the most significant measures that has impacted the patent community is the dramatic rise of inter partes review proceedings before the Patent Trial and Appeals Board. Additionally, hundreds of covered business method reviews have been handled by the PTAB, and post grant reviews are starting to take hold. As is readily apparent from the latest report of PTAB statistics, the overall number of AIA Petitions filed since 2011 is striking, and has far exceeded even the most aggressive predictions in terms of overall usage by patent challengers.
Although the USPTO director does not hold substantive rulemaking authority, the scope and power of the director’s procedural rulemaking authority has been prominently vetted and endorsed by the Supreme Court (see Cuozzo Speed Technologies v. Lee). In patent litigation, it is now essentially the norm for accused infringers to file a parallel IPR petition challenging patent validity and seek a stay of the district court litigation. In fact, IPR petitions have risen so dramatically over the last few years that the number of PTAB appeals before the federal circuit has recently eclipsed the number of district court patent appeals.
Given the pervasive use of AIA Petitions and the rate at which patents are being invalidated by the PTAB, it is not surprising that considerable disagreement exists on whether these new PTAB proceedings have improved or harmed the patent system overall. Many technology companies view IPRs and CBM reviews as a very effective way to challenge suspect patents and combat frivolous infringement litigation. However, numerous patent owners in the life science industries see the high invalidity rate of PTAB proceedings as an alarming trend that has decimated the ability to enforce U.S. patents and weakened America’s innovation system. In light of the overall volume and impact of PTAB proceedings, as well as the divergent views on their benefit, it is crucial that the incoming director take a balanced approach in any future developments or changes to PTAB regulations.
Protecting software and biotech innovations
With regard to subject matter eligibility under Section 101 of the Patent Act, since the Supreme Court decisions in Mayo and Alice and the widespread uncertainty that followed those decisions, the USPTO has made commendable efforts in providing ongoing interpretation and guidance on subsequent federal circuit decisions and their impact on subject matter eligibility policy. The USPTO issued its 2014 interim guidance on subject matter eligibility shortly after the Alice decision. And over the last two-and-a-half years the office has provided multiple updates to that guidance, as well as a series of memos, indexes of court decisions and other training materials, all in an effort to provide some level of clarity to examiners and stakeholders in the midst of a chaotic sea change in patent eligibility law. Additionally, the director has sought public input in holding periodic patent subject matter eligibility roundtables. This high level of commitment to transparency and user engagement has been very welcome, and it is extremely important for the incoming director to maintain this focus on patent eligibility and continue the dialogue with stakeholders as additional Section 101 cases come through.
In terms of legislation, it remains to be seen whether the 115th Congress will pick up prior patent reform efforts, and it seems unlikely that patent reform will be a focus in light of the many high profile issues likely to be addressed in the near term. That said, to the extent there is legislative activity, the USPTO director will be in a position to have considerable influence on the tenor of interactions and conversations with Congress on patent reform. Likewise, the Supreme Court continues to show interest in IP cases, such as its recent decision in Samsung Electronics v. Apple on design patent damages, and its grant of certiorari in TC Heartland v. Kraft Foods on patent venue and forum shopping and Impression Products v. Lexmark International involving the patent exhaustion doctrine. That trend seems unlikely to curtail, and the next director will have important opportunities to shape the U.S. government’s position on important IP cases before the Supreme Court.
Shaping America’s reputation and role in the world
From a global perspective, the prospects of significant changes to U.S. trade policy could lead to disputes or a chilling of relationships with major trading partners, China in particular. This could have a corresponding impact on the significant progress made in recent years on global patent office cooperation programs. For example, Patent Prosecution Highway programs, which are still in pilot phase, enable work sharing of examination results between patent offices, fast track examination and significantly reduced costs for inventors seeking international patent protection. Absent strong leadership and diplomacy from the next director, any reversal of sentiment in international relations could lead to an unfortunate setback in these programs, making it more difficult for American innovators to protect their R&D efforts on a worldwide basis.
In conclusion, the United States has benefited greatly from the strong leadership at the USPTO in advancing America’s innovation agenda over the last several years. The incoming Trump administration would be well advised to fully embrace the proposition that American innovation is the key driver of U.S. competitiveness. Thoughtful and diligent selection of an accomplished IP professional as the next USPTO director will provide the best opportunity to build on the USPTO’s world-class track record of success.
Bart Eppenauer is the managing partner of the Seattle office of Shook Hardy & Bacon and the former chief patent counsel at Microsoft.
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