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Kappos Takes Heat at House Hearing, Patent Reform Dead?


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: May 6, 2010 @ 11:59 pm
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Representative Zoe Lofgren (D-CA) grills Kappos on Capitol Hill

On Wednesday, May 5, 2010, David Kappos, Undersecretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office, testified in front of the United States House of Representatives Committee on the Judiciary. See Hearing Page and Kappos Prepared Remarks.  Many issues were covered during the hearing, but there were a couple matters that jump out as quite important. Most significantly, it seems that once again the Senate patent reform bill may be running into some difficulty in the House of Representatives. Some in the House of Representatives seem interested in slowing down regarding the substantive changes embodied in the Senate bill, but seem willing to consider legislation less grandiose and focused solely on giving the Patent Office fee setting authority and perhaps the ability to retain its fees. This, however, lead to a heated exchange that has been misreported in some outlets, so lets set the record straight.

Allow me to provide the backdrop for what transpired about 1 hour into the hearing. Representative John Conyers (D-MI) asked Damon C. Matteo, the Chairman of the Patent Public Advisory Committee who was also testifying, whether it would make sense to work on stand-alone legislation regarding fees to give the Patent Office “the power, the money and the authority they need to keep going on?” Matteo responded that he thought that while that might seem to be the appropriate thing it might actually make it less likely to get the patent reforms that are required. Matteo said, “I think my initial reaction to that is once you take the pressure off you are much less likely to get an end result I think we are all hoping to achieve on a number of fronts, fee diversion for example. So while it may be an expedient solution, I suspect that having done so would probably relieve the pressure and keep us from ultimately getting where we want to go.” This lead Representative Zoe Lofgren (D-CA) to ask Conyers, who is Chair of the House Judiciary Committee, if he would yield. Conyers turned to Lofgren and before he could grant her request to yield she jumped in. That should have been the first clue things were heating up and likely to get quite interesting.

Lofgren proceeded to ask for clarification, explaining that the goal would be to end fee diversion with a stand-alone bill. Matteo then explained that he must have misunderstood what Conyers was asking. He went on to say: “If the question is, ‘in the absence of being able to pass the patent bill in aggregate would a stand alone bill vis-a-vis fee diversion be palatable?’ Then the answer is an unequivocal yes.” Conyers then turned to Kappos, and asked: “Director Kappos, what say you?” And this is where things started to get extremely interesting… dim the lights, queue the music and pass the popcorn!

Kappos responded:

Relative to keeping the bill together versus taking out fee setting and other issues, I think that we have a heritage opportunity here on part of the intellectual property system overall; to pass legislation that is generations in the making and is badly needed. I think we should take advantage of that opportunity and press on and get comprehensive patent reform done that includes all of the changes needed for the PTO, including fee setting authority and the others, but also to all the other important changes that will move the US patent system back to the gold standard of patent systems and will advantage US innovators for many, many years, and hopefully generations, to come. I applaud the work the House has done, the leadership the House has taken in getting the bill to where it is now and the Administration would like to continue to support the House and the Senate in moving this legislation to completion, comprehensive patent reform legislation.

At the conclusion of this response Conyers said:

[W]e are intransigent now. We seem to be stuck. Someone asked me where we are since we met with you and the Secretary and I said, quite frankly I don’t know, but at least you come to the table optimistic, at least that is a good sign. I mention my optimism and your optimism, but still we are stuck. I don’t know what’s the hold up.

Lofgren again asked for Conyers to yield and said, “are you saying, Mr. Kappos…”  Allow me to interject in a Mystery Science Theater kind of way, which is admittedly more difficult to do in writing, that I have heard that tone before, and so has everyone who has ever gone to Catholic schools.  The fact that Representative Lofgren looks like one of the nuns that taught me at Saint Rose of Lima Elementary School just about caused me to twitch myself; just about that is.

Returning to the action, we find Lofgren saying “are you saying, Mr. Kappos, that if our diligent efforts to do a comprehensive bill fall short, and I’ve been working on this since 1995 along with the Chairman, then no thanks to the fee setting increase? You’d rather not have that and the end of diversion?”

Kappos fields the volley, responding: “My view is that we can get this legislation done.”

Lofgren returns: “Yes, but if you are wrong, and you are not a legislator…”  Que Gene Quinn’s second Mystery Science Theater interjection… Really?  Kappos isn’t a legislator?  Wow!  Who would have… are you sure?  Newsflash: I suspect Kappos already knows that and didn’t need to be reminded by such an obvious and unnecessary ruler swat.

Returning to the action, we find Lofgren saying “and you are not a legislator, Mr. Conyers has been here a number of decades and I have learned to respect and admire his legislative savvy, you’re saying no thanks to fee authority?”

Kappos returns: “I would like to continue to work with this Committee and both houses of Congress to get complete, comprehensive patent reform.”

Lofgren: “We got that, and if that fails you don’t want the ability to set fees, is that what you are saying?”

Kappos: “I truly think it would be preliminary for me to make a comment on that now.”

Lofgren: “I think that is stunningly disappointing that you’d rather not have the money but certainly the advocacy groups, the patent holders and the technology sector feels quite differently.”

Action back to the Chairman, Conyers turning to Lofgren saying, “well you tried Lofgren. (laughter in the gallery).”

Now, admittedly, I am not a member of Congress, so I don’t know whether when one is a member of Congress they lose the ability to listen and hear what is being said, but as a lowly patent attorney who, by the way, is also not a legislator, I know what Kappos said and no where did he say that the Patent Office doesn’t want fee setting authority.  So if you read in certain news outlets that Kappos said the USPTO didn’t want fee setting authority that would be incorrect.  At worst, Kappos was evasive in his answers, continued to stress the importance of getting patent reform done and not merely focusing only on fee setting authority.

To be honest, and I know some will say that I am an apologist for Kappos and have drank the Kool-Aid, what Kappos said was refreshing.  How many other politicians would have jumped at stand-alone legislation to raise fees and keep 100% of USPTO revenues?  Probably every politician would have taken that leap, but Kappos is different.  Whether you agree with him or not on patent reform it seems clear that he feels there is more at stake and Congress ought not to do, well the Congressional thing, which is to punt, avoid the heavy lifting associated with getting substantive reform done and simply agree on money, because after all we can just print more of that anyway.

For crying out loud!  There are parts of the patent reform bill that I am not in love with, and I would have liked it to include more, particularly inequitable conduct reform, but don’t we hire these people in Congress to actually accomplish something rather than always looking for the easy way out?

Patent reform is a complicated matter, and perhaps it is because of spending time at BIO and interviewing WIPO Director General Francis Gurry, who by the way seems to think getting a universal grace period internationally is doable, but I think patent reform is the cornerstone to getting the US patent system back on track.  Giving the USPTO help by ending fee diversion and giving them the flexibility to charge more for services rendered is only one piece of the puzzle.  It seems pretty clear to me that work-sharing is a big piece to the puzzle and without at least some harmonization of our laws that won’t happen, or at least won’t be a productive.  So are we doing innovators more benefit by simply raising the costs without trying to also speed the process?  I think not.

Look, I want more patent reform, not less.  This patent reform bill is not perfect, but it is a step, perhaps even an important step, time will tell.  It was unrealistic for Representative Lofgren to ask Kappos to cave on patent reform in exchange for more money, not at least until it is brutally obvious that it is either stand-alone legislation or nothing.  It is also inappropriate (in my opinion) to try and drag an Undersecretary into a Congressional power struggle between the House of Representatives and the Senate, and that is probably what offended me most.

Shortly after this exchange, Lofgren, who represents the district of Silicon Valley, went on about how wonderful Silicon Valley is and how Kappos should come out for a visit to scout out a possible location for Patent Office West.  Representative Darrell Issa (R-CA), who represents San Diego, also showed great interest in discussing satellite offices for the Patent Office. Not surprisingly, both support Western expansion of the Patent Office, but both support a satellite office in their own district. Perhaps raking Kappos over the coals wasn’t the best strategy to employ on the part of Lofgren, but I digress.

It is encouraging to hear those within Congress discussing the possibility of satellite offices, which heretofore has largely been considered to be an outside the box measure. I know many within the Patent Bar would welcome satellite offices, including a West Cost Patent Office. At one point in a collegial and even joking manner Issa and Kappos went back and forth on what part of California might be appropriate, which was almost surreal given the tensions of just minutes earlier between Kappos and Lofgren.  Kappos mentioned a number of locations, including his own home town (unspecified) in the Los Angeles area, which prompted Issa to ask “do you have a particular part of Los Angeles [in mind]?” Kappos responded “Orange County.” This lead to a  joking scolding from Issa who said Kappos just alienated all of Los Angeles.

Personally, I am with Kappos. Orange County California is beautiful and indeed one of my all time favorite places. Aside from the traffic, which you can’t escape anywhere in California as far as I can tell, Orange County, particularly the Newport Beach and Laguna Beach areas, are fairly well perfect.  But that is just me California Dreaming with yet another Mystery Science Theater-like interjection into the strange and crazy world of Congressional Hearings.  Aren’t you glad you aren’t a legislator (pause… raising eyebrows with a downward stare at my computer, a la the Grinch) Mr. Kappos?

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Posted in: Congress, Gene Quinn, IP News, IPWatchdog.com Articles, Patent Reform, Patents, USPTO

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

 


28 comments
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  1. When I hear the words, “tort reform”, what flashes through my mind in Chiller Mystery Theater style is a line of wrong doers (incompetent doctors, lawyers, manufacturers, etc.) all clamoring for special exemption. Each says: “When the next guy does a wrong to me, I should be able to sue him and throw the book at him. However, if he ever dares to claim I did a wrong to him; well sir, in that case I …, sorry cough cough I meant to say “we”, yes we need tort reform. It’s all for the greater good you see.”

    Same thing when I hear the words “patent reform”.

    There are bad actors on both sides of battle field. There are bad patent holders and there are bad patent infringers. Funny how the infringers so desperately clamor for “patent reform”.

  2. Gene,

    It is extremely disappointing that Kappos did not jump on the fee diversion issue. I do not know if Kappos is speaking for himself here of the Obama administration. However,the rest of the bill outside fee diversion is not “patent reform” but patent capitulation to foreign countries and large corporations who do not have the best interest of the country in mind.

  3. Nice touches of humor, Gene, and loved the Mystery Science 3000 references, but on the whole this was a sad tableau of a myopic Congress. Lofgren’s quid pro quo baiting of Kappos was particularly galling. The current bill – as you note – isn’t perfect, but it’s a step in the right direction.

  4. I know what Kappos said and no where did he say that the Patent Office doesn’t want fee setting authority.

    The point in the ruler swatting is that the opportunity to exactly say that the Patent Office did want fee setting authority (and end of fee diversion) was being purposefully not taken.

    While not exactly the same as saying that the Office doesn’t want the authority, it is very close. When someone keeps trying to hand you a gift and you don’t say no, but you refuse to take it, well, actions sometimes speak louder than words.

  5. Wonderful post.

  6. I thought the whole point of satellite offices is to achieve a much lower cost of living for Examiners, and a better quality of life, so that more and better Examiners can be recruited.

    I recall a news item a few years ago about a patent attorney working in Silicon Valley who was living at the YMCA because he couldn’t afford housing within commuting distance. Having looked at the possibility of moviong out there, I can see the problem. Those are extremely unrealistic places to locate a bracnch patent office, unless you are going to let the Examiners telecommute from Nevada.

  7. “When someone keeps trying to hand you a gift and you don’t say no, but you refuse to take it, well, actions sometimes speak louder than words.”

    Sometimes it pays to listen extra-carefully to the words, though.

    Kappos was asked whether he wanted the fee diversion bill alone, with no patent reform. If he said yes, Congress would have immediately scrapped the divisive reform bill and passed the much simpler fee diversion bill, and Kappos would have lost all his leverage in Congress to push for reform. If he said no, they would have said “okay, no money for you” when the reform bill inevitably failed, and he would have lost the moral authority to even complain about fee diversion. It’s a catch-22.

    Suppose your employer is considering giving you a raise, and also it’s almost lunchtime. If you don’t get your raise, do you want a sandwich? Say yes, you only get a sandwich because that’s what you want. Say no, and you’ll never get a sandwich again. Any answer is a wrong answer, because it’s the wrong question.

    Kappos handled the situation exactly right by dodging the question and reiterating that he wants patent reform and fee setting authority, and not giving Congress an easy way out.

  8. “I thought the whole point of satellite offices is to achieve a much lower cost of living for Examiners, and a better quality of life, so that more and better Examiners can be recruited.”

    That, and so you can recruit them without asking them to relocate clear across the country. But yes, they need to open patent offices where people can afford to live on an examiner’s salary, which definitely rules out places where patent attorneys can’t afford to live.

  9. Mike D-

    Glad you like the Mystery Science references. I somehow figured you would make mention of that. While we disagree on Godfather episodes, I figured we would have commonality there.

    I like your reference to “a myopic Congress.” Unfortunately, that has become a bit of an oxymoron of late, with increasing regularity if that is even possible.

    -Gene

  10. “I like your reference to “a myopic Congress.” Unfortunately, that has become a bit of an oxymoron of late, with increasing regularity if that is even possible.”

    Gene, sorry to have to call you out on this one, but I think you meant to say “redundancy” instead of oxymoron. It is an understandable mistake, with the word moron repeatedly coming into your mouth anytime you talk about Congress.

  11. BD-

    Come on man. Get a grip. You think Kappos was saying he doesn’t want an end to fee diversion and he wouldn’t take fee setting authority? What he was saying is that it is too early to throw in the towel. Patent reform can get done and it would be “preliminary” to comment on whether the Patent Office would want nothing or an end to fee diversion and fee setting authority. He knows, and I know, and I suspect you and everyone else knows as well, if he says what Matteo said then that would end patent reform efforts, it would throw certain Senators under the bus and all the Patent Office would get is fee setting authority and an end to fee diversion.

    Doesn’t it bother anyone else that Congress seems to think the answer to every question is more money? It was refreshing to me to see Kappos (a politician or at least a political appointment) say that money is not the end all solution here.

    If at the end of the day there can be no grand patent reform who among us things that Kappos, Secretary Locke and the Obama Administration would say no to more money for the Patent Office? He just didn’t want to cut and run. It is a negotiating tactic for sure. You can’t cut and run for cover at the first sign of trouble.

    With all due respect to Congresswoman Lofgren, who apparently thinks Congressman Conyers is a Jedi Knight of Legislators, the supposed deal between Senate Democrats (i.e., Leahy) and Senate Republicans (i.e., Sessions) isn’t more than a few weeks old. And the House is already ready to throw up their hands and cut and run? Please!

    I can’t exactly put my finger on it yet, but bits and pieces of information I have heard from many dating back to at least November 2009 suggest that there is more than meets the eye with patent reform. My Spidey senses became more altered based on my conversation with Francis Gurry and certain other things I was hearing at BIO. More to come.

    -Gene

  12. AC-

    I think you are right, and believe it or not I actually sat here and wondered whether that was the right word. I was about to look it up and decide if it was exactly what I meant and decided against it. You are 100% right. I just couldn’t pass up an opportunity to use the word moron in such close proximity to the word Congress!

    I plead guilty as charged!

    Thanks for reading, and for keeping me honest!

    -Gene

  13. “I thought the whole point of satellite offices is to achieve a much lower cost of living for Examiners, and a better quality of life, so that more and better Examiners can be recruited.”

    The other reason for satellite offices is that if the PTO is political. The more congressmen and senators who have a vested interest in the PTO being fully funded the less likely we will suffer from fee diversion.

  14. On top of what Dale writes, it also brings jobs home, and jobs that would pay quite well. I personally really like the idea of regional Patent Offices. With all the tech in CA it makes a lot of sense.

    I know a bit about Orange County, and the cost of living is lower in Orange County compared with Silicon Valley, and probably still lower in San Diego. There are apartment complexes all over Orange County that are upscale and affordable on a patent examiner salary. Go a little inland to Irvine and the deals get even better.

    -Gene

  15. Gene,

    Come on man. Get a grip. You think Kappos was saying he doesn’t want an end to fee diversion and he wouldn’t take fee setting authority?

    It is not a matter of what Kappos was saying. I get it. You get it. Everyone gets it. Wanting the job interview and the sandwich is not necesarily a bad thing.

    But that’s not what I am saying.

    To use IANAE’s example, “Sometimes it pays to listen extra-carefully to the words, though.

    Too bad IANAE does not do as he preaches. Contrary to “Kappos was asked whether he wanted the fee diversion bill alone, with no patent reform“, Kappos was asked IF patent reform could not be mended, would he settle for the smaller gift. There is a big difference between talking about a job interview that includes a sandwich and a job interview OR a sandwich. The definitive take-one-or-the-other is a complete misread. I think in this case that the extra-careful listening heard things simply not there. There was nothing stopping Kappos from saying “Yes, I want Fee Diversion to end. Yes I want the Office to have control of Fees. Yes I want the entire Reform movement to kep moving forward.” Not giving a straight answer to the first two points can be (and has been) taken as saying “no, I want it all or I want nothing”. It is one thing to hold out as you do with a statement like “If at the end of the day there can be no grand patent reform who among us things that Kappos, Secretary Locke and the Obama Administration would say no to more money for the Patent Office?“, it is quite another to do as Kappos did and lock the battle into a “All-or-nothing” mindset. Saying “I will take the sandwich IF AND ONLY IF I get the job” is just not as smart as saying “I want both, let’s eat the sandwich together and let me show you why I should get the job”.

  16. Yes to satellite offices.

    Yes to ending fee diversion.

    Yes even to giving the PTO authority to set its own fees.

    No to rewriting the patent statues and rebooting 200 years of patent law just to satisfy the whims of a small consortium of large software companies.

    No to Kappos, no to Locke, no to Obama on this issue. No to Congress passing legislation that will have widespread impact on American innovation with zero impact study before signing it into law. With zero debate on the floor. With zero input from small businesses and independent inventors.

    Yes to Team Lofgren. Finally, a champion on the right side of this issue in Congress.

  17. “Kappos was asked IF patent reform could not be mended, would he settle for the smaller gift.”

    It’s obvious that if he couldn’t get reform he’d rather have fee authority than nothing. Everybody knows that. That’s not the point.

    The question was posed in such a way that if he answered with “yes, I would settle for fee authority and nothing more”, that’s exactly what he would get – fee authority and nothing more.

    He also can’t say “I’ll take fee authority and then we’ll talk about reform”, because Congress isn’t going to consider two separate patent bills. He only gets one shot at this, and he wisely knows better than to commit in advance to concessions before the debate has even started.

  18. BD-

    We are going to have to agree to disagree.

    Kappos was asked, as you point out, if we cannot get the whole thing through would you want targeted legislation. He did not say yes, but he did not say no, despite what Lofgren thought she was hearing. He said it was premature to make such a call. He is right. The minute he says “yes, we would be happy with that” then that becomes the target and comprehensive remove is over. Lofgren knows that and that is why she pushed it so hard and then blatantly mischaracterized what Kappos said.

    In delicate negotiations you can’t take things back. An “if and only if” concession establishes the new maximum. That is fairly typical in resolving litigations, and why movements are only ever incremental. If you jump in with your best offer then the other side wants you to move from there. I have seen many negotiations go south because one side jumped to their bottom line well before such a drastic movement was required.

    Also, by not giving in then it continues to keep pressure on Congress. Of course it is easier to just throw money at the USPTO, but I get the sense that they don’t think that will be all that helpful. Sure, it keeps the lights on and operations ongoing, but it shows a tremendous lack of understanding on the part of Lofgren to believe that more money is what the PTO needs. They need far more than that.

    -Gene

  19. IANAE @ 17… I agree completely. Kappos wasn’t ready to go all in at this hearing when the House hasn’t even broken a sweat on patent reform. Conyers can say all he wants that in his experience nothing is going to happen so it is time to cut and run, but that only demonstrates Conyers lacks will.

    -Gene

  20. RKS-

    You say: “No to rewriting the patent statues and rebooting 200 years of patent law just to satisfy the whims of a small consortium of large software companies.”

    Then you say: “Yes to Team Lofgren. Finally, a champion on the right side of this issue in Congress.”

    Do you even know what district Lofgren is from? You act like patent reform is at the behest of large software companies and because Lofgren speaks up she is speaking up for the independent inventor and taking on those large software companies. Get real. She represents the district of Silicon Valley. If she is pushing something it isn’t because it helps small inventors or small business, it is because it helps the giants of Silicon Valley!

    I would also love to hear which parts of the patent reform bill are such a boon to large companies. Really, what are they? Most of what the large companies wanted over the past several years has been stripped from the bill. First inventor to file won’t help them, all it will do is harm them. They aren’t going to file any quicker than they already do because of the red tape, culture and environment. However, small businesses and independent inventors will have enormous interest to file quicker, which is what they should have been doing all along. So in the end it is clear that this legislation will not help large companies, it helps independent inventors and small businesses compete with large companies. The large elite companies will curse the day this gets passed and if you are honest you know that.

    Everyone is acting like large companies turn on a dime. They don’t innovate now and they won’t innovate moving forward.

    -Gene

  21. because Congress isn’t going to consider two separate patent bills.

    Why? – because you say so? The unmentioned white elephant in the room is that your position is that meaningful change can only come from gargantuan one-shot-get-it-all legislation.

    This is precisely the Kappos fallacy. Just because you repeat it does not make it any less a fallacy.

    Big packages get broken down into little ones all the time.

    How do you eat an elephant?

  22. BD-

    I would tend to agree with you. There is no reason Congress can’t do a two step, but I think the reality is they won’t. I have been hearing for some time they are wanting to get past patent reform and then put it away for a good long time. They don’t have interest in continuing the heavy lifting and fighting among well funded lobbies that has gone on for 5 years or more now. That is why from time to time I have been openly wishing and hoping that this doesn’t mark the end of reform efforts because big issues, like inequitable conduct and obviousness, need Congressional attention. I think there is a real good chance that if something passes then we won’t get Congressional attention back for many years. So there is a real fear that anything watered down would then leave everything the way it is, or worse to the courts.

    I would prefer one piece of legislation at a time, one or a few issues only, but that is not the reality inside the beltway, where there seems to be a strong preference for bills too large to read.

    Cheers.

    -Gene

  23. Gene,

    I think that you have hit upon the key:
    then we won’t get Congressional attention back for many years

    Since Congress works for us (the royal us), your statement should be changed to:
    then we won’t let Congressional attention back away from all its duties for many years

    It’s possible to eat the white elephant – just a little at a time.

  24. BD-

    Not sure I follow you.

    As far as I am concerned the solution would be to throw out most of the bums in Congress and force them to live in the world that is actually affected by their laws.

    -Gene

  25. Congress is a reflection of us – good, bad, and indifferent. As much as we may dislike them, they are us.

    If we want change, we need to voice it. I know you know that. How many of our readers have called their congressman and senator this month? this year?

    If we let Congress back away after a bite completed, who should we really blame?

  26. GQ, I’m with you. A patent law office in the OC would be more than welcome. And I predict that the USPTO wouldn’t have much trouble staffing it, either.
    http://www.industryweek.com/articles/patent_enforcement_21538.aspx?SectionID=2

  27. BD-

    I agree. We need to keep the pressure on and not be satisfied with mediocre performance.

    -Gene

  28. “I think we should take advantage of that opportunity and press on and get comprehensive patent reform done …”

    But the present bill accomplishes nothing. Remember, it was the PTO who earlier suggested rules changes that would have killed small entities. Just because they call it reform doesn’t mean it is.

    Patent reform is a fraud on America. It is patently un-American.

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