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!
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?