On April 4, 2011, I had the honor to interview Manny Schecter, the Chief Patent Counsel for IBM Corporation. I met Manny in October 2010 when I did a CLE presentation at IBM’s offices in Armonk, New York. Since that time I have worked to schedule a time to chat with him on the record, and we were recently able to coordinate and chatted on the record for approximately 60 minutes. During our conversation we talked about numerous topics, including patent reform, Microsoft v. i4i, Patent Office initiatives such as the Three Track initiative and Peer to Patent. We also discussed David Kappos, his former boss, as well as Watson’s Jeopardy triumph, the new Intellectual Property @ IBM blog and the usual fun questions.
We started the interview diving straight into patent reform. In the fast moving and shifting landscape of patent reform it is worth noting that the most recent amendments to the House version of patent reform had not been discussed or voted on when our interview took place, so for those who have been hanging on every twist and turn you will notice that the House Judiciary Committee vote on patent reform was not a topic of discussion because it had not yet happened.
I enjoyed my chat with Schecter, as I do all my interviews, but I must say it was particularly nice to have a discussion on the record with someone who didn’t particularly need to delicately answer questions because of ongoing litigation or because of a need to remain within a certain politically acceptable envelope. About the closest that Schecter came to dodging a question was when I asked about patents on Watson. I certainly didn’t expect any detailed information about an as yet unpublished patent application, but he did confirm what everyone probably already guessed; namely that the top patent filer in the United States — IBM Corporation — had indeed filed one or more patents that would cover the revolutionary computer accomplishment that Watson embodies.
Without further ado, what follows is part 1 of my interview with Manny Schecter.
QUINN: I really appreciate you taking the time to chat with me today. And I know there’s an awful lot going on in the patent world, so maybe I thought we would dive right in with one of the big ticket items that a lot of people in the industry are talking about, which is patent reform. What do you think about patent reform generally speaking? I don’t necessarily want to go provision by provision, but generally speaking what do you think about patent reform?
SCHECTER: I’m very pleased by the progress that’s been made on patent reform. It’s certainly been a long time in coming, not only in terms of the many decades since our patent laws were originally set up, but also the time spent in the last four or five, six years discussing the various versions of bills that have led up to the present moment. And we have gone on record as congratulating Senators Leahy and Grassley for the progress they made recently in getting the Senate version of the bill passed and similarly in terms of Congressmen Smith and Goodlatte for introducing their bill. Our general view is that we’d like to see the patent system brought up-to-date. We’ve seen whole industries come and go since the last major update of the patent laws in this country. Not every provision in the patent reform bills is going to be universally popular. But we think the bill basically is a fair compromise and works for all users of the patent system.
QUINN: So is this something that you follow pretty closely, or are there others on your team that are following it, or are you kind of like a lot of other folks just waiting to kind of see what pops out at this point?
SCHECTER: We’ve been following the legislation. We’re certainly interested in it. We as the largest user of the patent system in the United States at least, certainly have an interest in an efficient and modern patent system that improves the integrity of the system and the strength of the patents that come out of it.
QUINN: So my guess is you would be particularly supportive of those provisions where the Patent Office gets to keep their money and reinvest in the future, fair to say?
SCHECTER: Sure. We certainly want the Patent Office to have the resources that it needs to get the job done. No argument there.
QUINN: Now, I just wonder whether some of the stuff, and it’s probably way too early to tell because the bill is going to take whatever course it takes in the House. But it starts to seem that some of the old divisions are lining up. In the Senate it seemed like people were willing to go along with what the Senate did and there weren’t any major factions on different sides of the various issues. But do you think that this time is really different or do you think there is a fear that maybe we’ll see the interest groups splinter and we’ll get nothing again?
SCHECTER: Obviously, I don’t know the future. I have no idea what groups are lining up in the background, as you say. But I’m very encouraged by the fact that the Senate bill passed 95 to 5. We made some progress in previous years, but I don’t ever recall a bill passing by a vote anywhere near that margin.
QUINN: No, I know. That was remarkable it seemed to get bipartisan support.
SCHECTER: Right. So that suggests to me that there’s momentum here that had not existed previously. And I’m hopeful that that momentum carries over. Of course there may be some discussion still of provisions of the bill. I really don’t know what schedule the House thinks they’re on. But it would seem to me that the momentum is particularly high right now, and I’d hate to see us lose the opportunity.
QUINN: Yes, I would agree with that. The two issues that I have heard that potentially have the ability to cause the old splintering might be the inter partes review and then the prior user rights, which wasn’t even in the Senate bill. So if prior user rights stay they’re going to have to go back to the Senate. But then the inter partes review seems to be modified a little bit. So I think it’s way too early to tell what’s going to wind up happening with those issues. But it did seem like the House bill largely followed the structure set forth by the Senate, which I thought was particularly encouraging.
SCHECTER: Yes, I agree. You’re absolutely right there are changes to the bill, but I wouldn’t describe them as drastic. I think you actually called them little or small. And that, too, is tremendously encouraging.
QUINN: Yes, I did. I personally, and I don’t know whether you’ll want to go on the record with this, but I personally am not a fan of prior user rights just because I think that they will force people to keep trade secrets. And the patent system is really about getting the innovations out there. And that to some extent has really been what IBM has been all about for so many years, right? With the patenting and then the publishing. So do you guys have any thoughts on prior user rights or would you like to just pass on that for now?
SCHECTER: Well, what I’ll say is this, Gene. I thought a little bit about the prior user rights provision when it got introduced in the bill and the truth of the matter is that provision isn’t going to change our particular strategy for filing patent applications. We’re not going to file fewer patent applications because of the existence of prior user rights.
SCHECTER: I’d also point out something that I haven’t really seen in a lot of press coverage, including your own about prior user rights, which is we should all remember that prior user rights is/are a personal defense. So if there is a prior user that’s out there, their rights don’t torpedo the entire bundle of rights that the patentee has, they only affect the relationship between the patentee and that particular user.
QUINN: Right, right. I’m uneasy with it, too, to some extent because I don’t think we’ve had any cases under 273 since that’s gotten into the patent laws, even though we have prior user rights with business methods. And from my perspective it’s become more difficult over time to predict what the Federal Circuit is ultimately going to say. And it seems to be that section 273 doesn’t have as much in it as I would hope to give guidance. So maybe I’m just making a mountain out of a molehill, and feel free to tell me if that’s what you think I’m doing.
SCHECTER: I’m not in a position to comment further, especially about what the CAFC might or might not do.
QUINN: Okay, all right, that’s fair. But now circling back and picking up on what we have been talking about with respect to the Patent Office. I know you have, or had a special relationship with Director Kappos who was your boss, right, before he took the job at the Patent Office?
SCHECTER: He was my boss for many years, yes, indeed.
QUINN: And do you still stay in touch with him at all? Or has he kind of severed ties?
SCHECTER: Dave is rather careful to ensure that there’s not even the appearance of impropriety between his previous employer and his current employer.
QUINN: As you probably know I go to a lot of these events and I talk to him. And then I sit and I watch and I observe. He seems to be just a straight shooter. He is what you expect him to be. Enormously ethical, enormously gracious and I characterize him as like an energizer bunny. Do you think that those characterizations fit the man?
SCHECTER: Yes, they do. They’re quite accurate. Dave is, from my experience of having known him for quite a while, about the hardest working person that I know in our business or anywhere. He’s not just 24/7, he’s 24/7/365, and a quarter, I might add.
QUINN: Yes, 365 except in leap year where you get the extra day of production out of him, right?
SCHECTER: That’s right. He’s a great strategic thinker. He’s very open minded. He’s willing—he’s very good at welcoming new ideas and considering them openly. He’s not afraid to speak his mind. He does it in a very courteous way. He’s in my view a great person to have at the helm.
QUINN: Yes, I would agree with that. Now, some of the times I’ve talked to some people who aren’t nearly as familiar with him over a long period of time as you all are at IBM. And the concern comes up that they wonder whether he’s going to be able to keep up this pace, whether he’s going to run himself into the ground. And based on what I’m hearing you say, he’s been this way as far back as you can remember, right?
SCHECTER: I remember reading your interview of Dave where you asked him that and he said, oh, no, this is just the first inning, or something like that.
QUINN: So do you believe that?
SCHECTER: Yes. Dave has the endurance of a marathon runner, that’s for sure.
QUINN: Yes. I wish I had his secret, whatever it is, to seem to need less sleep and be more productive than any two or three people combined.
SCHECTER: Yes, we all wonder what vitamins he takes.
QUINN: If you could bottle that, we should patent that because that there would be a great invention. Now, one of the other things, and again, if you don’t want to—I think you’ve taken, not you personally, but IBM has taken a position on it. The I4I case with Microsoft where the Supreme Court’s going to talk about presumably whether or not to change the standard of review to invalidate patent claims. Have you all interjected yourselves into that case?
SCHECTER: If you mean by interjected whether we filed a brief the answer is that we did. We filed a neutral brief in the case. It’s certainly a very significant case and we came down in favor of sustaining the clear and convincing evidence standard.
QUINN: And maybe before we get to why you think that’s the right thing to do, can you give us an idea of how does IBM decide what cases to file an amicus in, and what is sort of the behind the scenes process for then actually moving forward to do the filing?
SCHECTER: Well, I don’t know that we have what I would call a really fixed process. And by that I simply mean that cases don’t come up so often that this is like some sort of a pipeline. We filed briefs in a handful of cases in recent years. But that by definition means that almost every time we file a brief the parties that are involved in making decisions about it within IBM change somewhat. For example, you just asked me about Dave. He obviously is no longer here, so he’s obviously no longer part of our brief decision making. But some of the kinds of things that we would consider would be not only the substance of the issue that the court is taking up, but also the likelihood that our position is unique. If 39 other people are likely to file a brief arguing the same point, that might make us less inclined to simply add another brief to the pile.
QUINN: Right. So you really take seriously what the amicus is intended to be, which is a unique perspective to help the court?
SCHECTER: Sure, absolutely.
QUINN: I’ve talked to Judge Michel about this, and he has always told me that he thought amicus briefs were very helpful. And I think it’s certainly fair to say when you read the Supreme Court decision in Bilski, just as Kennedy went out of his way to point out that they were very mindful of the potential list of horribles that were mentioned in the enormous amicus filings. Did it go through your mind or the collective IBM mind that this is an issue that since it strikes so much at the heart of the patent right, and IBM is the largest obtainer of patents in the U.S. that the Supreme Court may particularly be interested in hearing your perspective?
SCHECTER: Well, in fact, sure, because we get asked for our perspective all the time I think for the same reason, that is we’re the largest filer of patents. I realize the Supreme Court didn’t specifically ask us here, but in other environments people seek our view frequently because of the perspective that we hold and the prominence that we like to think we have. And so of course that same kind of a thing would be on our minds when we’re developing our view for the Supreme Court.
QUINN: And do you feel comfortable talking about what your view is about the clear and convincing standards staying the same or would you prefer not to? I know it’s always a sensitive issue. I know you’re not a party, but it is an ongoing case that you have to some extent interjected yourself in as an amicus.
SCHECTER: Yes, we tried to be very clear. I don’t mind talking about it a little bit. We tried to be very clear that we’re not interested in the outcome of the specific case per se so much, which is why we filed as a neutral. But from our perspective there were a number of reasons why we supported the clear and convincing standard. But I want to be clear, you know, we thought that it was worth the consideration of the courts to develop some best practices, particularly as to jury instructions to try to improve or resolve some of the concerns that we think led other parties to call for a change to a different standard.
QUINN: I think I’m following you.
SCHECTER: So for example, we think that it could be confusing for jurors to work with two standards. We don’t really see a definition anywhere of what it means to consider a reference. We don’t know how one can truly know what the examiner considered and what the examiner didn’t consider, much has been written about that.
QUINN: Yes, that to me is a big, big issue because I think the folks who are saying that, well, these things weren’t considered. Well, you don’t really know that when you’re going out and doing a patent search all kind of things don’t wind up finding their way into the search report that you looked at, you considered and you didn’t think maybe that was as useful or as on point as something else. Maybe it turns out that you’re wrong, but to say that they’re not considered, I don’t know how you know that.
SCHECTER: Right. And for those who would propose the dual standard depending upon whether the art had been considered before, I think one of the things that ultimately was persuasive to us was that one can always find some references that were not of record. And exactly whether they were considered or not, maybe you don’t know. But at least on their face there’s no evidence that they were necessarily considered. And in a straightforward kind of a way, if that’s all it took to swing the standard from clear and convincing to preponderance, then it would seem that the standard would collapse to preponderance because one would always overcome that hurdle. We thought it made more sense to properly instruct juries as to how to judge and calibrate evidence and then let them flexibly apply and weigh the evidence on their own based on whatever evidence there is that an examiner actually considered or didn’t consider a particular reference.
QUINN: Do you think that the Supreme Court’s likely to go down that path? Lately, and maybe for my entire career, and maybe forever the Supreme Court seems to want to just say that the appellate courts got it right or they got it wrong or consider these other issues, but they really resist stepping out and giving something more concrete, which in our area would be just incredibly useful, probably in other areas as well. So that’s always a frustration for me. So I’ll just kind of throw that out there and maybe if you want to comment on any part of it.
SCHECTER: No, I mean, I would agree with you that it’s sometimes frustrating when appellate courts get cases and then don’t step out and seem to render a decision that’s extremely narrow and doesn’t provide a lot of guidance. But I really can’t comment on where I think the Supreme Court will go here. At this point I’m in wait and see mode with everybody else.
QUINN: And I think that nobody seems to want to predict this one because I think you can make an excellent argument for each side with how the Supreme Court will come down on this issue. Because typically they don’t seem to take cases to affirm the Federal Circuit. Or if they affirm the ruling they do it for a different reason. So it’ll be interesting to see what winds up happening in the case, no doubt.
SCHECTER: One thing I haven’t seen, Gene, and maybe you have the data, but I haven’t seen any information as to whether the number of briefs the Supreme Court has received in the i4i case is materially greater or less than some of the other recent Supreme Court patent cases like Bilski or eBay or KSR.
QUINN: I don’t know. I should probably look into that, but I can give you what I’m hearing anecdotally, and I haven’t gone and counted them up. But there was a fear of some folks that I had talked to in some industry organizations and some firms and in some, well, let’s just leave it at that, that supported the clear and convincing standard, that they were afraid that there were going to be very few briefs filed compared to other cases. Because with Microsoft being involved as a party, and them being a part of so many different industry organizations themselves, that there were some actors that you would normally expect to stand up and take a position one way or another that were just going to sit this one out. So I don’t know whether you heard anything along those lines or not.
SCHECTER: I’ve not.
QUINN: Yes. So we could probably leave it at that because anything else we’re probably just going to be looking into crystal balls. And if I’ve learned anything in my legal career predicting what the Supreme Court is going to do is little more than a crap shoot usually.
Transitioning into something a little more interesting in terms of the day-to-day kind of stuff, what are your thoughts about the Patent Office reforms that the Kappos Administration is undertaking? Good, bad, neutral, good in parts? It’s kind of an open ended question on purpose to let you go where you might want to go with that.
SCHECTER: Well, the first thing that I would tell you about them is they are somewhat reminiscent of Director Kappos and his willingness to try things. I think one of the directives he seems to be on is to increase the amount of transparency and collaboration that goes on between the patent office and the rest of its constituency. And that I think is a terrific thing. You could go through all of his initiatives and sooner or later you’ll probably hit a few that you particularly love or that you don’t care for. But I think the thing that’s most important is he’s embraced the willingness to consider all of these things. And as he brings some of these ideas forward, hopefully the ones that are particularly well embraced by the patent community will in fact get implemented.
QUINN: Right. It’s a breath of fresh air it seems at the Patent Office. The embracing of different ideas. I suspect that this maybe frustrates him a little bit as well, but as a watcher I wish some of this stuff would happen a little bit quicker. I know it really can’t because you’ve got to put it out there for comment and take into consideration all the comments, which I think that they do a pretty good job at because when they come back with something it seems to really have taken the comments into consideration. But I think when we all look back at this time it’s going to be as monumental if not more monumental than 1952.
SCHECTER: Well, you may be right. I guess time will tell. I will say that I share your frustration about speed, I wish in some ways we could go faster. But if we look back at recent past history, I think we all had concerns about some of the changes that either were implemented or that past USPTO administrations considered implementing or even tried to implement but failed, and one has to wonder if the level of collaboration that’s going on now might have steered a better course for those particular changes in the past.
QUINN: I think the exact same thing. I think that there’s a lot more care trying to make sure they did it right, a lot more kicking it around to feel out where everything is. And I do think that they really do care. Like with the three track, I think that they heard loud and clear when they had the roundtable that there were some serious concerns about particular track three. And that’s I think why we got track one coming out ahead of track three rules. Do you have any thoughts on that three track in general, how good, bad will IBM avail themselves of faster or slower? Have you thought about any of that stuff?
SCHECTER: Well, we did submit some comments. It’s been a while since we’ve talked about them. With respect to the one track that is in the lead, so to speak, the $4,000 plus acceleration, as you could imagine with the number of applications that we file in a year, that’s not something that we could avail ourselves of much without a tremendous amount of additional expense. But overall, we’re fine with it.
HIGHLIGHTS: In part 2 of the interview we talk about Peer to Patent, Watson on Jeopardy, where the Supreme Court is heading with patent law, the usual fun questions to get to know Schecter on a personal level and more.