Just days before Christmas, on December 22, 2011, USPTO Director David Kappos went on the record with me in an exclusive interview that took place in his office. Earlier this week we published Part 1 what is a three-part series — See Kappos 2.0: Exclusive Interview with PTO Director David Kappos.
In Part 1 of our interview we discussed Track 1 and the nuances of rulemaking that will delay a small entity and micro entity fee break until likely March 2013. We also discussed Requests for Continued Examination, or RCEs.
The beginning of Part 2 of my interview picks up where we left off, and may seem a little odd as a starting point. Despite my own best efforts to keep up with everything I was unaware that a small entity discount is available under Track 1. I had thought that everyone needed to pay the $4,800 fee, but Director Kappos explains that a small entity status discount is available, making the fee $2,400 for small entities. It is the micro-entity discount that will not be available until March 2013. Perhaps others caught onto this, but given the importance of getting patents quickly for some clients I wanted part 2 of the interview to start here and highlight that point.
Part 2 of my interview then more generally broadens out to generically ask how Kappos approaches the daunting task of getting over 6000 patent examiners on the same page to provide uniformity when by the very nature of the decisions they make they are dealing with one-of-a-kind innovations.
Without further ado, here is Part 2 of my exclusive interview with PTO Director David Kappos.
QUINN: I didn’t realize that Track 1 incorporated a small entity discount already. That is wonderful. $2,400 to accelerate a patent decision to within 1 year strikes me as something many start-ups in need of a patent should consider doing. Do you know how many small entities have filed Track 1 applications do date?
KAPPOS: That is correct Gene. The normal 50% reduction for small entities is applicable through Track I so they can get it for $2,400. So far, 481 Track I requests from small entities have been filed through January 10, with 321 requests granted.
QUINN:Okay. Excellent to know. Now shifting gears perhaps a little, one of the things I wanted to ask you, not so much maybe on a micro level, although certainly if there are some micro issues that you want to touch on I’d love to hear them, but from a macro or philosophical level how do you manage 7000 or so plus examiners to get uniformity? Because it seems to me, and I write about it all the time, I really like what’s going on here at the patent office. I think that all the people here on the 10th floor that I know have their hearts and heads in the right place and are trying their best to help the process. And yet I hear from some attorneys that message may not always be filtering down to the ears of the people who some attorneys are dealing with. It’s a large agency, particularly in light of the fact that everything everybody’s doing on a decision making level is dealing with something that’s supposed to be brand new. And there has never been one of these before if you’re going to get a patent on some level. And it’s somewhat subjective sometimes. So from a management philosophical level, how do you navigate those waters?
KAPPOS: Yeah, well, that’s a great framing of a very challenging question, Gene. And it’s one of the most important things you have to do as a leader is to try and instill the right level of process, consistency, practice, excellence, judgment in order to be able to navigate what is I call frequently a non deterministic system. So we are doing a lot of things in that regard. One is obviously you hire, mentor, and train the best people you can. In fact, I had a meeting earlier this morning with about ten or so experienced examiners talking about the various issues and challenges they’re having exactly for this purpose of looking for ways to further improve our practices and processes for consistency, high quality across the board.
You’ve got to approach this kind of thing as continuous improvement. You’re always looking for the next thing to make it better. That said there’s a lot that goes into training providing more, better training all the time and that’s why I mentioned before providing a new regimen of training on after final practice. I guarantee, Gene, it’ll make a difference. People pay attention. The employees here, our examiners are actually really excellent. They drive like a sports car. Once they know what the rules are, they will adjust to them very quickly and very accurately. Now, is every single person doing the same thing at the same time? No, of course not. We are a large agency and there’s much too much judgment involved. Are we going to be perfect in every case? No way, we’ll never be. So that can’t possibly be sort of a realistic objective. We provide the interview training and lots of mentoring and improvement on that. Interviews will go up from 100,000 hours a year to 150,000 hours a year. That’s what you call positive change. We can do this and we will continue doing it by this combination of hiring, mentoring, skill development, training, training, training, and then the last thing, which is accountability and measurement. We’ve done a lot to improve the clarity of our accountability and measurement for our examiners and our managers all the way up to the top of the agency.
This is one of the reasons why we have this great dashboard on our website. We’re reporting a lot of stuff we want everybody to know how it’s going. We are watching quality, we’re watching consistency, and we’re watching things like inordinate numbers of returns, inordinate numbers of second action non-finals. Situations on appeal that have to be withdrawn. I’ll come back to that in a minute. All the stats we’re watching them much more closely and we’re using them not to punish people but we’re using them when we see outliers to go back to the TCs down into the spees, into the art units and offer the training and guidance to individual examiners and managers when needed to say, “Something’s going wrong here. Everyone else is marching the three step and you seem to be marching the five step. What’s going on? We have got to fix it.” And that’s all the basic management tools you use. And I would say, Gene, while we are never perfect, I think it’s clear from the statics that we clearly are making progress relative to these issues of consistency and quality.
The last thing I’ll say is that we all have to recognize that our country has made choices. The Supreme Court, the Congress, our political leaders have made choices about the kind of patent system they want for our country. They do not want a Swiss patent system here, right? As an example, there are other countries that have extremely tightly wound extremely clear patent systems. And you get something very different from that kind of patent system. Sure, you get extremely clear rules, but you know what, you also get a lot of false situations where an invention winds up getting not protected when it should be protected. Our country has made a very different decision. We don’t run a patent system in our country like the Europeans do. They’ve got a great patent system. . But they made decisions they’re not going to permit patents on business method related inventions. They’re not going to permit patents on software related inventions. People try and sneak around that a lot, but they’ve got limits on those things. And they don’t permit patents on a lot of genetic related inventions in Europe, and on and on and on. They’ve got a much more restrictive system than we’ve got. Perfectly fine. It’s easy to have good quality when you’ve got an easy way to say yes and no. Our country has made the decision we’re not going to have that kind of system. We’re going to have a system that is much more open.
Our Supreme Court in a recent decision that’s got my name on the right hand of the “v” was asked and offered the opportunity to create a very restrictive system for the much clearer, easier—it would have been great for us here at the USPTO, we could have had really simple rules for our examiners, everyone can rest easy at night, you know exactly when to reject a claim. I have no problem with any of this, so I’m not saying it to be critical, I’m just saying it to make sure everyone understands the decisions, the choices, the economic policy that’s being set in our country is that Congress and the Supreme Court said, “We’re not going to make it easy. We’re not going to make it as simple as it can be. We’re going to have a more open system and we’re going to say, for instance with respect to the Bilsky Decision that it’s only those claims that are insolubly ambiguous or that meet these very general criterion that are unpatentable.”
Now picture yourself as a patent examiner applying that standard. There’s a lot of free play in it. And its fine, it’s good, it’s what’s wonderful about the U.S. patent system. But when you have a system like that you should never expect it to be a Swiss watch of patent system. And so that gets back to your question. There’s tremendous amount of judgment, and there’s these 7000, 8000 people all around us here in these buildings who are trying to apply these rather open-ended laws and make good decisions. Of course there’s going to be some variation, there’s always going to be some variation, we should expect that, we should revel in it, its part of our system. What we need to have is ways to sort that stuff out quickly as you say through mediation programs and through much faster appeals and in the office and out of the office and the handling of RCEs and things like that. So that we can run a great system in light of the economic policy that our country wants to pursue.
QUINN: Yes. And just to go maybe on the same topic, but a slightly different path. I’ve been a champion for the examiners because I think that in the recent past, and maybe not even just the recent past, maybe for my entire legal career, examiners have been asked to do increasingly more with increasingly less.
KAPPOS: More claims, more complexity.
QUINN: More claims, more complex specifications because of the Federal Circuit and the Supreme Court, because of the value of patents, because of litigation concerns. And it wasn’t all that long ago that you had to send out a memo to the examiners, I think it was last April, regarding cutting overtime. You just couldn’t pay for overtime because you didn’t have the money.
KAPPOS: We turn it back on.
QUINN: Yes, I know you’re right about turning back on overtime, but there are a lot of choices that happen over across the river and I see the impact of what’s going there making examiners’ lives difficult. So I think the examiners are many times caught between a rock and a hard place. That’s number one. And number two while I think there are some examiners that attorneys could point to and say, “You know, I don’t necessarily think that examiner is working for the patent granting authority” or what have you. I suspect there are some attorneys that examiners could point to and say, “Well, they don’t work for the patent granting authority either because they’re not giving us anything to work with.”
QUINN: And as you can probably imagine running IP Watchdog, occasionally I’ll get an inventor say, “Hey, can you just look at my application? I’m not really sure what’s going on and I’d just like to get an objective.” So some of those things I get a chance to see make me scratch my head and say to myself the problem is not just an examiner recalcitrant problem. And it’s probably not just a poor lawyering problem. It’s a number of things that get fit into this subjective box to begin with. And I wonder from a management level, is there a way that you could say you get a lot of people complaining about this art unit or these technologies and then you go and you look there and you look at the stuff they’re getting to work with. And then you can say maybe there’s a problem going both ways and maybe there shouldn’t just only be some training of the examiners, but have you ever considered taking some time to have some symposia about, “Okay, guys, there are not great grant writes in these technologies and we’d like to tell you what we would like to see and we’d like to work together?”
KAPPOS: Yeah, that’s a great point, Gene. We actually are working on that exact problem. I totally get it, you know, sort of it takes two to tango with these things. I don’t like to really point fingers back and forth, but I think you’re right when you say that getting a good patent is about both good examination and filing a good application and then prosecuting it or working it through in a way that is both reasonable and convergent on getting to issues and getting them resolved. And so seeing that same sort of dynamic and need to both get examiners to employee better and more consistent best practices in examination, and applicants to employ good and consistent best practices in their preparation and prosecution habits, we actually are working right now with one of the external associations putting together a best practices program. And I think it’s actually very cool. I’ve gone over the materials myself. They’re quite good. And when this comes out I think it’s going to be yet another step in this direction as you say toward ensuring that both parts of the equation are really getting tuned up so that we can have a really efficient system where we can do our job of getting the best most appropriate patents for applicants doing it quickly and efficiently and applicants will play a great role and we’ll play a great role in all that. So look for that coming of best practices.
QUINN: And I don’t mean to point fingers, although I think sometimes you get into that game. I think historically that is where the relationship between the patent bar and the patent office at some points in the past has started to unravel because everybody sees it as the other person’s problem.
KAPPOS: I agree, Gene that these are shared responsibilities and you hear me say that a lot. The patent process is a shared responsibility. I continue to feel that having interviews and thoughtful interviews is a part of the solution because it gets people talking to each other and understanding one another. We’re actually in the process of working with our union on yet another new initiative that you might find interesting that we’re calling, or at least I’m dubbing it the super max interview option, which will be available to applicants at their election or to our examiners. We’ll give examiners all the time credit they need to conduct an interview of whatever length it needs to be preexamination, two hours, three hours, whatever you need, spend a half a day with the applicant just understanding their invention before you examine it, before you even search it. The idea being to give applicants in cases where they want to and examiners in cases where they want to to just sit down and get a really throughout bathing in the subject matter of the invention, the background, the prior art, what the invention accomplishes in light of all that. How the claims and body describe and capture the invention and go away completely understanding the invention and ready to do a great search and have a very efficient, thoughtful examination process. This was another idea that was suggested by the IP community. I didn’t have this idea. IP practitioners did and the only thing we did here is say, ”Ooh, that’s a good idea!”
QUINN: Yeah, I think that’s a great idea because I think when you can talk to an examiner you can get to commonality and you can figure out what we find is is you talk to an examiner and you could have swapped paper and never gotten to the one little tiny issue, oh, well, that’s the issue.
QUINN: Then, we’ve got here in the spec and maybe we do this and you can wrap it up. But now on that same token, you know, I work for people who want to get patents. I don’t know how familiar you, you’re probably pretty familiar, I mean, you’ve been in the industry for quite a while. There are, I’d say probably more than just a handful of patent litigators that think patent practitioners are stupid of ever saying anything.
KAPPOS: You mean in the record?
QUINN: On the record, amending claims, you know, it almost sometimes the things that I hear almost blow my mind, and I think to myself, well, if we didn’t do these things you wouldn’t have any patent to be arguing over and charging $800 to 1000 an hour to fight over. So that’s the one thing that goes through my mind. And I won’t ask you to comment on it. But I wonder if some of this interview stuff could be done off the record, which would make it a lot less objectionable to some who have these kind of, I think, unrealistic arguments to begin with, but they are concerns, and I do understand. They’re not just made up out of that whole cloth concern.
KAPPOS: Well, you know, I really disagree with those who feel that anything you put in the record is going to cause a scar to the patent. I have licensed and in my former life literally participated in bringing in billions and billions and billions of dollars licensing patents that had very thorough prosecution histories. A thorough prosecution history is actually an asset and not a liability if it’s put in place by a skilled practitioner. So the issue in my mind is not the thoroughness of the prosecution history, it’s whether a good job was done on building it up. So I would disagree categorically with the view that you don’t want to have any prosecution history.
The second thing is that I think it’s also important for the public to be able to have that prosecution history and know what’s in the record. And this is one of the reasons I like this super max interview program. It’s conducted at the very beginning, actually, before prosecution starts so it doesn’t preclude or prohibit or in any way interfere with getting a good prosecution going and the back and forth that’s needed in order to build up a good record and get a good solid defensible strong but appropriate patent out there.
QUINN: But would that be on the record? I can envision certain cases where you have very cutting edge technology that would be useful to talk to the examiner about some of the very basic stuff that was done in the lab and the science and the discoveries and so forth. But you probably wouldn’t want to have that kind of level of discussion on the record.
KAPPOS: The thing about the government is that anything you do with the government is on the record in the sense that we’re required by law to keep records of everything. So it is on the record in the pathological sense. But by having this interview before prosecution starts, before searches have even been conducted, it’s really of a background introductory basic understanding kind of a nature. So you’re not getting into the mode of, debating or scrutinizing a specific clause of a specific claim versus this, that or the other.
QUINN: Okay, so this wouldn’t be something where the examiner would be asking you to submit something in advance talking about what you’ve already submitted and kind of bringing them up to speed.
KAPPOS: Yeah, exactly. And so I think it’s very little down side and a lot of upside. Without, however, Gene, without winding up with no prosecution history later on because you still have all the prosecution to do, it’s just going to be much more convergent, much more thoughtful so you’ll get better file history because it’ll debate the real issues and not all the stuff that really doesn’t matter.
QUINN: I agree. And some of what I was just talking about was really devil’s advocate, because I believe that done properly the things that you do and say to get claims do not have to be a negative.
KAPPOS: I think that’s right. And the last point I would make on that is this ties back into RCE practice, you know, I know the bar is concerned, I continue to be concerned on RCEs. But many an RCE there is that I review, because people send these things to me, too, and I look at them. Many an RCE there is that reflects this sort of litigator’s notion of don’t put anything in the record. What happens when as a practitioner you refuse to put anything in the record is of course you’re not conveying anything to the examiner. Therefore, the examiner has no information upon which to make a judgment and a good decision, and helpful decision to you, which tends to cause the examiner to say, “I’m not going to grant this patent because I don’t see patentable subject matter and I don’t understand how this thing is patentable.” And that in turn drives you in RCE practice. So it actually in my view in many ways is not the right thing to do for the system. Counterproductive to your client’s interest, and will tend to drive in a way that’s not an examiner’s fault. But if you try to put the fault anywhere it turns out to be the applicant’s fault if the applicant’s are being evasive or non communicative as a means to avoid putting things in the record.
QUINN: Right. Now on that point, I wonder whether you have the data or whether you could even get this data. But it would be interesting to know how many responses to a first office action result in no amendments to the claims being made and only arguments being offered. Because in my experience that is a pretty quick and easy way to ensure you’re going to get a final rejection turned right around. I agree with myself. I agree with what I did the last time. You’ve given me nothing else to consider other than an argument that I’m not buying so final. When I asked some other attorneys this, some have said, “Nobody does that.” Or it’s rarely.
KAPPOS: Oh, it happens.
QUINN: And I think it’s rare when you’re doing your job you’re going to at least give the examiner something new to consider whether it’s a new claim or whether it’s you add some kind of limitation hesitantly, not just hap hazardly. But I think there are a lot of cases where you probably get no amendments to any of the claims.
KAPPOS: Yeah, Gene, let’s see if we can get that information so we’ll take a run at that and this is public information. If we can get it, we’ll give it to you, you can –
QUINN: Right. I just I don’t know whether you keep track of something that nuanced.
KAPPOS: I think we do, actually, because this is a subset where there are no amendments made. There’s a rejection, no amendments made to the claims. Obviously there will be some argument that’s presented. No interview probably you would say would be that subcategory. Let’s see what we can get.
KAPPOS: I think we probably could get something.
QUINN: If you don’t want to amend the claims and you want to make arguments, that’s fine. But then submit additional, some additional claims or different evidence of something.
QUINN: That the examiner can sort of sink their teeth in to. You know, because when we file, and I just assume everybody does this, you know, we’re looking to get the broadest claim that we can possibly get, but as Gary Michelson has told me he said, “Why would I ever want a broad claim that’s not valid. I want the broadest valid claim.”
KAPPOS: He’s right, we don’t, yes.
QUINN: And then we want to have a string of very narrow claims so that we can get something and then figure out where in the middle we can agree on.
QUINN: And I wonder whether some of this backlog is attributed to what I would call litigation minded prosecution.
KAPPOS: I think that some of it probably is. So let’s see if we can get the facts. You know, a related topic that I’d like to mention if it’s okay—
KAPPOS: –because I get this a lot from practitioners. This recently came up and so I had Peggy [Focarino] pull the stats on it, they’re interesting, is the scenario where the applicant and examiner are going back and forth. The applicant feels the examiner is being unreasonable. Final action applicant files notice of appeal. Applicant submits appeal brief. And an examiner withdraws appeal and pulls the case back into prosecution. It’s very frustrating and I know it happens. So we took a look at the stats on that because I was in giving some speech I think where someone said this is a problem and it’s getting to be out of control. Turns out it’s going down. The rate has gone down significantly of that scenario occurring, or examiners pulling back after the appeal brief is written. And I’m doing this from memory, Gene, and again, we can get the stats on this, too, if you want to see them. But my recollection is that it’s now down to somewhere like 20% or something like that of the time that is happening. And I was analyzing the stats the other night and I was thinking to myself, well, I don’t think 0% is the right number because if I put out a rule, I mean, I could put out a rule as a director that said there will be no instances of examiners pulling back an appeal after the appeal brief is submitted. And I could edict that. But that would be in a rather odd world, and I think a rather unfortunate world because then you’re telling examiners you can’t admit when you’re wrong. Someone files a blow away, knockdown, dragged out perfect brief and you read it and say, “Oh, my God, I just realized they’re right.” Now you can’t admit you’re wrong and pull the case back and reconsider it. Or do you learn something anyway? So you don’t want that world. So what is right percentage? Is it 5%? Is it 10%?
QUINN: I don’t know, but I think the problem is perception. Because the perception in the patent bar is is that when that happens, the examiner is admitting, or recognizing that they’re wrong. But not necessarily. I mean, this would be the follow up information to decide whether or not perception meets reality would be is, is are the examiners pulling these things to just reject for a different better reason to push the case up on appeal, which then just eats away time during prosecution. Or are they really pulling it back because they want another chance to do it right. Now, and “right” may be just rejecting. But right shouldn’t always be rejecting.
KAPPOS: There should be some mix.
QUINN: Yes, it should be some mix of okay, we’re pulling it back and granting and pulling it back and rejecting. And so because I think the perception—well, you know what the perception is, I mean, you were in practice for a long time.
KAPPOS: It’s just putting people on the treadmill.
QUINN: It does. And the perception is is that a lot of times—and this goes back to examiners being overworked, what I say overworked and under paid, they don’t have enough time to deal with the growing complexity of the applications in length of applications and growing number of claims. They have less time per application, so even in the perfect world where I think a lot of folks are in the patent granting bandwagon now, when do you actually get the examiner’s full attention?
QUINN: Is that in the first action? I bet you if you polled the patent bar a majority would say no. Is it at final? You’d probably get more who say yes. But there’s going to be some, and maybe it’s just in certain areas because I hear the same stories you hear. This is rampant, you know, and maybe it is rampant in certain groups, I don’t know.
KAPPOS: Well, we’re looking at the TCs now, so I’m actually looking at the data for the TCs to see if we’ve got some outliers and we’re gonna address that. But I would say, Gene, it’s clear that the instances of examiners pulling cases back after appeal briefs are not rampant. 20% is by no means rampant.
QUINN: Right, I would agree with that.
KAPPOS: It’s not clear whether we want it to go much lower than 20% because again I think we want to examiners the free play to be able to learn from appeal briefs. I don’t know, maybe 15%, maybe 17%, but, you know, we need to debate what the right number is.
QUINN: I would just say that I’m not sure you want to have the debate about what the right number is because I don’t know—
KAPPOS: Maybe we don’t.
QUINN: Well, there are, as you probably know some people that think that the mediation program on the appellate level is a grand conspiracy in order to make the patent office look better. You get rid of all these cases that would have gotten overturned on appeal to patent examining corps from look bad. And my response to that is: “well, isn’t the goal at the end of the day to get a patent?”
KAPPOS: Yes, if you should get a patent, that’s it.
QUINN: And there should be in my mind multiple opportunities to get it right, and that’s why I mentioned to you the mediation program before you get on that appeal.
QUINN: There ought to be multiple places where you could right a ship to get the right thing done faster. But there is this fear or perception again that constantly gets tied back into, well, when do you really get the examiner’s full attention? So I think that metrics here probably aren’t going to be nearly as helpful as some kind of qualitative assessment about what’s going on. As I’m thinking about all these things all the time, I keep coming back to, how in God’s name do you get the message on so many different fronts from the tenth floor down into the examiner’s offices. Because most of them probably are not lawyers. There’s a probably overwhelming majority are not lawyers.
KAPPOS: Many are not.
QUINN: So it seems like it’s almost an incredibly daunting task.
KAPPOS: I don’t see it as daunting. Again, I think that there’s proof that once we know what we want examiners to do, we tell them, they do it actually quite readily and with very little problem adjusting. And you can look across the board at the things, the changes. The allowance rate for example though it’s not something we target, has gone up quite noticeably. Again, reported on our dashboard. That’s a sign that examiners actually are working with applicants in finding reliable subject matter. The number of actions per disposal has gone down significantly from nearly three to about 2.5. And the only reason it’s now drifting up a little bit is because of all the new examiners we’re hiring and they of course are picking up new dockets so they increase the numerator but not the denominator. So I think, Gene, and all of this stuff has been training and development of examiners, we tell them what to do they’ll get it right. But I take your point, though, that we need to do some more qualitative work to show what’s happening at the early stage of the process and to demonstrate that we either are taking applicants seriously on the first action, or if we can’t demonstrate that, then take more steps to make sure that we are.