On Wednesday, January 20, 2016, I had the opportunity to go on the record with Michelle Lee, who is Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. Lee was confirmed as Director in March 2015, but she had been running the agency ever since then Acting Director Teresa Rea returned to private practice in September 2013. Although I’ve had opportunities to chat with Lee both before and after she was confirmed, this was the first time I had the opportunity to go on the record with her for an interview.
There were no topics ruled out of bounds for this 30 minute interview, not even the Supreme Court’s recent decision to accept cert. in Cuozzo, although as an attorney myself I know better than to ask questions that would have certainly provoked a polite “no comment” response in the face of ongoing litigation. Nevertheless, our conversation was wide ranging. We discussed the release of the Commerce Department’s Copyright White Paper, which among other things recommends expanding eligibility for statutory damages in certain copyright infringement actions. We also discussed Lee’s recent visit to the Consumer Electronics Show (CES), the power outage that brought down USPTO electronic filing systems, the Office’s patent quality initiative, the new patent classification system, the Patent Trial and Appeal Board (PTAB) and more.
Without further ado, here is part 1 of my interview with USPTO Director Michelle Lee.
QUINN: Hello, Director. Thank you for taking the time to chat today. I really appreciate it.
LEE: It’s a pleasure to talk to you again, Gene.
QUINN: There’s a lot that I’d like to chat with you about and we don’t have a lot of time so maybe we can just jump right into it. Perhaps a good place to start would be with this now being the beginning of the last year of the Obama Administration. I know from talking to you previously that you have a number of priorities for 2016 and it doesn’t sound like you plan on slowing down. Can you share some of those priorities with us? What you would you like to accomplish in the year remaining?
LEE: Sure, I’d be glad to. I had the opportunity to speak about some of my priorities recently at the Consumer Electronics Show (CES). That was a wonderful gathering of innovators, and it reminded us of why we do what we do here at the agency.
I have so many priorities. I’m going to list some, and they’re in no particular order, but they would certainly include the timely issuance of high quality patents, ensuring that the Patent Trial and Appeal Board (PTAB) conducts fair proceedings and issues high quality rulings within the statutory deadline, especially given the increases in the petitions filed that we have been seeing, and standing up and integrating all four regional offices in Dallas, Silicon Valley, Denver and Detroit to achieve the USPTO’s core mission. And I will say that these offices provide a great vehicle for education and outreach on the many services the USPTO offers to support innovators and educate a much broader segment of the population on the value and uses of intellectual property. Another priority is to continue to consider meaningful and balanced patent reforms that take into account changes occurring in the patent ecosystem — whether legislatively, judicially and/or administratively including through the USPTO.. And on the copyright front it would include the release of the White Paper on remixes, first sale doctrine and statutory damages and the ratification of the Beijing and Marrakesh Treaties.
So those are just some but on the last topic, on the copyright White Paper, we are very excited about the upcoming release of the White Paper as it will be the first major administration policy proposal on changes to copyright law since the 1990s. And the goal, of course, is effective and balanced copyright protection in an increasingly digital world. You may know this, but the White Paper is a product of the Department of Commerce’s Internet Policy Taskforce and we wrote it with the National Telecommunications and Information Administration. It’s a follow-up on the Green Paper, which looked at the full landscape of copyright issues in the digital environment. We had multiple stakeholder roundtables that led us to focus on three policy areas in the White Paper, which include the legal framework for the creation of remixes, the relevance and the scope of the first sale doctrine and appropriate calibration of statutory damages in the context of individual file sharers and secondary liability for large scale infringement. The key change is that the report recommends amending the Copyright Act to provide more guidance and flexibility to courts in awarding statutory damages. Statutory damages have become increasingly important in cases of online infringement where the scope of the infringing use may not be ascertainable, and the White Paper’s taskforce’s inquiry focused on the level of statutory damages that might be assessed against individual file sharers and against online services that can be secondarily liable for large-scale infringement. We believe the proposed amendments continue to ensure meaningful protection of intellectual property but also preserve the dynamic innovation which has made the digital economy so important to our society.
QUINN: Well, I can tell you as a content creator I’ll be very interested to take a look at that and see. At the risk of making IPWatchdog a target for even more hacking attempts than we already are, I will say that I was disappointed when efforts to reform the Copyright Act with the SOPA and PIPA legislation failed several years ago. Not to suggest that either were perfect legislation, or even the right legislation, but it’s a conversation I think we absolutely need to have in an open, honest and fair way because if content creators can’t create content knowing that it’s going to be able to be used for their benefit then we’re going to get an awful lot of retread content, which is unfortunately a lot of what you see on the Internet today. In my opinion you don’t see nearly as much new, high quality content created as you could or should.
LEE: So the White Paper supports providing incentives for the creators of new creative works and content. Without appropriate and strong protections we won’t see the creativity that we all cherish in our society and our culture, and so we need to incentivize that but also there are incredible new technologies that make that creativity very accessible in a much easier manner. The two pieces have to work together, so we have to get the right balance there. But that’s the focus of our White Paper and we very much look forward to getting — well, we already received– a lot of input from the stakeholders, and we look forward to continuing the conversation on some very important issues.
QUINN: I’d like to get to the patent questions here, but before we move past this, do you sense that there’s any real chance that over the next year the Copyright Act could be amended or is this just the beginning of what could likely be a multi-year process towards actually amending the Act?
LEE: Well, we know that Chairman Goodlatte is focused on these issues, Gene. I’m not the best prognosticator and predictor of the timing at which Congress moves. But as the principal advisor to the President through the Secretary of Commerce on intellectual property policy matters, including copyrights, I thought it was our job to provide appropriate input and guidance based upon extensive stakeholder conversations on some pretty important issues, and now we have done so through the White Paper.
QUINN: Okay. Well, now if we can maybe move into some of the patent centric questions. When you started your first answer you mentioned the Board and I think you mentioned some changes. I don’t want to ask you about any specific cases at the Board, but what I’ve personally noticed, and I haven’t done any kind of statistical analysis, but it seems that over the past several months, maybe longer than that, that the Board has in my words maybe turned a corner to some extent. It seems the Board is not instituting quite as many IPR cases as they were initially. Now there may be a variety of reasons for that, but I was wondering if you’ve noticed that as well and what you may think is going on with that dynamic, if anything.
LEE: So I don’t spend a lot of time fixating and concentrating on the numbers of cases accepted, Gene. After all, no one knows what “the right number” is in any event. The PTAB looks at the cases as they come in the door — the facts presented, the legal arguments made and the case law cited — and then makes decisions on an individual basis guided by the facts, arguments and law, allowing the cards to fall where they may. And it may very well be if the trend that you identified is true, that everybody is getting used to these proceedings and what to expect out of them. So I like to think that we’re all settling down, but it’s a priority of mine to work with the public and the stakeholders to further strengthen and improve these PTAB proceedings. They have proved popular, if you base popularity on the number of filings. We’ve had more than three times the number of filings expected, with over 4,000 filed to date. And the opinions that have gone up on appeal have, for the most part, been affirmed by the Federal Circuit and that’s really the most important for the agency as well as making sure that we issue high quality opinions that are consistent. You know we’ve got a great team of PTAB judges with strong patent law and technical backgrounds. That said, we recognize that as with any relatively new proceeding, there are improvements that can be made. One of the first things that I did when I began leading the agency was to say, “Look, we have a couple of years of experience under our belts with these proceedings, let’s go out to our stakeholder community and let’s ask them what we can and should be doing to further improve the effectiveness and fairness of these proceedings.” It was really a very wide open inquiry. We asked for input in all areas through a series of roadshows throughout the country. And after that period of time we also requested written comments. This past August, I think you know, we published some proposed rules to the PTAB proceedings. We’re looking to refine and strengthen the effectiveness and fairness of these proceedings and the comment period closed in November, and we are looking at the comments very carefully to get some final rules out as soon as possible. This will be the first set of revisions since the proceedings started except for some quick fixes that I think we issued earlier last year. But it’s not just the rule-making, Gene, that we are focused on. I mean, obviously, changes can occur through and have occurred through the PTAB issuing opinions clarifying their procedures and their rules. You saw that, for example, in Master Image 3D, which explained that motions to amend need only discuss prior art of record but also reminded patent owners of their duty of candor. So by clarifying the art that must be distinguished over is that already of record, the PTAB stopped the speculation that its Idle Free decision required a prior art search. PTAB never meant to cause additional searching by patent owners.
So these are just some examples. I mean, there’s the rule-making that we’re undergoing and then there are the opinions that continue to issue. Keep in mind the proceedings are relatively new and we will clarify, iterate and refine as many times as needed, based upon experience and stakeholder input, and where there is consensus and provided it’s within our Congressional mandate, we’ll make improvements.
QUINN: And you do think that those rules will be coming out within the next year?
LEE: Oh, yes.
LEE: Absolutely. Sooner rather than later.
LEE: But this is an ongoing process.
QUINN: I get it. I understand things take time and they are an ongoing process, and I also realize that every once in a while you get a curve ball. Now I’m somewhat hesitant to even bring this up, but I think I sort of have to at least bring it up given the importance of the issue. So I want to give you an opportunity to say whatever it is that you might want to say. Now being a lawyer I understand that this is a completely loaded question and I’m going to try and make it as unloaded as I can and hope you might be able to say something. With that lengthy preface, just say last week the Supreme Court took cert in Cuozzo, which I think surprised many people. It didn’t surprise me personally, as I think you know. But rather than ask any specific questions that would provoke you into saying “no comment,” I just want to give you just an open opportunity to say whatever it is that you may want to say, and if you don’t want to say anything because the litigation is ongoing I completely understand. But I want to give you that opportunity if you’d like to take it.
LEE: Well, thank you, Gene. And let me just say that the US government has taken positions on the issues that are at issue in Cuozzo through our many filings, so I think you know what the US government’s positions are, but what I will say and what I will add is that it’s my job as head of the agency to apply the statute and the case law as faithfully as possible. We will do whatever we need to do to comply with the law, whether statutory or as handed down by the Supreme Court. That’s our job.
QUINN: Okay. Fair enough. So now let’s move back to I think where you actually started the interview when you were talking about your priorities for 2016, which was with patent quality. Now that, to some extent, is a term that carries a lot of different meanings with it but I think, as I understand it, the meaning that the Patent Office is exploring at the moment most vigorously, perhaps, is to try and create a better prosecution history, a more clear record, so that everybody can understand what happened and why. Two questions, one, is that accurate; and two, do you think that that will be something that will be able to be completed over the next year as well?
LEE: Well, quality is a long-term initiative and you’ve heard me say this before, Gene, including our discussion at the National Press Club last year when we chatted on stage together at a Technology Policy Institute event, but any company that produces a quality product has been focusing on it for years, if not decades, so —
QUINN: Yeah, let me stop you right there because as I just finished that question it sounded stupid even to me. I didn’t mean to imply that quality is ever going to go away as a concern. What I wanted to ask was if these quality initiatives that you’re working will be able to be completed over the next year?
LEE: Some of our quality initiatives are shorter-term, others longer-term. We have undertaken about a dozen in our initial effort. What I will say is that it’s not just the clarity of the record, the prosecution record, but it’s also accuracy of the patents that issue. So stepping back, we all know that there is a cost to society if we issue a patent or a claim that should not have issued, just as there’s a cost to society if we do not issue a patent or a claim that should have issued. So issuing patents accurately is extremely important. By accurately I mean in compliance with Title 35 and the relevant case law. But issuing patents clearly is also important. When the process works properly the examiner, the applicant and the attorney have a meeting of the mind as to what the invention is. One of our goals is to make sure that this is reflected in the record, helping to ensure that our issued patents are strong, will be upheld in later challenges if they are challenged and provide clear notice.
I would also say that another critical piece of enhancing quality is continuing the collaboration with foreign patent offices on harmonization and work-sharing. We’re making good progress in this area, Gene. I’d like to take a little bit of time here on three initiatives that I’m particularly pleased about our efforts and our progress. One is the Global Dossier program, which provides stakeholders, examiners and the public with access to dossier information of the participating IP offices through a single online portal. The USPTO first suggested the idea of Global Dossier at the Trilateral meeting way back in November of 2011, and since then all of the five IP offices in IP5 (the European Patent Office, Korean Patent Office, Japanese Patent Office, the State Intellectual Property Office of China and the US Patent and Trademark Office) have developed this together.
You might say well, why is that so important? It’s because users no longer have to go through the time-consuming process of searching multiple patent databases to look at patent families. It goes to patent quality, and I would say worldwide patent quality is improved due to examiners and applicants having easier access to relevant prior art earlier in the examination process, including the hard-to-locate foreign prior art. It also lowers costs because of the availability of some machine-translated documents. So this is just the initial phase that we are planning. We are also aiming to allow for automatic cross-filing between the offices and amongst the offices. I would say Global Dossier touches on areas that are very important to me: quality, procedural harmonization and transparency.
And even if you look at our Cooperative Patent Classification System or CPC, Gene, when we converted from the US classification system to CPC, that conversion too supported enhanced quality. The more countries that classify their patents and their prior art using the same classification makes it easier for all examiners across the globe to find the most relevant art quickly and efficiently. We have no fewer than 19 countries participating to varying degrees in the CPC and more signing on each day. So these are important international initiatives that also increase the quality of patents that not only the USPTO issues but all of the participating countries, and that’s critical.
QUINN: Yes, and that last piece is extremely important and sometimes, we talk about these things and people will say “oh, well, I don’t really understand why that’s all that important and that just seems like it’s just fluff,” but the classification reboot is as substantive as it can be. You talk to all the old-time examiners and one of the reasons that they tell me that they think that examination used to be so much better, in their opinion, was that the system for classification was better; it wasn’t electronic. But all the examiners knew where to look to find the things that were relevant and if you didn’t know where to look you could ask colleagues and somebody would know where to look and they would tell you exactly which bin to search and you would go there and you would find exactly what you’re looking for. And then that sort of seemed to get out of control as innovation started exploding in a bunch of different areas and the system didn’t keep up with new classes of innovation. So I really think that that is one of the most important initiatives that the patent system has undertaken over the last handful of years, maybe even over the last generation.
LEE: I couldn’t agree with you more, Gene. And our US Patent Classification System had not been updated in decades. You and I know how quickly technology changes, right? So we were certainly overdue for an update and a refresh of the categories and the buckets into which we classify. But I think the power of the Cooperative Patent Classification System is that we have now so many countries signing on. So if collectively we all work towards the same classification system, you can imagine the efficiencies and advantages gained from– by accessing the most relevant prior art, especially foreign prior art that’s hard to get your hands on. That’s very powerful.
QUINN: I notice we are starting to run low on time. I’d still like to do a couple of the fun questions if you are up for those, but before we get there I have a couple more substantive questions. One is when we were talking about patent quality I always like to ask people what is your definition of patent quality? Because when some people hear that they hear multiple different things, from patent quality meaning the examiners are going to reject more to patent quality means the patent has to be a valuable, commercially relevant patent to meaning the patent just needs to be valid. So quality is sort of a loaded term that wraps in a whole lot of different things and I wonder what it means to you.
LEE: Well, thank you very much for that question, Gene. The quality initiative is not meant to issue fewer patents. It’s meant to issue claims that should issue and not issue claims that should not issue. It does not at all go to the valuation of the patent claim. I come from the private sector, and I have valued, bought and sold many patents, sometimes for very large sums of money. Let me tell you, it’s very difficult to assess the value of a particular patent. Market forces define the value of the patent. Patent quality does go to what I would say is the accuracy of the examination based upon Title 35 and the case law, and making sure that the agency applies the statute and case law accurately. And I think the agency has done a pretty good job, especially recently, in that area. But I think it also goes to the clarity of a patent and the public notice provided. Is the patent that issues out of the United States Patent & Trademark Office, is it useful for its intended use? Businesses, inventors, and innovators need to be able to look at a patent and say okay, I understand what is within the scope and what is outside of the scope of the patent, because they make business decisions based upon that information. They invest precious R&D dollars, and you want them to have the most efficient use and application of their R&D dollars and not spend in areas that somebody else has already innovated. So I would say that, again, the quality certainly goes to both the accuracy and clarity of a patent. I would say it does not so much go to the valuations. I leave that to the market forces. That’s not the job of the United States Patent & Trademark Office. And again, Gene, the goal of the enhanced patent quality initiative is not to issue fewer patents. We’re an incredibly innovative society. We will have patents. We’re fortunate that way. But the goal of the Enhanced Patent Quality Initiative is to issue patents or claims that should issue and not issue claims that should not and to do so clearly.
QUINN: Now, quickly on the power outage. I know that’s over about a month ago, but is everything back to normal? Are there any other updates? Can you confirm that no data was lost? Where do we stand?
LEE: Yes. So we are fully up and running as before, and we have been for a while now. No data was lost, and it was really an unprecedented outage of our online systems caused by an electrical failure to the data center that was owned and operated by contractors. It was not a failure of our IT systems or the result of foul play. And I have to say, Gene, the dedicated team of USPTO employees mobilized and immediately stabilized and restored the systems. They worked around the clock when the outage occurred, during the holidays, to restore customer service and we were, again, fully operational within a matter of days. That’s a real testament to the incredible hard work, the incredible dedication of so many employees here at the PTO working very hard and really wanting to do what’s in the best interest of the stakeholders to get those services up and running. So everything is up and running as normal. We did not lose data. And we’re conducting careful forensics and we’re looking to incorporate what we learn into further improvements to our system. Actually, not our systems, but the third-party systems that feed our systems. So it’s not a lost opportunity, but we’re glad to have it up and running, and I give all the kudos to the team.
TO BE CONTINUED… Up next are the familiar “fun questions” that give us an opportunity to pull back the curtain a bit and get to know Director Lee.