Judge Paul Michel presents supplemental testimony on PTAB reforms to the House IP subcommittee

By Steve Brachmann
September 19, 2017

Chief Judge Paul Michel (CAFC, ret.)

Chief Judge Paul Michel (CAFC, ret.)

On Tuesday, September 12th, former Chief Judge Paul Michel presented supplemental testimony to the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property and the Internet following up on testimony given by Judge Michel at a July 13th hearing of the IP subcommittee on the subject of patent reform. At the hearing, Judge Michel testified on issues with patent validity trials at the Patent Trial and Appeal Board (PTAB), especially ways in which leadership at the U.S. Patent and Trademark Office appeared to be misinterpreting statutes handed down by Congress with the passage of the America Invents Act (AIA) of 2011, among other issues.

To fix the current incarnation of the U.S. patent system and reinvigorate the American economy, Judge Michel called upon the House IP subcommittee to adopt seven specific action items. Five of the action items relate to improvements to patent law for the strengthening of patent rights while optimizing PTAB procedures already in place, while two other action items focus on the administration of the USPTO.

Judge Michel’s first action item focused on amendments which could be made to the AIA to create a level playing field in the patent space. “After six years, the AIA has caused more harm than good,” Judge Michel’s statement reads. Specific AIA amendments which Judge Michel called for mirrored some of his testimony in front of the House IP subcommittee during the July hearing. These include an off-ramp to reexamination processes, respect for the patent owner’s right to amend claims, dismissal of the broadest reasonable interpretation (BRI) claim construction and application of both the clear and convincing evidentiary standard and the presumption of patent validity. Judge Michel also calls for the PTAB to make sure that the decisionmaker who institutes a patent validity review trial is different than the panel who end up deciding on the merits of the case; in the July hearing, Judge Michel noted that this particular activity was happening in an apparent conflict with AIA statutes governing the institution of review proceedings. Implementing an Article III standing requirement would also help decrease the burden on PTAB and USPTO resources and “increase the fidelity of the review process.”

Second, Judge Michel calls for Congress to amend 35 U.S.C. § 101, the statute governing patentable subject matter, in order to fix the “chaos” into which the U.S. patent system has descended after recent decisions in patent cases before the U.S. Supreme Court. Specifically, Section 101 should be amended to recognize that a patent claim with a physical aspect or element satisfies patent eligibility; to clarify that processes containing purely mental steps are not patent eligible; and to add the language, “Eligibility shall not be denied based on any judicially-imposed exceptions.” Legal uncertainty surrounding basic patent eligibility in the U.S. “is devastating American business, including high tech, manufacturing, biotech, and pharmaceutical industries.”

In response to further confusion created by SCOTUS in its decision this May in TC Heartland, Judge Michel called upon Congress to make amendments to the patent venue statute codified in 28 U.S.C. § 1400(b). Because TC Heartland didn’t interpret the second part of the patent venue statute concerning a “regular and established place of business,” courts have been forced to define that language and have come up with differing interpretations. Judge Michel suggests that amendments to this statute recognize that the “regular and established place of business” should not include a place where a company merely has transient employees and activities, or locations where a limited number of employees either work remotely or telework.

To ensure that the USPTO has the resources necessary to conduct its activities and improve the quality of patent examination, fee diversions from the USPTO which amount to a tax on innovation should be ended. As Judge Michel notes in his supplemental testimony, nearly $410 million was diverted from the agency for non-agency purposes between 2010 and 2014.

The final action item specifically targeting procedural issues involves Congress authorizing technical support staff for the district court judges who are participating in the Patent Pilot Program. “The Patent Pilot Program successfully yielded a group of federal district court judges who are more experienced with patent infringement actions,” Judge Michel’s supplemental testimony reads. Additional technical support staff would give judges a better understanding of complex patent cases so that those cases can be disposed efficiently and rigorously, Judge Michel argues.

The final two action items in Judge Michel’s supplemental testimony focus on the USPTO’s leadership, including a call to require that the agency’s director be qualified and admitted to the patent bar. “This requirement will ensure that the PTO Director has the necessary technical knowledge to fully execute the PTO’s mission,” Judge Michel writes. “While the PTO Director need not be a technical expert, having the minimum scientific education is critical to effective leadership.” This would require any USPTO director to have a patent bar registration number. Andrei Iancu, President Donald Trump’s nominee to serve as the next USPTO Director, is registered to practice at the USPTO and would thus fulfill such a qualification requirement called for by Judge Michel.

Finally, Judge Michel called upon Congress to give the USPTO Director the authorization to reward patent examiners who provide excellent work as well as discipline those examiners which engage in improper conduct. “ In recent years, the PTO Director has been unnecessarily hampered by burdensome rules governing employee misconduct and responsibility, as well as insufficient means to reward the best employees,” Judge Michel writes. Specifically, the USPTO Director should have the power to award to the best patent examiners cash bonuses not to exceed 5 percent of the examiner’s per annum. The Director should also be authorized to expeditiously dismiss employees who commit egregious misconduct. Further, Judge Michel calls for improvements to examiner training and continuing education with an emphasis on both claim construction and 35 U.S.C. § 112, the statute governing patent specification.

Judge Michel’s supplemental testimony also includes a series of answers to questions posed by Rep. Darrell Issa (R-CA), chair of the House IP subcommittee, at the conclusion of the July 13th hearing. As to whether the PTAB should continue activities related to covered business method (CBM) review proceedings, Judge Michel wrote that there is no justification to continue the CBM program past its sunset date in 2020. “Ample time has since passed, the relevant prior art has been collected, and examiner expertise has increased,” Judge Michel writes. “The PTO has also taken steps to further improve its ability to search and identify prior art.” Judge Michel also said that the inter partes review (IPR) shouldn’t be expanded to include other requirements of the Patent Act, including eligibility under Sections 101, 112 or 35 U.S.C. § 102 for sales or public uses, as each eligibility requirement would add costs to the trial process and are unnecessary for various reasons. Finally, Judge Michel also testified that damages law does not need to be revised to deal with situations where patent claims are narrowed after an infringement suit is initiated but before a final judgment. “As I touched on above, the Federal Circuit has developed a robust body of case law that addresses the doctrine of intervening rights,” Judge Michel writes “This settled law can be applied in the AIA context, including the reexamination off-ramp.”

Updated at 12:45pm ET. An earlier version incorrectly stated Judge Michel’s supplemental testimony was submitted in August. 

The Author

Steve Brachmann

Steve Brachmann is a writer located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He has become a regular contributor to IPWatchdog.com, writing about technology, innovation and is the primary author of the Companies We Follow series. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 19 Comments comments. Join the discussion.

  1. CP in DC September 19, 2017 11:41 am

    To Mr. Brachmann

    Is there a link to Judge Michel’s testimony for those of us who wish to read it?

    The links send me to prior articles or websites.

    I know he testified in July on the same issues and I’ve had a chance to speak to him on multiple occasions about these issues, but I would like to read his complete testimony at my leisure.

    thank you

  2. Judge Rich's Ghost September 19, 2017 12:29 pm

    The supplemental testimony was submitted September 12 (not August 12).

  3. David September 19, 2017 1:16 pm

    This is lipstick on a pig.

    The Federal Circuit and PTAB have been on their best behavior since cert in Oil States.

    Paul knows that if the challenger is successful in Oil States, the Federal Circuit’s power will decrease. He also knows that the power consolidated in DC will dissipate through the national district courts. This result is unacceptable to him.

    Michel potrays himself as a champion for patentees, yet underlying all of his statements is his belief that patents are public rights. The old school Federal Circuit judges (Newman Dyk Michel) are obsessed with elevating the Federal Circuit above everything else.

  4. Steve Brachmann September 19, 2017 2:07 pm

    @CP in DC – My apologies, I was fairly certain I included the link. I have just updated the piece to include a link to the supplemental testimony in the first paragraph on the words “presented supplemental testimony”. If you don’t see it right away, it should update within the hour.

    @Judge Rich’s Ghost – My mistake, thanks for catching it.

  5. Anon September 19, 2017 2:37 pm

    David,

    On what basis do you make the assertions of “He also knows that the power consolidated in DC will dissipate through the national district courts. This result is unacceptable to him.

    This comes across as a naked accusation for illicit means, and that Retired Chief Judge Michel has some ulterior motive that is “not good” for the patent system on its own.

    I also think that your statement of “belief that patents are public rights” runs into a self collision. If patents are public rights, then they can be FULLY removed from the CAFC, which is the OPPOSITE position that you are trying to advance.

    I am not seeing your post as very convincing in what appears to be the positions that you want to advance.

  6. David September 19, 2017 2:51 pm

    Anon,

    A retired chief judge concerned about his legacy as well as the legacy of the court he helped shape has plenty of motive. He may also be getting paid as a consultant.

    He has said several times that the PTAB is constitutional.

    In terms of the Federal Circuit, its blend of narcissism and greed prevents it from accepting that “THEY can be fully removed from the CAFC.”

  7. Judge Rich's Ghost September 19, 2017 3:17 pm

    Nice summary. Well done.

  8. Anon September 19, 2017 5:45 pm

    Sorry David,

    Your additional posts seem scattershot at best, and do not address any of the points that I posted.

    I do not see what “motive” it is (for legacy) that intersects with ANY of the other issues.

    Sure, as well, he MAY be acting in some sort of paid consultancy role currently,. HOWEVER, what he has stated here is no different than some of his amicus filings which show NO such “paid consultancy” and which only furthers the view that you are speaking out of turn – or at the least, saying things for which you have NO backing.

    I do not recall the context of the “several times the PTAB is constitutional.” Being as that may, he simply may also be simply wrong on that point.

    Your accusation of “narcissism and greed” – without more – is mere name calling and given all of the other questionable attributes of your post, are not impressive (nor should it be).

    I remain rather unconvinced by your position.

  9. David September 19, 2017 6:05 pm

    Anon,

    What is your point?

    That Michel is trustworthy?

    As usual, it’s a mystery as to what you are trying to say.

  10. Anon September 19, 2017 10:22 pm

    It is rather clear what I am saying.

    I am saying that what you are saying is not convincing.

    In the least – and for a variety of reasons.

    Perhaps you are just too convinced that your feelings are accurate to even begin to understand that your statements just don’t amount to much.

  11. Night Writer September 19, 2017 10:24 pm

    I think all of this is just a fantasy. Google doesn’t care. Their game is to say we will take care of the innovation. You want us to continue to dominate the world of search, then give us what we want. We know what we are doing.

    The Congress ain’t going to do squat. The money is still saying burn baby burn.

    You guys have become more and more divorced from reality.

  12. Invention Rights September 19, 2017 10:40 pm

    Disappointing to see Judge Michel and Former Deputy Director Slifer circling the wagons around the PTAB with Oil States looming.

    So many that supported the AIA are willing to admit there have been serious unintended consequences, but afraid to leave the separate powers to their respective jobs – the Executive to issue patents and the Judiciary to invalidate them. The experiment with blurring those lines has proven to be unworkable.

  13. Judge Rich's Ghost September 19, 2017 11:09 pm

    Invention Rights – I don’t think it’s fair to say that Judge Michel is circling he wagons around the PTAB. His statement expressly states that one should not read into his statement any position he may or may not have regarding Oil States. The best takeaway from this statement is to see this as an effort to minimize the harm Issa may cause–assuming SCOTUS in Oil States says the PTAB is constitutional. Judge Michel has always had a very pragmatic judicial philosophy, and I think it comes through in his supplemental testimony. For purposes of this submission, he’s assuming that the PTAB remains constitutional but trying to propose changes that appearing acceptable to Issa. Think back to some of Issa’s comments during the hearings. He is someone patent owners should fear. So it’s a true service to have Judge Michel offering a proposal that helps patent owners and might be acceptable to Issa and his colleagues.

  14. Anon September 20, 2017 9:16 am

    IR,

    There are certain “experiments” of sharing power across the different branches of the government that HAVE worked. Typically these require a showing of intent to share and a retaining of some control by the proper branch.

    Here with IPRs I have shown several times how the aspects of other Constitutional protections of property simply are not met.

    Some who view themselves as “champions of patents as property” still struggle with understanding the fundamental problem with the IPR setup (hint: while their may be “issues” with how PTAB goes about doing what they do, the critical problem is NOT what the PTAB is doing – it is the system that Congress set up that at its core “experiments” beyond its authority).

  15. Paul Morinville September 20, 2017 12:08 pm

    David, I know Judge Michel personally. He is not beholden to anyone and speaks what he believes. I view him as a tower of integrity in the swamp of Washington. His points about the patent system invariably are directed toward strengthening patent rights, fairness and the basis of law. He knows the patent system like no other person in the debate and is fearless like no other person in the debate to say what needs to be said. I have met most of the hundred or so people most involved in the patent debate in Washington and Judge Michel without question stands alone for knowledge, integrity, honesty and courage.

    Your take on him is completely misguided.

  16. David September 20, 2017 2:19 pm

    Paul,

    The sooner you grow past this us versus them mentality the sooner you will see the world for what it is.

  17. Anon September 20, 2017 3:54 pm

    The sooner you grow past this us versus them mentality the sooner you will see the world for what it is.

    David,

    With all due respect, your hubris is unbelievable.

    There is no doubt – nor should there be – that there are different factions wanting different things from the patent system.

    There is no doubt – nor should there be – that one such faction is the large trans national who would rather compete on factors within their control (and specifically, to eliminate the factor of disruptive innovation).

    See the world for what it is, you say.

    I say that you have not seen the real world if what you post here is any indication.

  18. Paul Morinville September 20, 2017 4:11 pm

    David, unfortunately, until the government stops damaging small inventors and permits us to take part in solving this mess, it is them vs us. Today it remains…. perhaps it will change. One can still hope.

  19. Invention Rights September 20, 2017 7:04 pm

    Regarding amendments and off-ramps – this does nothing to help patent owners. The problem is intervening rights for the infringer. At best this might salvage the last few years of the patent term. But continuations serve that purpose. In the PTAB era a practitioner commits malpractice if he does not urge the patentee to maintain an open continuation for any commercially valuable patent.

    I worry that one day soon the PTAB will liberalize amendment practice and proceed to promote to the courts and Congress how the system has been fixed.

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