USPTO Director Andrei Iancu Discusses Patentability of Algorithms, PTAB Proceedings at Senate Judiciary Committee

Andrei Iancu, Director, U.S. Patent and Trademark Office

On the morning of Wednesday, April 18th, the Senate Committee on the Judiciary held a hearing regarding oversight of the U.S. Patent and Trademark Office and including testimony from recently confirmed USPTO Director Andrei Iancu. Compared to hearings on the U.S. patent system conducted over at the House of Representatives, the Senate committee evidenced a stunning amount of recognition as to the issues currently facing our country’s patent system. Informed observers would also note the efforts that Director Iancu continues to make to change the dialogue regarding patents and inventors in this country.

“We are focused on engaging in a new dialogue surrounding the patent system,” Iancu said near the top of his opening remarks. “A dialogue centered on the brilliance of inventors, the excitement of invention, and the incredible benefits they bring to the American economy and the country as a whole.” While this statement was not included in the written testimony submitted by Iancu to the Senate Judiciary Committee, it does echo statements he made the day before at a surprise visit to a conference of inventor groups meeting at the USPTO. It also marks a significant departure from patent troll rhetoric which has greatly damaged the U.S. patent system in recent years.

Senator Chris Coons (D-DE)

That damage to the U.S. patent system was a subject of the opening statement made by Sen. Chris Coons (D-DE), who noted that the U.S. Chamber of Commerce dropped the U.S. patent system to 12th this year after having been the world’s gold-standard patent system for greater than 200 years. “In the past decade, there have been a variety of actions on the part of the Judicial, Executive and Legislative branches which have had the cumulative effect of significantly weakening patent rights and the impact of these changes is becoming apparent,” Sen. Coons said. The Senator referenced post-grant proceedings before the Patent Trial and Appeal Board (PTAB), which have created great uncertainty over patent validity within the U.S., as one reason for the decline. “While some form of post-issuance review at the USPTO is desirable, the current review system is systematically biased against patent owners based on statistics from its first five years,” Sen. Coons said.

Senator Kamala Harris (D-CA)

Another problem discussed by Sen. Coons and other committee members was recent jurisprudence from the U.S. Supreme Court in cases like Alice v. CLS Bank and Mayo v. Prometheus Labs which have introduced a lack of clarity regarding the patentability of inventions, especially those in the software and biotech sectors. Issues surrounding the patentability of algorithms were at the center of a very interesting exchange between Iancu and Sen. Kamala Harris (D-CA). Sen. Harris made the point that artificial intelligence, a technology sector expected to become much more valuable in the coming years, relies upon software that processes algorithms to perform the mathematical computations required by AI systems. “I’m curious,” Sen. Harris said. “E=mc2. Would that have received any patent protection?” Iancu responded that Einstein’s theory of relativity was a mathematical representation of a law of nature and therefore not patentable. Sen. Harris followed up by asking whether algorithms were mathematical representations of laws of nature. “You’re getting right to the heart of the issue,” Iancu said. What Iancu said after that should be a major breath of fresh air to inventors and patent owners frustrated by Section 101 validity issues in the wake of Alice and Mayo:

“This is one place where I believe courts have gone off the initial intent. There are human-made algorithms, human-made algorithms that are the result of human ingenuity that are not set from time immemorial and that are not absolutes, they depend on human choices. Those are very different from E=mc2 and they are very different from the Pythagorean theorem, for example.”

Sen. Harris pushed Iancu further, asking the USPTO Director whether he felt that an algorithm was distinctly different from the identification of a pattern existing in nature. Although Iancu said that such determinations would have to take place on a case-by-case basis, he did say that, “As a general proposition, human-made algorithms that are cooked up, invented as a result of human ingenuity are different from discoveries and mathematical representations of those discoveries.”

Senate Judiciary Committee members including committee chair Sen. Chuck Grassley (R-IA), expressed a willingness to take a look at possible legislative fixes to patent-eligibility issues under current Section 101, a statute which Iancu noted hasn’t changed since 1952 and employs much of the same language since the Patent Act of 1793. Although Iancu said there were no current pending legislation on Section 101 that he found particularly promising, Sen. Coons had noted elsewhere that proposals on Section 101 fixes had been proposed by industry groups including the American Intellectual Property Lawyers Association (AIPLA) and the Intellectual Property Owners Association (IPOA). Other legislative proposals discussed during the day’s hearing included the STRONGER Patents Act, a bill which Sen. Coons noted would align PTAB proceedings with district court standards by maintaining the presumption of patent validity and heightening standings requirements for filing petitions for inter partes review (IPR) or post-grant review (PGR) validity challenges. Coons also discussed the Big Data for IP Act, a bill co-sponsored by Sen. Orrin Hatch (R-UT) which was introduced in late March. This bill would extend the USPTO’s fee-setting authority for an additional 10 years in order for the agency to invest in information technology infrastructure upgrades.

Sen. Hatch did raise concerns during questioning over the USPTO’s participation in the Department of Commerce’s shared services initiative, which has raised concerns among shareholders that agency fees may be siphoned off for non-agency purposes. He also raised concerns over the effects that PTAB proceedings have on patents that are also involved in Hatch-Waxman trials in district court. “Some commentators have expressed concern that IPR conflicts with the careful balance Hatch-Waxman struck,” Sen. Hatch said. “In particular, these commentators have pointed out that IPR can enable parallel validity proceedings with different standards and can also impact timing of certain FDA litigation benchmarks under Hatch-Waxman.” Anyone who has followed the story of the Allergan Restasis patents owned by the St. Regis Mohawk Tribe would be very familiar with some of the concerns voiced by Sen. Hatch here. Along with the effects of IPRs on Hatch-Waxman proceedings, Iancu also said that his agency was looking at various factors regarding decisions to institute IPRs and PGRs as well as claim construction standards, claim amendment processes, the composition of administrative patent judge (APJ) panels, the conduct of PTAB hearings as well as various standard operating procedures at the agency.

“I was a chief author of the Leahy-Smith America Invents Act that modernized our patent system,” said Sen. Patrick Leahy (D-VT). “I’m proud that innovation in the U.S. has thrived since AIA with investment and research and development increasing significantly. The United States has climbed from number 10 in the Global Innovation Index in 2012 to 4th in 2017.” One could assume that Sen. Leahy was also proud that his bill has helped lower the strength of the U.S. patent system to 12th overall and has seen the United States also drop out of the top 10 in the Bloomberg Innovation Index this year.

Sen. Grassley asked Iancu about actions that the USPTO could take to mitigate IP issues in China, including unfair trade practices regarding IP which were the focus of the Trump Administration’s Section 301 probe launched last August. Iancu discussed the agency’s ability to work with the U.S. Trade Representative and other administrative agencies to ensure that the IP rights of American companies were being respected overseas. Discussing a recent trip of his own to China on IP issues, Sen. Grassley said that, “After that trip, I’ve come to the conclusion that China will do anything that’s moral or immoral, legal or illegal, ethical or unethical to get ahead and stay ahead… They’re going to be a very difficult nut to crack.”

Sen. Mazie Hirono (D-HI) asked Iancu questions regarding the results of a recent Yale study which found apparent gender biases at the USPTO regarding patent examination, including findings that patent applications by women inventors were both more likely to be rejected and were more likely to have more words added reducing the scope of their patent claims. While Iancu noted that he had some questions about the study, which had come out a little more than one week prior to the Senate Judiciary hearing, he did discuss that the agency was working on initiatives regarding women and minority inventors. Iancu also noted that World IP Day next Thursday, April 26th, would feature a heavy focus on the contributions of women inventors.