Begins process mandated by the America Invents Act’s fee setting provisions to deliver on promises to the IP community and achieve long term financial stability

Washington – Under the America Invents Act (AIA), the United States Patent and Trademark Office (USPTO), for the first time in its history, was given the authority to work with IP stakeholders to set fees through the regulatory process. The agency took a first step towards that end this week when it published proposed fees for all of the patent services it provides. See Table of Patent Fee Changes and Executive Summary: Patent Fee Proposal.

USPTO Deputy Director Theresa Rea in her office on January 17, 2012.

On January 17, 2012, I sat down with Terry Rea, the Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office. We met in her office, which is on the 10th floor of the Madison Building adjacent to Director Kappos’ office and overlooking Dulany Street.

In part 1 of the interview we discussed USPTO hiring and Director Rea told me that the plan “this fiscal year was to hire approximately 1,500 examiners.” The Office, according to Rea, is also looking to hire another 80 Administrative Patent Judges during this fiscal year and the salary is approximately $165,300. With respect to APJs the Office is looking for “talented examiners to promote from within” but is “also interested in talented attorneys from outside of the agency,” said Rea.

Part 2 of my interview with Deputy Under Secretary Rea picks up with discussion of the America Invents Act. We generally discussed the rulemaking process, the fact that the post-grant proposed rules are a bit late in coming, comments and what the USPTO will do with them, as well as the upcoming Road Show the USPTO is taking across America for the purpose of discussing implementation of the America Invents Act.

USPTO Deputy Director Theresa Rea in her office on January 17, 2012.

I have known for a while now that I would be doing an in-depth look at the Senior Management Team at the United States Patent and Trademark Office. The series is currently in progress, and this is the second installment – my interview with Theresa Rea.  Rea is a long time patent attorney and former President of the AIPLA.  Currently, however, she is the person in the federal government with the longest title — Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office. Her title is longer than her boss’ title thanks to the inclusion of the word “deputy” twice.

When I interviewed USPTO Director David Kappos in December 2011, after the interview was concluded I asked him to give me some thoughts on his Senior Management Team. “When I say ‘Theresa Rea’ what are the first things that come to mind,” I asked. Kappos responded: “Tremendous background knowledge, energy, fun person to work with and to team with, deep knowledge of the life sciences sector…” Director Kappos would go on to say that with Rea at the agency “we’ve got all the bases covered. I’m the corporate guy, she’s the litigator. I’m the IT guy, she’s the Pharma person.”  Indeed, Deputy Director Rae is the real deal and a nearly ideal compliment to Director Kappos.

USPTO Publishes Proposed Rules for Supplemental Examination and to Revise Reexamination Fees

Changes will implement provisions of the America Invents Act

Washington – The United States Patent and Trademark Office (USPTO) is proposing rules of practice in patent cases to implement the supplemental examination provisions of the America Invents Act. The USPTO is also proposing to adjust the fee for filing a request for ex parte reexamination and to set a fee for petitions filed in ex parte and inter partes reexamination proceedings to more accurately reflect the cost of these processes. The USPTO published these proposed rules in the Federal Register on January 25, 2012.

Last week I wrote an article titled Business Methods by the Numbers, which took a look at the allowance rates for a variety of Art Units assigned to examine patents in class 705, the primary class where business methods and financial data processing inventions are classified in the United States.  The article has raised a few eyebrows and has caused some to question whether there is disparate treatment among Art Units at the United States Patent and Trademark Office.

The fact that there is disparate treatment between and among various Art Units and patent examiners shouldn’t catch anyone by surprise.  Everyone in the industry knows that some patent examiners feel they work for the Patent Granting Authority while others work for the Patent Rejection Office.  Notwithstanding, there are some who are excusing what can only be characterized as truly alarming statistics as having something to do with the various types of patent applications assigned to each Art Unit.  Allow me to call that out for what it is – hogwash!  Class 705, including the applications handled by Art Unit 3689, is dominated by a who’s who of the largest technology and financial companies in the world.  These companies hire some of the best attorneys in the world, they well understand how to write a patent application to articulate allowable subject matter and yet these large, well-funded companies represented by some of the best and brightest legal minds are incapable of obtaining a patent?  If you believe that I have a bridge I want to sell you!

The United States Patent Classification System is a system for organizing all U.S. patents into a smaller sub-collection of patents based on common subject matter. Each subject matter division includes a major component, which is called a class, and a minor component, which is called a subclass.  Few classes draw as much attention as class 705.  Class 705 is the generic class for innovations relating to the performing of data processing operations where the apparatus or method is uniquely designed for or utilized in the practice, administration, or management of an enterprise, or in the processing of financial data.  Class 705 was created in 1997 from the business and cost/price sections of computer classes 395 and 364.

The mere designation of an arrangement as a “business machine” or a document as a “business form” or “business chart” without any particular business function will not cause classification within class 705.  There must be significant claim recitation of the data processing system or of a calculating computer while at the same time having only nominal recitation of any external art environment within the claims.  If the claim mentions a particular tangible apparatus in combination with performing data processing or calculation operations then the invention is categorized in the classification that most closely matches the tangible apparatus.  In other words, class 705 relates to business method patents and the processing of financial data.

The USPTO’s 12 month accelerated examination program produces higher quality patents in less time and potentially less overall cost than conventional patent examination, or even the new “Track 1″ or other accelerated examination processes.  It’s also a high risk process with a large upfront cost due to the need to prepare an “examination support document.”  Anyone considering it for their own inventions should have a thorough discussion with their patent attorney/agent before embarking on it.

I spoke to five patent practitioners (attorneys and agents) who filed successful 12 month accelerated examination cases in 2011 to get their input on how the process went for them and what subjects should be considered by applicants and their patent counsel before embarking on it.  This will give you, our readers, a consensus view on the subject.  Each of these practitioners got their clients’ patents issued in less than six months.  That seemed like an excellent group to get solid guidance from.

In this installment, the third and final segment of my interview with David Kappos, Under Secretary of Commerce for Intellectual Property and the Director of the United States Patent and Trademark Office, we learn from Director Kappos that the USPTO budget is not a problem whatsoever.  While it is well known that the Office did not achieve a permanent end to fee diversion, less well known is the fact that Congress appropriated $2.7 billion for the USPTO for this fiscal year.  The USPTO is NOT operating under a Continuing Resolution (CR) as is the case with most of the rest of the federal government.  Furthermore, current projections have the USPTO collecting $2.5 billion in fees this fiscal year, so there will be a $200 million subsidizing of the USPTO by the General Treasury.

In this segment Kappos also says that the USPTO is looking to hire 80 more Judges for the Board of Patent Appeals.  “Tell your readers, if you’re an experienced patent attorney and you want to have a great career move, we give you a robe and a wig and a gavel and you get to be a judge,” Kappos said.  We also discuss the Detroit Satellite Office and Director Kappos’ thoughts on harmonization.

The Wall Street Journal is reporting that President Obama will today announce a proposal that would merge six agencies that focus on trade and commerce into one new department. Apparently the belief is that the restructuring will make it easier for businesses to navigate government bureaucracy. Notwithstanding, the proposed restructuring may better be thought of as a reshuffling since it seems that the plan would only save several billion dollars over 10 years. Thus, the real savings and streamlining may be minimal and likely won’t make the bureaucracy any more friendly unless regulations are minimized, but that is another topic for another day.

The Obama government restructuring plan is of particular importance within the patent community because it will affect the Commerce Department as well as five smaller agencies. As soon as I heard that my Spidey-senses started tingling. Wasn’t there something in the the Leahy-Smith America Invents Act (AIA) that applied only so long as the United States Patent and Trademark Office remained an agency within the Department of Commerce? Sure enough, there is. The new fee setting authority vested in the USPTO is contingent upon the Patent and Trademark Office remaining within the Department of Commerce.

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.

USPTO Announces Location for Elijah J. McCoy Satellite Office in Detroit

Riverfront office space confirmed; Agency targets July 2012 opening

WASHINGTON—The United States Patent and Trademark Office (USPTO) announced on January 10, 2012 that it has concluded a five-year lease agreement through the U.S. General Services Administration’s (GSA) Great Lakes Region for a 31,000 square foot space to be located at 300 River Place Dr. in Detroit, Michigan 48207. The building, listed on the National Historic Registry, was the former home to Parke-Davis Laboratories as well as the Stroh’s Brewery Headquarters.

Editorial Note: Last week I published an article titled Patent Strategy: Discovering Crucial Patent Examiner Data.  There were numerous, substantive questions posed about the PatentCore software, so I invited co-creator and patent attorney Chris Holt to address those questions in the article that follows.

_________________

We are very pleased with the interest generated in the PatentCore information system.  The feedback has been overwhelmingly positive.  A number of people have had questions about some of the specifics of the system.  The purpose of this article is to address the most common questions possed by IPWatchdog readers in response to a recent article; Patent Strategy: Discovering Crucial Patent Examiner Data, which was published on January 4, 2012.

One of the most persistent questions asks us to address the inspiration for and reasoning behind the system. As patent attorneys ourselves, we have prosecuted patents for many years for a wide variety of clients.  As committed professionals, we are constantly trying to improve our own performance to ensure that we are delivering quality services to our clients.  That was, quite frankly, the inspiration for the system.  As we began to explore the concepts behind PatentCore, we realized that we could bring value not only to our clients but to the patent community as a whole.  The primary goal of PatentCore is to improve the patent process for patent examiners, patent attorneys and, therefore and primarily, for our clients.

On Monday, July 19, 2010, I was granted behind the scenes access to the United States Patent and Trademark Office, and was allowed to follow USPTO Director David Kappos throughout the day as he went from meeting to meeting.  Nearly 18 months has passed since, and we have just entered what could be the final year of the Obama Administration, so it seemed as if the timing was right to once again sit and chat with the Under Secretary of Commerce for Intellectual Property.

I requested an interview through proper channels and it was arranged to take place at the USPTO on the 10th floor of the Madison Building in Director Kappos’ office.  The interview took place on Thursday, December 22, 2011.  The title Kappos 2.0 is how I have referred to this follow-up series.  In the initial series spawned three different articles; one about what I observed as a day in the life of Director Kappos, the interview with Director Kappos and an article about Kappos’ Senior Management Team.  In addition to what will be a three-part interview with Director Kappos, the Kappos 2.0 series will also entail in depth interviews with some of Kappos’ Senior Management Team, so stay tuned through the first quarter of 2012 for more.

On Thursday, January 5, 2012, the United States Patent and Trademark Office published three Notices of Proposed Rulemaking regarding implementation of various provisions of the Leahy-Smith America Invents Act (AIA). A fourth Notice of Proposed Rulemaking was published in the Federal Register on Friday, January 6, 2012.  The Notices of propose rules concern inventor oaths and declarations (77FR982), as well as for third party submissions of prior art (77FR448) in a patent application and for third party citations of prior art (77FR442) in a patent file. The Patent Office also published proposed rules related to the statute of limitations under which registered practitioners may be disciplined for misconduct before the Office (77FR457).

When I first set out to write this article my intention was to do something that briefly summarized the proposed rules to bring everyone up to speed.  Unfortunately, that is not going to be possible.  These proposed rules are the first wave of rules in 2012 that are aimed at the implementation of the AIA.  As we all well knew, the changes to patent law and practice were going to be enormous.  Even these seemingly peripheral rules have layers of nuances, making cursory summary nearly impossible.  For that reason I am going to go one at a time through the proposed rules, today tackling the proposed rules relating to the time limit for the Office of Enrollment and Discipline to bring an action against a patent practitioner for alleged misconduct.

The patent backlog has been well documented over the years. We don’t need to rehash the reasons for the backlog, but everyone in the industry knows that it takes far too long for the overwhelming majority of patents applications to mature into issued patents.  Sure, pharmaceutical companies, biotech start-ups and Universities may want to delay issuance of a patent, or even delay USPTO consideration of an application, but how many clients of yours really want and even need a patent as quickly as possible?  If you represent independent inventors, small businesses, entrepreneurs and start-ups the answer is almost universally that patents are needed with all due speed.

Over the past several years the Patent Office has attempted to offer a variety of procedures to speed up patent applications, such as project exchange where you drop one application to advance another out of turn and the Green Technology Pilot where certain green technologies are advanced out of turn.  Most famously, perhaps because it was a part of the America Invents Act, is Track 1, where you pay an additional $4,800 fee to obtain a patent decision within 12 months.  With all of these efforts some wonder why more haven’t taken advantage of the various acceleration options.  There are two reasons: (1) patent attorneys are very conservative and don’t like change (with good reason); and (2) $4,800 is no small amount of money.