Late this afternoon Teresa Rea, the Acting Under Secretary of Commerce for Intellectual Property and Acting Director of the United States Patent and Trademark Office, sent an e-mail to those who work for the USPTO. The e-mail was simply titled: “A Message from Teresa Stanek Rea.” The message was simple, the USPTO is facing “substantial budgetary uncertainty,” which is due to sequestration.

At this point I don’t know exactly the level of financial crisis at the USPTO, but it doesn’t sound good. The USPTO is a fee generating entity that runs largely on the fees it collects and this year projections have been well above realized revenue. With there already being a deficit, looming sequestration cuts could significantly harm USPTO productivity, which will cause harm to the innovation industry in the United States.

This is particularly alarming given the recent substantial raising of patent related fees for most applicants. How can the USPTO charge more and more for less service? The industry has already been uneasy about these substantial increases in fees, but most were willing to swallow hard as long as it meant a better functioning and faster moving patent process. It certainly doesn’t sound like a better functioning, faster moving patent process is on any relevant horizon at the moment. So the industry faces the prospect of paying more while returning to painfully slow processing of applications. A true nightmare scenario.

In addition to the aforementioned e-mail from Acting Director Rea, another e-mail was recently sent to union members from Robert Budens, President of POPA, the examiner’s union. Budens hypothesizes that there is an unofficial “gag order” placed upon USPTO officials by the White House. Budens has a reputation as a straight-shooter who is liked and well respected. For him to make such an assertion there must be some identifiable rationale on which he is relying. I have always understood Budens to have a good working relationship with USPTO management. The mere fact that he can’t get answers could justifiably raise suspicions. Of course, it may be because USPTO officials themselves don’t have any answers and are scrambling to address budget deficiencies, but you would think that could have been conveyed directly.

Today is the last day of the Kappos era at the United States Patent and Trademark Office. Director Kappos assumed control of the Office in August 2009, and three and one-half years later he is leaving the Office a better place, with virtually all metrics pointing in the right direction. The backlog of applications is down, the backlog of appeals has started to fall, the most sweeping patent reform in generations has passed, the USPTO has promulgated volumes of new rules to make the patent system better and to implement the America Invents Act, there has been a Memorandum of Agreement signed with the Smithsonian on the Innovation Expo, which will be held in June 2013, and the future Innovation Pavilion that will be housed at the Arts and Industries building, a new examiner count system was put in place revising the production goals and time given to examiners for the first time in more than a generation, the patent bar examination was updated for the first time in 5  years and continues to be updated every six months. The accomplishments are many. These are but a few that leap to mind at the moment.

But how will the Patent Office fare when the clock strikes 12:00 midnight later tonight and Director Kappos becomes private citizen Kappos? The USPTO will be in very capable hands. One of the biggest accomplishments of the Kappos Administration happened behind the scenes but oddly in plain view. I speak of “Team Kappos” regularly. It is because they are a team in a very real sense as far as I can tell. And while the assembly of the team was done in the public eye and those interested enough know who Kappos’ top lieutenants have been, Kappos quitely assembled an extremely talented team of dedicated, hard working individuals who will capably carry on.

Before profiling the top officials who will continue the work of the patent system, allow me also to pause and recognize a truly extraordinary moment in Patent Office History. The top three officials at the USPTO will all be women. Acting Director Teresa Rea, Commissioner for Patents Peggy Focarino and Commissioner for Trademarks Deborah Cohn will lead the Office forward steering America’s engine of innovation and commerce. If that doesn’t create a buzz of excitement even in Washington, DC, I don’t know what will! It is excitement well deserved and perhaps could lead to a higher profile for the USPTO, which would be very good for the patent system as a whole.

On January 15, 2013, I had the privilege to interview David Kappos one last time in his role as Under Secretary of Commerce for Intellectual Property and the Director of the United States Patent and Trademark Office. What follows is my exit interview with Director Kappos, where we reflect on his time at the USPTO, all that he has accomplished and the legacy that he will leave behind.

When conducting interviews I sometimes get a sense for whether the interview will be a good one once transcribed. Those who have helped me transcribe the interview and review it prior to publication (as we do with all interviews) tell me that this is a good interview. You will have to be the judge of that. I confess to being incapable of being objective.

Although I do write what I believe to be objective news articles from time to time, I am an opinion columnist. I am also an ardent believer in the patent system. The Kappos era at the USPTO also largely coincides with the time frame where I started to write daily (sometimes more). I attend public events at the USPTO and have interviewed Director Kappos several times and most of his top lieutenants. I have gotten to know Director Kappos and have seen first hand what his leadership has meant to not only the USPTO, but to the larger patent system in general. He has been a friend to the patent system and in my opinion is leaving the Patent Office far better than he found it. He will be sorely missed when he leaves at the end of the month, although he will leave with an excellent management team in place to carry forward the work for which he has laid the foundation.

UPDATE #4: 4:19pm ET on Nov. 26, 2012

David Kappos, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, will be stepping down and leaving the agency effective the end of January 2013. This news originally came to me from a high-ranking, well placed source within the USPTO who spoke on the condition of anonymity, and has subsequently been confirmed by the USPTO.

“I am honored to have served this administration by leading the USPTO,” said Kappos. “I believe we have made great progress in reducing the patent backlog, increasing operational efficiency, and exerting leadership in IP policy domestically and internationally. Thanks to the entire USPTO staff for their dedication and hard work. I wish them the very best as they continue their efforts to support the U.S. economy by promoting and protecting innovation.”

Indeed, Director Kappos has presided over the USPTO at a time of great change, thanks in no small part to the passage of the America Invents Act (AIA) on September 16, 2011.  This has lead the USPTO to put the pedal to the metal cranking out proposed rule package after proposed rule package.  The final wave of the initial AIA implementation rules packages will come out in February 2013 ahead of Phase 3 of the AIA implementation on March 16, 2013, which is when the U.S. will convert from first to invent to a first inventor to file system.

The tragedy unfolding in Japan currently is nearly unthinkable. One of the most powerful earthquakes ever recorded, followed by a tsunami which has devastated the country and brought the nation to the brink of nuclear disaster. At this time of crisis most, if not all, are focused on only the essentials. But life goes on elsewhere and with the law, particularly patent law, what that means is on top of this tragedy companies and inventors in Japan might find rights they have compromised in the United States. There is little that the United States Patent and Trademark Office can do, but yesterday they announced that they would offer whatever accommodations they can under the law. This is typical for natural disasters, and accommodations were given during Hurricane Katrina and several of the most recent earthquakes in California, although those are now years ago.

“Our thoughts and prayers are with the people of Japan who continue to suffer from the effects of the earthquake and resulting tsunami,” said Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos. “The USPTO is offering assistance in the form of flexibility on deadlines to the full extent allowable under our laws to Japanese applicants.”

Scott Daniels, partner in the firm Westerman, Hattori, Daniels & Adrian, and the primary author of Reexamination Alert™, recently happened across a rather rare reexamination story.  See PTO Director Initiates Reexamination Against Gift Tax Patent.  Earlier  this month, on January 12, 2010, the United States Patent and Trademark Office ordered a Director Initiated Reexamination pursuant to 37 CFR 1.520.  See also MPEP 2239.   The patent in question, U.S. Patent No. 6,567,790, relates to a patent on a method of minimizing tax liability.

Being in the greater Washington, DC area allows me to show up at IPO events, USPTO events and a host of other events.  In June when IPO honored Judge Michel at the Smithsonian I caught up with Q. Todd Dickinson, who is the current Executive Director of the American Intellectual Property Law Association and a former Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.  I asked him if he would speak with me on the record, and he agreed.  My travel schedule for the PLI patent bar review got in the way a bit, but throughout the summer we bumped into each other several times.  At the USPTO Roundtable on Three Track we again talked about and interview, and shortly thereafter the interview date was set.  On August 18, 2010, I had the privilege of sitting down for an extended one-on-one interview with the man known simply as “Todd” to practically everyone in the patent community.

Nick Godici, currently with Birch, Stewart, Kolasch & Birch LLP, is a former patent examiner, Commissioner for Patents and Acting Director of the United States Patent and Trademark Office. During the Summer of 2009 he was personally asked by Secretary of Commerce Gary Locke to return to the Patent Office as a special adviser to the Obama Administration and to pave the way for David Kappos to take over as Director. On Tuesday, June 29, 2010, I sat down with Godici in his Falls Church office for an in depth interview. This is part 2 of a 3 part series.  For part 1 see On the Record with Former PTO Director Nick Godici – Part 1.

In this interview we talk about how two Presidents that are extremely different on so many fronts, Presidents Reagan and Obama, are pursuing quite similar strategies regarding the Patent Office.  We also talk about the importance of good working relations between patent examiners and the patent bar, the enormous backlog of applications at the Patent Office, the Patent Office process for handling decisions and issuing guidance in situations such as the recent Supreme Court decision in Bilski v. Kappos and what it is like to be Commissioner for Patents and the Director of the Patent and Trademark Office.

On Tuesday, June 29, 2010, I had the opportunity to sit down on the record with Nick Godici, the former Acting Director of the United States Patent and Trademark Office and Former Acting Undersecretary of Commerce for Intellectual Property. Godici is one of only a small handful of individuals to have seen the Patent Office on every level, from newest patent examiner to SPE to Group Director, Commissioner for Patents and ultimately to Director of the USPTO.  I have wanted to sit down with him for some time now, and some mutual friends of ours, who are mentioned in the interview in passing, made introductions.  I was put in touch with Godici and now the rest is history, as they say.

I thoroughly enjoyed my time with Godici, and we managed to get into a wide variety of issues that ranged from his early days as a patent examiner, his patent examination philosophy and approach, the role of the USPTO, the Patent Granting Authority versus the Patent Denial Authority, examiner training, building relationships between patent examiners and the patent bar, the PTO work from home initiative, inequitable conduct, the Bilski decision and what the USPTO is now likely doing to address that, the parallels between the Reagan Administration and the Obama Administration in terms of patent and innovation policy and exactly what it is like to be the Commissioner of Patents and the Director of the Patent Office, and much more. Oh yes, we also talked about his getting a call from Secretary of Commerce Gary Locke last summer and returning to the Patent Office for a few months as a special adviser at the request of the Obama Administration.

I wish I had some inside information to pass along, but I do not.  All I can seem to come up with is unsubstantiated rumor and innuendo, but the report the other day from Patently-O that Duke Law Professor Arti Rai is heading to the Patent Office to fill a long vacant policy setting position has too much of a ring of truth to completely ignore.  There have long been rumors associated with Professor Rai given that she is a long-time friend of President Barack Obama, both having been in the same Harvard Law School class.  What we do know is that Rai was a member of the Obama transition team, and was rumored to be on the short list for Undersecretary of Commerce for Intellectual Property, a position that also carries the title and responsibilities of Director of the Patent and Trademark Office.  As practically everyone in the patent bar that came in contact with Professor Rai was kissing her ring in anticipation that she would become the new PTO Director, I heard an unsubstantiated rumor that she had been offered the position and declined.  I want to make as clear as possible that I am writing about rumors, and unsubstantiated ones at that in order to distinguish from hard facts and inside information so that readers understand that this may all be much ado about nothing.  Having said that, as well respected in academic circles as Professor Rai is, it would be an enormous mistake for her to be given a policy setting position within the USPTO.  So allow me for a moment to buy into the rumors and make my case.

Lets be perfectly clear, the Patent Office does not call me and ask my input regarding anything, which should be readily apparent to those who read IPWatchdog.com regularly.  Had the Patent Office done so, and actually taken my suggestions to heart the Department of Justice would not have needed to ask the Federal Circuit to hold off on taking the claims and continuations case en banc pending David Kappos being confirmed and perhaps withdrawing the rules and mooting the case.  No, it wouldn’t have been necessary because I was suggesting that directly since at least December 2008, and was begging Jon Dudas in my writings week after week to do the right thing the go back to the drawing board as early as September 2007.  In any event, this doesn’t stop me from pounding my keyboard and publishing my thoughts here.  I guess you could say I am naive enough to believe that eventually good ideas will be implemented; and yes, I do understand that I just impliedly referred to good ideas and the federal government in the same sentence.  Notwithstanding, there is real hope in the patent community that Kappos will usher in real reform, so I have hope.  In the meantime, I want to nominate a few people for the open position of Deputy Patent Commissioner for Patent Examination Policy.

We argue, hour by hour, day by day, about large issues of morality and ethics and discuss how to make our nation “green”. We discuss large high-level issues like “should we have a public option for healthcare?”, but we give less attention to the details regarding what such an option might look like. Similarly, in the patent system, the public often argues large issues like the patent eligibility of business methods, computer related inventions, and genes, but gives less attention to the establishment of consistent standards for determining which patents will issue and what innovations will be buttressed by the exclusivity incentives that come with those patents. It is time to focus on the details, and a good place to start is with the hiring of a new Deputy Commissioner for Patent Examination Policy (DCPEP).

Updated: Monday, August 24, 2009 @ 5:12:pm Eastern

On Friday, August 21, 2009, the United States Patent and Trademark Office posted a job opening for the position of Deputy Commissioner for Patent Examination Policy at USAJobs.gov.  See Job Announcement No.: MJM-09-0217-ExRD.  Many will undoubtedly recall that when Jon Dudas resigned, the day Barack Obama was inaugurated as President of the United States, John Doll who was the Commissioner for Patents was promoted to become Acting Director of the PTO, leaving open the position of Commissioner, which was filed by then Deputy Commissioner for Patent Operations, who was Peggy Focarino.  Peggy Focarino then became the Acting Commissioner for Patents, leaving open the Deputy Commissioner for Patent Operations position.  With the recent confirmation of David Kappos as Undersecretary of Commerce for Intellectual Property, a title that also comes along with the title of Director of the USPTO, that seems to have left John Doll in limbo, and perhaps Focarino in limbo as well.  Now the USPTO is looking for a Deputy Commissioner for Patent Examination Policy, the job formerly held by John Love who retired earlier this year.  In any event, it would seem that the management ranks at the USPTO are in flux.  I cannot claim to be in the loop on this, but if I were asked to opine on what might happen my opinion would be that Focarino will have the “Acting” removed from her title and become the Commissioner for Patents, and John Doll will be the odd man out.  As for the Deputy Commissioner for Patent Examination Policy, who knows?  There are plenty of qualified candidates out there, including some who lost their jobs during the Dudas Administration.

Something came up in the comments to a post earlier today and I want to address it and definitively debunk the rewriting of history that seems to already be started with respect to who is to blame for the problems of the patent system.  The question arises with respect to whether the Patent Office has created their own mess by artificially forcing down the number of patents granted because it was believed the allowance rate was too high and fewer patents should be issued.  Of course, to the extent that this happened, which we all know it did, this would be malfeasance of the first magnitude.  The law says that applicants are entitled to a patent unless the examiner can articulate a justifiable reason for not issuing a patent.  For some government official to simply believe the allowance rate is too high and institute means to guarantee it dropped violates not only common sense, not only the spirit of the patent laws and the Constitution itself, but it also runs contrary to the dictates of the relevant statute.  As a result, during the first quarter of 2009 the allowance rate sank to 42%, and the Patent Office budget is a mess.

On Thursday, August 13, 2009, U.S. Secretary of Commerce Gary Locke conducted a ceremonial swearing-in of Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos. In his remarks before thousands of employees on the USPTO campus, Secretary Locke said “David is taking on a big job… Promoting and protecting U.S. inventions, innovation and creativity directly affects our nation‘s welfare and prosperity.”  In his remarks at the ceremony, the New PTO Director took a not so subtle swipe at his predecessors, James Rogan and Jon Dudas, by saying: “To meet Secretary Locke’s direction to me, I will be HERE at the USPTO. I will minimize overseas travel, and focus domestic travel on listening to the U.S. innovation community and discussing our agenda with them.”  The capitalization of the word “here” is found in the official copy of Kappos’ remarks published on the USPTO website.  Those familiar with how the Patent Office has run over the last 8 years remember that Rogan, and to a lesser degree Dudas, famously traveled the country and the globe.  No doubt anything Kappos can do to demonstrate there is a new Sheriff in town will be welcomed by the patent bar, and all those who rely on the work done by the USPTO to assist them in achieving their business objectives.