[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
OVERSIGHT OF THE U.S. PATENT AND TRADEMARK OFFICE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET
OF THE
COMMITTEE ON THE JUDICIARY
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
THURSDAY, APRIL 27, 2023
__________
Serial No. 118-17
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via: http://judiciary.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
52-123 WASHINGTON : 2023
COMMITTEE ON THE JUDICIARY
JIM JORDAN, Ohio, Chair
DARRELL ISSA, California JERROLD NADLER, New York, Ranking
KEN BUCK, Colorado Member
MATT GAETZ, Florida ZOE LOFGREN, California
MIKE JOHNSON, Louisiana SHEILA JACKSON LEE, Texas
ANDY BIGGS, Arizona STEVE COHEN, Tennessee
TOM McCLINTOCK, California HENRY C. ``HANK'' JOHNSON, Jr.,
TOM TIFFANY, Wisconsin Georgia
THOMAS MASSIE, Kentucky ADAM SCHIFF, California
CHIP ROY, Texas DAVID N. CICILLINE, Rhode Island
DAN BISHOP, North Carolina ERIC SWALWELL, California
VICTORIA SPARTZ, Indiana TED LIEU, California
SCOTT FITZGERALD, Wisconsin PRAMILA JAYAPAL, Washington
CLIFF BENTZ, Oregon J. LUIS CORREA, California
BEN CLINE, Virginia MARY GAY SCANLON, Pennsylvania
LANCE GOODEN, Texas JOE NEGUSE, Colorado
JEFF VAN DREW, New Jersey LUCY McBATH, Georgia
TROY NEHLS, Texas MADELEINE DEAN, Pennsylvania
BARRY MOORE, Alabama VERONICA ESCOBAR, Texas
KEVIN KILEY, California DEBORAH ROSS, North Carolina
HARRIET HAGEMAN, Wyoming CORI BUSH, Missouri
NATHANIEL MORAN, Texas GLENN IVEY, Maryland
LAUREL LEE, Florida
WESLEY HUNT, Texas
RUSSELL FRY, South Carolina
------
SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND
THE INTERNET
DARRELL ISSA, California, Chair
THOMAS MASSIE, Kentucky HENRY C. ``HANK'' JOHNSON, Jr.,
SCOTT FITZGERALD, Wisconsin Georgia, Ranking Member
CLIFF BENTZ, Oregon TED LIEU, California
BEN CLINE, Virginia JOE NEGUSE, Colorado
LANCE GOODEN, Texas DEBORAH ROSS, North Carolina
KEVIN KILEY, California ADAM SCHIFF, California
NATHANIEL MORAN, Texas ZOE LOFGREN, California
LAUREL LEE, Florida MADELEINE DEAN, Pennsylvania
RUSSELL FRY, South Carolina GLENN IVEY, Maryland
CHRISTOPHER HIXON, Majority Staff Director
AMY RUTKIN, Minority Staff Director & Chief of Staff
C O N T E N T S
----------
Thursday, April 27, 2023
Page
OPENING STATEMENTS
The Honorable Darrell Issa, Chair of the Subcommittee on Courts,
Intellectual Property, and the Internet from the State of
California..................................................... 1
The Honorable Henry C. ``Hank'' Johnson, Ranking Member of the
Subcommittee on Courts, Intellectual Property, and the Internet
from the State of Georgia...................................... 3
WITNESS
The Honorable Kathi Vidal, Undersecretary of Commerce and
Director, U.S. Patent and Trademark Office
Oral Testimony................................................. 5
Prepared Testimony............................................. 7
LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING
All materials submitted by the Subcommittee on Courts,
Intellectual Property, and the Internet, for the record are
listed below................................................... 27
Material submitted by the Honorable Darrell Issa, Chair of the
Subcommittee on Courts, Intellectual Property, and the Internet
from the State of California, for the record
A letter from the Foundation of Human Rights in Cuba (FHRC),
Apr. 21, 2023
A letter from the Cuban Studies Institute, Apr. 21, 2023
An article entitled, ``Law must protect what padlocks
cannot,'' Jun. 9, 2004, Opinion | Sun Herald
A letter from Jaime Suchlicki, Director/Emeritus Professor,
Cuban Studies Institute, Apr. 21, 2023
Statement from Bruce A. Lehman, Former Secretary, Commerce
and Commissioner of Patents and Trademarks, Mar. 3, 2010
Statement from John K. Veroneau, Partner, Covington &
Burling, LLP, Mar. 3, 2010
Material submitted by the Honorable Thomas Massie, a Member of
the Subcommittee on Courts, Intellectual Property, and the
Internet from the State of Kentucky, for the record
An article entitled, ``No End in Sight for Rule 36 Racket at
Federal Circuit,'' Jan. 29, 2019, IPWatchdog
A fact sheet entitled, ``Big Tech Abuses the Patent Trial and
Appeal Board,'' Jan. 31, 2023, Docket Navigator
APPENDIX
Material submitted by the Honorable Darrell Issa, Chair of the
Subcommittee on Courts, Intellectual Property, and the Internet
from the State of California, for the record
A letter from the ACT |e App Association, Alliance for
Automotive Innovation, Bank Policy Institute, Computer
and Communications Industry Association, Consumer
Technology Association, High Tech Inventors Alliance,
National Retail Federation, Public Innovation Project,
Public Interest Patent Law Institute, R Street Institute,
Software & Information Industry Association, The Clearing
House (TCHPA), United for Patent Reform, and the US
Manufacturers Association for Development and Enterprise
(US MADE), Apr. 26, 2023
A letter from the Public Citizen, Public Innovation Project,
Public Interest Patent Law Institute, Public Interest
Research Group, R Street Institute, Michigan United, and
Michigan People's Campaign, Apr. 26, 2023
A statement from Quality Patents Coalition, Apr. 27, 2023
A letter from Unified Patents, LLC, May 1, 2023
QUESTIONS AND RESPONSES FOR THE RECORD
Questions to the Honorable Kathi Vidal, Undersecretary of
Commerce and Director, U.S. Patent and Trademark Office,
submitted by the Honorable Darrell Issa, Chair of the
Subcommittee on Courts, Intellectual Property, and the Internet
from the State of California; the Honorable Laurel Lee, a
Members of the Subcommittee on Courts, Intellectual Property,
and the Internet from the State of Florida; the Honorable
Nathaniel Moran, a Members of the Subcommittee on Courts,
Intellectual Property, and the Internet from the State of
Texas; the Honorable Henry C. ``Hank'' Johnson, Ranking Member
of the Subcommittee on Courts, Intellectual Property, and the
Internet from the State of Georgia; and the Honorable Deborah
Ross, a Members of the Subcommittee on Courts, Intellectual
Property, and the Internet from the State of North Carolina,
for the record
No response was received at the time of publication.
OVERSIGHT OF THE U.S. PATENT AND TRADEMARK OFFICE
----------
Thursday, April 27, 2023
House of Representatives
Subcommittee on Courts, Intellectual Property, and
the Internet
Committee on the Judiciary
Washington, DC
The Subcommittee met, pursuant to notice, at 9:08 a.m., in
room 2141, Rayburn House Office Building, the Hon. Darrell Issa
[Chair of the Subcommittee] presiding.
Present: Representatives Issa, Massie, Fitzgerald, Cline,
Kiley, Moran, Lee, Fry, Johnson, Lofgren, and Ivey.
Mr. Issa. The Subcommittee will come to order.
Without objection, the Chair is authorized to declare a
recess at any time.
We welcome everyone here today to today's hearing on
``Oversight of the United States Patent and Trademark Office.''
I will now recognize myself for a short opening statement.
First, although I'll welcome you officially later--welcome
to the Committee, and welcome to the work that you've already
had under our time, 100 days, but much longer to do. This
Committee, like no other, is interested in seeing and hearing
what you have to say about what you're doing today and what, by
definition, we will have to do in the future, in areas like AI
and the development of what we might consider to be patentable
products that, today, would be invented by men and women and,
tomorrow, certainly will be conceived of and refined by
machines.
The United States Patent and Trademark Office plays a
critical role in the Nation's ability to innovate and grow.
That has been true since our founding. The first patent, which
I'm honored to have a copy of in my office, is signed by none
other than George Washington and Thomas Jefferson. In those
days, the first five patents were reviewed, in fact, by the
Secretary and the President.
Last year alone--and I'm sure that the Director will have
numbers for us that are accurate and much more timely than
mine--but, last year, over half a million patents were applied
for and
certainly over 300,000, again, were granted. That means that
every
2-3 years we are currently adding a million patents.
To put that in perspective, my first patent, not that long
ago by my perspective, was in the four-millions. During the
last administration, I was honored to be at Mount Vernon for,
in fact, the 10-millionth patent, granted to Raytheon
Corporation. We are certainly past 11 million as we speak. More
importantly, it means that more than a third and nearly a half
of all patents ever granted are currently valid and
enforceable--an amazing number, an amazing statement to current
innovation.
It also means that the Patent and Trademark Office has a
job which is harder than ever before. Everyone can understand
that innovation is going very quickly, but we also understand
that overlapping innovation is greater than it ever has been
before. What is overlapping innovation? Overlapping innovation
is the fact that, although each patent individually must have a
piece of uniqueness, many, many patents, in many disciplines,
speak to the same basic product and to similar aspects of it.
That makes the job of examiners harder than ever.
In addition to that, because of artificial intelligence in
its early days, people are now putting together patents which
have hundreds or thousands of very similar claims, designed
with the assistance of computers, to bracket the invention,
meaning patents may have one independent claim and up to
thousands--I repeat--thousands of dependent claims.
That makes it very difficult for any examiner, or even any
examiner with the aid of a computer, to really see and be
accurate. Now, more than ever, the reexamination process, in
light of the scrutiny that comes after the granting of a patent
against overlapping patents, is essential. That is not without
conflict.
Obviously, one of the things that this office has, and the
Director's office has is a responsibility to provide the
greatest degree of patent certainty on the day of issue and,
if, in fact, it is challenged through ex parte or inter parte
reexamination, to, in a timely fashion, again reinstate that
patent certainty.
That is the most important thing I believe we will discuss
here today. It is the goal of this Committee and of the Under
Secretary.
We have had countless meetings over the years to try to
refine the Patent and Trademark Office's mission. We did so
nearly a decade ago successfully on a bipartisan, bicameral
basis. We have now gone a decade. We have seen some of the best
fruits of that work. We have also seen some of the challenges
that continue.
Although it is not within her purview, this Committee does
and intends to resolve the problem of selectively finding
places to go to get your patent--or, sorry--yes, to get your
patent enforced. The kind of shopping that's happened in East
Texas and West Texas even has gained the direct attention of
the U.S. Supreme Court, and that should not be necessary. This
Committee has the jurisdiction and the authority to find ways
to stem that trend.
We also have the situation with the United States ITC, and
the ITC also represents a lack of patent certainty for the
patent holder and for people who are practicing arts that do
not infringe patents.
So, as we speak here today, we do not claim to have
jurisdiction over every Article III judge's decision. We do not
claim to have jurisdiction over the ITC. In fact, under the
act, 10 years ago, we gave rulemaking authority to the Patent
and Trademark Office.
It is our goal to make sure that the Patent and Trademark
Office is able to produce and make those adjustments as facts
change, while at the same time recognizing that the role of
Congress is essential in actually creating the underlying
statute.
For that reason, I want to thank Director Vidal for
appearing here today and, on a separate note, repeatedly being
available to both the Chair and Ranking Member over the last
several years for the kinds of consultation that is essential.
That does not mean that we will not have things to discuss
here today that represent disagreements between this side of
the dais and that side of the dais. I think it is clear, we
cannot do it alone from Congress, and you cannot do it alone
from your role.
So, I look forward to the discussion today, those to
follow.
With that, I would recognize the Ranking Member for his
opening statement.
Mr. Johnson of Georgia. Thank you, Mr. Chair.
Director Vidal, thank you for being with us today, and I
look forward to hearing your testimony on the status of your
13,000-person agency--perhaps on the smaller side by government
standards but with outsized importance to the direction of this
country.
For example, employees of your office get to decide who
gets a patent, who gets a trademark registered, and who gets
their patent or trademark taken away upon further review. This
is an immense amount of power for a Federal agency to have. As
a result, the job that you hold, which is to run this agency
responsibly, to try to make the decisions consistent and fair,
with so many individual decisionmakers, is a unique challenge.
While there are many topics that we could discuss, in the
interest of time, I will focus on two that have been of special
concern to me.
First, it is now well-known that there is an ongoing
problem with fraudulent trademark applications being filed and
approved. The presence of these fraudulent marks complicates
the path for legitimate businesses to file for their own
trademarks, ultimately hurting consumers and our economy.
I was proud to lead the effort to pass the Trademark
Modernization Act of 2020. This act created new proceedings at
the office to allow for a quicker and less expensive challenge
to applications for trademarks that had not been used. This
provides a way to target some of these fraudulent applications.
While there are indications that it's been successful, I'm
afraid it might not be enough.
Likewise, although the office has put in place new
requirements on who must sign applications, there are signs
that this is being manipulated also. It seems clear that the
office needs to find more ways to be vigilant on the front end
to better spot the tell-tale signs of false information.
Second, I have concerns about the Patent Trial and Appeal
Board, or PTAB, being able to operate as a judicial body free
from political interference. Congress's original design for the
board was for its decisions to be final and nonreviewable by
Executive-Branch appointees, while there was always a right to
appeal to the Judicial Branch.
The Supreme Court decided that this arrangement was
unconstitutional and, consequently, created a new mechanism by
which a Director could single-handedly decide to review and
alter a case. I'm concerned about the degree to which this has
opened the PTAB up to political influence rather than a
judicial application of facts to the law.
The degree of change in PTAB proceedings under different
Directors has done nothing to allay my fears. The patent system
is not meant to be subject to frequent and unpredictable
fluctuations. The point of a 20-year patent is to allow for
planning, investment, and realization of new inventions. I'm
concerned that we have allowed law in this area to become too
subjective and too subject to the particular views of different
administrations. This is not the stable basis on which our
country's innovation ecosystem should rest.
Ms. Vidal, I look forward to hearing your thoughts on these
important issues as well as the rest of your testimony, and I
thank you.
I thank you, Mr. Chair, and I yield back.
Mr. Issa. I thank the Ranking Member.
Without objection, all opening statements will be included
in the record.
Mr. Issa. I now would like to introduce our one and most
important witness, the Hon. Kathi Vidal.
Ms. Vidal is the Under Secretary of Commerce for
Intellectual Property and Director of the United States Patent
and Trademark Office--a long title, and it's the reason we end
up saying ``Director'' a lot.
The Under Secretary uniquely leads an agency, as the
Ranking Member said, of 13,000 employees charged with
protecting U.S. innovations, entrepreneurship, and creativity.
In fact, one of the most important mandates in the Constitution
rests squarely on her shoulders.
Before her appointment, she worked in private practice,
where she represented clients in IP matters.
We welcome the witness today for appearing.
Pursuant to--you've seen this before, but you're required
to be sworn in. If you would please rise to take the oath.
Do you solemnly swear or affirm, under penalty of perjury,
that the testimony today you're about to give is true and
correct, to the best of your knowledge, information, and
belief, so help you God?
Ms. Vidal. I do.
Mr. Issa. Please be seated.
The record will reflect that the witness answered in the
affirmative.
With that, I would inform you that--and this one I can do
by heart. You know the routine. Five or so minutes. We won't
knock you off at the end, but your entire statement will be
placed in the record.
Pursuant to the tradition of this Committee, Members will
afterwards ask questions for five minutes. I will also not
gavel you if you're answering a question at the end of it. I
may gavel the member if they try to come back with several
more. The reason today is that at 10:30 we will have the South
Korean President, and we, by definition, will recess at that
point.
So, we'll try to get through this as pithy as we can.
Please make sure that your answers are full and complete, and
we won't stop you in the process of answering.
With that, I'm going to use the Jordan rule--one second.
Oh, I'm sorry. I wanted to announce that I will use the Jordan
rule and recognize Members in the order in which they want to
be received. So, if both sides would both have that.
So, with that, Director, we're honored to have you here.
Please continue.
STATEMENT OF THE HONORABLE KATHI VIDAL
Mr. Issa. That's the other one I was going to mention.
Ms. Vidal. OK. You'd think I would know that by now.
Chair Issa, Ranking Member Johnson, and Members of the
Subcommittee, I am honored and humble to sit before you today,
and I am heartened by the opening statements.
At the USPTO, we share a vision for America--a vision of
good-paying jobs and economic prosperity for all your
constituents, where access to jobs and the innovation ecosystem
will not depend on where you live or how much money you have,
where it won't depend on your gender or ethnicity, or whether
you took time to raise your children or for other endeavors. We
will continue to drive innovation without discouraging the
competition that allows family farmers to thrive and does not
unnecessarily delay lower-cost medications needed by many.
To achieve these objectives, my first goal was to listen to
you and to those our system is meant to serve.
As I start my second year, we are focused on action. We
recently started rulemaking around challenges to patents after
they issue to evolve our practices to better serve America and
the mission of the USPTO, while also better aligning with the
America Invents Act.
We have received your constituents' comments on how we can
issue more robust and reliable intellectual property
protections that will attract investment and grow jobs.
We are continuing our work to protect the trademark
register from harmful actions that threaten the accuracy and
integrity of the trademarks the USPTO issues and harms American
businesses.
We are continuing to provide greater education and access
to America's intellectual property system, complementing the
goals of the Unleashing American Innovators Act that Congress
passed last year.
I'm proud to say that, because of the great work of the
USPTO and Congress, the U.S. is again ranked No. 1 in the world
on the U.S. Chamber of Commerce IP Index.
As you know, we can, must, and will do better. The agency
is committed to making strategic and targeted changes where
they are needed while upholding the strong intellectual
property system that has made America the innovation engine
that it is.
Chair Issa and Ranking Member Johnson, I am honored and
proud to lead the USPTO and to work with my over 13,000
incredibly talented and dedicated colleagues. We cannot do it
alone. Together, we will work with you to fully realize our
Founders' vision.
Thank you again for the opportunity to testify today, and I
look forward to your questions.
[The prepared statement of the Honorable Kathi Vidal
follows:]
Mr. Issa. I thank the gentlelady. That's a record opening
statement time.
With that, we go to the gentleman from Texas, Mr. Moran,
for his opening statement--or opening questions.
Mr. Moran. Thank you, Mr. Chair.
Thank you, Director Vidal, for coming today. I appreciate
your time and answering some questions.
I'm going to tell you at the outset that I'm in a position
where my opinions are forming, they're not yet formed, about a
lot of the PTAB. I have a lot of concerns about some of the
things that I see.
I appreciate the rulemaking process that you've gone
through and the thoughtfulness behind some of those rules. I
have great concerns about whether or not that should happen on
our side of the ledger or your side of the ledger. In fact, I'm
someone that believes strictly in separation of powers and
think that, in this instance, I'm seeing a lot of overstep that
I don't quite care for. I'd like to see a lot of what you've
proposed come through the legislative process.
So, I don't want you to take some of my comments in a
negative way as it relates to the substance of what you've been
doing but, really, more the process and the structural
protections that I think here in America we hold dear to--
namely, separation of powers.
I do want to thank you for your work in that regard. I
actually represent the Eastern District of Texas, so patent and
IP cases are close to my heart. So, I've got a couple questions
I want to go through with you in particular.
Some of the problems that I--as I talk to some of my
counsel back in East Texas about PTAB and what's going on in
the IP world, they have great concerns that what we're seeing
over time is we're seeing, really, the USPTO shoving us away
from Article III resolution of these cases into the PTAB system
and more and more judges deferring to the PTAB system for
invalidity decisions.
Are you seeing--first, are you seeing some of those trends
where Article III judges that are not experienced in IP
litigation are simply saying,
You know what? I don't want to have to deal with this. I'd
rather PTAB make that decision, and hopefully this case will go
away.
Are you seeing that?
Ms. Vidal. We are not seeing that from a USPTO perspective.
Mr. Moran. OK.
In the Western District of Texas, I know there's a lot of
concern about a particular judge handling so many cases, and so
there's been some distribution efforts to try to get other
judges to handle those cases.
So, you're telling me, you're not seeing those other judges
stay their cases in deference to the PTAB?
Ms. Vidal. Speaking from the USPTO, that is not something
we monitor. I, of course, have a history litigating patent
cases, so I may have seen some of that in my past life, but
that is not something that I'm aware the PTO has information
on.
Mr. Moran. Does that give you concern, that we're moving
away from an Article III resolution of a lot of these cases
into this Article II resolution?
Ms. Vidal. It does not, for a couple reasons.
(1) The judge has the option to stay the case. So that's
up to judicial management of individual cases.
(2) The PTAB is a group of judges who are very skilled in
the technology, and if the judges do decide to stay, that just
reduces the cost while those issues are being sorted out at the
PTAB.
Mr. Moran. One of the biggest issues as we look at the PTAB
system, it seems there's very little standing or no standing
requirement, effectively.
I know you guys are proposing a rule that might deal with
the standing, and I'd like for you to talk about the standing
rule and whether or not you believe it's in the public's best
interest to have more strict standing on who can and who can't
bring a challenge to the validity of a patent.
Ms. Vidal. You are correct that there is no standing
requirement right now for people to engage in the PTAB
practice.
In the ANPRM, we have made some proposals based on feedback
we heard from stakeholders. So, some stakeholders have told us
that, because we don't look at the entity that is filing the
IPR or the other procedure within the PTAB, that some entities
may be abusing the PTAB process and may be doing it for
monetary purposes and not to actually benefit our mission or
the intent behind the AIA.
So, that is fleshed out in the ANPRM, the Advance Notice of
Proposed Rulemaking, that we have issued.
Mr. Moran. These proposed rules, are they going to help
reign in proxy entities that are coming in that really don't
have a judicial interest in the matter but are serving as a
proxy to continually and perpetually challenge certain patents?
Ms. Vidal. That is an issue that we have flagged in the
ANPRM. They are not rules per se; they are concepts that we
will then shape into rules in the Notice of Proposed
Rulemaking. That concept is absolutely in the Advance Notice of
Proposed Rulemaking.
Mr. Moran. What do you think the biggest challenge is or
the biggest thing you're hearing back--I've got 24 seconds--in
the PTAB process? What are you hearing from litigants about the
PTAB process that needs to change, number-one issue?
Ms. Vidal. I would say it's just the certainty, which is
what I've tried to address as soon as I came onboard, that, for
discretionary denial, I tried to make it more certain in the
first instance while we awaited policymaking through the ANPRM.
Mr. Moran. All right.
I will mention--I think Mr. Johnson, the Ranking Member,
mentioned certainty for businesses, and I agreed with those
comments.
I think the ultimate goal here is to promote and protect
innovation and intellectual property. I like the PTAB system,
but I think there's some tightening up to do. I would prefer
that the Legislative Branch handle that. I'd love to have more
discussions about that, be involved in that process, rather
than see it come through the rulemaking process through the
USPTO.
So, thank you so much.
I yield back.
Mr. Issa. The gentleman yields back.
We now recognize the Ranking Member for his five minutes.
Mr. Johnson of Georgia. Thank you, Mr. Chair.
Director Vidal, as I mentioned in my remarks, I'm concerned
about the patent system becoming unduly political over time
under the decision of the Supreme Court in the Anthrax case--
excuse me--the Arthrex case.
You have been one of the first Directors to have to
confront how to use this review power granted by the Supreme
Court. What steps have you taken to ensure that your Director
review process is not overtly and overly influenced by
political concerns or ex parte contacts that you have as a
regular part of your job?
Ms. Vidal. That is a very important question, and I
appreciate the opportunity to address that.
I will say, procedurally, as soon as I came onboard, I
clarified the Director review process, and I made it very clear
what my role would be, as the Director, with regards to PTAB
decisionmaking. So, I do not get involved at all, other than on
the public record. So, once a decision is made, it can come up
for review, and then anything that I do is in writing.
When I perform that role, I hold myself to the same
standard of any Article III judge. I do not have any ex parte
communications. I do not discuss the cases with parties. I do
not discuss them with Members of Congress. I do not discuss
them with anybody within the administration or anyone else.
To me, it's my job, then, to act fairly and publicly on the
record so that may then be reviewed by the Federal Circuit.
Mr. Johnson of Georgia. So, you don't have any
communications with the actual PTAB judges?
Ms. Vidal. When they're making their decisions, I have no
communications with them.
I do have some PTAB judges that help me sort through
Director review and work on decisions. The original panel that
makes the decision, they act autonomously. I have no input, no
insight into that. I do not look at their decisions until they
are final and written and public. That's when I will take them
up for review, if I do review them.
Mr. Johnson of Georgia. What percentage of the cases that
have been reviewed by you result in a reversal?
Ms. Vidal. I don't have the exact statistics on that. I
wouldn't want to speculate. I'm happy to get you that on the
record.
Mr. Johnson of Georgia. Twenty-five percent? Ten percent?
Ms. Vidal. I look at the facts and the merits. I don't
think about the outcome, but I'm more than happy to provide
that on the record for you.
Mr. Johnson of Georgia. Well, I'd appreciate it if you
would.
Mr. Johnson of Georgia. I continue to be concerned about
the prevalence of fraudulent trademark applications. Despite
the USPTO's rule to require U.S. counsel for foreign
registrants and despite the backstop of the Trademark
Modernization Act, these fraudulent applications seem to
continue to clutter the register.
What actions is the office taking to identify fraud on the
front end? Is there anything else that Congress can do to help?
Ms. Vidal. I share your concern. I am grateful for the
Trademark Modernization Act. That has been very effective for
use by individual stakeholders for expungement proceedings.
You are right that, even though we put the USPTO put the
U.S. local counsel rule in place, people try to abuse the U.S.
counsel rule. As a result, between December 2022-March 2023, 19
U.S. licensed attorneys were referred to our OED, Office of
Enrollment and Discipline, for investigation. So, we are aware
of the fraudulent activities, and we are on top of it.
We've also expanded our efforts on sanctions and
investigations to ensure that we can identify patterns and we
can make sure that we're on top of any of the fraudulent
activity.
Unfortunately, it's not a one-off. It's very difficult for
an individual examiner to identify fraud. It has to be work
that we do across the trademarks organization to identify
patterns of conduct. When we identify them, we sanction them,
and then we remove the pending applications.
Mr. Johnson of Georgia. Are you using artificial
intelligence to aid you in that process?
Ms. Vidal. We are not at this moment using artificial
intelligence. We are looking into that.
One of the challenges with artificial intelligence is we
want to make sure we use it responsibly. So, we are doing a lot
of investigations right now on all the new AI that is out
there. We'd love to incorporate it as soon as possible, but we
need to make sure that we're incorporating it responsibly.
We are using investigative services, people we bring
onboard to help us with that, because we don't have all the
capability to do that all in-house.
Mr. Johnson of Georgia. Thank you.
I've got 25 seconds, but I'm going to yield that back--
Mr. Issa. Will you--
Mr. Johnson of Georgia. Well, I'll yield to the Chair.
Mr. Issa. Yes.
Just following up on the Ranking Member, your consideration
of those PTAB review, there are thousands of them, many
thousands of them a year. What percentage of them do you
physically look at when you do the review? Obviously, you don't
review in earnest all of them.
Ms. Vidal. It's a very low percentage. It's based on those
who file for Director review.
Separately, we have a different process that you can file
for review if you want to challenge an institution decision.
So, I look at those, as well, to determine whether I should
pull up any of them and address those.
It's a very small percentage of the overall--
Mr. Issa. You consider them de novo?
Ms. Vidal. I do.
Mr. Issa. OK.
We now go to the gentleman from Kentucky, Mr. Massie.
Mr. Massie. Thank you, Mr. Chair.
Ms. Vidal, can you tell me what the purpose of the Patent
and Copyright Clause is in the Constitution? What did the
Founders have in mind?
Ms. Vidal. The Founders had in mind that we needed to
incentivize innovation, we needed to incentivize creativity for
the good of the country.
Mr. Massie. What are the criteria that inventions have to
meet at the Patent Office to be patentable?
Ms. Vidal. Right now, they have to meet a number of
criteria, including: They have to be directed to patent-
eligible subject matter; they have to be novel; they have to be
nonobvious; and they have to fulfill certain requirements as to
the written description and enablement.
Mr. Massie. Talk to me about this patent eligibility
subject matter.
Ms. Vidal. So, that is informed not only by the statute,
but by Supreme Court case law. Essentially, there are Supreme
Court cases that hold that certain subject matter is not
eligible for patenting, like abstract ideas and natural
phenomena.
Mr. Massie. Let me ask you this: If the Founders intended
to promote progress in the useful arts and sciences, why would
we take entire fields of useful arts and sciences, such as AI
or life sciences or diagnostics, and say, you know what, we're
not going to promote the useful arts and sciences in these
fields? Why would we let the Court do that, to say that those
are off limits?
Ms. Vidal. That is not a question I can answer.
Mr. Massie. You're running the Patent Office, right?
Ms. Vidal. That is a decision--
Mr. Massie. Let me ask your opinion then, not any kind of
legal thing or--and I'm not saying that you're in control of
this. In fact, I think Congress is.
What's your opinion, given that you know and take to heart
the Founders' intent to promote the useful arts and sciences?
Ms. Vidal. I would agree with you that the law around
patent eligibility needs more clarity, and we need to make sure
that we are protecting innovation in this country.
Mr. Massie. I think we--the danger of not allowing patents
in certain areas is that other countries, like China, are going
to overtake us in those areas.
So, the PTAB was set up before I got here, right before I
got here. It's supposed to be a cheaper, better, faster way of
adjudicating patent eligibility or validity.
Why do every inventor I talk to, why are they upset about
PTAB?
Ms. Vidal. I believe that, from what I heard from speaking
to them--so, when I started my time as the Director, I reached
out and spoke to a lot of inventor communities. What I heard
over and over again were that they had concerns about the way
certain entities were using the PTAB process, that it was
costing them more because there were serial petitions. They had
to face the cost both in District Court and at the PTAB when
the cases were not stayed in the District Court. They were
concerned with the implementation of the PTAB, that it was
removing their patents once they had invested money into it.
Mr. Massie. Those sound like valid concerns to me. Do you
think they have valid concerns?
Ms. Vidal. The USPTO has taken those concerns into
consideration in shaping the Advance Notice of Proposed
Rulemaking. So, there is specific language in there to attempt
to address those concerns.
Mr. Massie. I share my colleague's view that we should be
writing the laws, not the Supreme Court, and we shouldn't leave
these open areas for you to have to do it.
Isn't it true that the biggest users of PTAB are Big Tech
and foreign entities?
Ms. Vidal. I believe that may be true. I'm happy to answer
that off the record in terms of actual statistics.
Mr. Massie. Well, the top 20 users of the PTAB are large,
wealthy, and powerful companies.
Do you think it's appropriate for us to give a special
venue for these entities? I mean, they're the preferred users
of PTAB, not American inventors. This gets them out of the
court system. Do you think it's appropriate for us to cater to
those entities?
Ms. Vidal. I don't think the law should cater to any one
entity, which is why I took into consideration everyone's views
and input over the last year in exercising our rulemaking
authority and moving forward with the Advance Notice of
Proposed Rulemaking.
Mr. Massie. Should inventors have the right to have their
day in court if they don't get a favorable ruling in PTAB?
Ms. Vidal. For that one, I will say, that is up to Congress
and not something that I can comment on.
Mr. Massie. What's the current situation? Do inventors have
their right to a day in court?
Ms. Vidal. I'm not sure how to answer that. It depends on
what you mean by ``day in court.''
Mr. Massie. Can they appeal it? Will their appeals be heard
in an Article III court?
Ms. Vidal. Appeals from the PTAB?
Mr. Massie. Right.
Ms. Vidal. Yes, those would be heard by the Federal
Circuit.
Mr. Massie. Do you know what--Rule 36 is lawyer shorthand
for--can you tell me what Rule 36 is in the context of patent
appeals to the Article III court?
Ms. Vidal. Yes. The Federal Circuit can issue--can Rule 36
a case, which means that they issue a decision without a full
written opinion.
Mr. Massie. The opinion can be one word, affirmed. Is that
correct?
Ms. Vidal. That is correct.
Mr. Massie. So, as I yield back, I would just say that I
think it's wrong that they don't get their day in court, that
they get a one-sentence affirmation of PTAB, and I think we
need to change that as well. No slight to you.
Thank you for your time.
Mr. Issa. If I can--
Mr. Massie. I yield back.
Mr. Issa. --piggyback just for clarity, if you come through
a District Court to the same Fed Circuit, does Rule 36 apply?
Ms. Vidal. Correct.
Mr. Issa. So, either way, they can do that. They can do it
after a full jury trial in a Federal Court.
Ms. Vidal. They can.
Mr. Issa. Thank you.
Mr. Massie. In that case, they've had a jury trial.
Mr. Issa. The gentleman is correct, in both cases.
With that, we go to the Chair emeritus and my friend for so
long on this Committee, the Ranking Member on Science, an area
that hopefully will opine on how we add to the patentability of
some new technologies, the gentlelady from San Jose, Ms.
Lofgren.
Ms. Lofgren. Well, I thank you, Mr. Chair. Much as I would
like to have the Science Committee have jurisdiction over
patents and trademarks we do not.
Mr. Issa. We weren't going that far. You can opine in this
Committee.
Ms. Lofgren. I would just like to focus in on the role of
the PTO versus the role of Congress.
You are very committed to patent quality. So, is Congress.
When we enacted the change in the law, we assigned a role to
the PTAB to achieve that goal. As I read through the proposed
rule, I'm not sure that the proposed rules are, in fact,
consistent with what Congress did in the act.
Now, if we got it wrong we could revisit that. Not all
nonpracticing entities are trolls, but there were certainly
some trollish behavior that was an objective of the act. If we
have the balance wrong, this Committee will be eager to work on
it.
I'd like to focus in on the issue of when you can file. The
AIA is very consistent and very clear: You have 1 year to file
a petition after your suit. If you look at the proposed rule,
the review would be cutoff if a District Court's median time to
trial is shorter than what the statute prescribes for a PTAB
proceeding.
Now, this proposed rule outlines that if you're sued in a
fast-moving district, you may have only a few months to prepare
your petition. Further, in some districts, you might not be
able to file at all.
Now, the median time to trial in the Eastern District of
Texas is 16 months, which is two months quicker than the PTAB
schedule. As a result, any plaintiff could potentially prevent
access to a validity review just by filing a lawsuit in that
district.
Now, the PTO proposal to shorten the 315(b) deadline
clearly contradicts the text of the AIA and could create the
very problems that Congress sought to avoid by enacting this
one-year deadline.
As I noted earlier, if that's a good idea, if it's
something that Congress should revisit, we can revisit it. The
PTO is not a lawmaking body.
So, I'd like to address this concern that I have raised
here with you.
Ms. Vidal. Thank you for that.
The ANPRM, the Advance Notice of Proposed Rulemaking,
contains provisions that we thought were positive provisions to
move forward on in view of the comments the USPTO received in
response to its request for comment on this very subject
matter. It also contains some provisions that were proposed by
stakeholders, by those in various jurisdictions.
So, it contains a myriad of options. We want to hear from
stakeholders not only on how those provisions might affect
them, how we should evolve them, but whether we even have the
authority to move forward with them and whether they have
economic significance. So, we are hoping to hear from
stakeholders on all of this and make it a very open process.
As to whether there is something in there that shorts the
time period, I'm not sure I quite understand that, but happy to
answer any questions on that.
Ms. Lofgren. Well, I guess, just revisiting that, it's your
proposed rule, and it may be--maybe it's a good idea. I'm not
saying otherwise. It's great to reach out to the broader
community that has an opinion, but if your proposed rule is
inconsistent with the statute, having a proposal or a community
that thinks it's a good idea really is irrelevant. If they
think it's a good idea, they ought to come to us. We're the
ones that write the statute, not the PTO.
I mean, why would you propose something that's inconsistent
with the act?
Ms. Vidal. The way I understood it, that, by doing the
ANPRM, we were giving stakeholders a chance to shape the rule.
So, to my understanding, those are not our proposed rules.
Those are basically winnowing down the options and the feedback
we previously received so that we can get stakeholder feedback
as we shape the rules, and the rules would be in the Notice of
Proposed Rulemaking.
So that was my understanding, and that was the approach the
USPTO took when we went forward with it.
I'm not aware of anything within the body of the document
that's inconsistent, but I'm happy to address anything now or
offline. I'm more than happy to speak with you offline at any
time about this to make sure we're solving for this in the
proper way.
Ms. Lofgren. Well, I'd be happy to take you up on that.
There are a number of other items in the proposed rule, and I
think it's really a surprise that the PTO that is publishing
the proposed rules is now saying it's not their proposed rules.
That is very odd. There are a number of proposals that are not
consistent with the AIA.
As I say, if we got it wrong, we could revisit it. It's not
up to the PTO to try and make the law and redo it in your
rulemaking process.
With that, Mr. Chair, I yield back.
Mr. Issa. I thank the gentlelady.
I share her feelings, that we're more than a stakeholder,
and we have spoken as to that issue some 10 years ago.
With that, we go to the gentleman from California, Mr.
Kiley.
Mr. Kiley. Thank you, Mr. Chair.
Thank you for your testimony, Mr. Vidal--or Ms. Vidal.
Do you have a sense of the average cost of an IPR for a
patent owner to defend their patent through an IPR?
Ms. Vidal. So, my sense is that the fees to the USPTO
itself are around $30,000--oh, actually, for the patent holder,
they're not. For the patent holder, it's just the legal fees.
So, it depends on whether they can procure pro se assistance or
whether they actually have to pay an attorney to go through
that process.
Mr. Kiley. Yes. So, if they do have to pay an attorney, do
you just have a ballpark figure for how much it generally
costs?
Ms. Vidal. I would estimate between $150,000 to over
$300,000.
Mr. Kiley. Do you think that has any effect on the
incentive to innovate and to invent?
Ms. Vidal. I have heard from stakeholders that the IPR
process is creating concerns with innovators in terms of the
incentive to innovate and, more importantly, the incentive to
patent.
Mr. Kiley. Right.
Have you heard of a recent report called ``Wake Up,
America,'' which found that China's gross innovation
capabilities are now 40 percent greater than the United States?
Ms. Vidal. I'm not aware of that.
Mr. Kiley. Do you think that sort of sounds right, that
China has been gaining on us in key areas of innovation?
Ms. Vidal. I know that is their intent, and that would not
surprise me in certain areas.
Mr. Kiley. So, do you think there's a role in terms of
reforming the patent system to try to reverse that trend? If
so, what do you think it is?
Ms. Vidal. So, I think we need to do what is best to
promote a system that encourages and incentivizes innovation
and that creates clear rights that stakeholders and individual
inventors can rely upon.
Mr. Kiley. So, do you think--do you have anything specific
in mind to move us more in that direction?
Ms. Vidal. So, two things in mind.
One is, we are trying to work on measures related to the
robustness and reliability of patent rights so that the patents
we issue in the first instance are strong.
Mr. Kiley. Uh-huh.
Ms. Vidal. That's everything from incorporating artificial
intelligence into search, to a number of proposals we put out
there through a request for comment that we are looking into
now and moving forward on.
The second part relates to the PTAB, and that relates to
the ANPRM that we recently issued, which contains various ideas
on how we might reshape our practice as it relates to the PTAB
to ensure that inventors have more--that inventors can rely on
their patents.
Mr. Kiley. I see.
So, on the first point, do you believe that the PTO
currently issues a large volume of invalid patents?
Ms. Vidal. I don't know if I would go as far as saying
that. I do believe that patents have been issued with search
capabilities and other measures that are not as good as what we
have today, and I know that we're going to get better into the
future. So, there are definitely patents that are issued that
are not, by any standard, looking at the prior art that's
available, are not valid.
Mr. Kiley. I mean, the existence of the PTAB is sort of
predicated on the belief that there are invalid patents being
issued.
So, is there any argument to be made that maybe some of the
vast resources that are going into the PTAB might be shifted
to, sort of, pre-issuance examination of patents?
Ms. Vidal. That is an interesting idea. I'm happy to take
that back to the team.
Mr. Kiley. All right. Thank you very much.
What is the ability to make use of the IPR process for a
patent that's already been deemed valid by a District Court?
Ms. Vidal. Can you repeat that, please?
Mr. Kiley. What is the ability to challenge a patent
through the PTAB that's already been adjudicated as valid by a
District Court?
Ms. Vidal. So, you still have the ability to challenge that
at the PTAB. There's nothing stopping that other than the
ability of the Director, and, by delegation, the board, to
discretionarily deny the institution of the challenge.
Mr. Kiley. Do you think that sort of parallel form or
duplicative adjudication is a healthy thing for the patent
system and for innovation?
Ms. Vidal. That is one of the things we're trying to flesh
out through the ANPRM, is to figure out what kind of--how we
can exercise our rulemaking authority to deal with issues like
that?
Mr. Kiley. Sure.
Then following up on a question from Mr. Massie related to
subject matter eligibility, you said that there does need to be
greater clarity. Do you have any further thoughts on that and
what role Congress might be able to play in providing clearer
guideposts and more clarity for inventors?
Ms. Vidal. I know that bills have been introduced in
Congress, and we have a whole team that focuses on this,
including working with the DOJ when it comes to these types of
issues at the Supreme Court. We'd be more than happy to work
with Congress on any bills and provide technical assistance.
Mr. Kiley. Thank you very much.
You also mention in your written testimony that the USPTO
has launched its Climate Change Mitigation Pilot Program, which
accelerates the ``examination of patent applications involving
innovations to reduce greenhouse gas emissions.''
Is there any precedent for this, sort of giving privileged
status to particular types of innovations in the patent
examination process?
Ms. Vidal. For years, the USPTO has had accelerated
programs for different technologies that the government has
tried to accelerate.
Mr. Kiley. So, there is precedent for this.
Ms. Vidal. There is, correct.
Mr. Kiley. OK.
I don't know exactly how this particular program works, but
I would note that you probably don't want to be too narrow in
how you define what's eligible, because there might be a lot of
innovations, say, in AI that are not specifically climate-
change-related, but that might ultimately be very useful toward
that goal.
Thank you very much for your testimony today.
Mr. Issa. I thank the gentleman.
I might note that, if there's litigation on a pending
patent, that has long been a source of acceleration. So, there
are a number of reasons that they do have moving them up that
many of us have experienced.
We now go to the patient gentleman from Maryland, Mr. Ivey.
Mr. Ivey. Thank you, Mr. Chair.
Director Vidal, welcome. I appreciate your appearance and
your testimony today.
Like Judge Moran, I'm a little new to this area, so I'm
going to ask a few questions. I welcome the opportunity for you
to educate me and get me up to speed on these issues.
One of the things--and I'm focusing on the PTAB board, as
well, and the discretionary denials. I'm not clear on the
source of your authority to follow that path or to issue these
kinds of denials. I wanted to get a sense--I know the AIA is a
basis for the activity, but it does seem to be a bit of a
stretch of the authority to do it.
So, I wanted to give you a chance to give me some guidance
on how that works and how you operate using that tool.
Ms. Vidal. Thank you. I would welcome the opportunity to
speak with you offline as well, including going into more
detail on that authority, and I'm happy to provide that off the
record.
Just to give you an example, the AIA codified--I'm going to
get a little bit nerdy here with the Code area--35 U.S.C. 316,
which provides for the Director to prescribe regulation. So,
Congress has directed our office to prescribe certain
regulations.
In relation to that, there is language in here that says:
For considerations in prescribing regulations under this
section, the Director should consider the effect of any such
regulation on the economy, the integrity of the patent system,
the efficient administration of the office, and the ability of
the office to timely complete proceedings instituted under this
chapter.
Now, that ties into other statutory provisions. If it's OK
with you, I would love to provide a full answer off the record
that sets forth how the AIA envisioned that the USPTO would
engage in rulemaking and what that would look like.
Mr. Ivey. OK. Thank you for that, and I look forward to it.
Mr. Ivey. As I understand it, with the discretionary
denials, you can stop the process when a patent is being
litigated in court. Is that right?
Ms. Vidal. With discretionary denials, there are a number
of things that could trigger a discretionary denial, but it
would essentially result in the USPTO not instituting an IPR
proceeding. It could happen when there is a parallel District
Court proceeding. That could be one of the circumstances that
would cause us not to move forward.
Mr. Ivey. All right. So, your view is that's regulatory and
not adjudicatory?
Ms. Vidal. So, the discretionary denial is within the
discretion of the Director. So, the issue is really how the
Director exercises that discretion to not move forward with
institution.
Mr. Ivey. So, the denial is with respect to moving forward,
but it's not a denial on the merits?
Ms. Vidal. It is not a denial on the merits. The merits
could be taken into consideration. So, under the current
standard, if there is a parallel District Court case, we do
look at the merits of the case. So, if it appears that the
patent reaches a certain threshold in terms of invalidity, we
will take that into consideration as to whether that patent
should be removed.
Mr. Ivey. OK.
Then I had a second area I wanted to ask you about, and
that's with respect to the ``substantial relationship''
language in the ANPRM.
I wanted to get a sense of--I guess concerns have been
raised for me, with respect to how broadly that might be
applied and the impact that it could have beyond, certainly,
just simply one entity and the multiple relationships that
could be subject to the decision that's made.
What's your take on that and how it's going to work? How
are you going to figure out the parameters of how you're going
to define that?
Ms. Vidal. That was one of the issues that we raised as
part of the Advance Notice of Proposed Rulemaking. We want
feedback from stakeholders on how they think we should define
it.
I'll tell you where that came from. That came from a sense
from stakeholders that certain entities were trying to avoid
some of what Congress put into place in terms of estoppel, in
terms of not getting multiple bites of the apple and continuing
to attack a single patent over and over and over again. There
were some concerns that entities had enough of a relationship
that they were essentially disguising so that they could avoid
what Congress had put into action.
So, instead of trying to define it in the first instance
through rulemaking, through a Notice of Proposed Rulemaking, we
issued the Advance Notice of Proposed Rulemaking so that we
could hear from stakeholders on: Should that be defined the way
it is right now, which is real parties and interest and privy,
or should it be expanded in some way to make sure that the
parties really are related, that they're bound by what Congress
set forth?
Mr. Ivey. Thank you.
I see my time has expired, so I'd yield to the Chair.
Mr. Issa. We'll just take it back if you don't yield it
back. Thank you for your very good questioning.
With that, we go to the gentleman from Wisconsin, Mr.
Fitzgerald.
Mr. Fitzgerald. Thank you, Director, for being here.
It sounded like Mr. Ivey was kind of moving in this
direction, but, last week, PTO submitted an Advance Notice of
Proposed Rulemaking proposing substantive changes to the inter
partes review process.
Can you just walk us through kind of what actions, either
by Congress or industry--what prompted the proposed rule?
Ms. Vidal. It started when there was some concern about how
the USPTO exercises its ability to discretionarily deny
petitions that we receive for IPRs. There was some case law and
some guidance set forth before I took on the position of the
Director.
From the beginning, what I've tried to do is initially just
clarify what that guidance was so that stakeholders would have
certainty and clarity.
What the ANPRM does is, it addresses stakeholders' concerns
about the way the USPTO is implementing the AIA and activities
by certain entities to avoid some of the language that the
Congress put forth through the AIA.
So, we did issue a request for comment to hear
stakeholders' views on discretionary denial. We received 822
comments. This was about 1\1/2\-2 years ago, something like
that. We didn't feel like there was enough information there to
go directly into rulemaking.
So, what we did was hear from more stakeholders over the
course of the year, from small entities, from large
corporations, from everyone, to hear what they were
experiencing. We went back and read those 822 comments and
tried to shape different ideas that we could move forward with
to make it very clear how the Director, and, by delegation, the
board, is going to exercise their discretion.
Mr. Fitzgerald. So, the rule that proposes a change in the
test to determine the PTAB review, it kind of abandoned the
statutory test from the Patent Act and went from ``reasonable
likelihood'' to ``compelling merits test.''
Could you explain the difference between those two or how
you see the effect of that?
Ms. Vidal. So, it doesn't necessarily abandon that, because
that overlays the discretion of the Director to institute. So
what it really does is it clarifies that discretion, which has
been in place for quite a long time. It takes it to the next
step, seeks stakeholder input on how that should be clarified
and how that should be shaped. So, that's the role that the
ANPRM would play.
In terms of your questions about the test for institution
independent of the discretion to deny institution, the thought
with the substantial merits test is, prior to my position, to
me being the Director of the USPTO, there was some thought that
the USPTO was discretionarily denying even when there was a
strong case. So, that's where that test came from, I believe
the intent of the AIA was to get rid of the patents that really
were invalid.
I wanted to make sure that the procedures we had took that
into consideration when it came to discretionary denial and
that we would not discretionarily deny if it reached a
substantial merits test where we believed it was a strong case
and we thought it was best for America not to have invalid
patents out there.
Mr. Fitzgerald. So, the only thing I would say is, when I'm
in the district or touring a business and--it doesn't come up
often, but when patent law does come up, a lot of times there
is kind of a level of frustration among small businesses, that
they're viewed--they are not necessarily viewed in the same
light that you might see with some of the major corporations
that have an army of attorneys available to them.
So, I'm just wondering, how have you addressed that or kind
of moved forward thinking what are the different levels of
business, and how can they appropriately--how could you
appropriately interact with them?
Ms. Vidal. Well, and I appreciate that. In my past life, I
represented both large organizations as well as startups. I
spent a lot of time with startups. So, when I came onboard,
what I did was look at all the stakeholders that USPTO engaged
with. I expanded that to make sure we were getting out there
more into communities, hearing from inventor groups, hearing
from individual inventors.
So, the way we shaped the ANPRM was to make sure that we
were getting out to people even if they didn't have the ability
to come to us. So, we believe that the ANPRM really takes into
consideration all stakeholders, not just those who might
ordinarily have access. It's all been about access.
The other thing that I did is I started up a new ``Engage
with the Director'' website so that anybody that has something
they want to contribute or say can do that.
So, for me, it's all about, we need more people in the
ecosystem. We need to support small inventorship and
innovation. We need to give people access at all levels,
including in this process.
Mr. Fitzgerald. Very good. Thank you.
Mr. Chair, I yield back.
Mr. Issa. I thank the gentleman.
We now go to the gentleman from South Carolina, Mr. Fry.
Mr. Fry. Thank you, Mr. Chair, for having this hearing
today.
Thank you, Director, for being here. Much like many of my
colleagues on both sides of the aisle, I am a neophyte to this
area, so a lot of this is very educational. So, I appreciate
the testimony that you've given today.
I want to touch on a few areas. Let's start with the
USPTO's Advance Notice of Proposed Rulemaking that came out a
week ago.
Congress established the post-grant review programs in the
AIA because there was consensus about the quality of patents
coming out of the PTO, that they were poor. We needed an
affordable and streamlined way for the PTO to check its work,
as you said, ``in the Advance Notice.''
However, the limitations of the Advance Notice of Proposed
Rulemaking suggests there are no patent quality problems at the
PTO.
Are we putting the cart before the horse here? Shouldn't
the PTO internally fix the problem with the examination
process, instead of seeking to go beyond its statutory
authority, limiting the ability of others to address the PTO's
mistakes?
Ms. Vidal. I appreciate that. I will say, on the statutory
authority, it is not our intent to go beyond that, and we will
work hard to make sure that does not happen.
Can you repeat your other question, please?
Mr. Fry. No, I think that was it. So, your testimony is
that you're not going beyond the statutory authority. What I'm
hearing from, really, both sides of the dais, at this point, is
that there's concerns that maybe that is happening.
Is it possible to put that on hold, put these proposed
rules on hold, pending an examination by this body?
Ms. Vidal. So, first, I do remember your last question, and
that was, should we be focusing on patent quality in the first
instance? I'm happy to answer both of those questions.
As to the patent quality in the first instance, we are
focused on that. We put out a request for public information
and comment on our procedures for issuing patents. We are right
now sorting through all those answers and trying to figure out
the next steps to move forward--everything from that to
additional training on artificial intelligence, to the way we
route patents to the right examiner.
I could go on and on. That has been a huge focus of ours,
to make sure that we're doing the best job possible to issue
the strongest IP in the first instance.
As to the ANPRM and whether that should be put on hold, it
is just an ability to collect comments. So, that gives
stakeholders the ability to suggest if there are any ways in
which we are going beyond our authority and what their
reasoning or justification or backing for that is, given that
we were given rulemaking authority by Congress specifically and
given that we're trying to comport our practices to more
closely align with the AIA and make sure there aren't any
loopholes where people are escaping what Congress put into
place.
So, on that, I would suggest that, once we see the
comments, that would better inform this issue.
Mr. Fry. Thank you, Director.
Now, I want to talk about China. I'm going to shift gears.
A report recently issued by the Information Technology and
Innovation Foundation found that China's gross innovation
capabilities are now almost 40 percent greater than that in the
United States.
The report, titled ``Wake Up, America,'' finds that China
has surpassed the United States in total innovation and is
coming close to generating a greater proportion of all
innovation. Patents issued by the USPTO are believed to be
increasingly less enforceable since they are the subject of
second-guessing in PTAB.
What reforms do you think must be part of any meaningful
strategy to wake up our patent system and ensure that the U.S.
remains competitive with China?
Ms. Vidal. I would put it into a couple different
categories.
One, to get to the point of patent-eligible subject matter,
I think that needs clarity. I think that would be a good first
step, wherever that clarity comes from. We are working with the
Supreme Court, through the DOJ, to provide feedback on that. We
are happy to provide technical comment to Congress on any bills
when it comes to that.
In addition to that, we need to make sure we have more
access to our innovation ecosystem. We are doing everything
from educating children across the country in IP, innovation,
entrepreneurship, so that we start from the beginning. We
educated 280,000 children last year. We are trying to reduce
barriers everywhere and meet people where they are, including
people in our military, military spouses, et cetera, so that we
get more people innovating within our country. I think that's
going to be critical as well.
To the extent that there is a concern by those who are
innovating about patenting, if they have concerns that if they
patent it's not going to be upheld because of procedures,
that's what the ANPRM is attempting to address.
Mr. Fry. OK. Thank you.
Huawei received more U.S. patents last year than any
company except for IBM. It's expected to continue that pace
moving forward. Huawei is essentially banned from selling any
products in the United States due to sanctions.
Do you think that Huawei's continued and increasing
acquisition of U.S. patents, despite those sanctions,
represents a danger to the United States and its businesses?
Ms. Vidal. I think we have to closely watch competition
from other countries and make sure that we're doing our best to
ensure that we're competing.
Mr. Fry. Thank you, Mr. Chair.
I know I'm out of time, but I yield back.
Mr. Issa. I thank the gentleman.
We now go to the gentlelady from Florida, Ms. Lee.
Ms. Lee. Thank you, Mr. Chair.
Welcome to you. Thank you for being here with us today.
I would like to focus some questions on the operational
status of USPTO and your IT modernization project.
We know that back in 2018 you experienced a very
significant
nine-day systems outage. The 2020 Inspector General report from
the Department of Commerce detailed a number of critical areas
in which it recommended improvement, modernization, and making
sure that this type of outage would not happen again in the
event of a disaster.
So, I have a few questions related to that IT modernization
project. Let's start with the backups themselves and where you
all are in terms of contingency planning and keeping backup
logs and backup data where you can get back to a place of
recovery.
What is the status of improvement and modernization in that
regard?
Ms. Vidal. Thank you for that question. There's a lot I
could say on that, and I will provide more information on the
record for you, if you will permit.
I will say that we critically need to move to more
innovative systems. Our technology is very outdated; USPTO's
technology is very outdated. We have been moving swiftly and
deliberately to make changes.
We are moving to a new data center. That move has been very
successful so far. I can provide you with the statistics on how
much of the data has already been moved and how that gives us
additional certainty when it comes to our data systems.
Ms. Lee. OK.
What about the legacy operating systems that you're using?
That was another area that was identified as those needed to be
modernized or replaced. What's the status of those legacy
operating systems?
Ms. Vidal. So, we are in the process, as well, when it
comes to those. On the trademark side, around December of this
year, we migrated a lot of the trademark data and the trademark
processing to a new system. We are continuing to go through all
our legacy systems and make sure that we prioritize and
modernize as quickly as we can, given the fees that we have.
Ms. Lee. OK.
On the subject of cybersecurity, tell us the status--how do
you feel about your level of overall cybersecurity,
vulnerability to threat actors? What is the status over there
on cyber?
Ms. Vidal. From the data that I get from our CIO, we are
very well-positioned. We have a lot of processes in place.
We've hired experts in cybersecurity. We are looking to do best
practices across government. We're doing them now, but we know
that this continues to be an issue and that there are going to
be new types of attacks.
So, it is front of mind, to the point where in every
management meeting that's one thing that we talk about, is
cyber, because it's so critical to everything that we do that
we're secure when it comes to cyber.
We're working to ensure that our stakeholders are secure as
well. So, we're doing outreach to help them understand how they
need to be secure as well.
Ms. Lee. If you were to have a system failure today, do you
have any sense of the actual time to recovery? If there was a
significant breach, do you have a sense of your time to
recovery and getting back to an operational status?
Ms. Vidal. I would have to get back to you on the record on
that.
Ms. Lee. OK.
Ms. Lee. I know that we've invested I believe it's hundreds
of millions of dollars in modernization already to try to help
with some of these problems--the legacy systems, the backup
data, the time to recovery.
Can you tell us some of the highlights of where those
dollars have been invested and some of the improvements that
you've seen or made already?
Ms. Vidal. One of the largest improvements is this data
center that we are creating that's going have all the modern
technology and really provide the USPTO with the resilience
that it needs.
Then, beyond that, we're targeting systems based on the
ones that are the most important to migrate to new technology.
So, that's where a lot of that money has been spent. We've
collected that through our rulemaking.
Ms. Lee. Uh-huh.
Another one of the specific recommendations that was in
that IG report related to contingency planning and documenting
those contingency plans so that there was a written protocol in
place and something that everyone at USPTO would know, ``This
is what we're doing on data backup. This is our plan for
recovery in the event of a disaster.''
I believe the specific recommendation was to follow NIST
800-34 to ensure all that contingency planning documentation
was in place.
Has that piece of this project, to your knowledge, been
completed?
Ms. Vidal. I will report off the record, but I will say
right now that I believe it has. We definitely agreed with all
the recommendations and immediately went to work putting them
into effect.
So, I can verify that off the record, where we are in that
process, to make sure that I have that correct.
Ms. Lee. Thank you very much.
Mr. Chair, I yield back.
Mr. Issa. I thank the gentlelady.
We now go to the gentleman from Virginia.
Mr. Cline. Thank you, Mr. Chair.
Thank you, Ms. Vidal.
Recently, you issued orders sanctioning two entities,
OpenSky and Patent Quality Assurance, for flagrant abuse of
PTAB proceedings by imposing monetary sanctions as well as
removing both from those proceedings.
Both filed IPR petitions in an attempt to extort a patent
owner out of a piece of a large patent judgment awarded in
court. You later rescinded part of those sanctions by
reinstating both abusers back into the PTAB proceedings.
Why did you do that?
Ms. Vidal. So, that is actually an ongoing controversy. I
can't talk about the facts of that particular case.
I can talk about my decisionmaking generally, which is, as
the Director, I make decisions based on the information before
me. I work with our solicitor's office, and we work with the
Department of Justice, as well, to make sure that every
decision we make is the right decision and legally appropriate.
So, that's all I can say on that right now because I can't
talk about the specific facts of that case.
Mr. Cline. Are monetary sanctions alone sufficient to deter
PTAB abusers, considering the massive payouts they're
attempting to extort and the fact that they may be allowed to
continue their PTAB cases all the way to the end?
Ms. Vidal. I will say at a high level that there are only
certain sanctions that we can issue, and so--and monetary
sanctions are one of them.
Mr. Cline. Are they alone sufficient?
Ms. Vidal. I've not investigated that because I didn't have
the authority to do more than that, so I wasn't balancing
anything against each other.
Mr. Cline. OK.
What steps have you taken to address the serious concerns
raised in the GAO's investigation last year into improper
influencing of PTAB decisions by agency leadership and the lack
of transparency in the decisionmaking process?
Ms. Vidal. So, first, I agree with all the recommendations
from the GAO. The USPTO agrees with them.
When I came onboard, it was after the Arthrex decision, the
Supreme Court decision that really changed the role of the
Director vis-a-vis PTAB decisions. So, I immediately updated
the Director review website that provides information to the
public and the PTAB in terms of the role the Director will
play. I made it very clear that the Director will not get
involved in any decisionmaking until the Director plays her
role under Arthrex. So, in that case, there is no interference
between me and the PTAB until they issue a final written
decision. Once they issue it, then anything that I do is going
to be on the public record.
That is something that we set forth, we asked for comments
on that process, and I intend to go into rulemaking, as well,
to make sure that everything that we are putting into place to
secure that system persists into the future.
Mr. Cline. OK.
Your memorandum outlining reforms to internal review of
PTAB decisions retains mechanisms for individuals other than
the judges deciding the case to communicate with the judges and
potentially influence their decision before it's issued.
Why are such mechanisms necessary, considering that you
have the authority to review and change any PTAB decision after
it's issued in a transparent way?
Ms. Vidal. So, I'm not sure which portion of the memo that
you're speaking to. I know that some of the PTAB judges will
want to consult with another PTAB judge in management or with
our solicitor's office to ensure that they have the right
understanding of something. So, we do have the ability for them
to do that.
Nobody who they consult with has the right to direct their
action. They are independent judges. Once they render their
decision, then I would review it after that.
Mr. Cline. OK.
I'd love for a second round to talk about your lack of
compliance with the Congressional Review Act, but let me ask
you about the use of nonstatutory discretion in PTAB cases.
The stated basis for many of USPTO's PTAB rules, such as
the NHK-Fintiv rule, and many of the proposed rules in its
recent notice is Section 314(a). Do you agree that Section
314(a) does not use the word ``discretion'' anywhere?
Ms. Vidal. I don't have that in front of me. I'm happy to
get back to you off the record on that.
Mr. Cline. OK.
Ms. Vidal. I'm happy to provide the entire authority for
discretionary denial off the record.
Mr. Cline. OK.
Mr. Cline. All right. Well, at this point, I'm going to
yield my final minute to the gentleman from Kentucky, who has
some burning questions.
Mr. Massie. I thank the gentleman from Virginia.
Mr. Kiley had a great point earlier that I want to follow-
up on. Are all the tools that are available to the PTAB court
available to the patent examiners?
Like, is there something more we could do to improve the
presumption of validity when a patent comes out or the
presumption that it won't be invalidated by PTAB?
Ms. Vidal. So, we have a feedback loop between the PTAB and
the examiners to make sure that any lessons that were learned
at the PTAB about examination are fed back to the examiners,
including--one of the feedback loops is related to prior art.
So, if there are additional patents in a chain of patents that
are still before the examiner, then the prior art that's being
cited to the PTAB is then sent back to the examiner. So, those
types of tools are available.
What we often see at the PTAB is new art that is raised
that just was not found by the examiners. In order to address
that, that's why we are keenly focused on artificial
intelligence, on rolling out new search tools. We have a global
dossier where we can share search results across nations where
there's related applications. We're now working with the FDA to
make sure we're looking at all the right prior art when it
comes to pharmaceutical patents.
So, we're doing everything we can to make sure that the
prior art is found in the first instance and it's not something
new at the PTAB where the examiner was not aware of it.
Mr. Massie. I yield back to the gentleman from Virginia.
Mr. Cline. I yield back.
Mr. Issa. OK. Well, that only leaves me, Madam, and about
the right amount of time before people have to head to the
floor.
So, I first want to ask unanimous consent that a letter
from the Foundation for Human Rights in Cuba and a letter from
the Cuban Studies Institute supporting H.R. 1505 be put into
the record.
Mr. Massie. Without objection, so ordered.
Mr. Issa. I ask unanimous consent to insert in the record
an article from former PTO Director--my first PTO Director, I
might add--James Rogan, the testimony from former PTO Director
Bruce Lehman, and testimony from former USTR General Counsel
John Veroneau.
I'd recognize the gentleman from Kentucky for his UCs.
Mr. Massie. Thank you, Mr. Chair.
I ask unanimous consent to enter into the record an article
titled ``No End in Sight for Rule 36 Racket at Federal
Circuit.'' This is from IPWatchdog, January 29, 2019.
Mr. Issa. Without objection.
Mr. Massie. Then I have another unanimous consent request
for--it's just one page. It's from--the source is Docket
Navigator, ``Big Tech Companies Are the Biggest Users of
PTAB.'' Top 20 petitioners since the PTAB was established.
Mr. Issa. Additionally, materials from any Member that
wanted to add to--the record will be open for five days in case
you're not here at the end.
Mr. Massie. Did I get approval--
Mr. Issa. Yes, you do.
Mr. Massie. OK. Thank you, Mr. Chair.
Mr. Issa. Without objection.
Mr. Issa. So, back to me.
Director, I want to first thank you for the co-authorship
of a letter concerning the American Fairness Act, which
directly affects primarily AM radio, AM and FM radio,
terrestrial, and the fact that they currently receive no
revenue on that. I know that sometimes that's viewed as
political, but I think from your important role of the
constitutional responsibility that people be incentivized, that
inappropriately is not an incentive.
There's been a number of things brought up here today, and
I want to just touch on them briefly. Many of the things in
your proposed rulemaking, include items which have become part
of an unofficial or a tradition or an operating procedure at
the PTO. In other words, you've been doing them as though they
were rules for a period of time, and now they're out there as
comment.
Do you think it is appropriate to put them out for further
comment when, in fact, you're already doing them? Or should
they have gone directly to rulemaking, since you're already
doing them, without going through the statutory process that we
on this side of the dais have legislated for you?
Ms. Vidal. I believe the current process of creating
precedential decisions and guidance provides more certainty and
clarity among the PTAB judges.
There are about 230 PTAB judges. They exercise my
discretion by delegation. Without the ability to mark cases as
precedential or to provide guidance, I would not have the
ability to ensure they were exercising my discretion in the way
I would exercise it. It would also mean that, depending upon
which panel you got, you might get a different answer.
So, I always consider the guidance that I put into place as
interim until final. I always intend it to go through
rulemaking. I believe wholeheartedly in notice-and-comment
rulemaking. Even with the guidance--the first guidance I put in
place was just meant to memorialize current practices; it was
not meant to do any policymaking.
Going forward, any policymaking--I've been very clear about
not doing that in my judicial decisions. I believe in due
process. People should be able to rely on what was in place at
the time. So, any policymaking was not through my judicial
decisions, through marking something as precedent, or through
guidance, other than what an Article III court might do in
setting precedent.
Mr. Issa. I might note my question included a great many
that preceded you. Is that correct?
Ms. Vidal. Yes.
Mr. Issa. OK.
The comments today on additional areas of patentability--
I'm presuming that in your role as the, in a sense, the chief
innovation overview person of this administration, that you
would welcome further expansion and defining of patentability
including in AI.
Ms. Vidal. I would welcome the opportunity to work with
Congress on any bill that addressed AI or patent eligibility.
Mr. Issa. Are there any areas of patentability where you
believe the Constitution would prohibit a statutory decision
coming through this process? In other words, do you believe
that we should limit our patentability expansion or
clarification on any particular areas that ultimately would
prove to be unconstitutional?
Ms. Vidal. That is something I'd have to take offline with
my team as well, who are experts in this area, but would
welcome the opportunity to work with you on that.
Mr. Issa. OK. Particularly, Mr. Massie mentioned it--but,
observation of natural science is the discovery of that which
God created, so to speak, patentable, or he was just observing
that which has always been there since the beginning of time.
I really would appreciate, I know Mr. Massie and others
would appreciate your views on it. Because it is the intent of
this Committee to go forward with defining those areas, some of
which might prove to be expansions. Clearly, when we talk
about, as we have today, artificial intelligence, some might be
contractions of expectations. We'd like to work closely with
you on that.
Mr. Issa. I would ask--and you can do this off the record--
but for you to provide us with the names of individuals at the
PTO or other government agencies in the Executive Branch, or,
for that matter, other branches, that you met with in the
process of preparing this notice.
In other words, we'd like to understand a little of the
deliberative process of how you came to the conclusion of what
was included in your proposed rulemaking. I never really--I
still look at it as proposed rulemaking because it certainly is
a step.
Mr. Issa. Earlier today, there was a lot of discussion
about the 16 months going on in East Texas as a time. Isn't it
true, based on your observation, that some courts--and I'll use
West Texas for a moment--have chosen to set dates that preclude
a PTAB, when, in fact, the actual date that they occur often
gets delayed?
Ms. Vidal. I can say that a lot of the dates that are set
by courts do not stick.
Mr. Issa. Pardon me? Say that again.
Ms. Vidal. A lot of the dates set by courts for trial do
not stick.
Mr. Issa. So, in your rulemaking, how are you going to deal
with--if it goes forward the way it's proposed, how are you
going to deal with the fact that a historic time to trial may
be inaccurate and judges--at least one, as somewhat sanctioned
by the high court, was setting dates that it was clear were
only for purposes of not allowing transfers and the like?
Ms. Vidal. Our current practice already addresses that. The
guidance I set forth on discretionary denial moves away from
relying upon the date set for trial and moves toward looking at
actual data. That's also addressed in the ANPRM.
Mr. Issa. OK. I'm going to give you a considerable amount
more for the record under the consideration of limited time,
but I just want to highlight one.
As you're aware, under the law known as Section 211, which
protects the U.S.--the original owners of trademarks and
businesses that the Cuban government confiscated without
compensation, is not in compliance with the World Trade
Organization.
I've introduced H.R. 1505 that will bring the law into
compliance with the WTO and continue to ensure the Cuban
government is not enriched through its use of unjustly
confiscated property who--rightful owners have not been
compensated.
If you would opine on the underlying merits of true owners
based on--not on court or World Trade Organization, but based
on the U.S. Constitution and your understanding of your role?
Ms. Vidal. Is that one I can take offline?
Mr. Issa. Absolutely.
Ms. Vidal. Thank you.
Mr. Issa. OK. With that, even though there are many, many
more questions--and I thank the Ranking Member for his
indulgence by not pointing out that I was over time--as I said
earlier, we will leave the record open for additional
questions, if you'll agree to take them for the record.
Mr. Issa. Last, I hope that this will be, in a formal or
informal fashion, a nearly quarterly go-forward. Obviously,
this kind of hearing is not always possible, but if you would--
both the Chair and Ranking Member would appreciate it that your
shaking your head is an affirmative that we will not wait
another year before we have you back again.
With that, this concludes the Subcommittee hearing on the
courts. Again, I thank the gentlelady. We're adjourned.
[Whereupon, at 10:32 a.m., the Subcommittee was adjourned.]
All materials submitted for the record by Members of the
Subcommittee on Courts, Intellectual Property, and the Internet
can be found at: https://docs.house.gov/Committee/Calendar/
ByEvent .aspx?EventID=115813.