    [House Hearing, 119 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, ARTIFICIAL INTELLIGENCE, AND
                                  THE INTERNET

                                     OF THE

                           COMMITTEE ON THE JUDICIARY

                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                           WEDNESDAY, MARCH 25, 2026

                                   __________

                               Serial No. 119-62

                                   __________

             Printed for the use of the Committee on the Judiciary
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                   Available via: http://judiciary.house.gov

                                   __________

                          U.S. GOVERNMENT PUBLISHSING OFFICE
    63-299                       WASHINGTON : 2026
    =======================================================================

                           COMMITTEE ON THE JUDICIARY

                            JIM JORDAN, Ohio, Chair

    DARRELL ISSA, California             JAMIE RASKIN, Maryland, Ranking
    ANDY BIGGS, Arizona                      Member
    TOM McCLINTOCK, California           JERROLD NADLER, New York
    THOMAS P. TIFFANY, Wisconsin         ZOE LOFGREN, California
    THOMAS MASSIE, Kentucky              STEVE COHEN, Tennessee
    CHIP ROY, Texas                      HENRY C. ``HANK'' JOHNSON, Jr.,
    SCOTT FITZGERALD, Wisconsin              Georgia
    BEN CLINE, Virginia                  ERIC SWALWELL, California
    LANCE GOODEN, Texas                  TED LIEU, California
    JEFFERSON VAN DREW, New Jersey       PRAMILA JAYAPAL, Washington
    TROY E. NEHLS, Texas                 J. LUIS CORREA, California
    BARRY MOORE, Alabama                 MARY GAY SCANLON, Pennsylvania
    HARRIET M. HAGEMAN, Wyoming          JOE NEGUSE, Colorado
    LAUREL M. LEE, Florida               LUCY McBATH, Georgia
    WESLEY HUNT, Texas                   DEBORAH K. ROSS, North Carolina
    RUSSELL FRY, South Carolina          BECCA BALINT, Vermont
    GLENN GROTHMAN, Wisconsin            JESUS G. ``CHUY'' GARCIA, Illinois
    BRAD KNOTT, North Carolina           SYDNEY KAMLAGER-DOVE, California
    MARK HARRIS, North Carolina          JARED MOSKOWITZ, Florida
    ROBERT F. ONDER, Jr., Missouri       DANIEL S. GOLDMAN, New York
    DEREK SCHMIDT, Kansas                JASMINE CROCKETT, Texas
    BRANDON GILL, Texas
    MICHAEL BAUMGARTNER, Washington
    Vacancy
                                     ------

                 SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY,
                   ARTIFICIAL INTELLIGENCE, AND THE INTERNET

                        DARRELL ISSA, California, Chair

    THOMAS MASSIE, Kentucky              HENRY C. ``HANK'' JOHNSON, Jr.,
    SCOTT FITZGERALD, Wisconsin              Georgia, Ranking Member
    BEN CLINE, Virginia                  ZOE LOFGREN, California
    LANCE GOODEN, Texas                  TED LIEU, California
    LAUREL LEE, Florida                  JOE NEGUSE, Colorado
    RUSSELL FRY, South Carolina          DEBORAH ROSS, North Carolina
    MICHAEL BAUMGARTNER, Washington      ERIC SWALWELL, California
    Vacancy                              SYDNEY KAMLAGER-DOVE, California

                   CHRISTOPHER HIXON, Majority Staff Director
                    ARTHUR EWENCZYK, Minority Staff Director

                               C O N T E N T S

                                  ----------

                           Wednesday, March 25, 2026

                               OPENING STATEMENTS

                                                                       Page
    The Honorable Darrell Issa, Chair of the Subcommittee on Courts,
      Intellectual Property, Artificial Intelligence, and the
      Internet from the State of California..........................     1
    The Honorable Henry C. ``Hank'' Johnson, Ranking Member of the
      Subcommittee on Courts, Intellectual Property, Artificial
      Intelligence, and the Internet from the State of Georgia.......     7
    The Honorable Jim Jordan, Chair of the Committee on the Judiciary
      from the State of Ohio.........................................     8
    The Honorable Jamie Raskin, Ranking Member of the Committee on
      the Judiciary from the State of Maryland.......................     8

                                    WITNESS

    The Hon. John A. Squires, Under Secretary of Commerce,
      Intellectual Property and Director, U.S. Patent and Trademark
      Office
      Oral Testimony.................................................    12
      Prepared Testimony.............................................    14

              LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING

    All materials submitted for the record by the Subcommittee on
      Courts, Intellectual Property, Artificial Intelligence, and the
      Internet are listed below......................................    57

    Materials submitted by the Honorable Zoe Lofgren, a Member of the
      Subcommittee on Courts, Intellectual Property, Artificial
      Intelligence, and the Internet from the State of California,
      for the record
        A letter to the Honorable John Squires, Under Secretary of
            Commerce, Intellectual Property and Director, U.S. Patent
            and Trademark Office entitled, ``Additional Discretionary
            Institution Considerations,'' from Alliance for
            Automotive Innovation, Business Software Alliance, High
            Tech Inventors Alliance, Software & Information Industry
            Association, United for Patent Reform, and US
            Manufacturers Association for Development & Enterprise
            (US*MADE), Mar. 24, 2026
        A report entitled, ``Analysis of Unpatentability Findings in
            Inter Partes Review Final Written Decisions (2013-
            2025),'' Gaetan de Rassenfosse (EPFL) & Laura Sheridan
            (Google), Mar. 15, 2026
    A letter to the Honorables Howard Lutnick, John Squires, Scott
      Bessent, Susie Wiles, Kevin Hassett, Russell Vought, and Peter
      Navarro, from Randy Landreneau, President, and Dirk Tomsin,
      COO, US Inventor, Inc., submitted by the Honorable Thomas
      Massie, a Member of the Subcommittee on Courts, Intellectual
      Property, Artificial Intelligence, and the Internet from the
      State of Kentucky, for the record
    Materials submitted by the Honorable Kamlager-Dove, a Member of
      the Subcommittee on Courts, Intellectual Property, Artificial
      Intelligence, and the Internet from the State of California,
      for the record
        An article entitled, ``Trump Appointees Are Hijacking the
            Patent System,'' May 15, 2025, The American Prospect
        An article entitled, ``Trump PTO Pick's Fortress Ties Signal
            Big Tech Patent Fights,'' Mar. 11, 2025, Bloomberg
            Government
    Materials submitted by the Honorable Darrell Issa, Chair of the
      Subcommittee on Courts, Intellectual Property, Artificial
      Intelligence, and the Internet from the State of California,
      for the record
        A letter to the Hon. John A. Squires, Under Secretary of
            Commerce, Intellectual Property and Director, U.S. Patent
            and Trademark Office, from the Alliance for Automotive
            Innovation, Business Software Alliance, High Tech
            Inventors Alliance, Software & Information Industry
            Association, United for Patent Reform, and US
            Manufacturers Association for Development & Enterprise
            (US*MADE), Mar. 24, 2026
        A comment entitled, ``Comment by Anonymous,'' Dec 3, 2025,
            U.S. Patent and Trademark Office
        A comment entitled,``Comments of SIIA Regarding the Notice of
            Proposed Rulemaking:Revision to Rules of Practice Before
            the Patent Trial and Appeal Board,'' Dec. 2, 2025,
            Software and Information Industry Association (SIAA)
        A letter to the Hon. John A. Squires, Under Secretary of
            Commerce, Intellectual Property and Director, U.S. Patent
            and Trademark Office, from Arnold Ventures, Dec. 1, 2025
        A letter to the Hon. John A. Squires, Under Secretary of
            Commerce, Intellectual Property and Director, U.S. Patent
            and Trademark Office, from BadVR, Inc., Nov. 13, 2025
        A comment entitled, ``Comments on Notice of Proposed
            Rulemaking: Revision to Rules of Practice Before the
            Patent Trial and Appeal Board,'' from Business Software
            Alliance (BSA) (FR 2025-19580), Dec. 2025
        A letter to the Hon. John A. Squires, Under Secretary of
            Commerce, Intellectual Property and Director, U.S. Patent
            and Trademark Office, from the Consumer Technology
            Association (CTA) (90 FR 48,335)
        A letter to the Hon. John A. Squires, Under Secretary of
            Commerce, Intellectual Property and Director, U.S. Patent
            and Trademark Office, from Crypto Council for Innovation
            (CCI), Dec. 2, 2025
        A comment to the Hon. John A. Squires, Under Secretary of
            Commerce, Intellectual Property and Director, U.S. Patent
            and Trademark Office, from Entertainment Software
            Association (Docket PTO-P-2025-0025), Dec. 2, 2025
        A comment entitled, ``Comment by e-td55 llc,'' to the Hon.
            John A. Squires, Under Secretary of Commerce,
            Intellectual Property and Director, U.S. Patent and
            Trademark Office (Docket PTO-P-2025-0025-1514), Nov. 26,
            2025
        A comment entitled, ``Revision to Rules of Practice Before
            the Patent Trial and Appeal Board,'' Generation Patient
            (Docket PTO-P-2025-0025)
        A letter to the Committee on the Judiciary, from Software &
            Information Industry Association (SIIA)
        A comment from the National Retail Federation (NRF), Dec, 2,
            2025
        A letter to the Hon. John A. Squires, Under Secretary of
            Commerce, Intellectual Property and Director, U.S. Patent
            and Trademark Office, from Patients For Affordable Drugs
            (P4AD), Nov. 21, 2025
        A comment to the Hon. John A. Squires, Under Secretary of
            Commerce, Intellectual Property and Director, U.S. Patent
            and Trademark Office, from Senseeker Corp. (PTO-P-2025-
            0025-0894), Dec. 3, 2025
        A letter to the Hon. Chuck Grassley, Chair of the Committee
            on the Judiciary, the Hon. Jim Jordan, Chair of the
            Committee on the Judiciary, the Hon. Dick Durbin, Ranking
            Member of the Committee on the Judiciary, and the Hon.
            Jamie Rasking, Ranking Member of the Committee on the
            Judiciary, from the Hon. John A. Squires, Under Secretary
            of Commerce, Intellectual Property and Director, U.S.
            Patent and Trademark Office, Dec. 9, 2025
        A comment from the U.S. Manufacturers Association for
            Development and Enterprise (PTO-P-2025-0025), Dec. 2,
            2025
        A letter to the Honorable Darrell Issa, Chair of the
            Subcommittee on Courts, Intellectual Property, Artificial
            Intelligence, and the Internet from the State of
            California, and the Honorable Henry C. ``Hank'' Johnson,
            Ranking Member of the Subcommittee on Courts,
            Intellectual Property, Artificial Intelligence, and the
            Internet from the State of Georgia, from Alliance for
            Automotive Innovation, Mar. 23, 2026
    A letter to the Honorable Darrell Issa, Chair of the Subcommittee
      on Courts, Intellectual Property, Artificial Intelligence, and
      the Internet from the State of California, and the Honorable
      Henry C. ``Hank'' Johnson, Ranking Member of the Subcommittee
      on Courts, Intellectual Property, Artificial Intelligence, and
      the Internet from the State of Georgia, from the Council for
      Innovation Promotion, Mar. 24, 2026, submitted by the Honorable
      Henry C. ``Hank'' Johnson, Ranking Member of the Subcommittee
      on Courts, Intellectual Property, Artificial Intelligence, and
      the Internet from the State of Georgia, for the record

                     QUESTIONS AND RESPONSES FOR THE RECORD

    Questions for the Hon. John A. Squires, Under Secretary of
      Commerce, Intellectual Property and Director, U.S. Patent and
      Trademark Office, submitted by the Honorables Ben Cline from
      the State of Virginia; the Honorables Thomas Massie from State
      of Kentucky; the Honorable Zoe Lofgren from the State of
      California; the Honorable Joe Neguse from the State of
      Colorado; the Honorable Henry C. ``Hank'' Johnson from the
      State of Georgia; and the Honorable Kamlager-Dove, from the
      State of California; the Honorable Darrell Issa from the State
      of California, the Members of the Subcommittee on Courts,
      Intellectual Property, Artificial Intelligence, and the
      Internet, for the record
        No response at the time of publication

               OVERSIGHT OF THE U.S. PATENT AND TRADEMARK OFFICE

                                  ----------

                           Wednesday, March 25, 2026

                            House of Representatives

               Subcommittee on Courts, Intellectual Property, and

                   Artificial Intelligence, and the Internet

                           Committee on the Judiciary

                                 Washington, DC

        The Committee met, pursuant to notice, at 10 a.m., in Room
    2141, Rayburn House Office Building, the Hon. Darrell Issa
    [Chair of the Subcommittee] presiding.
        Members present: Representatives Issa, Jordan, Massie,
    Fitzgerald, Cline, Gooden, Kiley, Lee, Fry, Johnson, Raskin,
    Lofgren, Ross, and Kamlager-Dove.
        Mr. Issa. Good morning. The Subcommittee will come to
    order. Without objection, the Chair is authorized to declare a
    recess at anytime.
        We welcome everyone here to today's hearing on the United
    States Patent and Trademark Office, and I want to make it clear
    that at the stroke of 10 we started which is practically a
    record, but also that this is an extremely busy day. Most
    Members serve on two or three Committees, so you will see them
    coming in and out.
        Mr. Squires, that is not any reflection on you because
    there were equivalent people in at least two other hearing
    rooms for many of our people, but I suspect you will see in and
    out virtually every Member of the Subcommittee.
        Also, in addition, it is the policy of the Subcommittee,
    should any Members of the Full Committee come, they will be
    waived on either side without objection.
        I now recognize myself for an opening statement.
        Mr. Raskin. Mr. Chair, just to be clear, any Member who
    arrives from the Committee will be waived on.
        Mr. Issa. We waive on. The specifics of the Committee rules
    are that they still have to be yielded time from a Member of
    the Subcommittee.
        Mr. Raskin. Got you.
        Mr. Issa. I always say that so that everyone understands in
    advance. Also, that pursuant to the rules of the Full
    Committee, we won't waive on people who are not members of the
    Judiciary Committee.
        Mr. Raskin. Thank you, Mr. Chair.
        Mr. Issa. Thank you. We welcome the Ranking Member of the
    Full Committee here, too.
        Normally, I make relatively short opening statements, but
    this is a particularly important hearing. It is important
    because there has never been a time in our history in which
    getting it right, not just on patents as we have known them,
    but patents are as they are emerging. I want to thank the Under
    Secretary for, among other things, clarifying in AI the pathway
    to patentability. I certainly think that when we look at the
    ambitious agenda set out by President Trump, he selected well
    an Under Secretary to make sure that we can reach that.
        One of the first actions of Mr. Squires was, in fact, as
    Director, to take steps to move the President's AI agenda and
    to strongly support it. This meant going above and beyond and
    with some changes to the Biden era's policy which came out late
    in the administration. This thoughtful change, I believe, will
    bear well for the foreseeable future. Like everything else in
    AI, I will expect it will not be the last time that guidance
    will have to come either from the Director or, if necessary,
    from Congress. In fact, as we speak, we still live with the
    memory of the Copyright Office saying that AI is not
    copyrightable and the idea that AI-assisted production is not
    copyrightable or patentable, of course, is now in our tail
    lights, but it will not leave our memory.
        Additionally, under the Director's guidance, he set forth
    these clear guidelines for innovation. This, I believe, will
    accelerate the examination, but it comes with a price. As we
    know, AI is a wonderful tool, but AI can, in fact, extend and
    elongate patents, patents that might have had ten claims and a
    few dependent claims, now might have thousands of claims. That
    means that one of the things that the Director has asked for
    that we have to take serious consideration on is how we deal
    with long or particularly complex patents should there be a
    multitiered, and this will be discussed today, should there be
    a multitiered process for billing?
        As many on this Committee know, when the Congress on a
    bipartisan basis, bicameral basis, made it two decisions. One
    was that fee setting would be transferred substantially to the
    Trademark Office, Patent and Trademark Office, but also that
    fees collected would be embargoed, meaning they are not to be
    spent anywhere else in any agency, including Commerce, in which
    the Trademark and Patent Office are nestled. That means that
    there is an obligation to raise enough funds to modernize the
    Patent Office.
        Federal workers are stressed today in the Patent Office
    because they currently do not have the tools to keep up with
    the demand. In 18 human hours, 17-18 human hours, the question
    is do we get it all right on a 1,000 claim, including dependent
    claim patent applications, and the answer, of course, is no.
        One of the goals set out by the Director which I completely
    agree with, and I believe everyone on the dais does, is that we
    have to work hard to continue to sustain or improve patent
    quality. I say sustain because as they become longer, if we do
    not have the tools to allow patent examiners to do their job,
    or if, in fact, we do not supplement technologies that may not
    be available to the examiners, and I say that specifically
    because historically, the examiners are skilled in the
    technology they are evaluating.
        Many of the technologies are so short of people that, in
    fact, to recruiting those people or to train them in emerging
    technology, is virtually impossible. That means that not only
    do we have to embrace AI in the patenting process, but we have
    embraced AI in the Patent Office. This will cause the Patent
    Office to spend vast amounts of money, whether it is done in
    concert and collaboration with other AI companies or
    substantially an in-house production. It will cost a great deal
    to produce and maintain.
        However, when in the foreseeable future we are dealing with
    more than a million patent applications a year, more than half
    of which come from countries outside the U.S., the largest of
    which is China, a country that does not respect the rules of
    how we create and qualify inventors, we are going to need
    sophisticated tools to spot whether, in fact, true invention is
    being submitted to us.
        Implementing the President's Executive Orders is going to
    be a daunting task. Fortunately, he has selected someone that
    is highly qualified, someone that has the respect in the
    Senate, particularly, of both Republicans and Democrats and I
    believe today you are going to see that we are very pleased
    with your selection. That does not mean, Mr. Squires, that we
    are pleased with everything that is going on.
        Recently, you had to deal with a clear conflict of
    interest, but also with a policy that was ambiguous as to where
    a conflict lies. The particular case does not need to be
    discussed here because it has risen to criminal activity and a
    dismissal. Let's understand, patent examiners, with even a
    small amount of stock, cannot and should not be evaluating a
    patent that could benefit that company or that stock. That
    level of conflict of interest now is zero under your
    leadership, and I want to particularly commend you for that. If
    somebody had asked me, as someone who has followed the Patent
    Office for decades, if that was the policy I would have said
    well, of course it is, only to discover that in my entire
    career both in and out of government it was not. Again, I want
    to commend you because that is the kind of hands on
    decisionmaking that we need to have.
        Additionally, I want to make it clear the President has an
    agenda. That agenda is not in conflict on either side of the
    dais. That is that although sometimes when you say MAGA is
    pejorative in this body, that making America and keeping
    America great is the goal of every aspect of this body and of
    the Patent and Trademark Office. Onshoring of manufacturing of
    all sorts, mining, agriculture, conventional manufacturing, and
    yes, intellectual property manufacturing, is not just the goal
    of this administration, but it should be the goal of everyone
    that wants America to have 250 years that, in fact, resemble
    the first 250 years.
        Therefore, any policy that isn't helping and supporting the
    ability for companies to make a decision, whether they be U.S.
    companies or global companies located outside the U.S., to
    make, use, and sell in the United States is adverse to the
    President's policy and adverse to the best interests that we on
    this side of the dais enjoy.
        That brings up a particular point, and it is one that I
    think is important. Under the policies of Acting Director
    Stewart and quite frankly, as far as I can tell, the continued
    policies, I see a real threat to that. At the end of the Biden
    Administration, there were approximately 280 slots for patent
    examiners under PTAB. My understanding is that more than 80 of
    those slots are now vacant. The systematic change from 80-90
    percent of PTAB reexaminations being granted to just the
    opposite, somewhere in the neighborhood of 80 percent being
    rejected, including a policy in draft form that I will push
    back on is not within the discretion and I repeat, not within
    the discretion of the Patent and Trademark Office, is one that
    determines that if a patent is beyond a certain number of
    years, it simply will be automatically discretionarily
    rejected.
        I was here and some others on the dais who will talk today,
    we were here on a bipartisan, bicameral basis under former
    Senator Leahy. We came to a compromise. That compromise was
    worked out by parties far and wide, not to everyone's complete
    satisfaction, but to overwhelming support. That meant that PTAB
    did not completely displace ex parte reexamination, that it
    still has a valid use. It also means that the so-called one and
    done was never in place. To compromise between one and done
    which was asked for by a number of companies, not the least of
    which were the leaders in bio and pharma, we said that if you
    get past the first reexamination, which was assumed, if it came
    in with credible arguments, would go through reexamination,
    that it would be discretionary thereafter.
        The law was unclear and I have to take some credit and
    blame for that, that when you look back it doesn't actually say
    that the first one will automatically be more favorably
    considered, but the intention was clear and the spokespeople on
    both sides of the capital and on both sides of the aisle were
    speaking specifically that the bias would be toward yes on the
    first one and then there would be a higher standard when either
    the same company or another company came in with substantially
    the same information based on substantially the same patent
    accusation. I say that because, obviously, sometimes you have
    diverse and different views. One of them, for example, is one
    patent that has been asserted against Intel Corporation and
    Gillette for razors. I have to believe that the arguments in
    why that would be invalid, unsupported, or unin-fringed could,
    in fact, be different between a microprocessor and a razor.
    When I was shaving this morning, that was all I could think
    about was what could possibly be different?
        The reality is we have to balance that and Director
    Squires, you have the hardest job. You have to balance that
    with a reasonable expectation that a patent is what it says it
    is. The question is are patents, in fact, not of the quality we
    would like them to be? I am going to opine for a moment that if
    patents tomorrow became perfect and in no case was there any
    ambiguity, it would still be up to 26 years before the last bad
    patent could no longer be asserted against somebody for
    damages. That is a long time.
        Director Squires, if you manage to serve that long, you
    will clearly be the first. That means that we have to continue
    dealing with the legacy of the past with periods of time in
    which new technologies came in, they were not fully understood
    or, in fact, on occasion, one examiner is loose. We will always
    have to deal with the reality that somebody will get a patent
    which means X and then assert it maybe against Intel and
    Gillette as though it means XYZ and the like. This is not
    something that often is done well in Article III courts.
        Article III courts, when I arrived here before the patent
    pilot legislation and before modernization including PTAB, were
    running as much as 40 percent reversal at the Fed Circuit. The
    Fed Circuit was taking an amazing amount of cases because it
    was almost a coin flip. We have been working to reduce that,
    and I must tell you we are down to about 35 percent. It is not
    an easy job because Article III judges, all 677 of them, almost
    exclusively come from nontechnology background. They are
    prosecutors. They are public defenders. They are civil lawyers,
    but they are seldom patent attorneys or knowledgeable in
    intellectual property. That is not their fault. On top of that,
    for more than half of the Judges, they will be lucky to get one
    patent case--let me rephrase that. They will be unlucky to get
    one patent case. It will be their first and after that, they
    will try to find another Judge to take their patent cases. That
    means that the first Markman is their first Markman ever. It is
    a technology they don't understand and a patent that says
    things that have to be explained to them.
        That is not true with the PTAB. The 200--now 180, but once
    nearly 280, patent examiners are technical specialists. They
    will look at dozens of cases, both sequentially and in
    parallel. They adjudicate these over a year, so by the time
    they have been on the job for a couple of years, they have done
    60 or 70 patents. They have brought them to a close, and they
    seldom have any reason at all not to meet their deadlines. That
    means they do a better job. The proof of that is that they run
    about a 12 percent total reversal even in part, meaning if you
    lose to the Patent and Trademark Office or you win, you can
    pretty well take it to the bank and either move into Article
    III or move into another place with that patent. That means
    that we have to find a way to reinvigorate the Patent and
    Trademark Office.
        As I go through my questions today, I will be asking
    exactly that to the Director, how do we restore the ability for
    people who have been accused of patent infringement to
    rudimentary, particularly on the first time it has been
    asserted, be able to get in front of an examiner?
        There are other problems in the law that I want to make
    clear. We never believed that it would be 100 percent
    discretionary. We believe that the Under Secretary would, in
    fact, at the end of the day be reviewing the work of those
    Judges and expected there to be a process if there was a
    disagreement. Under Trump One, we discovered that, in fact, one
    person could without any explanation simply overturn a decision
    by an Article I judge. That still becomes a bit of a problem,
    and I know we will hear from Director Squires about how he is
    determining that and handling it. Additionally, we have
    discovered that a full trial that is nearing its one year, it
    is ready to go to decision, can in fact be pulled back and
    undone.
        Director Squires, I have to tell you it is my belief and it
    will be my legislative last act if I can that this either will
    be undone or we will undo it. Once a process, a determination
    is begun, even if you at the end of it all choose to not agree
    with the decision to undo it, to in retrospect undo it is, in
    fact, to have less than the fair process be appeared, and in
    fact both parties have spent money in the process. It should be
    allowed to go to decision. You can then evaluate the decision.
    That is of particular concern, and it will be the one that I
    spend most of my time on.
        Last, on the dais, there will be people who don't know the
    meaning of trolls, and there will be people who don't know the
    meaning of trolls. It is a difficult guess. There are
    nonpracticing entities who are great inventors, who invent
    things sometimes that have exactly one customer. That does not
    invalidate the ability for them to take their invention and say
    if you would like to use it, you will, in fact, have to work
    out a royalty. At the same time, there are nonpracticing
    entities who are simply in the financial gain business.
    Unfortunately, third-party funding has made it very possible to
    buy old patents, particularly those that have been around for
    more than six years and assert them either for the first time
    or for the first time against a particular defendant. That
    means that any deadline, any time out that says a patent can no
    longer be considered, cannot possibly be accurate, not because
    fair warning shouldn't cause someone to use a process earlier,
    even if not accused, I share with many that view. However, you
    don't know you are going to be sued in many cases until
    somebody redefines what that patent means.
        Again, in closing, I am going to back to, if you looked at
    a patent, any one of you in this audience and thought that it
    applied to Intel and Gillette, please raise your hand. If not,
    then in fact, that makes my case that you cannot know that your
    patent is going to be asserted against you in a particular way
    until it is. Without, at least, a constructive notice, a letter
    from the inventor or the like, you really are not on notice.
    That is why we have laches, but it is also why 6, 8, 10, or
    even in the 20th year we may need to use the ability to
    properly find out if, as asserted, the patent is valid and
    enforceable against that defendant.
        I have taken a lot of time. I have done so for a reason for
    the first and only time probably in my career. Nothing is more
    important to making a decision to onshore that knowing that in
    fact you are going to get a fair opportunity to defend yourself
    against patent and other legal accusations. I make the case in
    purely monetary terms. If 20 percent of the world's market buys
    here in the United States and you are currently making a
    product offshore, you have a 20 percent exposure in the U.S. if
    you lose a patent case. If, on the other hand, you make, use,
    and sell in the United States, even if only 20 percent ends up
    in the United States, you have a 100 percent exposure. Under
    the law, making in America gives you worldwide exposure in
    America. Who in the world would risk 80 percent of their market
    if they could make the product in a country they trust or
    multiple countries where they trust they would not be shut
    down?
        Unfortunately, that is the world we live in. We have to
    make it safe or at least predictable that if you are Intel, if
    you are Nvidia, if you are any of the companies, Taiwan
    Semiconductor, and you onshore here, you are not putting at
    risk your worldwide sales against a nefarious and quite frankly
    lengthy accusation that may or may not be valid. It doesn't
    mean that you don't have an obligation to quickly dispense with
    those that are valid, but it does mean that we have to maintain
    a system that typically in a year gets it, more or less, 90
    plus percent right. With that, I recognize the Ranking Member
    of the Subcommittee for his opening statement.
        Mr. Johnson. Well, thank you, Chair Issa, and Director
    Squires, thank you for being here today. We customarily don't
    take intermissions between opening statements, but I would be
    remiss not to offer you the opportunity for at least a bathroom
    break. Are you OK? All right. Thank you.
        Directors of the U.S. Patent and Trademark Office appear
    before this Subcommittee every two years or so and I have had
    the honor of being present for many of those hearings. You are
    the sixth Director I have had the opportunity to talk with in a
    forum like this. Hearings like today, give us the opportunity
    not just to provide meaningful oversight, but also inform the
    legislative process so Members of Congress can make the best
    decisions when considering legislation.
        In the many USPTO Director hearings I have had an
    opportunity to experience, I have witnessed occasional policy
    missteps from USPTO Directors, and we have discussed
    administrative failures, ranging from modernization growing
    pains to too long examination time. We certainly have had our
    differences, but never have I had reason to doubt that the
    Director was acting independently from the President until
    today. There was a time when the USPTO was removed from the
    politics of today. Now, it has been drawn squarely into it.
        I am going to take this opportunity to go over a few of the
    concerns I have heard over the past year. Keep in mind this is
    not in any way an exhaustive list. Under the Trump
    Administration, the Patent Office's workplace morale has
    plummeted, likely because of the administration's layoffs which
    were bizarrely characterized as an attempt to save money, even
    though the USPTO is self-funded.
        You have also stood by as USPTO employees collective
    bargaining rights were undermined by President Trump,
    destabilizing your already fragile workforce. Under your
    leadership, the USPTO has publicly explored implementing a
    patent tax that by all accounts would have a devastating effect
    on innovation in the United States. These are just some of the
    few examples of the partisanship inserted into an agency that
    prides itself on stability. When politics begin to shape a
    traditionally nonpartisan agency, the result is predictable.
    You are at the helm of an institution that has lost touch with
    its mission. This lost mission is most obvious in the USPTO's
    cancellation of its planned Southeast Regional Outreach Office
    in Atlanta, Georgia. The USPTO chose Atlanta after a long
    process as prescribed under the law.
        Instead of going forward, the Trump Administration canceled
    this outreach to the Silicon Valley of the South and instead,
    opened it within USPTO headquarters in Alexandria, Virginia.
    American innovation can thrive only when opportunity to
    participate is accessible to all. By placing the Southeast
    Office at USPTO headquarters, your agency has limited its reach
    and concentrated opportunity among those already best
    positioned to access it.
        I encourage you, Director, to reconsider this move because
    while it may not violate the letter of the law, it most
    certainly violates the spirit of it.
        As you can see, I strongly disagree with the Trump
    Administration. I also believe you want to do right by those
    who rely on the patent system. Your notice of proposed
    rulemaking to reform the Patent Trial and Appeals Board
    reflects ideas this Subcommittee examined when I was
    Subcommittee Chair, and has similarities to those proposed in
    my colleague, Congresswoman Ross' PREVAIL Act legislation.
        While these administrative changes are certainly worth
    discussing, agency action is not the same as legislation. When
    the Director changes, so can agency rules. Patents exist to
    ensure that research and development rests on firm, predictable
    ground. This kind of inconsistency between Presidential
    administrations undermines the stability that is essential to a
    functioning patent system. Ultimately, these are questions for
    Congress to decide, not the agency. They are questions I look
    forward to addressing if I became Chair of this Subcommittee in
    the next Congress.
        A healthy USPTO requires clear rules, consistent leadership
    free from political influence, and a steadfast commitment to
    protecting those who take the risk to create. It is incumbent
    on us to get these questions right because inventors and job
    creators are not asking for favors. They are asking for a
    predictable and stable system they can rely on. When policy
    shifts with the political whims of an administration, it is
    American innovation that pays the price.
        I yield back the balance of my time.
        Mr. Issa. I thank the gentleman for his brevity, and as I
    go to the Chair of the Full Committee, I might note that
    apparently Mr. Johnson is considering a party change, so I hope
    you will favorably consider him to replace me in the next
    Congress, and I recognize the Full Committee Chair.
        Chair Jordan. No one can replace you, Mr. Issa, that is for
    sure. I just want to thank the Chair for this hearing and I
    want to thank the Secretary and the Director, those titles, for
    being with us today and answering the Committee's questions.
    The record will show after the comments of the Ranking Member
    that the Chair's comments were the most brief--I haven't heard
    from Mr. Raskin, but I will bet it will be a little longer than
    my opening statement. With that, I would yield back.
        Mr. Issa. I thank the gentleman. We now go to the Ranking
    Member of the Full Committee.
        Mr. Raskin. Thank you, Mr. Chair, and I will be somewhere
    in between the Chair of the Full Committee and the
    distinguished Chair of the Subcommittee.
        Thank you, Director Squires, for joining us today. As head
    of the PTO, your job is to promote stability in the market for
    goods and services by protecting trademarks that are used in
    interstate commerce. In pursuant of the mission, the USPTO has
    for decades been removed from political intrigue, favoritism,
    and controversy by keeping politics out. Prior Presidents and
    USPTO Directors ensure that applicants had a fair and honest
    system to rely on.
        It seemed to change last year. You and President Trump
    injected partisan politics into the work of the PTO from
    working to strip trademark examiners of any right to collective
    bargaining, a right that they had enjoyed for many decades, and
    firing the Members of the Patent and Trademark oversight bodies
    to refusing to respond to congressional requests for
    information. Your tenure seems to be threatening the
    traditional integrity and nonpolitical nature of our system.
        You recently took an extraordinary and unprecedented
    action. Earlier this year, the USPTO itself filed trademark
    applications on behalf of Donald Trump's ill-defined, private,
    multibillion global project called the Board of Peace.
    President Trump has declared himself Chair for life of this
    illusive entity. He has promised billions of dollars from the
    taxpayers to the board, although Congress has not voted a
    single dollar for it. He has secured billions of dollars from
    mostly corrupt foreign governments including Saudi Arabia,
    Kazakhstan, Azerbaijan, the United Arab Emirates, Morocco,
    Bahrain, Qatar, Uzbekistan, and Kuwait.
        Beyond that, there is not much we know about this shadowy
    venture. We don't know its basic corporate structure. We don't
    know whether it is registered anywhere in the United States or
    in any other country. We don't know who controls the billions
    of dollars in its bank accounts. We don't know what countries
    those bank accounts are located in. We don't know who will
    conduct audits and oversight of the board, if anyone. We don't
    know what the President intends to do with this massive,
    secret, unaccountable slush fund while he is in office and
    after he leaves.
        When the Board of Peace decided it wanted to secure a
    trademark for its name and for its logo, a move that should
    have required it to identify the legal entity that actually
    runs it and controls its billions of dollars, you stepped in.
    You personally filed the trademark applications allowing you
    USPTO to stand in as a straw trademark holder to cover up for
    this slush fund that appears to put both billions of U.S.
    taxpayer funds and billions in payments from foreign
    governments into the pocket of the Chair for Life Donald Trump
    who will control it. The President set up a board that likely
    violates both the foreign and the domestic emoluments clauses,
    and now you are helping to run the operation as far as we can
    tell.
        What is more, I am not sure either you or the Trump
    Administration realize what you are confessing by filing a
    trademark application. You are admitting that the Board of
    Peace is not a legitimate governmental body, but rather a
    commercial enterprise set up by President Trump. Our trademark
    law began in 1879 when the Supreme Court struck down a
    trademark law that applied to any and all organizational
    designations. The Court ruled that Congress could do so only
    under the Commerce clause. When Congress passed the Trademark
    Act of 1881, it was written to apply only to marks used in
    interstate commerce. The modern version of the Lanham Act in
    1946 makes clear it only protects trademarks used in interstate
    commerce. Section 1052(b) specifically forbids the registration
    of any insignia of the United States or any State or
    municipality or any foreign Nation or any other governmental
    body.
        By filing for a trademark, you are admitting that the Board
    of Peace is not really a governmental entity at all. It is a
    purveyor of influence operating for profit with apparently a
    billion-dollar admission fee, at least that is what has been
    reported in the press. A money-laundering scheme to pocket the
    billions all made in a global shakedown in the name of peace.
        Now, as far as I can tell, the USPTO has just nine
    trademarks. Four are various logos for your office, some of
    which read USPTO, others have the full name of the agency
    written out, IS Patent and Trade Office. Three more are for the
    phrases Go for Real, and You're Smart Buy Smart, phrases that
    were part of a public awareness campaign that the USPTO itself
    ran with the National Crime Prevention Council. The other two
    are now for the mysterious Board of Peace which has no
    organizational relationship, I believe, whatsoever to the
    USPTO. By agreeing to act as President Trump's Phone a Friend
    and using the PTO to register a trademark on behalf of a third
    party, it would seem you are violating a cardinal principle of
    the Lanham Act which explicitly lays out in Subsection B that
    only ``a person who has a bona fide intention under
    circumstances showing the good faith of such person to use a
    trademark in commerce who may request registration of the
    trademark.'' That is quite a problem for the agency whose role
    it is to administer and police the registration of trademarks
    and to administer disputes about them.
        One can only imagine this decision will be challenged.
    There will be litigation over the mark that you have now
    claimed as your own for the PTO before your agency which is
    charged with being the neutral adjudicator of disputes about
    trademarks. The only reason anyone ever registered a trademark
    is to prevent competing uses. Why would the Trump
    Administration tell you to file for this registration except to
    suppress anyone else's trademark related to the word peace? The
    field is crowded with existing registrations by other
    educational purveyors of global peace. To give a few examples I
    found online this morning: World Peace Table, World Peace
    Network, Project Peace, Peace Vision Global, Global Peace
    Initiative, Global Peace Foundation, International Peace
    Center, Peace Network, Peace Action, the Peace Trust, and
    Greenpeace. Any one of these organizations would have a strong
    case to sue for cancellation of Trump's Board of Peace
    trademark on the grounds that it dilutes and infringes their
    own preexisting trademarks for peace facilitation services.
    Also, of course, that this mark is not registerable at all
    since it purports to identify a governmental entity and not an
    organization in interstate commerce.
        Now, only would you have to decide whether Trump has a
    defense to prior users' opposition to his marks, you would have
    to rule on any offensive use of trademark law by Trump against
    any of the other groups. Let's say he moves to attack
    Greenpeace for infringement of his commercial trademark or
    opposes registration of any new organization that uses peace in
    its name. Who would adjudicate this? You would, your office.
    You are both the owner and you are the judge of any rights that
    you have as an owner against anyone who wants to identify their
    organization with the word peace. This is not just a
    disreputable use of the trademark registration process; it is
    the first step in giving Donald Trump and his subordinates a
    monopoly on use of the word peace to make the very notion of
    peace unthinkable that departs from control of the new big
    brother who now owns it. If President Trump can't win the Nobel
    Peace Prize he craves because he plunged us into an aggressive
    toward the Middle East, now he will just own the word peace
    instead.
        I wrote to you last week, Director Squires, asking about
    this illusive entity and unprecedented baffling situation. If
    there is a reasonable explanation for the USPTO's conduct here,
    we would like to hear it today because if you simply filed on
    behalf of the Board of Peace as a favor to the President, then
    that is a serious problem. A decision like that doesn't just
    drag the USPTO into covering up for a slush fund that may
    violate both the foreign and domestic emoluments clauses, it is
    bad for the integrity of our trademark laws.
        When people lose faith in the fairness and objectivity of
    our system, it begins to fall apart. I am not just troubled
    that you may be violating the basic trademark rules. I am
    troubled that in violating the rules to help Donald Trump, you
    may be acting as a political operative in a way that will
    destroy our neutral system for regulating source identifying
    trademark rights.
        The trademark system is designed to protect everyone. If
    applicants think that the rules change for the wealthy and the
    politically well-connected, they are much less likely to
    believe the system can work for them. I look forward today to
    finding out how you justify your agency registering a
    commercial mark for this alleged governmental entity, if that
    is what it is, how you intend to resolve disputes with the
    dozens of past and future registrants of peace organizations
    and what you intend to do to restore the professional
    nonpartisan reputation of the USPTO.
        Thank you, Mr. Chair, I yield back.
        Mr. Issa. I thank the gentleman. Without objection all
    other opening statements will be included in the record. Before
    I introduce the Director, I would ask unanimous consent that we
    place into the record the Wiki delineation of the Voice of
    America which is a U.S. Government owned international
    broadcast with trademarks including Voice of America, VOA, VOA
    News, et cetera, which is owned by the U.S. Government and was
    trademarked in 2007. Without objection, so ordered.
        We now introduce the Hon. Director of the Patent and
    Trademark Office, the Under Secretary of Commerce for
    Intellectual Property and the Director of the Patent and
    Trademark Office. Prior to joining USPTO, Director Squires was
    a partner and Chair of IP at emerging companies' practice,
    particularly Dilworth Paxson LLP which is a longer name than
    when they had three names instead of two. We welcome our
    witness here and thank him for appearing.
        Pursuant to the rules, I would ask you to stand and take
    the oath.
        Do you solemnly swear or affirm under penalty of perjury
    the testimony you are about to give will be true and correct to
    the best of your knowledge, information, and belief so help you
    God?
        Thank you. Let the record reflect the witness answered in
    the affirmative.
        Director, our normal rule is five minutes. Considering the
    Ranking Member and myself, I will be lenient if you go over,
    very lenient. Since you are the only witness, we came here to
    hear what you have to say. However, your entire opening
    statement, if you don't use it all, will, in fact, be placed in
    the record along with any other supplemental information you
    choose. You are now recognized.

                   STATEMENT THE HON. JOHN A. SQUIRES

        Mr. Squires. Thank you, Mr. Chair. Chair Issa, Ranking
    Member Johnson, Chair Jordan, Ranking Member Raskin, and the
    Members of the Subcommittee, good morning. Thank you for this
    opportunity to discuss the USPTO's operations and initiatives.
        I thank President Trump for his confidence in me to lead
    America's innovation agency, and for his steadfast commitment
    to intellectual property, reaffirmed yet again with his
    national AI policy framework released on Friday.
        It is also the honor of a lifetime to serve Secretary
    Lutnick, a phenomenal leader with boundless energy and
    unparalleled experience, himself an inventor on nearly 500
    patents.
        I am honored today to provide the Subcommittee an overview
    of the USPTO's recent activities and accomplishments. America's
    innovation agency has two founders. For patents we have
    America's Invention Agency, and for trademarks we have
    America's Branding Agency. Together we function as the
    Department of Commerce's central bank of innovation.
        Every unit of intellectual property we put into circulation
    is a potential job, a new business, a competitive advantage, an
    investible asset, a lifesaving drug, all flowing into the real
    economy, into the real world. In its scale, American ingenuity
    means national prowess and global reach.
        I can't thank USPTO's highly educated and talented
    workforce enough for their dedication and commitment. I say to
    everyone they are the best in the world at what they do
    because, quite simply, they are. None of this would be possible
    without the fee setting authority so thoughtfully provided by
    Congress, allowing us to operate like a business, maintain
    long-term financial stability, and achieve our statutory
    mission.
        We also greatly appreciate the continued authority to spend
    anticipated fee collections which lies at the heart of our U.S.
    global leadership. We look forward to working together to
    maintain both it and our global lead. Indeed, we lead today
    because our Founders did the extraordinary two centuries ago,
    enshrining IP protection into our Constitution and, with it,
    the American experiment itself, the American experience itself.
        Last month, I told the head of the UKIPO how our
    constitutional charge allows us to lean into AI, to quantum, to
    medical diag-
    nostics, wherever the onrush of technology is going. His candid
    reply: I know. Wish I had that.
        Think about that. The very empire we won our independence
    from, two democracies, two outcomes, but only one clearly atop
    the IP world today. That is why it is incumbent on the USPTO to
    have an America First IP agenda, build atop a unique legacy our
    Founders bestowed on us. We are doing exactly that with the
    urgency of now.
        As I am before you today, our first priority was slashing
    the unacceptable backlog by 50,000; another 100,000 to come
    this year. By the end of my tenure, and with your continued fee
    setting authority, choking backlogs will be a thing of the
    past, and improved quality a confidence indicator.
        I am confident because we just announced our first agentic
    AI trademark classification tool. Five months of manual
    searching is now a five-second outcome. In patents, our AI
    search system delivers a top ten list of prior art before the
    first office action, providing quicker pathways to allowance.
    Across both, AI fraud protections helped us purge 70,000-plus
    baseless filings in just under a year. You see, AI tools will
    become our, our examiners' superpowers, supplying them with a
    cadre of agents to deploy as they see fit.
        On policy, Congress affords us discretion. Our North Star
    to its exercise is always both the letter and the spirit of the
    AIA, balancing, as instructed, economic impact, resource
    efficiency, and the integrity of our IP system. We are
    restoring balance and fairness on both the front ends with
    eligibility determinations, and the back end as to trials and
    error corrections with new feedback loops in between.
        Mr. Chair, I am humbled and proud to lead this unique and
    vibrant agency. We are back on our front foot and delivering
    the brilliance tomorrow's American ingenuity affords, tinker by
    tinker, breakthrough by breakthrough, dream by dream.
        Just as a Central Bank stabilizes the flow of capital into
    the real economy, the USPTO stabilizes the flow of innovation
    into the knowledge economy. With Born Strong protection, new
    ideas can blossom in a marvelous virtuous cycle that has
    delivered prosperity and bettered people's lives for over 250
    years like no Nation before, like no Nation ever.
        Thank you again, and I look forward to your questions.
        [The prepared statement of the Hon. Squires follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Issa. Briefly, so very brief. Thank you.
        We now recognize the gentleman from Kentucky Mr. Massie for
    five minutes.
        Mr. Massie. Well, the last Member of the Administration
    that I was very nice to was Kristi Noem. She was removed 48
    hours later.
        At that risk, I want to thank you for the great job that
    you do. I would like your analogy of intellectual property to
    currency. Let's don't compare the Central Bank to the Patent
    Office because some of the Founders, all of the Founders were
    unanimous in understanding that the patents and copyrights were
    the foundation that would allow our country to grow. I
    appreciate you doing that.
        It is an appropriate analogy because of intellectual
    property to currency because we have had a crisis in our
    currency over the last decade, I believe, of intellectual
    property. If your currency is called into doubt, if the Federal
    Reserve Notes in your wallet when you present them, even though
    they were issued by the government, if they are called into
    question when you try to use that currency, you have a problem.
        That is the way it has been with patents. The PTAB
    ostensibly was created to make it easier to adjudicate validity
    on the back end of a patent issuance and enforcement. The
    problem is it has created too much uncertainty. I very much
    appreciate the steady hand that you put on the tiller.
        I would disagree with my Democrat colleague who said that
    policy shouldn't change when administrations change. I would
    argue that elections should matter. Laws should not change. The
    patents that have issued should not change, they should still
    be valid. We need somebody in charge. We need somebody to
    exercise commonsense in the application of the laws that we
    have passed.
        It seems to me that you are doing a very good job of that.
    Could you tell us about the rule that you are proposing and the
    actions that you have taken in terms of exercising discretion
    on the IPRs?
        Mr. Squires. Thank you, Congressman. I am happy to speak to
    the notice of a proposed rulemaking we have put forward.
    Basically, it is intended to restore fairness and balance to
    the IPR process.
        There have been instances where there have been as many as
    seven serial filings. It is intended to be able to have the
    matter adjudicated once and for all early. It has been termed,
    I will say, as one and done.
        That is a misnomer. There are liberal joinder provisions
    that are carried through into the rule. I would say it is one
    join and done. The facility is provided for if there is a
    petition filed after there has been an adjudication that--
    excuse me, petitions filed, people can join. The answer isn't
    serial filings. We think the answer should be gang tackling. At
    the time it wasn't to be had.
        The preference would be to have a PGR-like process where
    things are laid open. That is not always possible. As has been
    discussed, things sneak through. There should be a point in
    time where there is quiet title, there is finality, and people
    can have that chance and do it together, but it has got to be
    adjudicated once and for all.
        Mr. Massie. I agree. Once you have the imprimatur of the
    government and you have survived a challenge that is important.
    Because what I have noticed in the last 10 years, a lot of
    people are shying away from companies that would have been
    based on intellectual property. I have people, inventors, say I
    am not even going to file the patent, I am just going to try to
    rely on trade secrets. That creates a world of haves and have
    nots when everybody can just keep all their stuff secret and
    that is incentivized because of a patent system that is not
    working.
        The PTAB, I do think it was probably, at least from the
    people who voted on it, originally intended to expedite this
    adjudication. It has created uncertainty that has hurt our
    country, hurt our inventors. I am glad to see that you are
    exercising some commonsense in the application of it.
        Any law can be weaponized. We saw that the PTAB law has
    been weaponized. I appreciate you taking it back and using it
    for commonsense.
        I will give you my last 15 seconds.
        Mr. Squires. Thank you very much, sir. Also, to be
    reminded, there--IPRs are but one avenue. There is always
    reexamination. There are post-grant reviews of the District
    Court.
        What we had found was, particularly with respect to IPRs,
    that it was intended to be an alternative to litigation, yet 80
    percent of the filers already had a District Court action with
    also doing an IPR.
        Mr. Massie. Thank you for taking out much of the redundancy
    that existed. Because it doesn't get cheaper when people keep
    getting subjected to continuous IPRs or to survive the IPR and
    then go to court.
        I will yield to Mr. Issa.
        Mr. Issa. Thank you. Just to clarify, that 80 percent
    includes a dramatic amount who have been sued and then come to
    the Patent Office, because that is the first notice of
    infringement is when they are sued. The chicken or egg often
    starts with a lawsuit and you go to the PTAB to shortcut the
    time it takes to show invalidity. Correct?
        Mr. Squires. Yes, sir. There is a one-year window if you
    have been sued in District Court from which to avail yourself
    of the point.
        Mr. Issa. Thank you. I now recognize the Ranking Member of
    the Subcommittee for five minutes.
        Mr. Johnson. Thank you, Mr. Chair. Director Squires, I hope
    that you will agree with me when I say that the greatest asset
    of the USPTO are its employees. Employees at USPTO have
    described the environment as ``rife with rumors, paranoia, and
    disillusionment.''
        Just last week in a governmentwide survey, only 13.8
    percent of PTO employees reported that they were satisfied with
    their job. What factors have contributed to such
    dissatisfaction by your employees? What specific actions have
    you taken to address this collapse in employee morale?
        My office received a call just the other day echoing these
    and other troubling allegations. What mechanisms are in place
    to ensure employees can report issues without fear of
    retaliation?
        Mr. Squires. Thank you, Congressman. We have robust
    facilities for reporting violations through our EEOC
    department. They are fantastic as to examiners.
        I do agree with you, they are the crown jewel of the USPTO.
    They are the best in the world at what they do. We are trying
    to make even better equipped to deal with the what has become a
    crushing backlog of work that they have so dedicatedly and
    assiduously have chipped down on.
        We have increased awards, financial awards for examiners.
    We are working on the personnel. I have myself--
        Mr. Johnson. What factors have contributed to the
    dissatisfaction that is evidenced by the survey?
        Mr. Squires. I am equally interested in making sure morale
    improves and have offered engagement. My, I think the biggest
    factor has been the backlog getting out of control. It rose to
    a historic high of 837,932 applications unexamined. This is
    just unacceptable, as the Secretary had said.
        Mr. Johnson. It is not the volume in and of itself, but it
    must be something that the agency has done to address that this
    has caused the lack of morale, or morale to plummet.
        What are those factors?
        Mr. Squires. The specific factors, we just concluded an
    employee survey last week and we will be working on those and
    examining them.
        I, myself, hold, host a, I am using I did them weekly, now
    monthly, for people to tell us what they think. That has been
    my mantra coming in. There's forums for people to tell us where
    there are problems.
        One of the issues that has been unhappy that caused some
    unhappiness has been not deploying people on the frontlines,
    the primary examiners and having oversight and training and not
    having signature authority at that point in time.
        We have found that this is the first interaction that the
    applicants have had with the office. Supervisory has been very
    important. It is consistent with other international offices.
    There has been some adjustment to that. There is some initial
    unhappiness with that, but we have been at that now for over
    six months and I think morale is getting better.
        Mr. Johnson. OK. I am going to move on. After the success
    of the four regional offices created in the America Invents Act
    of 2011, Republicans and Democrats worked together to pass the
    Unleash-
    ing American Innovation Act in 2022 to establish a Southeast
    regional outreach office, among others.
        Atlanta, Georgia was chosen as the Southeast location after
    a lengthy process. Last year the Trump Administration reversed
    course, announcing that the Southeast office would instead be
    at USPTO's headquarters. This change was announced with no
    explanation, and no search process was conducted, as required
    by law.
        Director Squires, regional offices were created to expand
    access and reach a more diverse set of stakeholders on a more
    local scale. How does placing the Southeast regional outreach
    office at headquarters advance that mission? Isn't it true that
    placing a regional outreach office in the literal headquarters
    of the PTO undermines the very purpose Congress had in creating
    it?
        Mr. Squires. Congressman, that decision, of course, was
    made and effectuated before I took office. I took office in
    September. However, my ongoing responsibilities are, as you
    have indicated, access, making sure there is access. Now, we
    have little compliance with the regional office footprint in
    having four. We recently had five and the Denver office was
    closed down, resulting in savings of over 3.8 million per year.
        Savings are not the issue, access is. In favor of that we
    have launched a Community Engagement Office model. We have just
    released a Request for Comment to the Southeast region,
    including Georgia, including all the States that were part of
    that defined region.
        We have had great success with the Mountain West region in
    this, to the tune where we are able to increase access, engage
    with universities, widen our footprint, and be able to do it at
    little or no cost to the office.
        We are moving to a model of the future. We are hopeful I--
        Mr. Johnson. You are doing it based on executive authority,
    undermining legislative authority. That is a trend in your
    agency that is upsetting. With that, I will yield back.
        Mr. Issa. I thank the gentleman. I am going to just join
    the queue on one thing.
        Director Squires, would you agree to have a separate
    lengthy briefing for the Ranking Member and myself on that
    plan, how it is to work, and how it can accomplish what was
    legislatively in place?
        I, for one, would not want to see San Jose closed for
    savings purposes, no matter how it might be without
    congressional approval. Would you agree with that?
        Mr. Squires. We would be happy to work with the Chair and
    the Ranking Member.
        Mr. Issa. Then we will make that arrangement. We now go to
    the gentleman from Wisconsin for five minutes.
        Mr. Fitzgerald. Thank you, Chair. Director Squires, thanks
    for being here today. Last Congress I introduced legislation to
    limit the enforceability of patents by entities on certain
    national security-related sanctions lists. This is because I
    believe, I think many Members believe, State-sponsored entities
    like Huawei can and do use protected patent litigation to slow
    or stop critical technologies from being developed in the U.S.
        Do you see that as the present or future national security
    threat? Where do you stand on limiting enforceability of
    patents in those types of cases?
        Mr. Squires. As to limiting enforceability, one thing I
    would point to is we recently--a couple things in the PTAB. We
    restored the real party-in-interest requirements. With that, we
    just issued a decision called Tianma last week which includes
    under the AIA, as with American Government entities and
    agencies are not persons and cannot be in the PTAB, neither may
    foreign sovereigns or State actors.
        If a real party-in-interest is identified they are not
    allowed to be in the PTAB and they can't bring challenges.
        To protect, with that, in the discretion of instituting
    IPRs we have also just released guidance that look to whether
    it is a small business in the U.S. or American manufacturing,
    manufacturing that is occurring in the U.S., as part of whether
    a challenge should be instituted, so to protect American
    manufacturing and have them choose here.
        Both sides of the equation we are trying to take into
    account what the real world is. The process for filing a
    petition we say tell us your story, and so we can take these
    into account.
        Mr. Fitzgerald. Another area where I know many Members have
    concern about foreign exploitation. It is all about the patent
    prosecution highway, right, as it is referred to.
        Under this program the USPTO will expediate review of
    certain patent applications that have received a favorable exam
    in a foreign patent office. We know that China participates in
    the program and, therefore, an entity like Huawei could receive
    expediated examinations of its patent, so long as it first gets
    a favorable exam in China, which is effectively a rubber stamp;
    right?
        Should we not allow, or shouldn't we be concerned, I guess,
    about the way that is playing out?
        Mr. Squires. Thank you for the question, Congressman.
        That is of great concern. It is a bilateral concern. In
    general, when cases come in through the patent prosecution
    highway they have already been examined, but there always is
    the risk of rubber stamping. We do an independent analysis. If
    it doesn't pass the smell test, then we kick it and it goes
    back in line and the prosecution is lost.
        On the other side, we found for U.S. companies the PTH has
    helped them in other countries. We are trying to always
    maintain that balance where American companies going into other
    offices are receiving a favorable treatment. They have behind
    them the examination that has occurred and, hopefully, Born
    Strong in the U.S.
        Mr. Fitzgerald. Right.
        Mr. Squires. We are always on the watch for incoming low-
    quality patents.
        Mr. Fitzgerald. Very good. Let me quickly turn to kind of
    another area. According to American Intellectual Property Law
    Association the average cost of patent litigation in a District
    Court is $5 million, whereas the cost for adjudicating patent
    disputes before the Patent Trial and Appeal Board on average is
    about 10 times less, or around a half a million dollars.
        Critics of the proposed changes to the PTAB process have
    said the result will be more patent cases being litigated by
    the courts. Assuming that could be true, did the USPTO take
    into consideration increased litigation costs when conducting
    an economic analysis of your IPR rule?
        If you didn't, then how did you handle that, and why didn't
    you maybe look at that?
        Mr. Squires. Thank you for the question. Yes, we have. We
    are taking, we are still in the process of finalizing the rule.
    We have received over 11,800 comments, which we are very
    excited about because people care. About 2,800 were unique
    clearing out all the me too ones or, clearing out the ones that
    are we don't like the Patent Office. Substantively there are
    about 2,800.
        By under the AIA we are required to consider economic
    efficiency, resource allocation to the office and effects of
    that sort. By all means we are looking at what the costs are in
    the rule. I am optimistic the rule will be finalized. I believe
    people will be very happy with the outcome.
        Mr. Fitzgerald. What around judge's caseload, did you take
    a look at that as well?
        Mr. Squires. Yes, we are looking at all that in the rule.
    Judge's caseload, but it is also not just District Court forum,
    what is the effect on reexamination, and what is the effect on
    PGR, and what is the effect also on ITC cases.
        Mr. Fitzgerald. Thank you. I yield back.
        Mr. Issa. I thank the gentleman. My understanding is it was
    about nine to one opposing the rule in that 2,800: 2,500 to
    about 300. Sound about right?
        Mr. Squires. Again, we are still working through it. I have
    seen those numbers. I have seen 97 to three. I have seen 80:20.
    Our role under the rulemaking process is we go through and
    respond substantively to comments. Comments have been very
    helpful.
        Again, I am of the firm belief that we are going to see a
    rule that will be workable.
        Mr. Issa. OK. Hopefully, the Ranking Member of the Full
    Committee has read all 2,800 and can opine on what he saw as
    the ratio. I recognize the gentleman from Maryland.
        Mr. Raskin. Mr. Chair, thank you. Director Squires, how did
    you come to file those trademark applications for the Board of
    Peace?
        Mr. Squires. Thank you for the question, Congressman.
        We came to file, I had them filed in response to an
    immediate cybersquatting land grab of the domain name. For
    those who are unaware of the term cybersquatting, it is like
    identity theft.
        Mr. Raskin. Sure. Were you acting as a lawyer for the Board
    of Peace at that point?
        Mr. Squires. No.
        Mr. Raskin. In what capacity were you acting?
        Mr. Squires. Well, the Board of Peace, this is exactly the
    issue. I am glad to have the opportunity to explain it and
    respond to your letter.
        Mr. Raskin. Please.
        Mr. Squires. The Board of Peace has not yet been formed as
    an international organization. The cybersquatters eight minutes
    into the President's speech announcing it registered the domain
    name. That is--
        Mr. Raskin. Is it a public entity, the Board of Peace, or
    is it a private entity?
        Mr. Squires. At this point I am not sure if it is formed or
    not. We acted as a custodian, so that they could have the
    mark--
        Mr. Raskin. How did you come to act as a custodian for that
    trademark?
        Mr. Squires. Under 35 U.S.C. 3 it is my responsibility to
    advise the President through the Secretary of Commerce on
    matters of national security and all matters of intellectual
    property. That is the--
        Mr. Raskin. The Board of Peace is a public entity, it is a
    governmental organization even though Congress has not created
    it? Is that right?
        Mr. Squires. Sir, I don't know the status of whether it is
    an entity formed or not.
        Mr. Raskin. OK. Well, how did you get involved in it? Did
    the President call you about the cybersquatting incident?
        Mr. Squires. No, the President did not call me. It came up
    through several organizations about the cybersquatting. The
    action needed to be taken to address the harm.
        Mr. Raskin. When you talked about the cybersquatting you
    noted that there were lots of other organizations that were
    already using some variation of Peace Organization, Peace
    Committee, World Peace, and so on; right?
        A dozens of them. I found them this morning just on the way
    in.
        Mr. Squires. Well, again, reference was made to shakedown.
    This was registered, this particular boardofpeace.org. Without
    that you don't have--
        Mr. Raskin. You registered that?
        Mr. Squires. No, no.
        Mr. Raskin. Oh, who registered?
        Mr. Squires. A cybersquatter did. Eight minutes into the
    President's speech.
        Mr. Raskin. Oh, but you don't have to talk about a
    cybersquat-
    ter, there are dozens of other groups that have peace in their
    name; right?
        Well, look, where did your legal authority come from to
    file trademark applications on behalf of this Board of Peace,
    whether it is a public or a private group?
        Mr. Squires. It comes from the combination of 35 U.S.C. 3
    and 35 U.S.C. 2 under the Lanham Act. In your opening
    statement--
        Mr. Raskin. Well, wait. Do you usually act as a custodian
    for the intellectual property rights of other entities or is
    this just for President Trump?
        Mr. Squires. This was to protect the name Board of Peace as
    the entity gets booted up, to act as custodian in a very narrow
    capacity with a bona fide intent to use the name. Then, its
    attempt to use application to be changed forward.
        Mr. Raskin. Who has the bona fide intent to use it?
        Mr. Squires. The USPTO.
        Mr. Raskin. The USPTO is. What are you going to do with it?
        Mr. Squires. In the very limited services that we define
    there, which are fraud prevention, misuse.
        Mr. Raskin. Is that a service you offer to all American
    citizens? In other words, if I am thinking about maybe creating
    a group one day and we might want to have a trademark, and I am
    afraid somebody else has a competing trademark, you will go
    ahead and file the application for me?
        Mr. Squires. My responsibilities are, again, under 35
    U.S.C. 3 to advise the President on matters of national
    security.
        Mr. Raskin. So, this is a matter of national security?
        OK, let me ask you this. You have emphasized today, and
    rightfully so, the importance of people who are applying for
    patents or trademarks to pay a fee, because yours is a fee paid
    office. How much does it cost for someone to seek a trademark?
    When you applied for that trademark for the Board of Peace, how
    much does that cost?
        Mr. Squires. It is, it is not an expensive fee. Depending
    on--
        Mr. Raskin. The website says 350 bucks. Is that right?
        Mr. Squires. Generally, yes.
        Mr. Raskin. It was not expensive. OK. My one of the able
    lawyers on my staff just passed me this, that you filed a
    petition on January 21, 2026, to waive that fee for the Board
    of Peace. Then you granted that petition the very next day,
    which underscores the bizarre conflict of interest you are in,
    now acting both as a representative of the Board of Peace and
    also the Trademark Office that is going to pass on the
    petition.
        Why did you seek a waiver for the $350 for the Board of
    Peace? Why did you grant it?
        Mr. Squires. The waiver was sought under the particulars of
    the intent to use application as the custodial filer. I did not
    grant my own application.
        Mr. Raskin. Well, your signature, as I am reading it you
    filed this on the 21st, and then you approved it on the 22nd.
        Mr. Squires. Well, I would like to see the document to
    which you are referring.
        Mr. Raskin. OK. We will get you those documents. Are you
    saying you would not have approved of it had you seen it?
        Mr. Squires. I am saying I don't recall this particular
    situation.
        Mr. Raskin. OK, but your signature--
        Mr. Squires. I do believe it is in my authority. Yes.
        Mr. Raskin. OK, it was approved by Dan Vavonese but your
    signature is on the petition. I guess--
        Mr. Squires. Yes.
        Mr. Raskin. --well, why did you request that waiver of the
    $350 payment for the Board of Peace?
        Mr. Squires. Again, given that this is going to be an
    international organization and given the situation with intent
    to use and the bona fide limited scope that we had, I made that
    petition just as I signed the application. It was granted by
    someone else.
        Mr. Raskin. OK. Then, finally, you know that the, the
    Lanham Act forbids anyone from submitting an application unless
    they are the owner of the mark or the legal representative of
    the mark. Were you representing yourself as the owner of the
    mark or the legal representative when you filed the petition?
        Mr. Squires. No. We are very clear it is on a custodial
    basis. We are not the owners. It will be transferred to the
    entity once it is formed.
        Mr. Raskin. OK. Well, you are listed as the owner on the
    petition both for the waiver and also the application.
        That is the way the Lanham Act works. In other words, if I
    am asking for your advice could I get another company to apply
    for a trademark for me? What is the answer to that?
        Mr. Squires. If you are the President of the United States,
    yes.
        Mr. Raskin. The President of the United States could have
    somebody else--the President of the United States has tons of
    trademarks. You are saying that he doesn't have to submit
    himself? Where does it say in the Lanham Act that the President
    of the United States is exempt from the general rule that you
    cannot have a third party seeking an application on your
    behalf?
        Mr. Squires. I am, again, directing you back to U.S.C. 35,
    35 U.S.C. 3, where it is the Under Secretary of Commerce and
    Director of the Patent Office shall advise the President on
    national and certain international intellectual property
    policies.
        Mr. Raskin. Those are matters of public policy, they are
    not questions of representing the President before the
    Trademark Office which, obviously, creates a stark conflict of
    interest.
        Mr. Issa. The gentleman's time has expired, but you may
    answer.
        Mr. Squires. Sir, I was not representing the President of
    the United States in this regard, I was representing a--filing
    an application to address a cybersquatting issue under my
    authority under 35 U.S.C.
        Mr. Raskin. I appreciate it. Thank you. I yield back, Mr.
    Chair.
        Mr. Issa. I thank the gentleman. Just one question for
    understanding. The gentleman from Maryland mentioned a number
    of other uses for peace and so on. Under both common law and
    any marks they have, those marks are previous, superior, and
    are not eclipsed by this new mark. Is that correct to your
    understanding?
        Mr. Squires. That is my understanding. It was a very narrow
    filing for the logo and the, and the name. Again, it was an
    intent to use application. If nothing happens, it expires of
    its own weight. It just goes away.
        Mr. Issa. One thing, because I am a little new to
    government, but you are, you are in the Article II, you are in
    the government that is headed by one person, the President;
    right? No matter how many pockets you have in your suit it is
    still one suit jacket; right?
        The $350, if it had to be paid for by the government, can
    you tell me the difference between all these different places
    in the government that would transfer $350 to another pocket of
    the same suit? Because I am just, I am not quite understanding
    the gentleman's question.
        Mr. Raskin. Mr. Chair, are you saying that it is a
    governmental body in that case?
        Mr. Issa. Well, it appears as though the President of the
    United States made a statement that either it would be a
    Government entity or, like Voice of America and many of these
    other entities that are government-sponsored, it would be
    government-sponsored. There has been no assertion that this was
    a for-profit private entity or anything of the sort.
        Mr. Raskin. The Voice of America doesn't get a billion
    dollars from the Saudi Government. That would make it an
    illegal, unconstitutional foreign emolument. This is just
    getting more confusing by the moment here.
        Mr. Issa. I share with the Ranking Member questions of
    other moneys that are not necessarily associated today. I am,
    quite candidly, willing to participate in all the fact finding
    on anything related to money.
        The gentleman came here with tremendous expertise. Your
    line of questioning was very good as to how at times the
    Trademark Office does in fact institute protection against
    cybersquatting. You were also very helpful in delineating the
    fact that there are these entities that aren't quite
    government, that are government, that have trademarks, one of
    which is the Voice of America and many other highly recognized
    U.S. entities which are solely funded by the Federal
    Government.
        It has been productive. I will join with you to continue
    looking at questions of moneys from other governments, whether
    or not they are coming to the government or whether they are
    going to a third party because I think that is fair area. I
    just don't think it is within the gentleman's expertise.
        Mr. Raskin. All right. Well, I would welcome a thorough
    ventilation of all these issues just so--
        Mr. Issa. Like we don't go down a dark road here. Thank
    you.
        Mr. Raskin. Thank you.
        Mr. Issa. With that, we go to the gentleman from Virginia,
    Mr. Cline.
        Mr. Cline. Thank you, Mr. Chair. Director Squires, third-
    party litigation funding allows outside investors, including
    foreign entities and sovereign wealth funds, to finance patent
    litigation in exchange for a share of any recovery with no
    disclosure to the court or defendant.
        You called foreign-backed litigation funding at the PTAB
    unacceptable during your confirmation and committed to stronger
    transparency requirements. This is an important concern. When
    disputes are pushed out of PTAB and into District Court,
    discovery becomes a weapon.
        Yangtze Memory Technologies, which is on the BIS entity
    list as a national security threat, is currently suing Micron
    and has used discovery to compel disclosure of highly sensitive
    trade secrets.
        Does the USPTO support transparency requirements for third
    party litigation funding? What role should the office play in
    preventing foreign adversaries from using opacity in litigation
    funding to drive American companies into discovery that exposes
    sensitive technology?
        Mr. Squires. Thank you for the question, Congressman.
        In terms of litigation funding and disclosure for District
    Courts, those would be my understanding would be handled by
    local rules and requirements.
        For the PTAB what we did is imposed real party interest
    disclosure requirements by reinstituting the Corning Optical
    precedent. Then, ensuring when real parties are identified and
    they are foreign sovereigns or State actors they are not
    allowed to participate in the PTAB because they are not
    persons, just as the U.S. Government is not considered a person
    in the PTAB.
        RPIs are critically important. They go to issues of
    estoppel, they go to issues of fairness, and they also go to
    issues where foreign sovereigns or State actors under--try to
    undermine the U.S. patent holders and the system.
        Mr. Cline. OK. Nonpracticing entity District Court filings
    rose 18.7 percent in 2025, two consecutive years of increases
    before your proposed IPR restrictions have even taken effect.
        Consider who benefits from that. Four of the top five U.S.
    patent recipients in 2025 were foreign entities. Huawei, which
    previously sued Verizon for over a billion dollars, has
    transferred nearly 1,000 U.S. patents to assertion entities
    targeting American companies. BOE, Tencent, and CATL, all
    formerly designated by the Department of War as Chinese
    military companies, are also among the top recipients.
        What evidence does the USPTO have that the proposed
    rulemaking will not further drive-up patent litigation costs
    for American innovators and manufacturers?
        Mr. Squires. Thank you for the question. Again, we are
    working through all the comments and rules, including the
    justifications that we are required to under the AIA such as
    economic theft.
        To your question, at the PTAB we have considerations which
    was just instituted in the guidelines for people to tell their
    story if they are American manufacturers and they are being
    pursued by foreign entities or these holders of patents
    entities in particular, foreign entities. Tell us your story
    and we can make sure that this is considered in instituting a
    proceeding or not instituting a proceeding. It works both ways.
        We are trying to look at the real-world picture on the
    ground and take that into account when a request comes for a
    proceeding to be instituted or not.
        Mr. Cline. OK. Switching to trademarks, you may know I am
    the Cochair of the Trademark, the congressional Trademark
    Caucus. I hear concerns from American brand owners about the
    growing backlog in processing trademark applications and the
    impact on the ability to secure foreign trademark priority
    rights under the Paris Convention.
        As I understand it, to benefit from a U.S. filing date
    under the Paris Convention an applicant has to file a foreign
    trademark application within six months of the U.S. filing date
    forwarded by a PTO-issued certified copy of the U.S.
    application.
        I am told the PTO's stated goal is to issue such certified
    copies within seven days, but that current processing times
    exceed three months. That appears to be getting worse.
        I am concerned that the inability of the PTO to timely
    process these requests threaten to jeopardize the ability of
    American trademark owners to claim and defend foreign trademark
    priority rights.
        Can you tell us what you are doing to reverse the
    disturbing trajectory of this backlog, and to ensure that the
    ability of American companies to protect their trademarks
    against foreign competitors is not jeopardized by staffing
    issues at the PTO?
        Mr. Squires. Thank you for the question. That has been a
    concern. It has been unacceptable as the backlog has increased.
    One area we have had, as I understand, and we looked into it,
    data processing issues that have been remedied. I have invited
    people to send me the request for the copies directly, and they
    have done so.
        The word has gotten out among paralegals that there is
    redress here. I get half a dozen emails a week which we get
    through.
        Longer term we just announced--and I think you will be
    happy with this--our international search classification tool
    which takes five months' worth of work, normally leading up to
    that six, down to five seconds, literally.
        These are going to be the sort of first agentic entry to
    equip our examiners with these types of tools. International
    search classification is just a bear, especially if you have
    pseudo marks and the like. The future looks very bright there.
    We have to make sure our house is in order and our own blocking
    and tackling and getting certificates out.
        Mr. Cline. Thank you very much.
        Mr. Issa. Would the gentleman yield for just a second?
        Mr. Cline. I yield.
        Mr. Issa. If I could clarify or have you clarified what you
    answered the gentleman. You talked about some of these
    protections, rules, and so on. You seem to be talking both
    about defendants and plaintiffs.
        Some of the things that I heard which sounded like
    protections, in fact are limitations on the defendant in PTAB
    proceedings.
        Mr. Squires. Again, the--
        Mr. Issa. American manufacturing and foreign entity and the
    like were the question.
        Mr. Squires. If there is a petition filed against a patent
    holder in the PTAB, and part of the complexion there is that
    this is an action against a U.S. manufacturer, we want to know
    that. Tell us that and that will go to the discretionary
    component of the decision whether to institute or not.
        Mr. Issa. I understand. It is just that it also works for
    Huawei effectively when they have a strong manufacturer and
    they say, well, here it is, but it is still a Huawei patent.
        Mr. Massie. Point of order. How many times does the Chair
    get to take five minutes?
        Mr. Issa. I only asked the gentleman to clarify what he had
    answered to the other gentleman. I appreciate you can take it
    up at a future time if Mr. Massie is in a hurry.
        With that, I go to the gentlelady from California for her
    questions.
        Ms. Lofgren. Thank you, Mr. Chair and Director Squires.
    Under prior practice, decisions were made by the PTAB. When an
    IPR petition was filed a three-member panel of expert
    administrative patent judges decided whether to institute a
    review under the AIA's reasonably likelihood standard.
        You first centralized power over discretionary denials in
    the director in March 2025. Then last October 17th, your
    memoranda went further by consolidating authority over
    institution decisions in the director as well.
        As you know, we only have five minutes here, so these two
    questions really have either a yes or no answer.
        Do you intend to continue this policy instead of restoring
    that responsibility to a three-member PTAB panel of expert
    judges? Would that be a yes or a no?
        Mr. Squires. I can give you a maybe.
        Ms. Lofgren. OK. We would like to know further if you
    ponder this, because under your current policy I am wondering
    whether you consult with at least three PTAB judges before
    making an institutional decision?
        Mr. Squires. Yes.
        Ms. Lofgren. OK. That is helpful. What concerns me is not
    just the centralization of the authority and, therefore,
    potential for abuse. It is that the office now regularly denies
    requests through PTAB review of patents that may have been
    improperly granted, without giving any written explanation.
        I have an example. This is a denial. It is two pages, and
    it just says no. Right? Here is the way it used to be, which is
    yes or no and the reasoning. People knew where they stood.
        I am just sort of wondering, under the standard operating
    procedure manual it says the significant writing assignments in
    AIA proceedings include decisions on institutions. It goes on
    and on.
        The expectation is that there will be a detailed
    explanation for whatever the decision is. Now, I am just
    wondering in these bare bones summary denials where someone
    would find the reasoning in the arguments raised by
    petitioners. Do you think that practice is really consistent
    with principles of transparency and fairness?
        Mr. Squires. I do think so. There is a body of over 600
    decisions that have been issued. Where there is matters of
    where we have something to say, or if a story needs to be told,
    we do issue those decisions and opinions so to provide
    guidance.
        The Revvo line of cases has been one where there have been
    inconsistent claims offered from District Court. There is, in
    fact, unsettled expectations, it has worked the other way where
    a patent holder had their patent lapse before it was served
    against the defendant.
        Ms. Lofgren. I would just like to ask unanimous consent,
    Mr. Chair, to put into the record a letter from the Alliance
    for Automotive Innovation, the Business Software Alliance, the
    High Tech Inventors Alliance, United for Patent Reform, SIIA,
    and U.S. Made, along with a study that really shows their
    dissatisfaction with the current practice.
        Both on the winning end and the losing end, if you don't
    have insight into the reasoning of the decision it is
    problematic.
        Mr. Issa. Without objection, so ordered.
        Ms. Lofgren. I would like to just recall creating the
    patent law was, the America Invents Act took a long time. It
    was not easy. I participated in it. Some other Members of the
    Committee did as well.
        The idea was really straightforward: High quality patents
    drive innovation and growth; low quality over broad patents do
    the opposite, they drive up prices, they impede competition,
    they expose businesses to abusive litigation. We designed IPR
    as a streamlined, expert-driven mechanism that attacks the
    patents that should never have been granted to begin with. It
    ensured the kind of efficient, targeted administrative
    correction that good government looks like.
        Now, if there are flaws with that system, we are willing to
    address those flaws and work through them. The agency's
    institution rate has lapsed, not because the petitions lack
    merit but there are barriers that are being applied that
    Congress never authorized. Just as never, Congress never
    envisioned that the IPR process that we crafted and are willing
    to work on further if it is flawed, would be supplanted by the
    director just seizing control of the whole operation.
        I see my time has expired. You have discretionarily denied
    64 percent of all petitions, and the institution rate sits at
    about 20 percent.
        Mr. Chair, although my time has expired, I am looking
    forward to delving into this further because I do think there
    is a problem here, not only in the administration of the office
    but the lack of enthusiasm for the process among innovators in
    America.
        With that, I yield back my time.
        Mr. Issa. I thank the gentlelady. The gentlelady yields
    back. We now go to the gentleman from Texas for five minutes.
        Mr. Gooden. Thank you, Mr. Chair. Unlike everyone before
    me, I will be under the time limit.
        Director Squires, I would like to inquire about an IPR that
    was recently brought to my attention. This IPR concerns a
    challenge against a patent owned by VLSI on behalf of NXP,
    which is a semiconductor based in Texas.
        Based on the record, it seems this case might have been
    mishandled by the previous administration. Does this ring a
    bell?
        Mr. Squires. I have read in the papers about that.
        Mr. Gooden. OK, I will keep going. Under this IPR, VLSI's
    patent was challenged by two entities called OpenSky and PQA
    continues to be tied up in proceedings. These entities were
    formed around the same time VLSI won a jury trial before a U.S.
    District Court in Texas regarding the same patent that OpenSky
    and PQA challenged later.
        PQA and OpenSky's founders and backers remain largely
    unknown to the public. Director Vidal found this to be an abuse
    of process, but the cases were still allowed to continue. Since
    that Director Vidal is no longer in charge, would you happen to
    know who is behind PQA and OpenSky?
        Mr. Squires. I do not know. That is one of the reasons we
    instituted the RPI process.
        Mr. Gooden. Your answer is the same as mine because I don't
    know and neither do anyone I have spoken to. People keen on
    using the American patent system are worried about the safety
    of their patents, especially those in Texas.
        If unknown entities backed by unknown individuals start
    emerging out of thin air and tying up patents in endless
    proceedings it is not a good look for transparency and
    reliability of the American patent system. I believe you have
    been acting in the interests of promoting American innovation.
    I thank you for that.
        We would really appreciate it if you would look into this,
    take appropriate action, and get back to me with the answers I
    can't seem to find.
        Mr. Squires. Thank you for the question. We will look into
    it and be happy to speak further.
        Mr. Gooden. Thank you. We have also heard concerns from a
    lot of folks in the patent process about the lack of
    predictability between administrations. Is there something
    Congress can do or should do to help with transitions in the
    future?
        Mr. Squires. Well, one of the things that would be of great
    value would be to continue with the fee setting authority and
    fee collection authority, which will be expiring in September.
    We especially saw that to the dramatic benefit of our
    stakeholders this year with the government shutdown of 43 days.
        The Patent Office did not shut down. We operated on
    reserves because we were able to do so, running like a business
    from this fee setting authority. My No. 1 ask would be for that
    to continue.
        Mr. Gooden. Noted and thank you. Thank you for all the work
    you are doing. I yield back. I will yield to Mr. Massie the
    balance of my time.
        Mr. Massie. I thank the gentleman. Can you talk about how
    important it is that patent holders are able to get injunctions
    that the relief that comes after years of finally recovering
    some kind of royalty isn't enough to dissuade infringers?
        Mr. Squires. Thank you for the question. It is very
    important. We have said so now on three instances. We formed a
    Standards Essential Patent Working Group. Before that we have
    come in three cases as partners with the Department of Justice,
    or co-filer with the Department of Justice Antitrust Division
    regarding the injunctive factors.
        We intend to use our office as a policy voice for what is
    important for strong patents. To not only be Born Strong but to
    remain strong because they can get injunctive relief across all
    the factors.
        We filed in the ITC. We filed in District Court. I will
    expect to see us there to articulate the reasons why strong
    patents and strong injunctions for valid patents are important.
        Mr. Massie. Isn't it true that the situation we have now is
    the result of court rulings and not congressional action? Is
    there something that Congress could do to restore injunctive
    relief?
        Mr. Squires. We are aware, certainly, of and have looked
    into the provisions of the RESTORE Act, as I understand it is
    called, which would rebalance injunctive relief considerations.
    It has been hodgepodge in District Court and that has been part
    of the problem. Especially if you are in an arm's length
    negotiation and there is the holdout problem as it is called in
    Standards Essential patents.
        Having predictability would have a great market effect. The
    provisions, like those in the RESTORE Act, is something that
    only Congress can take up. We would be willing to have further
    dialogs as to what that might look like.
        Mr. Massie. Thank you. I yield back.
        Mr. Issa. Would the gentleman further yield, Mr. Gooden?
        Mr. Gooden. Yes.
        Mr. Issa. Just one question very quickly. You said a
    hodgepodge in District Court. Isn't the eBay decision a high
    court decision?
        Mr. Squires. Yes, it is. The--
        Mr. Issa. The high court has ruled on injunctive relief. We
    live under the guideline produced in interpretation of law and
    the Constitution; right?
        Mr. Squires. The eBay case sets forth the factors which the
    District Courts have to apply. They have applied them in a
    hodgepodge fashion.
        Mr. Issa. Well, that is why we like PTAB. With that, I
    recognize the gentlelady from North Carolina for five minutes.
        Ms. Ross. Thank you, Mr. Chair and Ranking Member Johnson,
    for organizing this hearing. Thank you, Director Squires, both
    for your service and your testimony today.
        I am proud to represent North Carolina's Research Triangle,
    home to companies and startups that have built thriving
    businesses from a single idea or an invention. This type of
    innovation and growth couldn't happen without strong
    intellectual property protections that we enjoy here in the
    United States and that came from our Constitution.
        Yet, small inventors are having a much harder time
    defending their patents. The PTAB allows, as we have heard,
    multiple challenges even from the same party to a patent's
    validity, forcing the patent holder to defend their invention
    again and again, often until the patent holder gives up and
    settles, mostly because they don't have the resources.
        Not only that, but challengers often file parallel suits
    against the patent's validity in Federal District Court, which
    we have heard about, hedging their bets and hoping to get a
    finding of invalidity in one venue or the other. Of course, the
    challengers have more money to get to do that.
        As we know and we have discussed, the USPTO filed a Notice
    of Proposed Rulemaking last fall to help address this problem
    of repeated challenges to a patent's validity. I really
    appreciate Mr. Massie's comments on this earlier in this
    hearing.
        I just want you from the perspective of a small inventor to
    tell us what you have heard about the difficulty of defending
    their patent in different venues or having multiple parties
    come after them?
        Mr. Squires. Thank you for the question. Before I took
    office, I represented startups, small entities, and small
    inventors for about 10 years. I may be the only director who
    has had that direct experience.
        It has been a terrible problem, as you have referenced.
    Sometimes we have seen as many as seven petitions keep coming
    in waves. That is why under the NPRM we are saying that we have
    to have some parity, quiet title finally. If you want to still
    have multiple filings or multiple parties, join it. One join
    and done.
        To your question on the individual small entities'
    experience, it is a killer. People are not able to become I am
    aware of a funny little patent emanating out of Stanford in
    1999, the PageRank patent. That is now, of course, Google.
        Where our next Googles are coming from, where our next big
    companies and big tech are coming from start in someone's
    garage, and they are small inventors and they need to have the
    same respect as afforded everybody in the system.
        Ms. Ross. Great. Well, I am a cosponsor of the bipartisan,
    bicameral PREVAIL Act along with Congressman Moran from Texas,
    and then, of course, Senator Tillis and Senator Coons. We are
    hoping that bill will get a hearing. Then Congress can have its
    say.
        I do want to ask a question that was mentioned in some of
    the opening statements.
        As we know, there have been reports that the USPTO and the
    Department of Commerce are considering plans to institute a
    value-based patent fee. Last fall I led a bipartisan effort
    with several Members of this Subcommittee to Secretary Lutnick
    urging the Department not to move ahead with the patent tax
    because, again, I believe it will hurt small inventors more.
        Although Secretary Lutnick recently said in a Senate
    hearing that this was not a plan, his answer appeared to leave
    open the possibility of extracting more value from patents by
    other means.
        At any point in your tenure at Commerce or with PTO have
    you considered this value-based patent tax? How would you
    implement it if you did it?
        Mr. Squires. Thank you for the question. I echo Secretary
    Lutnick's statements. He explained how you would do that, how
    you would value that.
        I have never been in those discussions where value had any
    consideration. It is not something that is on the table or even
    could be done.
        Certainly, the Patent Office would not be in the business
    of providing market valuations for people on their patents. We
    are in the business of granting them, making sure they are Born
    Strong, and letting the market work.
        Ms. Ross. Well, thank you. I hope it remains that way. I
    yield back.
        Mr. Issa. I thank the gentlelady. I now recognize the
    gentlelady from Florida for five minutes.
        Mr. Massie. I have an unanimous consent.
        Mr. Issa. The gentleman is recognized for a unanimous
    consent.
        Mr. Massie. I ask unanimous consent to submit a five-page
    letter from a U.S. inventor to the record.
        Mr. Issa. Without objection, so ordered.
        Mr. Massie. Thank you.
        Mr. Issa. Now, the gentlelady may proceed.
        Ms. Lee. Thank you, Mr. Chair. Director Squires, thank you
    for being here with us today.
        The work of the U.S. Patent and Trademark Office plays such
    a critical role in supporting innovation, protecting
    intellectual property, and ensuring our patent system functions
    effectively for businesses and inventors. I appreciate your
    time with us here today.
        I continue to hear from retailers and manufacturers, and
    Main Street businesses that they are being sued for widely used
    off-the-shelf technology like Wi-Fi systems or point of sale
    devices, and being forced into settlements because the expense
    associated with litigating in our Article III courts is simply
    too high.
        How do you respond to concerns that limiting access to PTAB
    is increasing litigation costs and forcing small businesses
    into these settlements?
        Mr. Squires. Thank you for the question. The high cost of
    litigation is, of course, a concern. That is why under the AIA
    IPRs were designed as an alternative to litigation, lower cost
    litigation. The IPR is not the only game in town. People also
    tend to conflate PTAB, limiting PTAB. That is not what is
    intending to happen, that is not what we were intending with
    the rule. There is always the avenue of reexamination. We would
    love to see people utilize PGRs more effectively, sooner in
    time, clearer title.
        In general, we preferred a more laid open model where you
    take your shot but take it now and take it once and for all. As
    I said, instead of one and done, people need to think about as
    one join and done. There is the ability for collective action
    and there is also, then, of course, District Court. There is at
    least three alternatives available under the PTAB.
        Ms. Lee. One of the other things I think is important on
    that front in trying to minimize that down the road litigation
    you touched on in your opening testimony. That really is the
    quality of the initial examination.
        I want to hear more about what you are doing with
    artificial intelligence and how AI is being used on the initial
    patent examination.
        Particularly I would like to hear you have emphasized
    human-in-the-loop approach using AI but also having humans
    involved. Tell us a little bit more about that and what
    safeguards do you have in place to ensure that using AI tools
    is not introducing any sort of bias or narrowing the scope of
    prior art consideration?
        Mr. Squires. Thank you for the question. It has multiple
    touch points, of course, in the office. I will give you one
    example.
        We have launched what we call ASAP!, an AI-generated pilot
    program which takes the prior art, gets it to the applicant
    before the first office action. Literally, the examiners and
    the applicant are on the same page as the prior art beforehand.
        They have some agency as to what they want to do. They can
    make an amendment. They can marshal their arguments or decide
    this is not going to go well, we are not going to waste our
    resources, and refile with something direct to their resources
    to something that might be more productive.
        We are trying to get information in the hands of people at
    soon as possible point where they can do something with it and
    have people be on the same page.
        On the eligibility side we have formed a 101-working group.
    We had started to deploy AI agents to assist in some of the
    areas where there are the thornier issues to decide on 101 and
    to give some assistance to the examiners. Always it will be a
    human in the loop.
        The larger vision is, as I mentioned in my opening
    statement, to have the examiners be able to examine a cadre of
    agents, deploy them as they see fit to their cases, and be able
    to do thousands of hours in hundreds of hours' time but still
    remain expert in their field, and be just as equipped as the
    private sector applications coming in to meet the examination
    challenge.
        Ms. Lee. Thank you, Director. I yield the balance of my
    time to the Chair.
        Mr. Issa. I thank the gentlelady. A couple of quick things.
        You keep talking about these off-ramps, these other
    opportunities. Just between two people who have dealt with
    patents for a long time, an ex parte reexamination is exactly
    that, it is the inventor and an examiner, sometimes the same
    examiner, sometimes someone different, talking about whether or
    not some third-party allegation is correct or not.
        It is a one-sided process that favors dramatically the same
    or substantially same patent. It is not an even playing field.
    The PTAB exists because ex parte was ending almost always
    successfully favoring the reinstatement or the continuation of
    a patent compared to the outcome of PTAB. Isn't that true?
        It is not a place that really if you have been accused it
    makes any sense to throw it and hope for the best without
    seeing anything until it comes out?
        Mr. Squires. That may have been the case in the past with
    reexamination. I don't believe it is that case now. In fact, it
    has become a quicker and almost the same outcome experience as
    the PTAB has been.
        Mr. Issa. I appreciate that. I would love to have a longer
    dialog, but I don't own the time. The gentlelady from
    California is recognized for five minutes.
        Ms. Kamlager-Dove. Thank you, Mr. Chair. Director Squires,
    before we get into your recent policies, I just want to make
    sure that we are grounded in the basics because much of this
    debate seems to move past them too quickly.
        To my understanding IPR is an administrative process
    allowing parties to ask the Patent Trial and Appeal Board to
    reexamine whether an already-issued patent is valid. It was
    created to provide a faster, more cost-effective alternative to
    litigating patent validity in Federal court, recognizing that
    initial patent review can be imperfect.
        Instituting a review means the board agrees there is enough
    merit to examine the challenge, while denying institution means
    the challenge does not move forward. Is that correct?
        Mr. Squires. In general, the IPR process has two
    components, one discretionary and one merits.
        Ms. Kamlager-Dove. Right. OK. At the end of the day, it is
    ultimately about protecting U.S. companies, inventors in those
    parents? That is what we are here to.
        Mr. Squires. We are trying to make sure where there has
    been, especially when there has been error in examination--
        Ms. Kamlager-Dove. Right.
        Mr. Squires. --there is redress available.
        Ms. Kamlager-Dove. OK. There are concerns raised that IPR
    may disproportionately impact individual inventors and small
    entities. There has been discussion about nonpracticing
    entities, entities that assert patents but do not manufacture a
    product, and their role in patent litigation, including some
    that may have foreign ownership or backing.
        Does the USPTO distinguish between different types of
    patent holders when evaluating how PTAB policies affect
    stakeholders?
        Mr. Squires. It is certainly a discretionary consideration
    that we invite people to tell their story. As I said, we just
    recently announced guidance that for American manufacturers, or
    if they are patent holders and there are petitions filed
    against us, tell us about that. We want to know.
        Conversely, if they are State actors or foreign sovereigns
    they can't be in PTAB under the recent return mail application
    to foreign sovereigns or State actors. We need to know who is
    there and what their particular situation is.
        Also, with the guidance on the manufacturing we reference
    small businesses. We want to know what the dynamic of whatever
    side you are on is before instituting proceedings.
        Ms. Kamlager-Dove. OK. You are saying if there are
    sovereigns, if there are foreign actors, you do want to know?
        Mr. Squires. Well, we need to know because they aren't
    allowed any feedback.
        Ms. Kamlager-Dove. Yes. OK. That means that you also have
    collected this data. You have done data collection on this so
    you know?
        Mr. Squires. There is a real party-in-interest requirement.
        Ms. Kamlager-Dove. Uh-huh.
        Mr. Squires. The RPIs have to be identified at the time of
    filing. That is a disclosure.
        It can be raised by the patent holder in response to a
    petition, and so it's a disclosure type process. We do have
    data on the number of foreign State actors who collectively
    from foreign countries who have appeared in PTAB historically.
    If you aggregate them, they would rank No. 4.
        Ms. Kamlager-Dove. OK. If I asked you to provide to this
    Committee a breakdown of that data, so, broken down by entity
    type, domestic versus foreign ownership, whether the patent
    holder manufactures anything, you would be able to do that?
        Mr. Squires. I don't know the extent to what granularity we
    have.
        Ms. Kamlager-Dove. Uh-huh.
        Mr. Squires. I can provide you with a list of who the
    filers are, yes.
        Ms. Kamlager-Dove. All right. Well, that would be helpful
    because I think the question is, are different entities treated
    differently? Small versus big is always going to be an issue.
    When there is also concern that a company has foreign backing,
    for me that also raises national security concerns; right?
        I wouldn't want a Huawei, for example, getting in the mix
    and playing a role in seeking or holding a patent that should
    be for a U.S. inventor or company.
        Mr. Squires. I understand. We are happy to work with your
    office. I would direct your attention to the Corning Optical
    memo that I issued, which did have a listing of IPR petitioners
    in aggregate by IPR petition.
        Ms. Kamlager-Dove. OK, great. We are on the record as
    saying we are requesting that information. We would love it for
    you to be able to share that with the Committee.
        Mr. Squires. Thank you.
        Ms. Kamlager-Dove. I do have--I am sorry.
        Mr. Issa. Do you have an unanimous consent?
        Ms. Kamlager-Dove. Yes, I do, Chair. Ask unanimous consent
    to enter into the record, ``Trump appointees are hijacking the
    patent system.'' This is dated May 2025 prospect.
        The next one, enter into the record ``Trump's PTO Pick's
    Fortress Ties Signal Base Tech Patent Fights.''
        Mr. Issa. So ordered.
        Ms. Kamlager-Dove. Without objection. Thank you.
        Mr. Issa. At this time, I will also put into the record by
    unanimous consent a copy of the docket for the Patent and
    Trademark Office, the revised proposed rules that we have been
    alluding to.
        Additionally, a number of letters. I will ask them to be
    placed en bloc which they do include, but not limited to,
    patents for affordable drugs, general action patent, Crypto
    Counsel on Innovation, and a number of others.
        Without objection, so ordered. We now go to the gentleman
    from South Carolina for his five minutes.
        Mr. Johnson. Mr. Chair, I have a unanimous consent. I would
    like to enter into the record a letter from the Counsel for
    Innovation Promotion, dated March 24, 2026, addressed to
    yourself and me regarding this hearing.
        Mr. Issa. Without objection, so ordered. The very patient
    gentleman from South Carolina is recognized.
        Mr. Fry. Thank you, Mr. Chair. Director, thank you for
    being here. The PPAC and TTAC have served as effective vehicles
    for the private sector subject matter experts to offer
    specialized guidance to the PTO. I would like to commend you
    and Secretary Lutnick for appointing new members to these
    bodies last fall.
        When do you anticipate the remaining vacancies to be filled
    and the Committees will reconstitute and begin their work?
        Mr. Squires. Thank you for the question. Very soon. As we
    have seen both on the PPAC and TTAC side there is really an
    all-star roster. We just extended an offer last night to the
    individual mentor which is the statutorily required person that
    crystalized everything. We are hopeful very soon.
        Mr. Fry. Great. Thank you for that. I am going to move on
    to a separate issue on U.S. research and development.
        Obviously, we are competing with China on any number of
    things across many fields: Medicine, telecommunications,
    manufacturing, and emerging technologies. In the context of
    patents, how do China and foreign competitors undermine our
    system in your view, very briefly?
        Mr. Squires. As brief as I can. In several ways. One is
    known as flooding the zone. We have seen a lot of low-quality
    applications in different areas. Others are fraudulent filings
    which we have deployed some AI tools and identified.
        As I said, we have moved, especially on the trademark
    register, and tens of thousands of fraudulent applications. The
    third arrow in our quiver that we just announced is a rule that
    you must be a U.S. practitioner before the Patent Office and to
    file papers. Accountability is, of course, important. Those are
    ways we are trying to address these issues.
        Mr. Fry. Regarding pharmaceuticals, what steps has your
    office taken or plans to take to ensure that the U.S. remains a
    global leader in pharmaceutical innovation?
        Mr. Squires. Again, our No. 1 goal is to have patents Born
    Strong, make sure they receive rigorous and thorough
    examination, and get to market in a timely manner.
        Mr. Fry. Switching gears again, on the IPR, we have talked
    about that a lot today, how is the office thinking about
    striking the right balance related to IPR, ensuring that
    manufacturers and strategic industries can effectively defend
    against questionable patents while also preserving the strong
    protections in access for small businesses, startups, and
    independent ventures?
        Mr. Squires. Thank you for the question. Yes, it is,
    balance is the key word. It is a unitary system. I like to quip
    sometimes that means that someone is always unhappy.
    Nevertheless, we are trying to strike the balance, especially
    on the discretionary side, as I mentioned, where there are
    small business factors or manufacturing, it cuts both ways.
    Tell us your story.
        We even had issues where things that have been
    controversial, like I said, all expectations cut both ways.
    There have been assertions where patents have lapsed and then
    come into being, or licenses have been issued against the
    expectations, and those get taken into account whether to
    institute or not.
        Mr. Fry. Thank you for that. You would agree that China--
    you said flood the zone earlier--so you would agree with me
    that nation-states like China challenge current patents or
    trademarks pretty frequently. Is that fair to say?
        Mr. Squires. They have. The new precedent will end that
    process.
        Mr. Fry. OK. How do we deal with domestic companies that do
    that?
        I will give you an example. The Monster Energy drink is
    like the No. 1 filer against existing trademark applications.
    They are far and away above everybody else. They have been
    labeled as a trademark bully of the year by multiple times, at
    least since 2012.
        I don't want to single them out, but I do think it is real
    problematic. Some of these cases are like camping gear because
    the name is 4Monster; a craft brewery company. What I am
    concerned about is big companies with a lot of assets that come
    in and swing at small restaurant owners.
        I guess there was a restaurant in Ohio, it is a shawarma
    restaurant and they are called the Monster Shawarma. Somehow
    that is a patent or a trademark infringement on Monster. It is
    just really aggressive.
        How do we protect small businesses against trolls like
    Monster Energy drinks?
        Mr. Squires. It is a difficult question. The way we protect
    them is, I early access files if they can. Monster, of course,
    has a famous mark and it has a wider berth in courts in
    assertion. A trademark system is a registration system. It
    levers off of use in commerce, often from State rights. They
    register Federal as that.
        The part of the solution is to let people know we are here.
    You should file.
        Mr. Fry. What about Rule 11 sanctions? If they are filing
    frivolous things and they are, obviously, I am not suggesting
    that all their cases are not meritorious, but I am suggesting
    that it is a little bit alarming that they are the No. 1
    company in the country filing against small businesses. They
    are really aggressive in their tactics.
        What I would like to know is if you have got tools in your
    toolbelt to rein some of these practices in. You have already
    got a full docket. How do we rein in companies like that from
    abusing the system?
        Mr. Squires. Again, thank you for the question. On the Rule
    11 basis that is, of course, more of a District Court
    litigation dynamic.
        In terms of utilizing our office in terms of oppositions
    per se, those are something that we do have a TTAB and we do
    have discretion around those types of matters. Again, just like
    the patent side, tell us your story. That is often compelling.
    We are trying to be responsive to the real-world dynamics out
    there.
        Mr. Fry. I appreciate you doing that. This isn't a
    criticism of you or the office. I just want to make sure.
    Obviously, we want to focus on China and the things that they
    are doing to undermine our competitiveness. We also have some
    problems domestically, too, some of these people that abuse the
    system.
        Thank you, Mr. Chair.
        Mr. Issa. That is great. Just one clarification. You used
    the term famous mark. IBM is a famous mark. Ford Motor is a
    famous mark.
        Monster Cable doesn't--Monster drinks don't meet that
    requirement, does it? You used it but I don't think you meant
    to use it.
        Mr. Squires. I have not come to that conclusion, but--
        Mr. Issa. To be a famous mark, the word monster all by
    itself would have a secondary meaning; right?
        Mr. Squires. That would be for a court to decide. Those are
    the parameters, yes.
        Mr. Issa. OK. Monster movie, Monster Cable, which every,
    every professional musician uses and predates Monster drinks, I
    am trying to understand because it is important for this
    hearing.
        Do you want to go back and revise for the record your
    statement that Monster drinks is somehow because it, obviously,
    is a huge difference in how you and the courts deal with that
    allegation; right?
        Mr. Squires. I would revise my saying and say if Monster is
    famous mark then these the types of things that they could do
    in court.
        Mr. Issa. I absolutely agree with you. I have certainly
    seen a blue oval without the word Ford be considered as
    important because it is a famous mark. I appreciate that.
        I now ask unanimous consent en bloc that a number including
    submissions includes from Arnold Ventures, from Entertainment
    Software Association, from the ES--that is the same one. Hang
    on for one second.
        Yes, OK, from the Business Software Alliance. Some of these
    are long. They really have things to say to you, Mr. Secretary.
        From the most famous of all, the CTA, the Consumer
    Technology Association, who opined in the negative, to say the
    least.
        There are too numerous. We will be giving them all to you.
    Without objection, so ordered. I now recognize myself for a
    number of questions.
        Isn't it true that the number of so-called serial
    applications, the repeat use of PTAB, was less than one
    percent? Yet, your rule applies to 100 percent. Is that
    correct? The historical serial attacks using PTAB is less than
    one percent?
        Mr. Squires. Of PTAB actions filed, of IPR actions filed?
        Mr. Issa. Correct, sir.
        Mr. Squires. I don't know the exact figure. I will--
        Mr. Issa. OK. That is the figure that staff on this side
    comes up with. Please give us your answer for the record.
        I have already discussed the ex parte. We are going to
    agree to disagree that you performed anything, simply because
    it is still a process that there are only two people in the
    room and one of them is not the person who submitted the
    documentation, they are not part of the process. That is why it
    is ex parte; correct?
        Mr. Squires. That is correct, ex parte.
        Mr. Issa. OK. I have got a great many items to say the
    least, as you could tell.
        Probably the largest one is currently when I mentioned that
    you have taken cases in which they were discretionarily
    allowed. Process had nearly reached a conclusion and then you
    pulled them back, essentially retroactively, discretionarily
    said they never existed.
        Where do you believe you get that authority?
        Mr. Squires. I don't know which specific cases you are
    referring to or the particular facts of the matter, but the
    Federal Circuit has--
        Mr. Issa. It would be that Interactive Communications is
    one example that we have that you did that to. I cite this
    because when it goes to a final decision, if you want to
    reverse it you can, but there has to be, essentially, it is not
    without paper. When you simply do a denial there is no paper,
    as we have seen today.
        Retroactively doing it makes a huge different because that
    discretionary denial after the facts have been laid out, after
    it has gone through the process and expense then denies the
    individuals either an outcome, possibly reversible, or an
    explanation, which you did not give in that case.
        Mr. Squires. Again, I am not familiar with the underlying
    case even by caption. However, there is wide discretion
    afforded. I believe the use of discretion would include
    changing your mind.
        Mr. Issa. Well, I don't believe you have that discretion
    once a process begins. We would like you to cite, as you did
    very eloquently in others, where you believe in the America
    Invents Act that you believe you have that discretion. Because
    we disagree.
        Additionally, since that discretion is not challengeable in
    court and, yet, the final decision would be, you see where the
    ambiguity is. You have taken away the ability to have
    additional appeal because you have denied them by using the
    discretionary denial after the fact, which takes away their
    ability to actually have any further redress. Correct?
        Mr. Squires. I don't agree with that. The authority is 316-
    35 U.S.C. 316(b). I am required by statute in rulemaking, we
    use this in our decisions for to take into account the economy,
    integrity of the patent system, and the efficient use of
    resources in the discretionary part of our what we do.
        The merits part is different, of course. The discretion
    piece is the one component before you get to the merits.
        Mr. Issa. OK. I am going to use my final time to ask some
    very tough questions. You mentioned Secretary Lutnick having
    500 patents. Is it true that, to your knowledge, that the
    Secretary during his tenure was often a plaintiff suing in
    District Court, directly or indirectly?
        Mr. Squires. I am recalling days of eSpeed and BrokerTec,
    and there were several suits back in the 2000s around that.
        Mr. Issa. It is fair to say that from the monetary
    standpoint he benefited from lawsuits and may or may not have
    an opinion on whether he likes PTAB or not, since he began
    reducing PTAB's effectiveness during his tenure before you came
    onboard directing the acting?
        Have you had any discussions with the Secretary concerning
    any of these policies?
        Mr. Squires. The NPRM that was issued is the Secretary's
    first and signature rule. He was absolutely behind those.
        Mr. Issa. OK. As you sit here today the Secretary has a
    role. Let me ask one last question. To your knowledge has the
    Secretary eliminated all owned assets that could in any way
    benefit from these changes?
        Mr. Squires. I have no knowledge one way or the other.
        Mr. Issa. OK. Would you to the best of your ability ask for
    the record, or perhaps we will ask the Secretary directly by
    subpoena. It is my understanding that he may not have
    eliminated all his holdings. Therefore, there could genuinely
    be a conflict as you, whether right or wrong, whether you have
    authority or not, dismantle PTAB cutting by 80 judges and
    continuing to cut by discretionary, both regular and
    retroactive.
        There is a lot more to ask. I will ask the rest of them for
    the record and ask that you agree to answer them if we send
    them to you within five days?
        That is actually a question we normally ask at the end by
    unanimous consent. If you will agree to take written questions
    from the record from all Members?
        Mr. Squires. I would welcome the chance to interact with
    this body.
        Mr. Issa. Thank you. In conclusion, this has been an
    illustrative hearing. I will say, and this is usually something
    the Minority would be saying, that it has been too long, it
    took too long. We are now over 15 months into an
    Administration, and this is the first visit of a Committee that
    to the Committee of jurisdiction.
        It is our hope that prior to the close of this Congress
    that we will have you back for at least one additional hearing,
    not to repeat the subjects but to followup on them. It is the
    normal practice to have a regular dialog with the Patent and
    Trademark Office. It is my personal hope, and I believe the
    Ranking Member's personal hope, that this dialog will continue
    so that by the time we come to the next one we won't be talking
    in single digits how often we have been able to have
    interactions with your office directly.
        With that, I am required to say this concludes today's
    hearing. I want to thank our witness for appearing before the
    Congress.
        Without objection, all Members will have five legislative
    days to submit additional written questions, and to the
    witness, and additional materials for the record.
        Without objection, we stand adjourned.
        [Whereupon, at 12:08 p.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=119088.

                                     [all]