Obama’s Man at the USPTO Seeks to Rehab the Agency

David Kappos spent a career at IBM. He started on the lower rungs and eventually rose to VP and assistant general counsel, overseeing the company’s massive patent and trademark portfolios. In that capacity, he sat before Congress and argued for patent reforms. Some of those proposed reforms put him at odds with many in the independent inventor community. And then last year President Obama installed him as the new director of the U.S. Patent and Trademark Office. Kappos says he supports independent inventors and small entities, even though opponents say some of his proposals would do more harm than good. Undeterred by critics, a huge budget shortfall and an increasing backlog of patent applications, Kappos seeks to reshape the world’s busiest intellectual property system.

Jan2010coverOver the next several days, we’re running our extended interview with Kappos, which appears in our January 2010 print edition. Here is Part I:

ID: I thought I’d let this from the USPTO Web site set the tone: “The office continues to deal with a patent application backlog of more than 770,000, long waiting periods for patent review, information technology systems that are regarded as outdated and an application process in need of reform.”

Let’s start with the backlog – is this the new normal?

DK: That’s a great question to start off with. The answer is that it is not going to be the new normal. It’s not acceptable. It’s a result of some good things and some not-so-good things, right?

Americans are extraordinarily innovative. The United States is the world’s innovation destination. If you want to file a patent, you file it here because we have the world’s best innovation system – although there’s lots to do to improve it. So that’s the good news.

My view of the USPTO is we should be able to handle as many patent applications as we’re getting. Our mission is to process those efficiently. So that’s where I start the analysis.

To me, where the analysis goes is that every patent application that we sit on is an American job not being created. And it’s a product that’s not going to market. It’s someone’s life that’s not being saved. It’s growth for our country that’s not being delivered. It’s really unfortunate. Every patent application that we’ve got sitting in here holds that kind of prospect to it, that kind of opportunity.

And so we cannot settle for the backlog to become the status quo. We’re not going to settle for that. It’s our mission to cut that backlog down very very substantially. We’re putting in place the system and the processes in this office to enable us to get to 10 months average pendency to first office action and 20 months average pendency to disposition.

ID: How’d you derive at those numbers?

DK: Those numbers are derived from the applicants’ view. Those numbers are not suited to government’s interest. They’re numbers that best represented what was best for applicants. And what I mean by that is, if you’re an applicant, you don’t want your patent to issue before 18 months publication, because the 18 months publication time is your trade-secret time.

Some innovators will want patents to issue in two or three or four months. My goal is to process applications that fast for those who want them processed that fast. But on average, those innovators need to have the choice to have their patent issue after the 18-month publication period, which is their globally standard trade-secret period.

So that’s sort of a first-limit stop, if you will.

ID: How are you going to get there? What’s the alchemy? You stated the goal, but what are some of the steps you’re going to take?

DK: This is like any hard management problem. You solve it not by doing one thing, but a number of things. There are a number of parts to this solution that have to come together.

The first part to the solution is the count system reform that we’ve already announced. This totally re-levels the playing field, totally changes the ballgame by incentivizing both applicants and examiners to solve issues quickly, not go into RCE (requests for continued examination) process unless they need to, and get decisions that are efficient and high quality.

ID: The union here approved of that.

DK: The union approved that. And I … formally signed an MOU that waived the 30-day notice requirement, thereby putting into effect immediately as many of the provisions of the new count system as I could put into effect other than some ones that require some major changes to our IT systems.

So the count system is done and it’s on its way. We’ve got some IT work to do. Parts of that are done and it’s on its way. We’ll put those into effect over the next several months.

So we have the count system reformulation, that’s No. 1.

Part two is re-engineering of our patent office processes. You wouldn’t believe how complicated our patent processes are. And, yes, they are complicated because the laws are complicated. So there’s a certain level of complexity that’s inherent. But there is complexity beyond that, and we’re looking at taking that out of the system.

There are delay loops built in. There’s multiple processing built in and all the things built in that from the business viewpoint you engineer out of any business process by analyzing, dissecting, understanding the subprocesses and diagramming them all out, determining dependencies and compressing and removing them. This is what I call Business 101.

So that’s the second component, the re-engineering of the internal processes.

The third component is work sharing. And that takes advantage of and takes account of the fact that about 50 percent of the patent applications originate outside the U.S. And a large majority of them are filed in some other patent office first – the EPO, the JPO, China’s patent office, Korea’s patent office, Australia, New Zealand, Canada, you name it.

So we’re focusing on in a very disciplined way now on taking the work sharing initiatives that have proven to be viable and taking them to scale. The patent cooperation treaty is one of them – it’s a wonderful statutory framework. It’s a treaty-based framework for work sharing. And the patent prosecution highway is another one.

Another one I’ll mention that’s really important for independent inventors is encouraging early interviews in patent applications. The reason I mention that is that we have been running an early interview pilot through the USPTO.

The first phase of the pilot concluded. And I was shocked when I reviewed the numbers. The percentage of applicants who receive notices of allowance and incredibly fast issuance of their patents just went through the roof when you use the early, one-on-one consultations with examiners.

Any inventor can seek one. We encourage our examiners to undertake them. You can come in and do them in person, if you can get here in person, and you don’t have to bring an attorney.

But you can bring an attorney and we certainly encourage people to bring their attorneys. And you can do it over the phone. So if there’s an independent inventor located in Berkeley, Calif., or located in Detroit, Mich., you can get on the phone, you can conduct your interview, get to know the examiner, talk about what she or he thinks is important about your invention, what the issues are, exchange viewpoints.

And what you’ll find and your readers will find is an extraordinarily high statistical rate of fast and efficient processing of patent applications that are directly caused by those early interviews. And patents will issue much less expensively and much more quickly and with higher quality.