Chairman Goodlatte: When we look at the array of agencies and departments within the federal government, only a certain number carry out a mission that is explicitly called for in the Constitution. The U.S. Patent and Trademark Office (PTO), at the Department of Commerce, is one such agency. As the PTO carries out its Constitutional mission, we need to conduct appropriate oversight to ensure that our IP laws are being implemented fairly and in line with Congressional intent.

Over the past several years the PTO has been tasked with implementing the America Invents Act (AIA), which was signed into law nearly five years ago on September 16, 2011. I believe that it continues to be imperative for this committee to examine the rules and procedures that the PTO has adopted to implement this important law, in particular the various post grant proceedings called for in the AIA.

The AIA post grant proceedings were designed to create a cost-effective alternative legal forum at the PTO to provide a simpler way to review questions of patentability, thus reducing the costs of frivolous litigation on job creators. These past five years have demonstrated how important the PTO post-grant proceedings are, particularly the Inter Partes Review process. It is important for all patents to be subject to IPR, and maintaining a strong IPR process is paramount to ensuring strong patent quality going forward.

As the PTO continues to operate these proceedings it is important for them to work fairly for both the patent owner and those accused of infringement. Additionally, based upon the statistics and cases being reviewed through the business method transitional program, it continues to be a success and is operating quite well. It will be important for this program to remain strong in the future.

And when it comes to the Courts, we are seeing the Supreme Court hearing a significant number of patent cases. I think that it is important that the PTO have the ability to file amicus briefs in cases that could help improve the patent litigation landscape. And if there are roadblocks that prevent the PTO from filing amicus briefs in important Federal Circuit cases, then that is something that we should look into.

In addition, the PTO is taking steps to improve patent quality internally, with improved prior art searches and clearer guidelines. While I applaud these efforts, I also hope to hear from the Director on the additional steps that the PTO is taking to implement the recommendations made by GAO in the two reports, which I requested, that were issued publicly in July. GAO indicates that the increase in the number of patent infringement lawsuits being filed can be directly attributed to concerns over patent quality.

While the Patent and Trademark Office has taken steps to improve patent quality, GAO found that more work is needed in this area. And when it comes to patent search technology, I would hope that the PTO is modernizing their systems to at the very least make use of the types of search engine technologies widely available today.

I am also concerned about patent examiners that refuse patent applications multiple times, requiring the applicant to make changes to fix the application, only to then refuse the application based on entirely new reasons or prior art. Patent quality is important, but we also need to make sure that for a patent applicant their application is reviewed consistently and that examiners are up front with applicants. It shouldn’t simply be the luck of the draw when it comes to an examiner efficiently reviewing your patent application or dragging it out for years.

On the patent quality front, I strongly believe that the PTO should not simply be in the business of granting patents and leaving the mess created for the courts and Congress to fix, but rather focus on tightening the requirements for patent eligibility to reduce the overall number of weak or overly broad patents from entering the system. This includes patents on so-called incremental innovations that may unnaturally extend monopolies beyond a single patent term and hinder price competition.

There are also some patent applications that have been pending for a very long time. These pre-GATT or “submarine” patent applications have, in some cases, been pending for 30 or 40 years. This long pendency is not the fault of the PTO, and I appreciate that the PTO previously provided Congress with a report detailing these several hundred pending submarine patent applications.

Apart from being a drain on PTO resources, if such applications were to issue as patents today, they would be entitled to a 17-year term and would not expire until the year 2033. Moreover, because these applications have not been published the public has no notice that patents may issue and no opportunity to provide the PTO with prior art that could directly apply to the overly broad claims in many of these applications. And so I call on you to provide Congress with these submarine patent applications immediately.

Patent and Trademark quality are key components of the PTO’s overall mission. But I also want to ensure that the PTO is properly spending the fees that it collects, and that its employees are acting appropriately when it comes to hiring appropriately qualified individuals. I am deeply troubled by the recent Commerce Department Inspector General report on time and attendance abuse within the PTO.

The amount of wasted man-hours that could have been spent reducing the patent backlog is astounding, not to mention the millions of taxpayer dollars that were wasted paying USPTO employees for work they were not doing. I hope to hear more from the Director on the steps being taken to ensure that patents are examined properly, consistently and efficiently.

Intellectual property powers the engine of American innovation and creativity, it creates new jobs and helps grow our economy. I look forward to hearing from Director Lee on these important issues.

Click here to learn more about today’s hearing.

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