 Well, good afternoon. My name is Jim Lewis. Welcome to CSIS. We're very lucky today to have with us Michelle Lee the Undersecretary who is responsible for the US Patent and Trademark Office USPTO and with her also a very distinguished panel of experts the format for today is Michelle will give opening remarks and Then the other panelist will join us up here We'll have an interactive session and then we'll turn to you the audience for questions. So I'm looking forward to this event I think we can have a pretty good discussion of a timely topic We have bios available on the website, but I'll do a brief introduction As I said Michelle Lee is the Undersecretary for Commerce for intellectual property and director of the USPTO Which I didn't realize it was 12,000 employees. That's quite a lot. It's grown. It's grown since I've known and she directs its day-to-day operations, right? Her background is really interesting in some ways, and it's kind of unique. It's unique in Washington I'm maybe it's not unique in Silicon Valley because she was at MIT worked at what we would know as CCL the artificial intelligence lab and then was PTO's The first director of PTO's Silicon off Silicon Valley office and it worked at Google fund patent issues and then came back After getting a law degree, which I probably got the order wrong, but you'll just have to live with it came back And is now came back to Washington, East Coast and is now the director of the patent office And I'll introduce the other speakers when we get up, but let me turn it over to Michelle now Thank you Thank you, Jim Good good afternoon everyone and it's a real pleasure to be here to talk about a subject that is extremely important to me And I think to all of you as well, and that's the topic of innovation I would like for us to consider the critical role that the US patent system plays in making the American economy competitive in today's increasingly global innovation economy To give you a little historical perspective It wasn't so long ago that patent law was considered a niche topic The most valuable assets of a company were oftentimes tangible The plants their warehouses and their inventory But today the most valuable assets of our leading companies are the intangible assets The inventions the algorithms the processes the designs and the brands of a company what we like to call intellectual property or IP and Because these tangible assets are more easily copied the Protecting them is important for investment and American competitiveness patents which provide the market exclusivity for a limited period of time are Important form of that protection It's a fact that our economic competitors Recognize appreciate and mention often in my meetings with them Last May I traveled to Beijing China for meetings with the ministers and vice ministers of China's trade patents copyrights and trademark offices But I began my trip With a meeting with one of the most senior officials in the Chinese government and that is vice-premiere Wang Yong During that meeting he emphasized China's desire to strengthen its IP protections and enforcement system Not just because its trading partners were asking for these changes but because China views it as necessary in their desired transformation from a manufacturing based economy of Inventions developed elsewhere to an innovation based economy with technologies developed in China to provide products and services higher up the value chain Put another way China wants an economy more like ours in which Intangible assets play a greater role and to get there They recognize the need for a patent system more like ours From that meeting in China and many other encounters. I've had with leaders around the world I've repeatedly hear that the United States is a global leader when it comes to protecting and enforcing intellectual property rights Despite all of our discussions and debates here at home Our IP system is frequently what many countries look to when designing their own IP systems and enforcement mechanisms And while we can and should take pride in this We also need to need to take heed that as China and other countries seek to move from a Manufacturing based economy to an innovation based economy We will face more and more competition We cannot afford to stand still as other nations seek to catch up We cannot idle as other manufacturing economies seek to move up the value chain And we cannot remain immobile as American innovators seek to compete in the 21st global economy so We are faced with a question Do we leave our patent system as is or do we strive to make it even better at incentivizing and promoting innovation and investment It's worth noting that our patent system itself is quite innovative At its core is the bargain between inventors and the rest of society Embedded in the progress clause of the Constitution The inventor gets an exclusive right for a limited period time to a patented invention in exchange for teaching society How that invention works? That exclusivity makes it easier to secure investment and to commercialize the invention and The public disclosure of how the invention works allows others to begin working on improvements while also letting others know which technologies require licenses or workarounds But the Constitution only provided a very broad level framework for our patent system It left the specifics to Congress to design and to update through legislation and Over the years that legal framework has further developed through courts interpretations of the laws in light of changing circumstances and Administratively such as through the work of the United States Patent and Trademark Office That work continues to this day in an information Economy where patents are increasingly viewed as assets like any other corporate asset. I Saw this firsthand during my time in the private sector in the past Operating companies would build their patent portfolios Sometimes cross-license them with other companies, but they wouldn't often transfer or sell their patent assets Today in contrast, there's a much greater market for patent assets and with that Comes a greater chance that the assets end up in the hands of somebody else With the patent system such as ours that imposes meaningful penalties for infringement We've seen the rise in behavior of purely monetizing the value of a patent bought from another Without contributing anything inventive and without making or providing any product or service This can and has led to increased patent threats And to the extent that patent infringement claims are made merely to coerce cost of defense Settlements without regards for the merits of a claim This is inefficient and costly for everyone involved Particularly small companies and startups who oftentimes have limited financial resources. I Can tell you from my time in the private sector Litigating patent cases is very expensive Defending against patent infringement suit can cost on average depending upon a variety of factors Anywhere from three to five million dollars for a case. That's not very complicated For a venture-backed startup with an initial round of funding of say ten million dollars That's a devastating cost on innovation Taking a patent case to trial can burn through one or even two rounds of funding At a time when a young company should be spending its limited precious amount of money hiring employees investing in research and development or growing its business and Let's be clear. This is not just bad for small businesses and startups. It's bad for all of us for inventors consumers jobs and the American economy and Worst of all it reduces the public's faith in our patent system But there's some good news here and it is this We can change things and we can do it in a way that preserves balance between maintaining strong patent protections that are necessary to incentivize innovation and Ensuring a more efficient and streamlined way of handling patent disputes Achieving this balance is the responsibility shared by all three branches of the government Each has a particular set of competencies that make it better than others in addressing a certain aspect of the issue We strengthen our patent system most effectively when we take advantage of what each branch of government Does best Let me start with the US PTO Which is an administrative agency within the executive branch? charged with examining and issuing patents our Patent examiners have the important duty of examining patent applications and issuing patents when the legal requirements are met and Rejecting applications when they are not Every one of our patent examiners understands that issuing patents Accurately and of clear scope is more important now than ever before So that inventors can better understand the scope of their invention And so that others including competitors can have the information they need to make better informed business Decisions on how to invest their limited research and development dollars and when to take a patent license This is why we launched our enhanced patent quality initiative at the end of last year Soliciting an unprecedented amount of input and feedback from the public on how the agency Can enhance the quality of the patents that it issues Our patent trial appeal board also plays an essential role as a quality check on patents In this case patents that have already issued The board provides a faster and lower cost alternative to district court litigation Where the validity the validity of a patent claim is in question? The board's proceedings also have an important impact at the front end of a patent system By making patent application by making patent applicants think more carefully about pursuing broad claims That may not ultimately be upheld This is good as it ultimately drives down needless Expensive and time-consuming district court litigation while also encouraging applicants to seek patent rights of appropriate scope But the courts still have an important role to play in bringing about needed improvements to the patent system Recent decisions have tightened the standards of clarity for patent claims and made it easier for judges to award Attorneys fees in patent infringement cases These are welcome changes, but we must remember they are also incremental Judges can only decide the cases before them and they can do so only one case at a time and Because the rulings can be appealed all the way up to the Supreme Court Judicial rulings take time to propagate throughout our entire patent system if we want changes that are uniform systemic and timely That save our small businesses and startups the money they need to innovate now Targeted and balanced legislation is needed and of course There are certain changes that can only be achieved via legislation Which is why I'm pleased that the patent reform legislation is moving forward in Congress As I've said before it's important that these changes Reduce the incentives to engage in abusive patent litigation tactics without undermining the strengths of our world-class patent system Targeted and balanced reforms can strengthen our patent system and level the playing field for all innovators By providing increased notice to parties in patent suits about the patent allegedly infringed By providing financial incentives for parties both plaintiffs and defendants to take reasonable positions in litigation By providing opportunities for manufacturers who are best suited and incentivized to step in and Defend in against infringement suits on behalf of their customers and end users and providing increased Transparency of patent ownership information to reduce barriers to patent licensing and patent sales These reforms combined with other changes that are occurring in the judiciary and Administratively will ensure that our patent system continues to remain an engine of innovation with strong clear and balanced property rights of appropriate scope that are enforceable These reforms will contribute to our competitiveness in today's increasingly global economy Reallocating resources from wasteful litigation to productive research development and commercialization These reforms will ensure that American innovators will continue to define the top of the global value chain Even as the rest of the world rushes to catch up Reform is not a crisis of faith about our patent system But a way of keeping faith with its goals of promoting innovation and technological progress If I've learned anything in my experience in the private sector It's that no good company Ever rests on its laurels It's always looking for new ways to improve to streamline and to adapt to the new realities of an ever-changing environment From my vantage point as head of the United States Patent and Trademark Office I believe we should treat our patent system the same way While we need to maintain what is best in our system We must also strive to improve what can be approved guided by the constitutional mandate to incentivize innovation and The conviction that the best days of American innovation are still ahead of us Thank you for your attention, and I look forward to continuing the discussion with my fellow panelists Thank You Michelle, please have a seat and if I could invite our other panelists to come on up For quite a long time and so it's a real pleasure to have them here at CSIS go ahead take your chairs seats, please First is Victoria Espinel who many of you know as the president of BSA the business software Alliance But before that as the first Intellectual property enforcement coordinator at the White House, which was a kind of a path-breaking Job and before that you probably knew her from USTR where she handled many of the IP related negotiations and Broke a lot of new ground in all three jobs. So Victoria. Thank you for being here I've also known Michael for a long time Michael what Michael Wehring is the director of the Washington office and Executive director of federal relations for the University of Michigan Someone I've worked with for many years on innovation topics and a real expert both in how Washington works and on how Washington policies might help us move the ball forward on innovation What I've told them for the format and I was thinking of changing it while Michelle was speaking But I won't because I don't Is we'll ask both Victoria and Michael to briefly Say something respond to Michelle and then we'll go into questions from all three of us at that point If you have something I'll ask you to raise your hand Please identify yourself keep it as a question not as a speech and then we'll move ahead But Victoria why don't we turn to you great? Thank you Jim and thank you for inviting me to be here today It's such a pleasure to be here. It's a thoughtful and well-respected organization. So I really I thank you and and Michelle for Pulling together this event. I also want to say congratulations to you on your confirmation I know it's a few months old at this point, but it's just it's great You've been doing great work at PTO for many years and it's fantastic Thank you for the confirmation process is happily behind you and it's real honored to be up here with Michael So our universities are an incredibly important part of the innovation system of our country I spent a lot of time in my prior jobs working on by dole and ways to support the universities It's a real pleasure to be up here with you So I am victorious finale We my organization represents the software industry worldwide And one of the reasons that my job is a really fun one is because our companies are among the most innovative companies in the world And because of that they also some of the largest patent holders in the world So we really believe in and clearly understand the importance of having a well-functioning patent system We also believe and sort of what you said about keeping faith with the patent system that it's important That our litigation system be set up in a way So it doesn't allow bad actors to game our patent system or abuse our patent system And so for us, it's very important that there be changes to our litigation system to avoid the kinds of abuses that have been happening today In essence, we want to make life hard for bad actors and we want to make life better for innovators There are also speak very very briefly I think people are probably aware of the fact that there's been various pieces of legislation moving through our system There are probably four things that we're most focused on so I'll mention those briefly and then turn things over one We want to make sure that if anyone gets sued for patent infringement that they get genuine notice in other words That the suit that is filed against them clearly lays out what the actual allegations are against them We think that kind of genuine notice is really important to having to having an efficient litigation system and a fair litigation system Second with respect to where cases are brought. We want to make sure cases are brought in the right court and we want to avoid forum shopping by plaintiffs Third we want to make litigation and discovery specifically We want to make it as efficient as possible and so therefore we think it would be best if certain if discovery was delayed until certain preliminary motions had already been addressed and dealt with and Got get them out of the way and fourth we want to deter The frivolous cases that are being brought so we think it's important that there it be possible for fees to be awarded in cases Where claims are brought that are objectively unreasonable and that there be some sort of efficient mechanism So that those fees can actually be awarded We if we believe that if the financial incentives are shifted So it is not so easy and so cost-free to bring the kinds of frivolous litigation that is brought today That will be better for the system as a whole that will make our patent system even stronger and better than it is today There's a big issue for us. It's something we care about quite a bit. I could talk at length, but I won't I will I will conclude there and Turn the mic over so to speak to Michael great. Well. Thank you very much first of all Jim Thanks for the invitation to be here always a pleasure to be here with Michelle and with Victoria here and talk about a topic that We seem to be talking about in Washington for a long time. You know, we just went through three Congresses where we wrestled with this whole notion of the patent system. What should the patent system be in America? How should we update it to make it fit with the international Norms and our own understanding of the patent system and it took three Congresses to pass the America in Vents Act Here we are now less than four years later trying to make major changes to that legislation So I think that's an interesting dynamic interesting place for us to be I should also say first before I get too far down the road that while I work for the University of Michigan I'm not really here speaking on their behalf today. I'm really representing hopefully representing the higher-ed community at large Including the six higher-ed associations that have all banded together to work on behalf of the university system around the country I'm also not an attorney. So I can't spar with my colleagues here on the law Haven't been involved in a negotiation specifically with the Congress on this issue But I'm fairly aware of what's going on with this issue So I will be respond I will respond as best I can to some of the questions and concerns that we have and hopefully we'll talk About things beyond just the legislation because I think there are other issues that the PTO is wrestling with Let me start by saying Let me talk about talking about why universities care about patents And there was an allusion to the by Dole Act in 1980 which was really a watershed piece of legislation that Almost didn't pass it passed in the waning hours of that Congress Thanks to the work of senators birch by and Bob Dole right at the end of the Congress They were trying to get out to finish up their year And they were able to get some approvals by a couple of senators to take holds off this legislation and move this bill through the Congress Up until then the government when it funded research the government held the patent on that research And you know the government's good at a lot of things with the government's not always good at business And a lot of those things that were created in university labs and other places around the country that were funded Didn't have a mechanism really to get that Invention that idea out to the private sector to try to develop into a real product or a real drug or real new technology So they said well, let's let's let's do this differently. Let's have universities Have the patent and see if we can use that as leverage with licensees to try to actually create a marketplace for these ideas And so out of that was born the whole tech transfer system that we have at universities and have had for the last 35 years And I would submit that it's been a very effective system for America I think the most recent statistics that I have from the university technology managers association Is that it's created in the last even less than 35 years a trillion dollars in economic development for the country thousands and thousands of startup companies three million jobs Hundreds of new drugs that we all are able to take advantage of to improve our health care in the United States That's a wonderful legacy and other countries are now trying to mimic that with their own versions of by dole around the country So I think that speaks well to the system that we have so but if you think about it The patent is really the bridge from the lab to the marketplace for most discoveries So the discoveries created in the lab They bring the idea to the tech transfer office and the business people in the tech transfer office say well That's an interesting idea. That's interesting knowledge. That's interesting discovery. What could we do with that? Would there be somebody who would want to license if we had a patent should we get a patent first of all? That's a complicated thing. It's an expensive proposition to even get a patent. Is it new knowledge? Could we find a licensee who would want to develop that patent? Who would then want to fund provide further research dollars to sort of finish up the work that was started on the university campus? Which is probably fairly basic and then get that out into a new start-up company or an existing company to actually develop and we then Reap the benefits of that all of us do as taxpayers as American citizens It's it's really the linchpin. It's I was at a forum here a couple months ago And an inventor described the patent as the collateral The collateral that would be then be used to try to attract the venture capital That's going to be needed to take that idea out of the lab and actually get it out to the marketplace where people can take advantage of it so that's why patents are really important and Patents are things that universities need in order to do their job to get this tech transfer process working by large So when we see legislation that we think is going to make asserting patents more complicated More expensive potentially more risky for inventors and their patent holders and their licensees to pursue We get concerned and so I think that's part of what the debate has been in Congress is about where we go from here I will note that you know during those three Congresses that we worked on a It took that long to finally get to a consensus point of view and at the end when that bill passed pretty much everybody Well, they didn't get what they want everything they wanted They were able to live with the outcome essentially and I would submit that if you look at the situation today That is not the situation we have now with this legislation We continue to have large segments of the country University is included who still have major concerns about the legislation being considered particularly in the house So I would just throw that out for people to think about the difference in dynamic of the political situation in 2011 When we passed a IA with fairly much of a consensus viewpoint and now what we have such divergence of viewpoints on this other legislation So that's why we care about these issues. That's why we're involved in these issues. That's why we work closely with groups That's why we've been at the table trying to negotiate with both the House and Senate folks to work on these issues And why the university community feels so strongly about patents and so I'll stop there and great. Thank you, Michael I'm gonna start with a general question. I can think I can pose it to all three, but I'll begin with Michelle One of the things we're looking at here at CSIS is the transition in how we think about economic policy as we move Into really an economy that's driven more by intangible assets, right? This is a big challenge for how we measure how we construct policy many of our policies are out of date But it's also I think as Michelle noted something. That's a global problem So I know there's a lot of positive statistics you can say about the US patent system We lead in any number of things US PTO is an unappreciated jewel But one of the things we lead in is in patent litigation So let me start by asking Michelle when you think about other patent systems when you think about Japan or the EU Or China as you mentioned How do you think we stack up? Where is it? We would want to improve our performance to be competitive and then let me ask Victoria and Michael to comment on that as well Let's see. Well, I think there's a lot that we do right in this country And now that I have the privilege of having the role that I have and speaking to many of the IP leaders in the world I do hear a lot about both what we're doing, right? And then you also get a sense of what they would rather not have a part of and clearly our litigation system is Probably one of the more expensive Litigation systems on this planet probably involve some of the most extensive discovery Compared to other systems. And so I think what you're seeing is in the legislation that is currently before Congress as Victoria mentioned There's a provision in there dealing with streamlining discovery and perhaps greater notice and greater Specificity in the pleading requirements of a complaint. So I think it's right for Congress at this point to be focusing on The litigation related reforms in the aia. We made a lot of good progress We moved and we harmonized with the rest of the world We went from a first to invent to a first to file system making clearer simpler and more uniform rules with the rest of the world We got the ability for the US PTO to set its own fees and we got a whole set of post grant review proceedings Which have been you know pretty effective as a quality check But in the area of litigation the litigation related forms didn't quite get addressed in the aia I think that's an area that obviously we're all focused on and it's a matter of striking that right balance So I would say you know innovation is Clearly one of the things if not the thing that makes the United States globally competitive That's something that I thought a lot about in my previous jobs and not to get too much off topic here but I think what you said I think there are a lot of places where our policies and How we count for trade balances are Completely out of date with where the value in our economy is coming from and I think that's a really interesting project that That needs to be fixed But going going back to the topic at hand here Now I think our patent system is absolutely one of the strongest in the world. I think our PTO does tremendous work There you know the the concerns about patent quality is one that Dave Capos and now you have taken on with vigor in terms of trying to improve and and you know a big part of that is Changing internal processes in ways that have been really creative and innovative like getting Input from the outside world also making sure that PTO has the funding that they need that they are getting the full amount of their Fees back so they can continue to do the great work that they do so I think our patent system has lots of strengths Well, I would I would basically agree with Michelle I think that it's less something in our patent system that I think is a problem And I think there's the way our litigation system is structured that allows people to take unfair Advantage of our patent system that is the problem The issues that we have for frivolous litigation here in the United States are not issues that we see in other countries around the world And that is because our litigation system in some ways is set up differently So in terms of for example how fees are awarded We have a different system here in the United States that we do in the rest of the world I'm keenly aware of that because when I was negotiating trade agreements We had to carve us fee shifting out of those trade agreements because it was out of step with what every other country that we were negotiating The system that they had so I think there are some I think there are clearly some changes that need to be made to how our Litigation system interacts with our patent system, and I think what that will do is make our patent system even stronger I think one of the things that you see this in other forms of IP to I think when When there are frustrations about the system because of inequities in the litigation process that That can cast a pall on the system as a whole it can make people doubt whether or not patents are a good thing And it's really a that's it bad for all of us collectively if people start to doubt whether or not patents are a good thing So that we a part of making sure that we have as strong a patent system as Possible is making sure that we can clear out some of this frivolous litigation and get rid of it And get rid of the the shadow of doubt that it can cap cause cast onto a patent system I think Michelle touched on an interesting word, which is balance That's what we're all trying to seek here is a balance of interest here And I think that's the tricky part and that was the tricky part five years four years ago at AIA and essentially What we're really doing is re litigating AIA to try to deal with these issues that we weren't able to bring Russell to the ground four years ago We're trying to deal with them again, and they're not any simpler to deal with they're not any easier to resolve We talk about the the issue of Pleading's and making things very obvious what the what the case is all about we would agree that pleading's need to be improved These people who get these little mom-and-pop retailers who get these letters in the mail threatening them with a five hundred or a thousand dollar penalty because they're using some kind of patented technology in the Wi-Fi that they bought down the street at Best Buy is wrong But it's interesting HR 9 doesn't even deal with that issue doesn't deal with that issue That's the kind of thing where we need to find a balance it and if you make some people if you're gonna make people Essentially argue their entire case before the case even comes to trial in the pleadings. That's gonna be tricky It's gonna maybe make it impossible even to have to meet the meet the pleadings Requirements if they're too high because some of this information you're not going to get into you actually interact more with the people that are involved in the lawsuit Going to court is always the last resort It's always the last resort and most of the time when we're doing when universities deal with people and they send them a demand letter Because they think there may be some infringement most of the time it gets resolved between the parties without ever having to go to court There's either a license taken or we realize that the technology doesn't infringe and that's not a problem So I think these are all questions of balance and the issue is how where does that balance need to be and I would submit that for example in HR 9 Where there is a presumption that anyone who goes to court and loses Ergo must be a troll and Ergo must show they had a value to their case Goes too far and the other way of trying to seek to Rebalance the system. So I think that's that's the issue That's the what's the fight is all about and I think that's what we need to come back to is what is the balance point? That's going to protect the interests of both the big the big parties and the small parties the individual inventors as well as the licensees and And I find it interesting too the venture capital community has essentially now a national venture capital association has come out and Raised as we have and other groups have had serious concerns about this legislation If people aren't going to invest in technologies because they think there's going to be some question about the validity of The value of the patent or the ability of the patent to stand up under scrutiny Then we're not going to see innovation occur because people are not going to make those kind of investments that we need to get things out Of the lab into the marketplace Michelle or Victoria. I don't know if you want to respond to that. We did invite Michael So he would be flamboyant and provoke you so that was he's living up to our expectations I'm happy to say a couple of things one is You know legislation that says if you lose You have to pay fees is not something that we would support and I don't think it's something that legislation actually says but but In any event it's not something we would support as I said our companies are very innovative Our companies are some of the world's largest patent holders our companies go out and assert patents So we have a real interest in making sure that it is not too difficult to assert patents And we would not support and have not supported legislation that would say if you automatically If you have the plaintiff go in and lose your word of fees We do think that if you as a plaintiff go out and assert claims that are objectively unreasonable Then fees should be awarded against you and we think that will be helpful in trying to deter People bad actors from going out and making cases that are objectively unreasonable We think that is we think that's a reasonable place for the for the system to end up The second thing is and I may have misheard you but it sound like you were saying you know People are concerned that the patents can't hold up under scrutiny that that cast out on the system and I guess I would say you know There our companies are real innovators and real inventors and there are real innovators and inventors inside the university system that you Represent and they are going out and it's discovering incredible things and those patents will be held up under scrutiny I think that's what we should be looking for ways to support support good patents That will stand up to scrutiny because I'm not that concerned about Having a system where bad patents that don't can't hold up under scrutiny Are not part of the system. I think we want a strong patent system for good patents I'll just add that on the fee-shifting provision. I don't like to refer to it as a loser pay system I like to refer to it as an abuser pay system So if you're abusing the system if you as Victoria said are plaintiff or defendant if you're a plaintiff If you've unreasonably asserted a claim of infringement when you shouldn't you should pay if you're on the defense side in the defend You're defending and you unreasonably defend a case for longer than you should have when you should have settled or you should have taken a License you too should pay so it imposes a financial discipline on the system to make it more expensive To engage in abusive litigation tactics. That's number one and I guess number two is sort of more broadly I think we're all in the same boat together Universities businesses companies are innovators. I mean the universities are incredible engines of innovation We would not our society would not be where it is today If it were not for the contributions of our universities and we all recognize that on the other hand too I think the universities when they license their technology out or when they License their technology out to that startup company that startup company is going to be in the real world of The patent ecosystem and if they're facing patent infringement lawsuits that are abusive. It's not in the interest of the university It's not in the interest of our society to allow that to continue to persist So we're all looking to work together to make sure that we strike that balance that balance is critical And I think that's why you're seeing the legislation just doesn't get done like that I mean people are very smart people are working on and thinking about these issues So I'm optimistic that we can get there. There have been a lot of good discussions But it's going to require everybody's input and effort on this It's not easy We have to be able to preserve the incentives to innovate But we also have to preserve the ability to enforce your patent rights when you need to and curtail abusive litigation Yeah, I think Michael mentioned by dole and a lot of times people in the room realize it But many people don't know how important that was for the US to sustain its Technological lead and we've worked through a couple models of how the US innovates. We're in another transition Maybe a good question to ask and I'll ask first on your secretary Lee and then the other two is What are you spending your time on now? What are the biggest challenges you have at PTO and What are the changes you'd want to see other than the ones we've already talked about? That would best strengthen the patent system to make it an engine of innovation Well, I've got a lot of issues that I'm working on and You know as I just list them I've as I said in my keynote I do believe that each branch of the government is uniquely suited to do and accomplish certain things So at the US PTO one of the issues that we are very very focused on is Truly enhancing the quality of the patents that we issue and you might say well Michelle You're not the first director of the US PTO and you certainly won't be the last one to say that quality is a priority And I get that and so why now why now are you so focused on quality? And the reason is because a couple of factors number one all this discussion about abusive patent litigation It is even more important for us to issue patents that should issue and not to issue patents That should not because there's a cost both ways Number two is pursuant to the America and Vance Act for the first time in a long time We've been given the ability to set our own fees and I cannot tell you what a difference that makes in terms of being able To do the job that we need to do I mean we set the price of a patent application based upon the cost it cost us to provide that service And if we are not getting access to the full amount of our fees quite frankly We're making do with less and thirdly our patent backlog was going sort of up and up and up for a while And now we've brought that back down. So now we are really in a position to focus on patent quality So patent quality is hugely important huge patent quality initiative separate department launched And it will be a long-term initiative and we welcome everybody's input But also getting getting the patent trial and appeal board proceedings and trials, right? Making sure that those proceedings issue opinions quickly promptly and accurately is also an important priority And I'll stop there because I of course could go on on many other initiatives But I would say at least for purposes of this audience. Those are two of the top priorities at the USPTO So first I just want to thank you again for all the work on patent quality is tremendous Interparties review process that came out of the AIA We think has been has added some real value and we're so there's Want to thank you for that. I'd be Curious to ask you a question about one of the things that you didn't mention Which is the satellite offices, which is a really innovative step that PTO has taken. I don't know how familiar people are with them I'm familiar with them, but at a little bit of a distance now So I'd be really interested in hearing your thoughts on how they're going and you know what they're adding to community and how you're using them and Yeah, no, I'd be glad to answer that so as many of you know, I was the first director of the Silicon Valley satellite office actually first director of any of the satellite offices and I was responsible for formulating much of the vision for the satellite offices and Basically, we have four satellite offices outside of the DC area. They're in Denver, Dallas, Detroit and the Silicon Valley and I thought it would be a shame if all those offices did was help process patent applications That would not be taking advantage of the full potential of those offices We've got so much innovation that occurs outside of the Washington DC area And so many small startups who are not as well funded as the big companies who don't have the resources to fly their outside counsel Out to Washington DC to interview their patent applications or to participate in the patent trial and appeal board Or who even know much about the filing process or registering a trademark or filing for a patent application So really these satellite offices. There's my opinion nothing but upside It's the opportunity to bring a wider range of PTO services educational materials out to the local innovation community rather than asking the innovation community to come out to us and We develop lots of policies and procedures at the PTO and we are now getting a much broader range of input Like what is patent eligible subject matter? How do you like our guidance and it's now no longer just the big companies sophisticated companies with legal department and governmental affairs department Who are providing input? It's the smaller companies who are also providing input and the rules affect them too So I think that input is critically important for us in order for us to do our job well So I think it's it's a win for everybody. Awesome. Let me jump on that because I want to thank you By the way for opening the Detroit office. We love that at the University of Michigan And it recognizes the number of engineers that are in that whole Southeast Michigan area Largely due to the auto industry, but now more and more other industries as well It's been very helpful and and your director there Crystal Shepherd has even been to our campus and seen what's going on out there So it's great And I know you solicited input from our campuses to give you ideas and that sort of thing And I think that is good to get ideas The other thing I want to say is that we we are fully behind this whole notion that PTO's fees ought to stay at PTO And now that's an issue unfortunately That's not in this legislation, but it ought there ought to be a way to sort of protect you all Every time the sequestering comes around so that you're not having to be have half your fees or some percentage of your fees Taken off the top so you can do your job. So we were very much behind that effort and would support that absolutely. Thank you Sorry Let me see if there are any questions in the room we can turn I have plenty so we've got one in the front here We're gonna use microphones because we're webcasting Here at 12 o'clock Right there you go And remember to introduce yourself, please hello Kirk Taylor Intersect Inc. And we're a small startup and we're interviewing patent and intellectual property firms at the moment and I guess from a standpoint of You know sort of down in the lean startup mode. Is there a way? Out of the PTO's services that that the inventor entrepreneur who's looking at web Technology putting together things that haven't been put together before type that type of thing Do you have to hire a big firm because what I'm what I'm hearing is that you you can go through the whole thing and put in your Submit if they say it's patentable you submit and then three years later You find out and and maybe you might have gotten a different outcome Had you gone to a different firm and so the whole idea that you have to sort of put up $50,000 when your startup or or some equity in exchange with some of the firms who are kind of Set up that way with with startup practices that say okay, you know, you're worth this and for five points We'll do this Self-serve Searching what is patentable Etc that's the question. Yeah, well, I'll take it So thanks very much for the question and I think as many of you know I come from the startup community and the community of technological innovation and When I was thinking about what I would want out of our satellite offices I had a long list of ideas based upon my past experiences and I will say that the US PTO has a phenomenal Panoply of resources targeted to support the startup environment because I mean that's where our future jobs are coming from the highest growth The future got jobs is going to come from our smaller companies So we have things like an inventor assistance hotline where if you're you have questions about the patent process or there You can call and ask questions. We have a trademark video online available for viewing We have a pro bono Program where if you qualify as an under resourced Inventor you can get and we'll pair you up with an outside counsel for free if you don't satisfy as an under-resourced Inventor we also have a pro se program which means that you can write the application yourself And we have a dedicated team at the US PTO to help kind of handhold you a little bit more through the process People who are very seasoned very experienced who can spend a little bit more time with you So we'd like to say that we have a whole range of services not only that but for our small entities if you qualify for small entity status you can have a 50% discount on fees if you qualify for a micro entity status you can have up to 75 percent discount on fees So we're really trying to be user-friendly and make all of our resources available to not just the big companies We hope one day you grow up into a big company and pay full fees But really for the smaller start companies as well So what I would say is contact us we'd be glad to put you in touch with all the resources that we've got for small Startups and our satellite offices are also playing a really critical role on the ground in the local innovation communities Okay Unleashed Pandora's box. How about right there and then we'll go in the back. Hi, Todd Dickinson from Novak Drew's I'd like to ask about this a related issue that's been fairly prominent and that's patent eligibility It's been a year now since the Alice decision came down at the Supreme Court where they Attempted to define and most would argue narrow what was eligible for a patent. This probably hits the software industry particularly studying just came down a week or so ago that said that That the CFC I think it's only one out of the last 20 plus decisions Where 101 was raised was it held patentable the CBM process at the PTO a hundred percent of the cases coming through CBM Where 101 was raised it was sound unpatentable Examining core is now doubled the number of rejections under 101 Is anything patentable anymore? Under Alice or not Is that trouble you Victoria or do we need some there's a presumption of validity for example But in the statute and yet the presumption of validity never seems to apply to section one one That was really a good question then I'll turn to For a while I couldn't tell which side you were on I don't know who wants to start So I was so we're obviously watching carefully to see sort of you know how that's being interpreted by the court It's and by PTO We agreed with the Alice decision. We thought the patent that was an issue in that case should not you know Was not about a pattern should have been overturned But we're watching to sort of see how that develops that be interested in Michelle's views on but but I wouldn't say we've taken the view That nothing is patentable. Well, in fact, the Supreme Court said as much right They didn't say that software or business method patents are not per se impatentable And there's still room for patent eligible subject matter in the area of software. So I mean there have been very I'll say significant changes in the case law Including from the Supreme Court on what is patent eligible subject matter in the area of software You're seeing the courts respond to it district courts are having to respond to motions to dismiss summary judgment Motions based upon lack of patent eligible subject matter the US PTO is on the front line of that. We're issuing guidance We've gotten a lot of input from the public But we all hope for greater clarity on an issue that is extremely complicated And I think we'll see lots of Dell developments I hope to see lots of developments in the foreseeable future in this area because there's still quite a bit of ambiguity Yeah, I just want to say the higher-age community has been weighing in that we filed comments with you on that We appreciate that some of the movement that we've seen on that issue would look for more as we move forward here It is a complicated issue, but it's very important We had the one in the back there, so Jacob the person right behind you Yeah, good afternoon. My name is Rosemary Segero. I'm a president of an a camp and gold Segeros international group Thank you for your presentation. We have innovators young innovators and Innovators in Africa who have invented things and ended up into the hands of countries Different countries or big guys and nothing is done How could you or how can you comment on such how can such a companies? Protect themselves because maybe they don't have resources. They are small companies But they have the innovations and end up into the big guys hands who have the money so they can't protect themselves How can we go about that thing? So the question was there are innovators in Africa who come up with something and then Because of the patenting systems in those countries or the lack of resources for these very small innovators They will see their innovations taken up by large European companies That without without getting the proper Do so and the issue is is there anything that that you're in the legislation or USPTO or BSA is doing that might help Help address this problem. Yeah I will say that we work with a lot of countries across the globe Including some in Africa and in fact my chief of staff was over just in the African continent in Ghana working and talking about intellectual property and our international affairs team is always working with other governments and trying to get other governments to really develop robust intellectual property Systems because it not only benefits the local indigenous inventors But it also benefits American companies looking to export their products or services overseas when we enter a market We want to make sure that American companies and products the intellectual property in there are also respected So I like to say to the extent that we can have a level playing field for all countries in every country All of us will be better off There will be a really a global marketplace and everybody will be treated equally based upon the merits of their product or service And we should be encouraging innovation and supporting it whether it is foreign or domestic I mean our society will be better off if the best ideas come to the top I would just add that The little guy big guy argument is part of the argument we're having here in this country as well about how you balance again those rights And especially in a courtroom. I mean if you think about American jurisprudence, it's designed to protect the little guy The big guy will have the resources to defend himself or herself It's the little guy who needs the help and if we bend over too far in this effort to try to try to change what the dynamics are in litigation Changes can be made but if we bend over too far We're going to make it very hard for the little guy to have much of a chance if he if he or she has to go to court at some point Speaking of big guys, let me come back to another CSIS obsession Which is China right and Michelle brought this up in her remarks the Chinese do indeed want to move up the value chain and Get out of being the people who make things based on other countries patents to being the people who patent themselves But I was reading a book a little while ago written in 1900 About a British diplomat in China who was complaining that Within a couple months of a new British product showing up in China It was copied and there were copies available on the market. It's been a long-standing problem And we're and this is I know Victoria doesn't spend any time on China But perhaps she can add and Michael in the universities. How do you see us working with China on these issues? How do you see the Chinese reacting to changes in? Significant changes in US patent law over the last few years. Yeah, so as I said I just returned from Beijing a week in Beijing meeting with the vice premier Wang Yong And all the heads of the trade patents copyrights trademark offices And I have to say that I am encouraged about their desire to want to strengthen IP systems IP enforcement and protection, but there's still a long way to go I mean they are undergoing changes to almost every aspect of their IP law They're undergoing legislation legislative changes on their patent law copyright law trademark law Already concurrently right now and we've provided input to that and we are helping them with that And they're considering some trade secret law changes. Also, there's the issue of sort of antitrust anti-monopoly issues and we work very closely with our counterpart offices. We work very closely with the American companies and I'm a co-chair of the China US joint Joint Commission of Commerce and Trade out of the Department of Commerce that Secretary Pritzker also leads She's not have the IP working group But she's the head of that principle in that group and we're working together with them to really as I said Get to a place where domestic and foreign innovators are treated equally and that there's a respect for Intellectual property rights and China's recognizing this they recognize that they've got innovators on the ground at home and if they want those ideas to be protected and Encouraged to develop they need to have a strong intellectual property system. It will take time there's lots of work to be done and We've emphasized to the extent that market forces can determine which companies and which products and what price Things are sold at that would benefit everybody rather than so much government intervention So I would say on China which I still spend happily some of my time thinking about China I would say a couple things one is on patent quality. I think you know China has has really struggled to patent quality I think you know in part that was driven by I think there was a big internal push to get their numbers up very quick So their numbers be closer than numbers coming at the US patent office And I think that put so much pressure on the system that we that they ended up with a number of patents That weren't particularly good quality and I think they are I think there there's a recognition of that And I think there's a real desire to work on that I don't know if it came up in their conversations and they also have a Registration no examination system and then examination system. So you've got this dual track So you've got patterns that are basically unexamined and then patterns that are examined and we definitely have some concerns about how the Unexamined track is working and some of the patents that come out of that system and even some patent quality concerns out of the Examine system, but I but at my my sense that is something that China's you know very that once they want to see that aspect of their system improve the Major concern that I was going to mention is one that you alluded to is how their patent system interacts with their Anticompetitive with their monopoly law and using patents are using their monopoly law to try to undermine patents in China and undermine US companies in China, so we do have some real concerns that and we you know have been working with the Chinese government and with the US government on those concerns You know, I think there is a tremendous amount of innovation happening inside of China right now. That's really good news So I think you know there when I think of China there are lots and lots of issues That affects software in China some of them are IP related many of them are not IP related But in the intellectual property space, I do think taking you know a somewhat long view of this And looking at the amount of innovation that's going out of China I think that will that will internally help spur changes that will be really helpful for the system as a whole So I think and that and in what we're talking about sort of patent quality and and sort of interaction between patents and monopoly laws Now I'm hopeful over the long term that we will continue to see Some real improvement in China in those areas I'm not aware that universities have gotten directly involved in that specific part of our relationship with China I will tell you that my president is actually in China today Meeting with Chinese university leaders We started some as most universities have developed relationships with other universities around the world China clearly is a partner with us We exchange students. We exchange faculty all for the betterment of scholarship and for research So not looking directly involved in those sort of discussions But if there's a role that we might be able to play along the way you might think about how we might be able to be helpful at Some point I will add one more point on the Chinese show because I think this is important They're making a lot of judicial changes So they recently established a specialized IP court to hear IP cases and this is a national court Not a local court that might be subject to kind of local favoritism and so forth It's a national court. They're very much looking to it as an experiment for future sorts of judicial reforms Greater amount of transparencies in terms of recordation of their opinions perhaps allowance of more discovery and Maybe even greater damages or awards along the lines for infringement of IP rights So those are some positive changes that we are looking forward to and that I think they are working very hard on I'm glad you mentioned that because I think it is a positive step and BSA out of our Beijing office Have been working with the IP courts and the last six months that they've been established Been you know working doing trainings with the judges and holding various seminars on intellectual property issues And you know, they've been going we've had a very positive reaction to that So it's been it's been great to see the Chinese government take that step and see that they seem to be taking it really seriously When I talked to people from Chinese companies it appears to me that they are eager to Incorporate themselves into sort of the global norms of business the global so they can sell to a global market I don't always get that sense when I talk to people from the Party or the government so in the long run. I think you're right. This will be positive, but it may be a bumpy ride in the interim We have what's swing up in the back. We have one in the back there, and we've got one in the front Raise your hand again, please. Thank you. Remember to identify yourself. Hi My name is X driver. I'm from knowledge ecology international We are an NGO that does access to medicine and access to knowledge work I have a question about the pharma carve out in the inter part a review process It seems that that would require differential treatment for the enjoyment of Pharmaceutical patent rights as compared to other fields of technology But the US and the pharmaceutical industry Critique countries like India Currently that treat patents differently in other areas of pharmaceutical patent law Such as laws that prevent patents on drugs that don't show an improvement in safety or efficacy So my question is is if this carve out provision passes on inter part a review Will that make it more difficult for the US to argue against those aspects of patent law in places like India that have differential treatment? And I thought about having someone from Pharma here or one of the groups and just we don't have enough space on the stage I apologize for that Michelle. I think you got to get stuck with me Michael. Yeah, so thanks so much for that question and I think your concerns are Interesting and valid concerns as you know, it's a topic that's being discussed It has not gone through obviously no legislation has passed, but I think this is a concern that a lot of people are focused on Okay Yeah, it's interesting It's fun to compare China and India in this regard and the Chinese in some ways are a little further along and they're thinking about the benefits of Intellectual property protection in my view But I haven't looked recently so it's it's one of the places where you see disparities in the economy That's not a pharma specific comment It's more a comment between how the two countries administer things, but it's been an issue of concern We had one in the front. I think and then we have another in the back. Go ahead Hi, my name is Harvey Rishikov. I'm with the American Bar Association I'm affiliated with the standing committee of law and national security and a senior counsel at cruel and mooring and I want to thank you all Jim particularly for getting the patent gurus together here and getting them so in that one space and Victoria we were together in the economic espionage report and I was with the government in 2011 I want to thank you because we have a first time we named not only China, but Russia and Iran as advanced persistent threats in this space. So my question really is Russia also plays a big role as a violator and I'm in private practice now And I think the enforcement issue is what we are really concerned about for our clients and we're seeing a variety of activities that combines both patent trademark and cyber in which things are gone forward and I'm curious Also, most recently we just had the indictments of the university professors and the fact that universities are involved in cutting-edge work with the military and DoD and we're seeing more and more penetration of the universities and then information leaking out. So it's for all three of you in a way What do you see as the Rule that we can play in the private sector and increasing the capacity for enforcement given the fact that we're seeing extraordinary bleeding from our clients trademark NIP work So so I would say you know in Russia We have real concerns about the situation on the ground there Enforcement of intellectual property never a strong suit for Russia It certainly is deteriorating I think And and I don't think that's you know sort of targeted at intellectual property I just think that there's a lot of areas where we're unhappy with the positions that the Russian government has taken One not related to intellectual property is a data retention law that was recently passed And we are very concerned about any country that would pass legislation that says that information or data has to stay within their borders trying to trying to create a Russia only internet and Balkanize the internet Mandating that data centers be located in a particular place that is that is a real concern for software And would be a real if if widespread Would be a real blow to the promise that we see coming from big data. It makes cloud computing Impossible essentially on any sort of efficient scale So we're so we're very concerned about some of the steps that Russia has has taken I Will say my impression it'd be interesting here what others think is some of the steps that Russia's taken for example on data retention Loss are coming from a very senior level of the Russian government So it is it is difficult candidly sitting here to give advice on how to try to Improve the situation in Russia. We have found on the enforcement side that at you know at at At less senior levels there is still an interest in trying to work together I think it's difficult in the system like Russia's for to be able to make progress if the signal that you're getting from the top is The is a different one To re-emphasize something I said the outside. I don't think the sort of The enforcement of intellectual property concerns we're having is really kind of the main focus of Putin's government I think that's sort of a core negative corollary effect Of the larger economic policies that he's pursuing that we are concerned about but that is certainly one of the effects and as I said It's whereas in China. I think you can look at the situation in China and say okay We have real concerns here, but it seems like there's some progress here and you know in this area It looks like it's going to be difficult to have Constructive discussions, but in other areas there are areas where governments or government and business can really work together At this moment in Russia, it's hard to say that And so it is difficult for me to give you advice on how to improve the system there You know we have operations in Russia We are concerned About you know both personnel and and the the general state of our operation. So it's something that we are you know We're keeping a very close eye on But I think unless But it's difficult at the moment to see any path forward to positive change there Which is which is deeply unfortunate and the last thing I'll say on Russia's one of the other things that we are concerned About is other countries looking to Russia as a precedent. We have not seen that yet But certainly it would be a grave concern to us if we started to see other countries either in the region or elsewhere in the world Look to for example the data retention law that Russia has put in place as a positive example I'll speak more to sort of the patent and copyright side of the equation and we share the concerns In fact, we recently Have now established an IP attache in Moscow now for those of you who don't know We have an IP attache program and that is a US PTO Representative on the ground helping Americans navigate the IP landscape in a given country So we have IP attaches in a whole range of countries about a dozen of them worldwide Brazil Bomb New Delhi Brussels we have three or four three in Beijing So we've got these resources on the ground and because the landscape is as challenging as you mentioned We thought it important to offer that resource so that American companies know what they're stepping into It's not you know the complete solution But it's really a sharing of information and sharing of how do you navigate that environment? Given what it is and also importantly it's the opportunity to work with policymakers and lawmakers and Law enforcement officials on the ground to try to do what we can to improve the situation It's a difficult situation. I'm not pretending it's not but at least if we're there on the ground We have the ability some ability to get better information about the environment the conditions under which our American companies are operating to try to make a positive chain Change in the the law, but also so that we in Washington know them And so I would say for those of you who represent companies who are facing these issues Definitely let us know in the government the experiences that you're facing and to the extent that you can be more specific We can raise these issues and these concerns in conversations with specific examples Which I can tell you makes a big difference. Otherwise, you're just stating a generalization, you know trade secrets not being respected Well, what instance who under what circumstances and so forth? So please do let us know because we do gather that information and in our communications And discussions with our peers and counterpart offices. We will have those conversations and we will raise those issues Because I say two things with that so one thing I do want to emphasize I think you know as I said at there are certain levels of the Russian government that I think they're still areas to cooperate So for example the Ministry of Interior the Ministry of Interior We're still seeing interest in cooperation and that's great So I would encourage your clients to know where they still are find those pockets of cooperation to Absolutely try to work with the Russian government and then to add on to what Michelle said about bringing concerns to the US government There's a agreement between USTR and Russia specifically on enforcement of intellectual property that has pretty concrete obligations that the Russian government has Is has committed to work on? And bringing concerns to USTR that as Michelle said are as specific as possible Could be one potential Avenue, I'm sure that USTR will be enthusiastic about taking them on whether or not the Russians respond is is a different question But there is a very specific agreement that was negotiated and if you couple that with very specific Concrete concerns That may be a possible avenue. There's a lot of potential jokes with Russian trademark violations But I'll in the interests of time. I'll skip them I'm gonna interrupt you now and Ask a question one of the things I know Michael's wrestled with this too, and you both probably all have How do you measure success right and so a lot of times we use proxy measures and particularly for innovation We used to count number of PhDs or a number of startups or number of patents You can use time time isn't okay proxy How does it take you know what are the rates of challenge or the litigation rates? That's not a positive indicator by the way How do you measure success here? What is it that you each look at when you try and say this is working not only as a patent system? But it's something that contributes to the American economy. Let me start That's something that the higher community has been wrestling with for a number of years is sort of how you measure Output and you can measure it. There's lots of these numbers you can put on patents and startups and that sort of thing the AAU Association American universities and the Association of Public Landry universities Set up task forces with presidents last fall to walk through a little bit of that discussion But really think about more about what why we do what we do why are we in this business? Why are we in this innovation business and if you look at the what the results that each kind of came up with in a Parallel track, they're essentially saying the same thing It's really it's really about doing this activity this tech transfer of this discovery to Commercialization really on the basis of the public good That's how we out of value it from the public good perspective and you can you can track a lot of these different variables But doesn't always tell you the right story and and I was just at though I was just at the bio industry convention here two weeks ago or three weeks ago in Philadelphia First time I've ever been there. It's an amazing Trade show they have hundreds or if not thousands of companies talking about the work They're doing to solve health care issues or agricultural issues Energy issues an amazing amazing place and there were some amazing stories told about this sort of thing about people the people stories about a little girl who had a rare form of cancer and they were had run out of ideas and these This doctor came Out of the box solution and she walked on that set four years later cured of that cancer and the There wasn't a dry eye in the place and those are the kind of stories that you want to see Those are the that's that's that's one way one can measure it. It's anecdotal. Yes But the more of those stories there's a lot of those stories out there where people's lives have been changed by the work That's being done by researchers both on campuses in Companies and labs national labs all around the country So it is an issue that's hard to try to quantify I think you have to look at it on balance is what has been the effect on the on the economy and on the Country as a whole are we better off? Economically do we have better quality of health care? Do we have are we training the next generation of? Scientists which which I would can say we certainly are in fact the biggest tech transfer at universities is not this movement of ideas out to the marketplace It's it's sending out millions of educated students into the economy to do great things To to whatever their job might be whether it's whether it's research related or not So that's really an important measure too So when I think you look at these things it's hard to it's hard to necessarily agree on one certain set of Criteria you're going to use but I would say the overall benefit of this enterprise ought to be is the country in a better place on These measures in this way than it was five years ago ten years ago, whatever Let's see what the others have to say So I'll think so, you know, I think I think it is important to have metrics like number of patents that sort of thing I think in the you know I don't think this should be the measure of success But I think it's important to have those if nothing else is sort of purposes comparison and you could see if there's big swings I'm going to answer the question from the from the government point of view I think You know governments are great at many many things in my view governments are really important governments are not particularly good at innovating But private citizens are tremendously good at innovating and so I think from a government's point of view the measure of success should be whether the government can Credibly say that it has stepped back and removed as much friction from the system as possible to let inventors innovate And so whether that is making sure that there is an immigration system that Makes it as easy as possible To get skill into this country whether that is making sure that there's an education system that ensures that we have our own pipeline of Young innovators and software engineers and developers and bio engineers coming up through the system Whether that is making sure that we have a litigation system that is not throwing unnecessary sand into the system and diverting money from research and development into litigation To me that would be the measure of success of the government looking at all the different Sort of factors of innovation and seeing it has the government done everything that it can and obviously can't do everything But has it done everything it can to try to take as much friction out of the system as possible so that individuals and Companies and universities can create and innovate as much as they possibly can I Don't have much to add to that. I agree Well, what is it you track do you have a whiteboard in your office that has you know number of days number of backlogs Well, no, so we clearly track all those things. I thought we were talking about more global lofty But since you had nothing to add We track lots of things. We track our pendency. We track our time to first office action we track the Number of cases in our patent trial appeal board that are adjudicated within the one to one and a half year statutory time frame Which has been a hundred percent of them We track the number of the outcomes of these cases when they go up on appeal and for the most part They've all been affirmed so we track a lot of things but on the issue of sort of how do we measure? The effect of government and government policy on innovation, you know, I think Victoria and Michael hit it just right You track the number of cases in particular subject matters areas. Oh, that's what we track. We measure everything So one thing I'd be curious about is whether or not There's you know, do you ever sort of see like so this I don't know biotech for example It's going up and then you see a dip for some reason Like do you track sort of trends and then try to diagnose why up swings or down swings are happening We see trends and a lot of them are macroeconomic driven, right? Beyond factors beyond our filing fee and our backlog and so forth factors in the economy or what have you but What we're doing now is we're trying to make our data I mean if you think about it the US PTO has a lot of very valuable information Which is a very early tell-tale sign about certain trends and directions where investments are made where companies are Actively engaged and we're looking forward through our big data initiative through the department commerce and at the PTO to make available Publicly available information about patent filings So that people businesses can take that and make informed business decisions. How crowded is that landscape? Where is the activity occurring in this area? What region of the country is a lot of this kind of talent located to unleash that kind of information and to make it available? I think has tremendous economic impact and Sort of societal planning benefits for for a country That's really interesting I was gonna jump in I was gonna commend the PTO for the really the work that began at a Dave capos Which I think has continued to sort of dig into this backlog I remember Dave telling a story about Once a week he would sit down in his office and he would have them bring to him the hundred oldest Patent applications and they would dispose of them that day Essentially as a way to sort of say look where these people have been hung up three four five whatever however long it's been We're going to resolve this because it's unfair to people to try to hold up their innovation because of our Bureaucracy or because what's going on there? And I think that's why we're all in favor of you having more resources that you can deal with that and Continue to get the the process of getting these applications looked at adjudicated and out the door as fast as you can. I Love leading edge indicators. So if you're putting more on the market, that's great We had a question in the back. We had two questions. We'll get to you eventually Fatty as burns from GE We have two sort of visions of patent reform a Senate version and a House version And I'd just be interested in hearing from you. Which of those do you do you believe is is tuned to? As you put it nicely Victoria taking the most amount of transaction costs out of the system And I think you put it really well and talking about that little girl coming up on stage making sure that we are going to be As innovative as possible. Do you favor the House or the Senate version and? Why would that be? I mean the hired community has been working very closely with the Senate We very much appreciate the tenor in which we've had negotiations with them on a number of issues The draft that was voted out of the committee here several weeks ago Has improvements on two of the major points that we're concerned about one is the the fee shifting language and also the jointer piece which allows With the jointers and attempt to try to get reach back to people who are other investors And I think there's a there's a the way the Senate bill is written is a better way to sort of Shield off people who shouldn't be held liable in that sort of situation So that the House bill we pretty much have Indicated is not up to our liking on a number of reasons those are two areas in particular that we have we have Highlighted in the past all our statements have been fairly public about that and so that's kind of where we are We're this process is ever-going. We were talking beforehand. I think I think the Senate Discussions are continuing. I don't think there's I don't think I get the sensors not at the floor time to take up that bill Before the fall so there's obviously other further a discussion opportunities there I think the House is looking to act much sooner on their bill. So we'll see that all plays out So I would say What you might expect from a former negotiator I think both bills have some good things in them and both bills have some concerns where we'd like to see things changed Or made better You know the be a slightly more specific on the Senate side I think we have some concerns over the inter parties review and and the House bill has a Provision on venue that we like and the Senate bill doesn't have so we'd like to see that venue provision beyond this is the forum shopping issue But I think you know when the Senate bill was moved through committee It was made pretty clear that they understood that they were going to be more work on that bill and you know They've continued to be in our experience very open about having those discussions So we'll continue to work with the Senate on their bill On the House side, I think you know, it's fair to say we also have some concerns on the House side one specifically goes to heightened pleadings and trying to make sure that there is language in there to try to avoid the kind of Gaming that can happen at the beginning of litigation, you know We're letters are being sent out that don't clearly assert what the claims are, you know a situation It's not made clear what or how the pattern is being infringed So we think that could be improved in the House bill and we'll continue to work with the House to just share a committee on those Concerns as well, but it but it is good from our perspective to see that things are continuing to move and that Congress is continuing to focus on trying to Eliminate some of these concerns Just to add I mean we're working obviously very closely with stakeholders and congressional members on these issues and There are various strengths. I mean, there's certainly a more activity on the inner parties review Side of the proposed amendments in the Senate bill as Victoria says the venue provision in the House Is in the House bill but not in the Senate and then there's a whole range in the middle that has a lot of many common issues fee shifting heightened pleadings discovery customer stay and there are minor variations between the bills in between the House and the Senate so I hope that and I am optimistic that People will work together They'll get the best parts of each respective bills so that we can get a consensus bill on the President's desk this year So still work to be done But I think a lot of good-hard thought has gone into many many of these provisions some a little bit more so than others, but You know, it's definitely heading in the right direction and there's good momentum You don't want to jinx these things, but the bills do look Conferensible and you look at them both so, you know, it's early, but that's a good thing It's early in the Congress. They've got lots of time to Move around we had one last question in the back Jim, thanks for bringing this great group together. It's it's really important to discuss all these issues Len Matias, I'm the chairman emeritus of the National Electoral Property Law Institute in 1994 the president the Institute Author it was the original author of the Economic Espionage Act in the National Trade Secrets Act One of the provisions that we attempted to get into the law at that time Was a civil portion of it because we didn't want to have to wait and depend on just the government Filing some form of action today Concurrent with that 1994 action was the establishment of the National Counterintelligence Center And in their first report to Congress on Economic Espionage They said that there were eight countries that were actively and aggressively stealing technology from the United States The last report in 2011 out of now the office of the National Counterintelligence Executive said there was over a hundred and forty countries who are actively and aggressively stealing technology Now that we've moved to first to patent all of that stolen technology is being patented by other countries How do we protect our? inventors in this country with all of that stolen Data of all those innovations now coming forward at patents that they've had no ability to protect themselves again That one's gone everyone or do I mean go ahead? Do you want to talk briefly? So I mean, I think there's that's a big big question, right? Obviously. I think When you say we again, I'm gonna answer that question from the from the perspective of the US government But if others have things in the private sector, they want to say they should jump in I mean, I think there's a few things the government could so first of all enormous problem Something I spent a fair amount of time thinking about in my prior job And I think there are some legislative changes that would be helpful here in the US system to give our law enforcement More authority to help on trade secret theft. It is very difficult if you're talking about activity that is happening 100% overseas But there is a fair amount of trade secret theft where there is some nexus or connection to the United States And so I think having law enforcement have greater authority and in some cases having greater penalties would be very helpful I Additionally think that in a minted 140 countries, but there is still a Smaller number of countries. I think which are the greatest concern in my own view is that many of those countries having very senior-level diplomatic pressure or encouragement To forestall some of the economic espionage that is going on as opposed to I'm gonna take national security out of this for the Moment just focus on economic espionage and trade secret theft. I I think that can in Certain cases be very helpful. I think if it in order to work. It's very important that it be a very Clearly concerted effort by the United States government at the most senior levels of all of its agencies I don't think you know one agency the Department of Commerce the Department of Justice can do that alone I think it has to be a signal that's being sent very clearly across the US government but that has been helpful in some cases and so I think that is A an approach the US government should take and the last thing I'll say actually moving away from the government for the moment is I think Companies need to be and I know that there are serious resource implications for this But companies particularly in companies that are clearly in sectors that other Governments have decided they are going to focus on in terms of building their own innovation economy Companies need to be investing more in trying to make their own systems as foolproof as possible I am keenly aware that it is not probably not possible to make any system completely foolproof But there are some things that companies can do and in my old job I was often surprised to see how often companies were hoping that they would not be a target rather than investing resources and trying to Firewall off the way they kept information be careful about Which locations research is being done be careful about what employees had access to what types of information I'm not again I'm not saying up here saying that there's a way for companies to 100% protect themselves from trade secret that but there are some Things that companies can do and I think particularly if you are operating globally and you are in a sector Which another government has has said is a target in terms of their own domestic economy You need to be taking steps internally to try to make sure you're as a protect as possible Yeah, the only thing I would add is you know I came from the private tech sector and Some of the companies that I work for were direct victims of trade secret misappropriation in large amounts large dollar amounts So it is clearly a big problem and in the 113th Congress as you had mentioned There is there was a piece of legislation to create a civil federal cause of action for trade secret misappropriation And my sense was talking to the various stakeholders There was a fair amount of consensus on that point I mean, it's ultimately something did not pass and they were still working on language But my sense is that there's at least some interest by a broad range This is all range of all different kinds of companies in the United States whether biotech pharmaceutical, right? You name it there was consensus on this point. So I wouldn't be surprised if you see that legislation perhaps Being brought up again There's probably a need for it and the question is just getting the language right, but You know what the US PTO is trying to do in terms of trade secret misappropriation curtailment We do a lot of work with again people on the ground We do a lot with the IPAC IP enforcement coordinator and making sure that people are aware and have the resources Because it's a little late after the trade secret has walked out the door I mean, that's not really not the time to be coming into the government office It's really beforehand preparing beforehand as Victoria says and preventing it and self-protecting where you can And then working with us so that we can make sure that we have appropriate remedies and laws that incentivize Respect for trade secrets. And when I was in China again, this was another topic I raised to treat trade secrets as a form of intellectual property just like patents copyrights trademarks And people are beginning to get it We would certainly support the civil right of action and in fact have been actively advocating And have been working in Europe with the European Commission Which is looking at harmonizing its own trade secret theft law and is very interested in what's happening here in the United States You know you mentioned this moving from first inventor to file is the system that we have now It's part of a a a it's part of a number of changes IPR was created all this created out of that whole process We're just now beginning to see the implications Just now three or four years later of what a a means and it's going to have it may have positive Implications there may be some things that there are coming out that now we're seeing that there may be some issues with that Which is why I think we need to be if we're going to legislate again in this area this whole patent area But you'd be very careful about how we go about it because we're just now seeing the What's the output in some ways of what the IA was back in 2011? So we ought to be cautious about how we go back and wade back into that water again If I could just say one last thing on this point, so I agree with you I mean, this is this is a big problem in the United States. It's also Increasingly a problem in Japan who is also looking at revising their trade secret law. It's a problem for European companies So I think this is one of the areas where the US government can work really well with its counterparts and at the European Commission and at the National Member States and certainly with the government of Japan to to try to encourage Other governments either put law domestic laws in place that make it easier to Prosecute against trade secret theft or as Michelle said to put policies in place to try to prevent trade secret theft from happening in the first place there does appear to be a Incipient consensus US Europe and Japan and there are measures you can take that will Reduce this problem, but you have to take them. So I think one of the things we're seeing now is Rethinking our approach to the larger issue and a more assertive approach might be useful But we've reached the end of our time. I thought this was a great panel. It was really fascinating Michelle Lee, thank you so much And you cut me off before I could thank Victoria and Mike