Joff Wild

Some time soon Penny Pritzker, Barack Obama’s nominee to be the next US Secretary of Commerce, is expected to be confirmed in the post following a vote in the Senate. Assuming she gets the nod – and no-one is expecting anything else – one of her first tasks will be to choose who will become the next Director of the US Patent and Trademark Office. The vacancy was created when David Kappos left the role in January, after unexpectedly announcing his resignation shortly after the president was re-elected in November 2012.

Since Kappos stepped down, the acting Director of the office has been Teresa Stanek Rea, who was previously his deputy. She is, no doubt, a front-runner to take the job on a permanent basis, but will not be the only candidate. Whoever does get the nod will take over at a time of considerable significance not just for the USPTO itself, but also for the US patent system as a whole. Because not only is the USPTO in the process of rolling out a series of reforms introduced by Kappos designed to improve patent quality and grant timeliness, while at the same time implementing the considerable changes brought about by the America Invents Act, both in the face of a major funding squeeze, but also what looks to be a concerted effort to bring about further reforms aimed at curtailing the activities of NPEs/PAEs/trolls is now in full swing. The USPTO Director will have a crucial role to play in all these areas.

Back in 2012 at the IP Business Congress in Portugal, Kappos told the audience during one of the plenary sessions that NPEs are “neither good nor bad”, but should instead be regarded as “a market clearing mechanism”. It is pretty clear that the Obama administration does not believe that to be the case in 2013. Instead, we have seen the President himself attack those who assert patents but “do not make anything themselves” as people “just trying to essentially leverage and hijack somebody else’s idea [to] see if they can extort some money out of them”. This was followed up last month by a ludicrously one-sided report entitled Patent Assertion and US Innovation produced by the Office of the President and a set of executive actions and legislative proposals “designed to protect innovators from frivolous litigation and ensure the highest-quality patents”. Then yesterday, the head of the FTC Edith Ramirez announced her wish for the agency to conduct a wide-ranging assessment of the impact of patent assertion entities, telling her audience that "there is mounting evidence that PAE activities may have an adverse impact on competition and consumers”.

In the face of this offensive –and the numerous legislative proposals relating to NPEs now before Congress – it would be nice to think that the new Director of the USPTO would be strong enough a personality to put the other side of the story to an administration that clearly scents blood. How should trolls/NPEs/PAEs actually be defined, such a person might ask. If you spend tens of millions of dollars each year on R&D, seek patents to protect this investment and enforce what you have been granted, does that really make you an extortionist if your business model is based on licensing rather than production? If you assert patents you have bought or licensed from a third party, such as an SME or a lone inventor, who does not have the means to enforce itself, or if you are working with them on a contingency basis, are you really hijacking an idea? If you do the same for a big company, are you seriously to be considered a bad guy? And what about the law of unintended consequences: can you really frame legislation that will have a significant impact on troll-like behaviour (whatever you finally decide that is) without similarly affecting countless other entirely blameless patent owners? What’s more, the new Director could also point out that poor quality patents are more likely to be granted when resources are reduced – making it harder to recruit, retain and train examiners, and equip them with the best IT system – and the application process is dominated by a relatively small number of applicants, who between them own more than 50% of all currently active US patents.

You can be sure that someone like David Kappos would make such points (isn’t it exceedingly convenient that he is no longer around, by the way). To be credible, his replacement will surely have to make them too. The new USPTO Director must be someone who will ask difficult questions and make sure that the other side of the troll/NPE/PAE story is heard and given due consideration. The US patent system has helped ordinary Americans, and companies big and small, achieve extraordinary things over the last two centuries; things that have benefited not just the US and its economy, but the entire world. The job of the USPTO Director is to point this out morning, noon and night, and to ensure that nothing is done that could cause the patent system any damage. If people want change, the Director should say, it is incumbent on them to demonstrate beyond any doubt that it will do more good than harm. Up to now, we have seen nothing that comes close to that.

Because of what is currently at stake, the last thing that is needed right now is a stooge in the Director’s office at the USPTO. Let us hope that between them President Obama and Penny Pritzker do not provide us with one.