Can Andrei Iancu make patents great again?

There are few if any jobs in intellectual property bigger than head of the US Patent and Trademark Office (USPTO). The US patent system may have lost some of its sheen of late – thanks to uncertainty in the courts over patent-eligible subject matter and the rise of validity challenges through inter partes reviews – but it remains an undoubted leader, particularly in the world of IP value creation.

Iancu’s rise to the top job is another chapter in an impressive life story, which saw him arrive in the United States from his native Romania at the age of 12, graduate from law school after a stint as an engineer and then build an impressive career in private practice.

While his time as a patent litigator led to a roster of courtroom victories for the likes of TiVo and Ariosa Diagnostics, Iancu was little known in wider IP circles – despite his time as managing partner of the much-admired California firm Irell & Manella. This all changed when his name first surfaced in 2017 as a possible contender for the USPTO’s top job.

In many ways, that might have been one of the keys to his success, as he arrived with little apparent attachment to a particular industry or sector of the economy. This was in stark contrast to rivals for the position such as former Johnson & Johnson senior IP executive Phil Johnson – who was seen as closely aligned with the pharmaceutical sector – and to Iancu’s immediate predecessor Michelle Lee, whose time at Google left her vulnerable to accusations that she was too close to the high-tech industry.

“I think it would be difficult for any particular group to criticise me for being beholden to one particular industry or another, or that I have sympathies for a big company versus a small one, or that I have sympathies for the plaintiff side or defence side,” Iancu muses. “I have really represented all of them and I think that does help in potentially bringing some consensus, hearing everybody out and driving towards positions that are in the best interests of the IP system and the US economy.”

In one of his first interviews with the media, Iancu met with IAM in early March, shortly after returning from a trip to Japan to meet his counterparts from the European and Japanese patent offices. From his office on the top floor of the USPTO’s headquarters in Northern Virginia, a pristine view of the Washington Monument visible in the distance, he laid out his priorities for his time in charge, including the thorny issue of patent-eligible subject matter, reform of the Patent Trial and Appeal Board (PTAB) and changes to the patent examination process itself.

Throughout the interview he returned to what might become the defining issue of his time in charge – bringing greater certainty to the US patent system. “It is critically important to have predictable patent rights,” he insists. “If you have predictable patent rights then you have quality patent rights.”

An advocate for innovation

When asked to list his priorities as USPTO head, Iancu began with a broad message to the patent-owning community. “First of all, I think it is incumbent on us as leaders of the IP system to advocate for the IP system and to advocate for innovation,” he comments. “I believe that inventors and invention are key drivers of economic growth and human progress and that when IP rights are carefully balanced, the American IP system provides the necessary protections and incentives.”

It is a message that should appeal to all patent owners but particularly the small inventor community which, in many cases, feels that the US IP system has been working against it in recent years. On more specific priorities Iancu hits on a topic that is a huge source of unpredictability in the US system – namely, recent changes to the jurisprudence around patent-eligible subject matter.

Thanks to a series of Supreme Court decisions over the last decade – including Mayo Collaborative Services v Prometheus Laboratories, Association for Molecular Pathology v Myriad Genetics and Alice Corp v CLS Bank – patent owners’ heads have been left spinning as they struggle to determine just what is patentable. In some cases, they have seen their grants knocked out in early district court challenges in what have come to be known as “Alice motions”.

Part of the USPTO’s role is to respond to the decisions handed down by the Court of Appeals for the Federal Circuit (CAFC) and the Supreme Court, and to draft guidance on how those affect the 101 landscape (Section 101 is the part of the US patent statute that covers eligible subject matter). While this means that the agency will always be left to react to the latest ruling, Iancu maintains that it can do more to get ahead of the curve.

“I do think the office could play a role in identifying what is and what is not patentable upfront proactively in light of and within the context of the Supreme Court decisions and the Federal Circuit decisions that we’re already faced with,” he argues.

The uncertainty around Section 101 has led to three of the largest IP stakeholder groups – the Intellectual Property Owners Association (IPO), the American Intellectual Property Law Association (AIPLA) and the American Bar Association’s IP section – proposing to rewrite Section 101 to bring greater clarity. Iancu concedes that a revision of the statute is something the USPTO is looking at and is “one of the possibilities out there” but points out that “ultimately it is up to the legislature to make that decision”.

After the Supreme Court’s 2014 Alice decision raised questions over the patentability of software, a series of Federal Circuit decisions have helped restore some certainty in what is patent eligible. Most recently in the majority opinion in Steven E Berkheimer v HP Inc, the court ruled that: “Whether a claim recites eligible subject matter is a question of law which may contain disputes over underlying facts.”

That is undoubtedly favourable to patent owners, particularly in the field of computer-implemented inventions, as it should help to curtail a district court’s ability to invalidate patent claims in summary judgment. While that has given those in the tech community a little more peace of mind around the strength of their IP rights, many in the life sciences and medical diagnostics sector remain concerned by the uncertainty that hovers over their patents.

Iancu declines to be drawn on whether there has been a widening gap between different sectors on Section 101. “I do know that there have been more decisions around computer-implemented inventions compared with life sciences,” he concedes. “But whether one has more clarity than another, I don’t know if that’s the case or not.”

A question of quality

Arguably the defining issue of Michelle Lee’s time as director during the second Obama administration and the start of President Trump’s time in office was an increased focus on patent quality. Lee introduced the Enhanced Patent Quality Initiative and appointed the first deputy commissioner for patent quality.

According to Iancu much of the focus on improving quality needs to be on the original examination and on closing the gap between the amount of prior art identified initially during an exam and the amount then thrown up years later when the patent is challenged either in district court or at the PTAB.

“It’s not just a US problem, this is an international issue,” he insists. “One of the main reasons for that is that over the past couple of decades there has been a publication explosion and an explosion in the accessibility of publications.”

“If we can work to narrow the gap between the art that is found at the front end and the art that can be found later on during litigation or post-grant proceedings, then we will have increased the quality and reliability of the patent.”

But how might the office go about that? “It’s one of the priorities that we’re working on and we can look at better use of technology, perhaps exploring how we use artificial intelligence at least at the front end of the searching process,” he reveals. “There are a whole host of options that we need to explore.”

However, one of the difficulties that patent owners face is that typically a patent is not asserted in court until eight to 10 years after it is issued, sometimes longer, by which time the rules of the game might have changed. An owner that received its grant in the late 2000s, for instance, now faces a very different landscape thanks to cases such as Alice and developments such as the creation of the PTAB.

Iancu admits that changes such as these are out of USPTO hands but there is still a role the agency can play to bring greater stability. “The fact is we live and operate in a country that has a common law approach with the courts issuing decisions on an ongoing basis,” he reflects. “And, over time, Congress can issue new laws and we can’t change that.”

“What we can make sure we do a good job on is that we have a solid examination and prior art search at the front end, that our review processes down the line are fair and balanced and, to the extent that there are new laws, that the office is in the game and can lead when appropriate to ensure that any new law has a stabilising effect or at least a neutral effect.”

Andrei Iancu, USPTO director

Picture: Jay Premack/USPTO

Iancu’s biography

• 1968: born in Bucharest, Romania.
• 1981: emigrates to the United States with his family.
• 1989-1990: receives his bachelor’s degree in aerospace engineering and then his master’s in mechanical engineering from the University of California (UCLA). He subsequently works as an engineer at Hughes Aircraft Co.
• 1996: receives his JD from UCLA.
• 1996: joins law firm Lyon & Lyon in Los Angeles.
• 1999: moves to Irell & Manella.
• 2012: becomes managing partner of Irell.
• 2018: confirmed as US Patent and Trademark Office director by the US Senate.

Notable cases

• BlackBerry: represented the Canadian tech company on IP issues relating to its $777 million investment in the Rockstar Consortium, which acquired the former Nortel Networks patent portfolio for $4.5 million.
• TiVo: represented the company in a series of disputes with the likes of Verizon and AT&T resulting in settlements that totalled more than $1.6 billion in payouts to TiVo.
• Ariosa Diagnotics – acted for the company in a lawsuit against Sequenom, successfully invalidating Sequenom’s patent relating to a test for foetal abnormalities. The decision proved controversial in some quarters, given the apparent innovative nature of Sequenom’s discovery.

A seismic shift

The biggest change to the US system that was introduced by the America Invents Act, the last major legislative patent overhaul passed in 2011, was undoubtedly the creation of the PTAB and the introduction of inter partes reviews as a means to challenge patent validity in a more cost-effective and efficient manner.

However, since their introduction in 2012 inter partes reviews have come to represent, in the eyes of many, a skewing of the US IP system against patent owners’ rights. Although the proportion of claims invalidated in post-grant review has continued to drop year on year, the PTAB remains dogged by controversies such as the use of expanded panels and panel stacking, limited opportunity to amend challenged claims and the application of sovereign immunity by universities and Native American tribes as a defence against inter partes reviews.

Iancu admits that, regardless of the reality, the PTAB has a perception problem. “And when you have a perception problem, you have a real problem in the sense that if the IP community loses faith in what you do, then it loses faith in the reliability of the system,” he concedes. “It is a fact that the office has not engaged in rule making on amendments during inter partes reviews, so that’s an area we’re looking at right now to consider the best approach and whether rule making is necessary or not.”

Surrounded by his family, Iancu is sworn in as director by Commerce Secretary Wilbur Ross

Amendments were thrust into the spotlight last October in the CAFC’s en banc decision in Aqua Products v Matal, a case which elicited five different opinions from 11 judges and ran to a daunting 148 pages. A majority of the judges could at least agree that it was up to the petitioner in an inter partes review to persuade the PTAB that claims which have been amended in a review are unpatentable. However, the lengthy ruling left many unsatisfied.

“From the standpoint of a member of the Patent Bar, it would be better to appeal to the Supreme Court to get a final answer rather than to keep this issue under a cloud for two more years while the USPTO gropes around for some new rule that might past muster,” Aqua Products’ victorious lawyer James Barney stated shortly after the decision.

Iancu’s comments suggest that claim amendments is one area that the USPTO is looking closely at – although, as with many parts of the patent system, the Supreme Court might take the lead in dictating a change of approach.

A sovereign right?

While the relative rarity of claim amendments in an inter partes review has been a bugbear of PTAB critics for some time, a more recent hot-button issue for IP stakeholders has been the use of sovereign immunity – first by US universities and then, more recently, by a Native American Indian tribe – to shield patents from post-grant review.

Last September pharmaceutical company Allergan agreed a deal with the St Regis Mohawk tribe, whereby the former transferred several patents relating to a drug for dry eye treatment to the latter and then licensed them back for an upfront payment of $13.75 million and an annual licensing royalty of $15 million. The transfer was an attempt to shield the patents from PTAB challenges filed by generic drug companies.

The deal proved controversial from the start, with critics insisting that it is an abuse of sovereign immunity to protect patents in this way. It has even attracted the interest of legislators, with a bill proposed in the Senate to effectively put an end to similar agreements. The PTAB itself has also stepped in by ruling, in a case between the University of Minnesota and Ericsson, that sovereign immunity is waived when a patent owner asserts its grant in court. Then, in February, the board denied a motion by the St Regis Mohawks to terminate the inter partes reviews against the Allergan patents, in a decision that will surely eventually be reviewed by the CAFC.

Iancu is understandably reluctant to comment broadly on such a sensitive issue, especially one that is likely to be the subject of future legal challenges. He describes the topic as “a complex area” and one that will “eventually percolate up on appeal to the Federal Circuit”.

He also refuses to be drawn on whether deals such as the Allergan one undermine the system as a whole. “People have reasons to transfer patents of all sorts,” he insists. “I don’t think I’m in a position right now to judge whether a particular transfer was reasonable or not.”

The issue of sovereign immunity underlines the degree to which PTAB reform presents Iancu with one of his biggest challenges. Inter partes reviews remain popular with some powerful patent-owning constituencies, such as high-tech, while for others it has become a symbol of all that is wrong with the US patent system. Deciding on a balanced approached will be far from straightforward.

First among equals

However, restoring equilibrium to the system is crucial if the United States is to regain its position as the global patent leader. In the most recent IP index from the US Chamber of Commerce, a ranking of many of the world’s leading IP markets, the US patent system slipped again from 10th to 12th, with the uncertainty around patent eligibility and inter partes reviews highlighted as particular problems.

Iancu admits that he is troubled by the latest ranking but not surprised. He points out that the leading patent systems in the latest ranking are separated by relatively little and while his goal is to make the US system stronger, it is still a member of the global IP elite. “Making it even stronger depends on introducing greater predictability in areas like patentable subject matter,” he points out. “It also depends on issuing patents with claims that are appropriately scoped in light of the prior art and on having a post-grant system that’s fair and balanced. All of that will help increase predictability and impact this ranking.”

Iancu at the unveiling of a new US patent design

Iancu’s career as a patent litigator has given him an excellent perspective from which to view the recent changes to the US system and he admits that they have thrown up problems for patent owners and defendants in trying to predict the outcome of an infringement lawsuit or a validity challenge.

Predictability is an issue that he returns to time and again, but he also underlines the role that the USPTO must play in advocating for US innovation and intellectual property. In some parts of the economy, such as among the software community, there remains a sense that patents can threaten innovation and that, overall, patent-owning inventors do not enjoy the same status as once they did.

“There used to be a time when inventors were national heroes,” Iancu reflects. “If some now hear the words ‘patent’ and ‘inventor’ as dirty words, then that is unfortunate and it has to change. As leaders of the American IP system and leaders of the innovation economy, we need to lead the country in a positive direction so that inventors once again become heroes and people want to be associated with them.”

There seems little doubt that Iancu appreciates the scale of the task facing him. To achieve his goals of instilling greater predictability in the US patent system and advocating for the IP-owning community, he will need political, diplomatic and leadership skills that will test him to the limit. No pressure then.