After the announcement that David Kappos was nominated for the Director of the United States Patent and Trademark Office (USPTO), there has been much speculation about possible reform programs that Kappos may enact. The USTPO faces a few major problems due to the increase in applications and complexity of technology. The USPTO is backlogged with almost one million patent applications. Further, some allege that low quality patents are being issued that increases the amount of litigation and/or the costs of litigation. In addition, the USPTO must harmonize its examination process and patentability requirements with recent court rulings.
In March 2009, David Kappos, while working for IBM, offered his support on behalf of IBM for the S. 515 Patent Reform Act of 2009. David Kappos’s testimony focused on the benefit that improving the value of patents and controlling litigation may have on innovation. To overcome the alleged low quality patent problem, the Act proposed two solutions. One solution is to allow third parties to submit prior art to the USTPO during examination and to comment on how that prior art is relevant. Secondly, the Act proposed allowing the public to submit relevant information, after a patent has issued, about whether the patent was properly issued. These solutions open up patentability determinations by encouraging the public to come forward with any relevant information. They allow the Patent Office to become more collaborative, which harnesses the knowledge of the public and may provide for issuance of a greater quality of patents. Additionally, allowing the public to submit information regarding the validity of a patent after the patent has issued may eventually decrease patent litigation costs.
Patent litigation has significantly increased in the last ten years. Some allege the increase is due to low quality patents and uncertainty in intellectual property law. Litigation diminishes innovation by discouraging other inventors and competitors in the field. Requirements of patentability and validity must be clear; otherwise, the public cannot determine the scope of a patent which may lead to more litigation. Unclear patentability also impedes the public from investing in technology that might be in the scope of a patent but for which the potential applicant may be unsure because of the requirements. The market favors licensing and fair deal making. When infringement occurs, there needs to be damages, but only computed in an efficient manner that does not interfere with innovation.
To overcome the increase in litigation, Kappos supported a set of three methods that courts may use in determining damages. First, courts can adopt the“essential features” factor which was used in the Supreme Court case Quanta v. LG Electronics. Damages are determined by what the inventor actually invented, i.e. the “essential features.” Therefore, an inventor will only receive the value of their contribution, and whether background or contextual elements are added to their claims is irrelevant. The second method may take into consideration where a component is placed in a product. This approach determines whether demand for the product was driven by a certain feature of the patented invention or by other components. The last method may increase the strength of the district courts in making royalty decisions. Better articulation and logic by the district courts may be better for review later, and may instigate licensing and other deal making.
The Patent Reform Act of 2009 also proposes: changing the patent filing system to a first to file system; revising the prior art definition to include inventions that were “otherwise available to the public”; permitting a company to file an application on behalf of an inventor when there is an obligation to assign; eliminating interferences; expanding inter partes reexamination; codifying the 2007 In re Seagate Technology, LLC decision’s standard for willful infringement; and permitting use of evidence of prior public use or sale as permissible grounds for reexamination.
In the months to come, if Kappos gets the position as director of the USPTO, the programs ultimately implemented and positions supported will become evident. The Act was proposed when Kappos was working for IBM; however, his responsibility will include all inventors, small and large, in the intellecutal property field. In his confirmation hearing on July 29, 2009, David stated “I am mindful that the USPTO serves the interests of all innovators in this country, small and large, corporate and independent, academic and applied, and most importantly the public interest. While I have spent my career to date at a large corporate enterprise, I am familiar with the concerns of all USPTO constituents, including small and independent inventors, the venture and start-up community, public interest groups, the patent bar and many others, and I will reach out to all of them.”