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New USPTO Deputy Director Discusses Challenges, Changes at Embattled Office


Margaret Peterlin
Under Secretary of Commerce for Intellectual Property
US Patent and Trademark Office
Name: Margaret Peterlin
Position: Deputy Under Secretary of Commerce for Intellectual Property; Deputy Director of the Commerce Department’s US Patent and Trademark Office
Background: Counsel for Legal Policy and National Security Advisor to Dennis Hastert, Speaker of the US House of Representatives; General Counsel to Richard Armey, Majority Leader of the US House; clerk, Fifth Court of Appeals under Judge Jerry Smith; Officer, US Navy

In May, US Secretary of Commerce Carlos Gutierrez appointed Margaret Peterlin as Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO.
Peterlin inherits the role at a tumultuous time in US patent law, as pending patent reform legislation and a score of recent US Supreme Court decisions have rankled members of various industries in the US, especially biotech. Meanwhile, members of other industries, such as information technology, have helped to drive much of the patent reform to try and shape what they see as an outdated system to better fit their needs.
BTW caught up with Peterlin last week to discuss her new position, her views on patent reform, and how the USPTO hopes to alleviate the increasing demand for its services and growing patent pendency backlog.
How did you develop your interest in patent law and what made you decide to pursue the position at the USPTO?
For almost six years on Capitol Hill, I served as the general counsel or as counsel for legal policy first in Majority Leader [Richard] Armey’s office, and then in Speaker [Dennis] Hastert’s office. I handled judiciary issues, including the intellectual property subcommittee issues that would work their way through sub-committee, through committee, and the House floor for passage; and then into conference committee with the Senate; and worked with the administration to get some of these to become public laws. So I had that exposure and interest.
When the Bush administration came in, they realized that the office had been suffering from lack of full access to their fees; they had only been doing attrition hiring while applications were increasing at about 6.3 percent per year over two decades. With the Bush administration focused on the issue, and with Secretary of Commerce Gutierrez taking an interest in the operations, the USPTO began to develop new initiatives and techniques to attack the patent backlog. It’s interesting subject matter, and it was an area where people were appropriately increasing [their] focus, so it’s an area that also became very attractive to me.
I didn’t actually pursue the job, though. I had been pursued by the folks [at the USPTO] for about a year because they knew about my interests and activities when I was on the Hill. When the opportunity came to try and step into [former USPTO deputy director] Stephen Pinkos’ shoes, it was a really great opportunity for me.
What are your duties both as deputy undersecretary of commerce for IP, and as deputy director of the USPTO, and how do those roles overlap or differ?
Unfortunately finding time for lunch doesn’t appear to be on my list of duties, so that’s been a challenge. But one of the great things about this job is that there are actually these dual roles that are intertwined in terms of their responsibilities. The off-hand way that some people refer to it is that I’m the COO of a major agency that at this point has a budget of about $1.9 billion per year and employs about 8,500 persons, including our examiners and corporate side, but not including the contractors that work with us.
I’d like to talk about the two roles in terms of what my goals are inside those roles. As deputy undersecretary, I think the focus that I’ve been able to develop is looking for best practices and working with other countries. [USPTO] Director [Jon] Dudas and I just attended an historic meeting between the heads of the five [largest] patent offices, and then I came back [the] next week to head a tri-lateral meeting with the European patent office and the Japan patent office. We’re looking for opportunities to sort of ease the transition from the US patent system to another country’s patent system. We’ve found in some of our outreach programs that a lot of small businesses don’t realize that their US patent or trademark is only providing them protection here in the US. We’re trying to look for ways to work with other countries to either learn from their best practices and develop them here, or to find opportunities for harmonization, keeping in mind that our goal is to do all of this so that it benefits US business persons, or to not do it at all.
In terms of the deputy director role, what’s particularly great about that job, in addition to the management opportunity, is [the] work-life aspect. For instance, my first official act was to congratulate our HealthierFeds participants. We had an unusually high percentage of participation in that program. There are lots of work-life issues, facility issues — we have a 2.2-million-square-foot facility. Those roles are particularly interesting to me.
But on the more operational side of things, I’m very interested in our process mapping so we can become an organization that does end-to-end electronic processing, which will help us not only with our quality and pendency issues, but will also help us with our long-term goal of becoming a nationwide workforce.
One other area of particular interest to me is the fee-setting issue that we have. Both our patent and trademark organizations are starting to look at where we place our fees and the timing of our fees. You’d be amazed sometimes that if you just look at the placement of a fee, you find that you’re driving the exact opposite behavior of what you think is efficient for the system. Those are the types of projects that I think are going to reap rewards for users and our examiners, because they will make our processing more rational and of better quality.
What is your take on the Patent Reform Act that is currently under bicameral review (see BTW 4/23/2007 and 5/14/2007, and related story, this issue)?
That’s actually a subject that I’ve been following for years because it’s the very type of thing I was doing on Capitol Hill. So I do have a view that has developed over time, and especially now that I’m here and participating in initiatives such as our views letter. This is an 11-page document that lays out a lot of our specific positions. It keeps in mind that there are people with varying approaches, or solutions, and you have to pick the best approach for the most people.
In terms of the patent modernization bill, on balance we like the bill. The bill that was introduced in the House and Senate was identical, which, from my experience, is a very good sign that we may actually get a public law out of it. It means that the chairman and the ranking members of the committees are working together to try to solve the problems, and that’s always optimistic.
We think that modernization is good and necessary. The system will evolve over time. One thing that’s worth remembering is that American IP is now worth about $5 trillion. That’s about half of our GDP, and greater than the GDP of any other nation. IP-based businesses are the largest sector of the US economy right now, so a patent system that has been around since the 1700s probably is ripe for modernization at different periods in its life cycle, and this seems to be a good period.
Many people in the biotech industry and at universities have said that the Patent Reform Act, when combined with recent US Supreme Court decisions, is patent-hostile and may stifle innovation. What are your thoughts on that?
We hear that from people and we welcome the conversation, because we can’t have informed input into the system unless we’re hearing from the users and the people who are not similarly situated across the patent application community. One of the things we focused on is the issue that the Biotechnology Industry Organization and other interested groups brought to us, [which] is that they submit a higher number of claims than the other arts, and business methods might be the only other unit that shares the same tendency. Part of that is because their capital markets and their development require a longer time frame. We understand that this is driven not by a simple choice on their part, but by their underlying market structures. And the high-tech people live in a very different market structure, where their development timelines might be 18 months or shorter. A new drug generation, on the other hand, might take fifteen years. We have to look at that and then keep our mandate and direction from Congress until the policy makers come and say, ‘We want to treat people differently on the basis of their underlying market structure.’ We have an obligation to do the best we can in terms of quality and pendency throughout the system. These market structures are important distinctions to discuss, and it’s been very useful to bring that conversation and highlight that distinction both to us and Congress. We have to figure out what modernizing changes we can make that solve the most problems for the most people.
It seems that the Supreme Court has also taken a lot more interest in patent cases in recent years. Do you believe that to be the case, and if so, is there an underlying reason for it?
I’m not a very good conspiracy theorist, so I don’t think they’ve sat down and agreed to do that. But it doesn’t surprise me because the value of IP has grown both nationally and globally. Again, when we’re looking at a system that is as old as the country itself, and we are becoming more dependent on our IP business sector for our growth and development, and to sustain our quality of life in the US, you’re going to see more points of tension in the system. These are naturally going to be brought through the court system more. The Supreme Court has smart justices on it — nine of them, in fact — and a lot of smart clerks working for them, and it’s their job to spot critical issues for the US, and to provide clarification when necessary.
Some opponents of patent reform have suggested that the system doesn’t need to be reformed, but that more resources need to be allocated the USPTO in order to enhance the productivity of the current system. Do you think the USPTO needs more resources, financial or otherwise?
One of the things we pride ourselves in is that we are a fee-based agency, and we don’t tap into taxpayer funds to provide our work for the US government or applicants. The PTO certainly needs access to its full fees, and we’ve been very appreciative of President Bush’s recognition of that and his work with Congress, and their recognition of that, to provide us full fees, because that was a change. That has allowed us to increase productivity by increasing efficient initiatives like our patent hoteling program, where we have and will continue to give patent examiners the ability to work at home. That doesn’t just have productivity returns, it also causes fewer wasteful emissions in the environment — it’s just good business from a lot of perspectives. We also have seen a 40-percent decrease in sick leave usage by our hotelers since we’ve instituted this program, which is obviously related to our productivity. We also have a laptop program, where we’re providing laptops to examiners, both of which improve examiner morale and productivity. That’s on the patent side; on the trademark side, 85 percent of the examining attorneys who are eligible actually work from home.
Yes, we need access to our fees, but there is a limit to what resources buy, and that is where our focus has been. Quality begins when the application is drafted. If you look at our views paper, we’re very interested in having a highly participatory, highly engaged relationship with our applicants, including benefiting from the knowledge that they uniquely have about their invention. You can give us $10,000, but the knowledge in the mind of the innovator is more valuable. That helps us understand what problem you were trying to solve and how you were trying to solve it. Then the quality is improved from that moment throughout the entire time, and it will also allow us to lower our pendency. If we take higher quality applications in the door, and do all the efficiency and quality and productivity improvements that we can do, then you have a fully optimized system from start to end. We would prefer the highest quality application and a very engaged relationship with the applicant.
Are there any ways that have been proposed to help that process, to ensure higher quality patent applications?
Yes, and actually, it’s more than a proposal. In our accelerated examination program, we have people who have participated and voluntarily provided an initial search report, and characterized the prior art. I think our first patent issued under that did so in less than six months, which is the kind of pendency that we’d love to see across not just our current patents, but our backlog too. We have experience with these applicant quality submissions, which are these initial search reports that establish the minimal incoming quality and start that relationship between the examiner and the applicant, and that is the first issue we address in our views letter.
Also, regarding applicant quality submissions, if you look at our views letter, we recognize that it is attached to something called inequitable conduct, which has created a perverse incentive to not have this highly participatory relationship. Sometimes fixing one problem means fixing three problems, and that is what we are confronted with in further expanding these applicant quality submissions.

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