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The USPTO Director fiasco reflects a failure of leadership at the White House

While the heads of most of the globe’s major issuing authorities are civil servants who often do not have any background in IP, the post of Director of the US Patent and Trademark Office is different. It comes with the title of Under-secretary of Commerce and is very much a political appointment that by and large is handed to someone with long experience of working in senior IP positions in private practice, industry, or both.

USPTO directors are not only expected to oversee the interpretation of statute and case law, and the grant of patents and trademarks, but are also supposed to help develop policy and to advocate policy lines. David Kappos, the last permanent director of the agency, was recruited from IBM - where he headed up the IP operation - and was very closely involved in the behind the scenes politicking that finally saw the America Invents Act signed into law by President Obama in 2011.

Because of the attributes the head of the USPTO is supposed to possess – as opposed to those required to run, say, the EPO, the JPO, KIPO or SIPO – finding someone to do the job is always going to be a challenge. A person in the running is almost certainly going to have to resign themselves to a significant pay-cut, while also having to agree to in-depth, highly personal and intrusive vetting. And that is just to get the nomination. You only get the job if you are OKed by the Senate Judiciary Committee.

All this has to be thrown into the mix when considering why the USPTO director’s office remains empty, 20 months after Kappos announced his plans to quit. In that time, of course, the role has been filled temporarily by two women. First Teresa Stanek Rea, Kappos’s deputy; and currently Michelle Lee. But for reasons that have never been explained the Obama Administration seems to have decided that neither was up to being nominated to take the post on a permanent basis.

At the end of June strong rumours emerged that Phil Johnson – Senior Vice President of Intellectual Property Policy and Strategy at Johnson & Johnson, and a high-profile member of the 21st Century Coalition for Patent Reform – was about to be put forward by the White House to fill the vacant Director’s role. Judged against previous post-holders’ credentials Johnson seemed to be an ideal fit. But what worked back in the day clearly does not work now.

As soon as the news of Johnson’s possible nomination broke, there was uproar as organisations and media outlets that favour fundamental patent reform latched onto his opposition to some aspects of the proposed law changes that had been approved by the House of Representatives before floundering in the Senate. Johnson was described as being anti-reform and of having a track record of opposing reform attempts (in fact, he was an active proponent of what became the AIA). His appointment, it was stated, would be a huge blow to the tech sector. Almost single-handedly, they seemed to be claiming, it was Johnson who had ensured legislation designed to rein in the US’s “out of control patent troll problem” did not make it onto the statute books – notwithstanding that the reality was very different.

Now, in the middle of July, it looks as if the outrage has been successful. As of today Johnson has not been nominated and reports last week suggested that he will not be. The USPTO Director’s job is clearly more political than it has ever been.

Johnson’s opposition to parts of the reform package was, within the world of IP, pretty mainstream. Thus, finding someone with the established credentials whose appointment will not cause outrage among reform fundamentalists is going to be a tough ask. And when you think how spectacularly badly the Obama Administration has read the politics around a Johnson appointment – and you throw in its rejection of Stanek Rea and reluctance to put Lee forward to be director - you have to wonder whether it is capable of finding someone willing to make the sacrifices necessary to be interested in doing the job.

The alternative, of course, might be to nominate someone who is a reform fundamentalist. But that will probably mean a person whose views will be unacceptable to other parts of the IP eco-system or someone without any significant, high-level IP experience. At the very least, either scenario would make the nomination process difficult.

What all this may mean is that we will not now see a permanent director in charge at the USPTO until there is a new president in the White House. Given how important IP is to the American economy that is not an appealing prospect. It would also represent a massive failure of leadership.

Sadly, though, it would not be a surprise. Leaving a good man like Phil Johnson hanging out to dry, seeing David Kappos leave the USPTO, letting Teresa Stanek Rea follow him out of the door and not nominating Michelle Lee for the director’s job indicates that we have an administration that does not know - or maybe does not care - what it is doing when it comes to IP policy. That is just not good enough, so let’s hope that President Obama ends up proving us wrong. But with less than three years until his presidency comes to an end the clock is ticking. And whatever happens now, a year and a half has already been lost.


Joff Wild
IAM Magazine
14 July 2014

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Comments

RE: The USPTO Director fiasco reflects a failure of leadership at the White House

Several points in this post deserve comment. First, it is not at all uncommon for a prospective nominee’s name to be floated informally before the White House embarks on the difficult-to-reverse course of nomination. There are many people inside the administration who weigh in on a nomination and some have narrow perspectives, perhaps informed by naïve politics or personal networks. A more Machiavellian explanation is that Johnson’s name was put forward as an accommodation, knowing it would likely be shot down in flames. Note that a nominee has to pass through the Senate as a whole, not just the Judiciary Committee, and nominations are easily blocked, especially in today’s partisan climate.

Johnson’s nomination would have resurrected not only the battle over reform but the frustration over the derailment of the legislative process by Senate Majority Leader Harry Reid. It was he, not Senator Leahy, that effectively pulled patent reform from the Senate agenda when it had already passed the House and the Judiciary Committee had invested time and effort. Ironically, had patent reform been allowed to proceed without derailment from above, Johnson might possibly have been nominated and confirmed. As it was, Reid’s maneuver was attributed to lobbying by pharma and trial lawyers. Yet patent reform was supported by the administration – in fact, the administration’s initiative of June 2013 was the first time the White House itself had launched a patent reform agenda in 47 years.

Philip Johnson may have looked good to someone somewhere – at least on paper. He is an insider’s insider, a well-regarded representative of both the patent bar and the pharmaceutical industry. (Note that only two of the past five PTO directors (Dickinson and Kappos) actually fit the insider model described in the blog post.) However, insiders have become victims of their own success. The spread of software and business method patents throughout the economy has created highly distributed liabilities (and opportunities for arbitrage) in a wide range of downstream businesses. Your May 25 blog incorrectly limits the push for strong reform to narrow tech sector interests, while the signatories of opposing letters show that half the economy pulling for strong reform and the other half for weak reform if any. Yes, much of the evidence is anecdotal, but good empirical data will be long in coming because the problems are papered over with non-disclosure agreements. It is not in insiders’ interests to require the reporting of business data.

The previous insider left on a divergent path from the White House, professing support for nonpracticing entities, upping the volume of patents granted 51% over three years, raising the effective allowance rate from 68% to 89%, and denying the General Accounting Office’s critique of software patent quality. It may be time for a nominee with a fresh perspective.

Brian Kahin

Senior Fellow, Computer & Communications Industry Association

Fellow, MIT Sloan School of Management Center for Digital Business

Senior Policy Analyst, White House Office of Science and Technology Policy, 1997-2000

Brian Kahin, Computer & Communications Industry Association on 16 Jul 2014 @ 17:16

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