“The statistics I mentioned are those published by the USPTO concerning claim cancellation upon challenge at the PTAB which are a small subset of all issued patents, not a measure of quality at the front end.” – John Squires
The Trump Administration’s nominee for U.S. Patent and Trademark Office (USPTO) Director, John Squires, has submitted written responses for the record following his May 21 testimony to the Senate Judiciary Committee expanding upon and clarifying his earlier comments.
During the May hearing, Squires made some statements about the Office’s error rate based on Patent Trial and Appeal Board (PTAB) statistics. Specifically, Senator Ted Cruz (R-TX) asked Squires whether the PTAB is effectively an arm of Big Tech that disproportionately favors large challengers, and Squires surprised many when it seemed he was suggesting the problem is not with the PTAB, but rather is found on the front end, which leads to poor quality patents routinely being issued by the Office.
However, in his written responses, Squires clarified these comments in answer to a question from Senator Adam Schiff (D-CA), who asked: “Do you believe that approximately 68 out of 100 U.S. patents that are currently in force are defective?”
Squires replied “no,” and added that “the statistics I mentioned are those published by the USPTO concerning claim cancellation upon challenge at the PTAB which are a small subset of all issued patents, not a measure of quality at the front end.”
He also expressed his view that there is a need to “analyze trends in PTAB proceedings against the relevant issued patent marketplace data to better understand why IPRs have the types of numbers reported while PGRs seem less preferred; why prior art was missed in cases of invalidation and if that art is making it back to the art unit post disposition to address issues on the front end; and why industry appears to be under-utilizing third party submissions and what can be done to address this issue; among other issues.”
He reiterated his philosophy that patents should be “born strong,” including with respect to erroneously rejecting claims that should be issued. “I believe it is to the benefit of all stakeholders if prior art is identified and applied at the earliest stage of examination or post issuance, as we benefit as a society from patents ‘born strong,’ beginning with the original patent grant,” Squires wrote.
Senator Peter Welch (D-VT) noted that the rate of discretionary denials of inter partes reviews (IPRs) has dropped from 68% to 43% since “the publication of a new rule,” which presumably refers to Acting Director Coke Morgan Stewart’s new interim procedure, and asked how Squires plans to “address” that decrease. Squires replied:
“I testified that this data seems ‘skewed’ to me as between the Patent Trial functions of IPRs, PGRs and Derivation proceedings as one might expect a more ‘normal’ distribution, or at least as between IPRs and PGRs. As to the drop in the rate, I would want to explore the avenues of redress where that is headed, whether it be district court or elsewhere. If confirmed, I look forward to working with stakeholders the USPTO and Congress to ensure that the PTAB fulfills Congressional intent as to all aspects.”
Senator Chuck Grassley (R-IA) asked Squires if he has intentions to “alter the PTAB’s authority or restrict access to IPRs.” Squires said he has no such intentions and prefers a “balanced approach.”
Squires was also asked by Senator Grassley whether he would keep the policies in place regarding discretionary denials that have been implemented by Acting Director Coke Stewart, including whether he agreed with the decision to rescind the 2022 memo by then Director Kathi Vidal that put at least temporary restrictions on discretionary denials. Squires was non-committal, saying he needs to understand the underlying policy changes and operational considerations, and would work with Stewart and USPTO management to ensure the PTAB meets Congressional intent to provide a faster, cheaper alternative to litigation. Then, later in his answers, in response to a question from Senator John Cornyn (R-TX), Squires did commit to not using discretionary denial authority as previous Directors have:
Cornyn: Will you commit to requiring the agency you lead to operate the PTAB as Congress articulated in the America Invents Act and not exceed the authority granted to discretionarily deny petitions for review as previous Directors have done?
Squires: Yes.
Another area of questioning by Senators focused on litigation funding, particularly a concern raised several years ago by now CIA Director John Ratcliffe who said that foreign adversaries were participating in U.S. litigation as undisclosed third parties for the purpose of accessing confidential and sensitive technology. In one particular answer to Senator Grassley, Squires explained the need for more transparency at the PTAB relating to the real parties in interest, which should be well received by patent owners. Squires wrote:
“Allowing foreign rivals to bankroll lawsuits against U.S. companies to gain access to our technology is unacceptable. District court local rules require such disclosures and notification of the patent office of such parties in interest, the PTAB should have similar transparency requirements. If confirmed, I will work to ensure that the PTAB proceedings are used in accordance with statutory requirements.”
In other responses, Squires emphasized his interest in using AI tools to improve patent quality and examination efficiency; his commitment to investigating “patent thickets” with respect to the impact of pharmaceutical patents on drug pricing; his agreement with Senator Thom Tillis (R-NC) that eligibility law is in need of clarity and “leading to a lack of American competitiveness”; and that he will prioritize reducing the current USPTO backlog of patent applications. With respect to the latter, he said that one solution, in addition to AI tools, is to work with the U.S. Trade Representative (USTR) “to identify and eliminate from the system cases, especially foreign-filed that are overburdening the system.”
A Senate Judiciary Committee Executive Business Meeting held today listed Squires’ name on the agenda for the first time, and the vote was held over until the next meeting.
UPDATED June 5 at 4:43pm ET to reflect that Director Vidal’s 2022 memo did not end discretionary denials, but rather restricted their availability.
Image Source: Deposit Photos
Author: iqoncept
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