“Oversight of the U.S. Patent and Trademark Office”
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House Judiciary Subcommittee on Courts, Intellectual Property, Artificial Intelligence, and the Internet U.S. House of Representatives
Follow its sittingsSpeaker 1
Meaning, they are not to be spent anywhere else in any agency, including commerce, in which the trademark and patent office is nestled. That means that there is an obligation to raise enough funds to modernize the patent office. Federal workers are stressed today in the patent office because they currently do not have the tools to keep up with demand. In eighteen human hours, seventeen to eighteen human hours, the question is, do we get it all right on a thousand claim, including dependent claim, patent application? And the answer, of course, is no.
One of the goals set up by the director, which I completely agree with, and I believe everyone in the dais does, is that we have to work hard to continue to sustain or improve patent quality. And I say sustain because as they become longer, if we do not have the tools to allow patent examiners to do their job, or if, in fact, we do not supplement technologies that may not be available to the examiners. And I say that specifically because, historically, the examiners are skilled in the technology they're evaluating. But many of the technologies are so short of people that, in fact, to recruit those people or to train them in an emerging technology is virtually impossible. That means that not only do we have to embrace AI in the patenting process, but we have to embrace AI in the patent office.
This will cause the patent office to spend vast amounts of money. Whether it's done in concert and collaboration with other AI companies or substantially an in house production, it will cost a great deal to produce and maintain. However, when in the foreseeable future, we are dealing with more than a million patent applications a year, more than half of which come from countries outside the US, the largest of which is China. A country that does not respect the rules of how we create and qualify inventors, we're going to need sophisticated tools to spot whether in fact true invention is being submitted to us. So implementing the president's executive orders is going to be a daunting task.
Fortunately, he has selected someone that is highly qualified, someone that has the respect in the Senate, particularly of both Republicans and Democrats. And I believe today you're gonna see that we're very pleased with your selection. That does not mean, mister Scriars, that we are pleased with everything that is going on. Recently, you had to deal with a clear conflict of interest, but also with a policy that was ambiguous as to where a conflict lies. The particular case does not need to be discussed here because it rose to criminal activity and a dismissal.
But let's understand, patent examiners with even a small amount of stock cannot and should not be evaluating a patent that could benefit the company or that stock. That level of conflict of interest now is zero under your leadership, and I wanna particularly commend you for that. If somebody had asked me as someone who has followed the patent office for decades if that was a policy, I would have said, well, of course it is. Only to discover that in my entire career, both in and out of government, it was not. And so, again, I wanna commend you because that's the kind of hands-on, decision-making that we need to have.
Additionally, I want to make it clear. The president has an agenda. That agenda is not in conflict on either side of the dais. That is that although sometimes when you say MAGA is pejorative in this body, that making America and keeping America great is the goal of every aspect of this body and of the patent and trademark office. Onshoring of manufacturing of all sorts, mining, agriculture, conventional manufacturing, and, yes, intellectual property manufacturing is not just a goal of this administration, but it should be a goal of everyone that wants America to have 250 years that, in fact, resemble the first 250 years.
Therefore, any policy that isn't helping and supporting the ability for companies to make a decision, whether they be US companies or global companies located outside The US, to make, use, and sell in The United States is adverse to the president's policy and adverse to the best interest that we on this side of the day as enjoy. That brings up a particular point, and it's one that I think is important. Under the policies of acting director Stewart, and quite frankly, as far as I can tell, the continued policies, I see a real threat to that. At the end of the Biden administration, there were approximately 280 slots for patent examiners under PTAB. My understanding is that more than 80 of those slots are now vacant.
The systematic change from 80 to 90% of PTAB reexaminations being granted to just the opposite, somewhere in the neighborhood of 80% being rejected, including a policy and draft form that I will push back on, is not within the discretion. And I repeat, not within the discretion of the patent and trademark office is one that determines that if a patent is beyond a certain number of years, it simply will be automatically rejected. I was here, and some others on the dais that will talk today, we were here when on a bipartisan, bicameral basis under former senator Leahy. We came to a compromise. That compromise was worked out by parties far and wide, not to everyone's complete satisfaction, but to overwhelming support.
That meant that PTAB did not completely displace ex party reexamination, that it still has a valid use. It also means that the so-called one and done was never in place. But in order to compromise between one and done, which was asked for by a number of companies, not the least of which were the leaders in bio and pharma, we said that if you get past the first reexamination, which was assumed if it came in with credible arguments, would go through reexamination, that it would be discretionary thereafter. The law was unclear, and I have to take some credit and blame for that. That when you look back, it doesn't actually say that the first one will automatically be more favorably considered.
But the intention was clear, and the spokespeople on both sides of the capital and on both sides of the aisle were speaking specifically that the bias would be toward yes on the first one, and then there would be a higher standard when either the same company or another company came in with substantially the same information based on substantially the same patent accusation. And I say that because, obviously, sometimes you have diverse and different views. One of them, for example, is one patent has been asserted against Intel Corporation and Gillette for razors. I have to believe that the arguments in why that would be invalid, unsupported, or uninfringed could, in fact, be different between a microprocessor and a razor. When I was shaving this morning, all I could think about was what could possibly be the difference.
The reality is we have to balance that. And, director Squires, you have the hardest job. You have to balance that with a reasonable expectation that a patent is what it says it is. The question is, are patents, in fact, not of the quality we'd like them to be? I'm gonna opine for a moment that if patents tomorrow became perfect, and in no case was there any ambiguity, it would still be up to twenty-six years before the last bad patent could no longer be asserted against somebody for damages.
That is a long time. Director Squires, if you manage to serve that long, you will clearly be the first. So that means that we have to continue dealing with the legacy of the past, with periods of time in which new technologies came in, they were not fully understood, or in fact, on occasions, one examiner is loose. But we also will always have to deal with the reality that somebody will get a patent, which means x, and then assert it maybe against Intel and Gillette as though it means x, y, z, and the like. This is not something that often is done well in the past in the article three courts.
Article three courts, when I arrived here before the patent pilot legislation and before modernization, including PTAB, were running as much as 40% reversal at the Fed circuit. The Fed circuit was taking an amazing amount of cases because it was almost a coin flip. We have been working to reduce that, and I must tell you we're down to about 35%. It is not an easy job because article three judges, all 677 of them, almost exclusively come from technology non-technology backgrounds. They are prosecutors.
They are public defenders. They are civil lawyers, but they are seldom patent attorneys or knowledgeable in intellectual property. That is not their fault. On top of that, for more than half of the judges, they will be lucky to get one patent case. Let me rephrase that.
They will be unlucky to get a patent case. It will be their first. And after that, they will try to find another judge to take on their patent cases. And that means that first markman is their first markman ever. It is on a technology they don't understand, and a patent that says things that have to be explained to them.
That is not true at the PTAP. The 200 and now a 180, but once nearly 280, patent examiners are technical specialists. They will look at dozens of cases, both sequentially and in parallel. They adjudicate these over a year. So by the time they've been on the job for a couple of years, they may have done 60 or 70 patents.
They have brought them to a close, and they seldom have any reason at all not to meet their deadlines. That means they do a better job. The proof of that is that they run about a 12% total reversal, even in part. Meaning, if you lose the patent, trademark office or you win, you can pretty well take it to the bank and either move into article three or move into another place with that patent. That means that we have to find a way to reinvigorate the Patent and Trademark Office.
As I go through my questions today, I will be asking exactly that to the director. How do we restore the ability for people who have been accused of patent infringement to rudimentary, particularly on the first time it's been asserted, be able to get in front of an examiner. There are other problems in the law that I wanna make clear. We never believe that it would be 100% discretionary. We believe that the undersecretary would, in fact, at the end of the day, be reviewing the work of those judges and expected it there to be a process if there was a disagreement.
Under Trump one, we discovered that, in fact, one person could, without any explanation, simply overturn a decision by an Article One judge. That still becomes a bit of a problem, and I know we'll hear from, director Squires of how he is determining that and handling it. But, additionally, we have discovered that a full trial that is nearing its one-year, that is ready to go to decision, can in fact be pulled back and undone. Director Squires, I have to tell you, it is my belief, and it will be my legislative last act if I can, that either will be undone or we will undo it. Once a process, a determination is begun, even if you, at the end of it all, choose to not agree with the decision, to undo it, to you, in retrospect, undo it is, in fact, to have less than the fair process be appeared.
And, in fact, both parties have spent money in the process. It should be allowed to go to the decision. You can then evaluate the decision. That is a particular concern, it'll be the one that I spend most of my time on. Lastly, on the dais, there will be people who don't know the meaning of trolls.
It is difficult, gasp. There are nonpracticing entities who are great inventors, who invent things sometimes that have exactly one customer. That does not invalidate the ability for them to take their invention and say, you'd like to use it, you will, in fact, have to work out a royalty. At the same time, there are non-practicing entities who are simply in the financial gain business. Unfortunately, third party funding has made it very possible to buy old patents, particularly those that have been around for more than six years, and assert them either for the first time or for the first time against a particular defendant.
That means that any deadline, any time out that says a patent can no longer be considered cannot possibly be accurate, not because fair warning shouldn't cause someone to use a process earlier, even if not accused. I share that view with many. However, you don't know you're going to be sued in many cases until somebody redefines what that patent means. Again, in closing, I'm gonna go back to if you looked at a patent, any one of you in this audience, and thought that it applied to Intel or Gillette, please raise your hand. If not, then in fact, that makes my case that you cannot know that your patent is gonna be asserted against you in a particular way until it is.
Without at least a constructive notice, a letter from the inventor or the like, you really are not on notice. That's why we have latches, but it's also why 06/08/2010, or even in the twentieth year, we may need to use the ability to properly find out if, as asserted, the patent is valid and enforceable against that defendant. I've taken a lot of time. I've done so for a reason, for the first and only time, probably in my career. Nothing is more important to making a decision to onshore than knowing that, in fact, you're going to get a fair opportunity to defend yourself against patent and other legal accusations.
I make the case in purely monetary terms. If 20% of the morals market lies here in the United States and you're currently making a product offshore, you have a 20% exposure in the US if you lose a patent case. If on the other hand, you make, use, and sell in The United States, even if only 20% ends up in The United States, you have 100% exposure. Under the law, making in America gives you worldwide exposure. Who in the world would risk 80 of their market when they could make the product in a country that they trust or multiple countries where they trust they would not be shut down.
Unfortunately, that's the real world we live in. We have to make it safe or at least predictable that if you make, if you're Intel, if you're Nvidia, if you're any of the companies, Taiwan Semiconductor, and you onshore here, you are not putting at risk your worldwide sales against a nefarious and, quite frankly, lengthy accusation that may or may not be valid. Does it mean that you don't have an obligation to quickly dispense with those that are valid, but it does mean that we have to maintain a system that typically in a year gets it more or less 90 plus percent right. And with that, I'd recognize the ranking member of the subcommittee for his opening statement.
Speaker 3
Well, thank you, Chairman ISA. And director Squires, thank you for being here today. We customarily don't take intermissions between opening statements, but I would be remiss not to offer you the opportunity for at least a bathroom break if.
Speaker 3
Alright. Okay. Thank you. Directors of the US Patent and Trademark Office appear before this subcommittee every two years or so. And I've had the honor of being present for many of those hearings.
You are the sixth director I've had the opportunity to talk to in a forum like this. Hearings like today's give us the opportunity not just to provide meaningful oversight, but also to inform the legislative process so members of Congress can make the best decisions when considering legislation. In the many USPTO director hearings I've had an opportunity to experience, I've witnessed occasional policy missteps from USPTO directors, and we've discussed administrative failures ranging from modernization, growing pains, to too-long examination times. We've certainly had our differences, but never have I had reason to doubt that the director was acting independently of the president until today. There was a time when the USPTO was removed from the politics of today.
Now it has been drawn squarely into it. I'm gonna take this opportunity to go over a few of the concerns I've heard over the past year. Keep in mind, this is not in any way an exhaustive list. Under the Trump administration, the patent office's workplace morale has plummeted, likely because of the administration's layoffs, which were bizarrely characterized as an attempt to save money, even though the USPTO is self-funded. You've also stood by as USPTO employees' collective bargaining rights were undermined by President Trump, destabilizing your already fragile workforce.
And under your leadership, the USPTO has publicly explored implementing a patent tax that, by all accounts, would have a devastating effect on innovation in the United States. These are just some of the examples of the partisanship inserted into an agency that prides itself on stability. When politics begin to shape a traditionally nonpartisan agency, the result is predictable. You are at the helm of an institution that has lost touch with its mission. This lost mission is most obvious in the USPTO's cancellation of its planned Southeast regional outreach office in Atlanta, Georgia.
The USPTO chose Atlanta after a long process as prescribed by the law. Instead of going forward, the Trump administration canceled this outreach to the Silicon Valley of the South and instead opened it at USPTO headquarters in Alexandria, Virginia. American innovation can thrive only when the opportunity to participate is accessible to all. By placing the Southeast office at USPTO headquarters, your agency has limited its reach and concentrated opportunity among those already best positioned to access it. I encourage you, director, to reconsider this move because while it may not violate the letter of the law, it most certainly violates the spirit of the law.
As you can see, I strongly disagree with the Trump administration. I also believe you want to do right by those who rely on the patent system. Your notice of proposed rulemaking to reform the patent trial and appeals board reflects ideas this subcommittee examined when I was subcommittee chair and has similarities to those proposed in my colleague, Congresswoman Ross's Prevail Act legislation. And while these administrative changes are certainly worth discussing, agency action is not the same as legislation. When the director changes, so can the agency rules.
Patents exist to ensure that research and development rests on firm, predictable ground. This kind of inconsistency between presidential administrations undermines the stability that is essential to a functioning patent system. Ultimately, these are questions for Congress to decide, not the agency. They are questions I look forward to addressing if I became chairman of this subcommittee in the next congress. A healthy USPTO requires clear rules, consistent leadership, freedom from political influence, and a steadfast commitment to protecting those who take the risks to create.
It is incumbent upon us to get these questions right, because inventors and job creators are not asking for favors. They are asking for a predictable and stable system they can rely on. When policy shifts with the political whims of an administration, it is American innovation that pays the price. I yield back the balance of my turn.
Speaker 1
I thank the gentleman for his brevity. And as I go to the chairman of the full committee, I might note that apparently, Mr. Johnson is considering a party change, so I hope you'll favorably consider him to replace me in the next Congress. And I recognize the full committee chairman.
Speaker 4
No one can replace you, Mr. Rice. That's for sure. The, I just wanted to thank the chairman for this hearing, and I wanted to thank the secretary and the director, those titles, for being with us today and answering the committee's questions. And I think the record will show after the comments of the ranking member that the chair's comments were the brief, most brief of I haven't heard from mister Raskin, but I will bet he'll be a little longer than my opening statement. With that, would yield back.
Speaker 2
Thank you, Mr. Chairman. And I'll be somewhere in between the chairman of the full committee and the distinguished chairman of the subcommittee. Thank you, director Esquire, for joining us today. As head of the PTO, your job is to promote stability in the market for goods and services by protecting trademarks that are used in interstate commerce. In pursuit of the mission, the USPTO has for decades been removed from political intrigue, favoritism, and controversy.
By keeping politics out, prior presidents and USPTO directors ensured that applicants had a fair and honest system to rely on. It seemed to change last year. You and President Trump injected partisan politics into the work of the PTO, from working to strip trademark examiners of any right to collective bargaining, a right that they'd enjoyed for many decades, and firing the members of the patent and trademark oversight bodies, to refusing to respond to congressional requests for information. Your tenure seems to be threatening the traditional integrity and non-political nature of our system. You recently took an extraordinary and unprecedented action.
Earlier this year, the USPTO itself filed trademark applications on behalf of Donald Trump's ill-defined private multibillion dollar global project called the Board of Peace. President Trump has declared himself chairman for life of this elusive entity. He's promised billions of dollars from the taxpayers to the board, although Congress has not voted a single dollar for it. And he has secured billions of dollars from mostly corrupt foreign governments, including Saudi Arabia, Kazakhstan, Azerbaijan, the United Arab Emirates, Morocco, Bahrain, Qatar, Uzbekistan, and Kuwait. Beyond that, there's not much we know about this shadowy venture.
We don't know its basic corporate structure. We don't know whether it's a registered entity anywhere in the United States or in any other country. We don't know who controls the billions of dollars in the bank accounts. We don't know in what countries those bank accounts are located. We don't know who will conduct audits and oversight of the board, if anyone.
And we don't know what the president intends to do with this massive secret unaccountable slush fund while he's in office, and after he leaves. Yet when the board of peace decided it wanted to secure a trademark for its name and for its logo, a move that should have required it to identify the legal entity that actually runs it and controls its billions of dollars, you stepped in. You personally filed the trademark applications allowing the USPTO to stand in as a straw trademark holder to cover up for this slush fund that appears to put both billions of US taxpayer funds and billions in payments from foreign governments into the pocket of the chairman for life, Donald Trump, who will control it. The president set up a board that likely violates both the foreign and the domestic ammunitions clauses, and now you're helping to run the operation as far as we can tell. What's more, I'm not sure that either you or the Trump administration realize what you're confessing by filing a trademark application.
You're admitting that the board of peace is not a legitimate governmental body, but rather a commercial enterprise set up by President Trump. Our trademark law began in 1879, when the Supreme Court struck down a trademark law that applied to any and all organizational designations. The court ruled that Congress could do so only under the Commerce Clause. So when Congress passed the Trademark Act of 1881, it was written to apply only to marks used in interstate commerce. The modern version of the Lanham Act in 1946 makes clear it only protects trademarks used in interstate commerce.
Section 10-52(b) specifically forbids the registration of any insignia of the United States or any state or municipality or any foreign nation or any other governmental body. So by filing for a trademark, you're admitting that the board of peace is not really a governmental entity at all. It's a purveyor of influence operating for profit with apparently a billion-dollar admission fee, at least that's what's been reported in the press. A money laundering scheme to pocket the billions, all made in a global shakedown in the name of peace. Now, as far as I can tell, the USPTO has just nine trademarks.
Four are various logos for your office, some of which read USPTO. Others have the full name of the agency written out. US Patent and Trade Office. Three more are for the phrases go for real and you're smart, buy smart, phrases that were part of a public awareness campaign that the USPTO itself ran with the National Crime Prevention Council. The other two are now for the mysterious board of peace, which has no organizational relationship, I believe, whatsoever, to the USPTO.
So by agreeing to act as president Trump's phone a friend and using the PTO to register a trademark on behalf of a third party, it would seem you're violating a cardinal principle of the Lanham Act, which explicitly lays out in subsection b that only, quote, a person who has a bona fide intention under circumstances showing the good faith of such person to use a trademark in commerce who may request registration of the trademark. That's quite a problem for the agency whose role it is to administer and police the registration of trademarks, and to administer disputes about them. One can only imagine this decision will get challenged, and there will be litigation over the mark that you have now claimed as your own for the PTO, before your agency, which is charged with being the neutral adjudicator of disputes about trademarks. The only reason anyone ever registers a trademark is to prevent competing uses. Why would the Trump administration tell you to file for this registration except to suppress anyone else's trademark related to the word peace?
The field is crowded with existing registrations by other educational purveyors of global peace. To give a few examples I found online this morning: World Peace Table, World Peace Network, Project Peace, Peace Vision Global, Global Peace Initiative, Global Peace Foundation, International Peace Center, Peace Network, Peace Action, The Peace Trust, Greenpeace. Any one of these organizations would have a strong case to sue for cancellation of Trump's Board of Peace trademark on the grounds that it dilutes and infringes their own preexisting trademarks for peace facilitation services. And, also, of course, that this mark is not registrable at all, since it purports to identify a governmental entity and not an organization in interstate commerce. Not only would you have to decide whether Trump has a defense to prior users' opposition to his marks, you would have to rule on any offensive use of trademark law by Trump against any of the other groups.
Let's say he moves to attack Greenpeace for infringement of his commercial trademark or opposes the registration of any new organization that uses peace in its name. Who would adjudicate this? You would. Your office. You're both the owner and the judge of any rights that you have as an owner against anyone who wants to identify their organization with the word peace.
This is not just a disreputable use of the trademark registration process. It's the first step in giving Donald Trump and his subordinates a monopoly on the use of the word peace, to make the very notion of peace unthinkable if it departs from control of the new big brother who now owns it. If President Trump can't win the Nobel Peace Prize he craves because he plunged us into an aggressive war of choice in the Middle East, now he'll just own the word peace instead. I wrote to you last week, Director Squires, asking about this elusive entity, an unprecedented baffling situation. If there's a reasonable explanation for the USPTO's conduct here, we'd like to hear it today.
Because if you simply filed on behalf of the board of peace as a favor to the president, then that's a serious problem. A decision like that doesn't just drag the USPTO into covering up for a slush fund that may violate both the foreign and domestic emoluments clauses. It's bad for the integrity of our trademark laws. When people lose faith in the fairness and objectivity of our system, it begins to fall apart. So I'm not just troubled that you may be violating the basic trademark rules.
I'm troubled that in violating the rules to help Donald Trump, you may be acting as a political operative in a way that will destroy our neutral system for regulating source-identifying trademark rights. The trademark system is designed to protect everyone. If applicants think that the rules change for the wealthy and the politically well-connected, they're much less likely to believe the system can work for them. I look forward today to finding out how you justify your agency registering a commercial mark for this alleged governmental entity, if that's what it is, how you intend to resolve disputes with the dozens of past and future registrants of peace organizations, and what you intend to do to restore the professional, nonpartisan reputation of the USPTO. Thank you, Mr. Chairman.
I yield back.
Speaker 1
Thank you, gentlemen. Without objection, all other opening statements will be included in the record. Before I introduce the director, I'd ask unanimous consent that we place into the record the wiki delineation of the Voice of America, which is a US government-owned international broadcast with trademarks including Voice of America, VOA, VOA News, etcetera, which is owned by the US government and was trademarked in 2007. Without objection, so ordered. We now introduce the honorable director of the Patent and Trademark Office, the undersecretary of commerce for intellectual property, and the director of the patent and trademark office.
Prior to joining USPO, director Squires was a partner and chair of IP at emerging companies practice, particularly Dilford Paxton LLP, which is a longer name than when they had three names instead of two. We welcome our witness here and thank him for appearing. Pursuant to the rules, I'd ask you to stand and take the oath. Do you solemnly swear or affirm under penalty of perjury the testimony you're about to give will be true and correct to the best of your knowledge, information, and belief. So help you, God.
Thank you. Let the record reflect the witness answered in the affirmative. Director, our normal rule is five minutes. Considering the ranking member and myself, I will be lenient if you go over. Very lenient.
But since you're the only witness, we came here to hear what you have to say. However, your entire opening statement, if you don't use it all, will in fact be placed in the record along with any other supplemental information you choose. You're now recognized.
Speaker 5
Thank you, Mr. Chairman. Chairman ISA, ranking member Johnson, chairman Jordan, ranking member Raskin, members of the subcommittee. Good morning, and thank you for this opportunity to discuss the USPTO's operations and initiatives. I thank President Trump for his confidence in me to lead America's innovation agency and for his steadfast commitment to intellectual property, reaffirmed yet again with his national AI policy framework released on Friday. It's also the honor of a lifetime to serve Secretary Lutnick, a phenomenal leader with boundless energy and unparalleled experience, himself an inventor on nearly 500 patents.
I'm honored today to provide the subcommittee with an overview of the USPTO's recent activities and accomplishments. America's innovation agency has two foundries. For patents, we have America's invention agency. And for trademarks, we have America's branding agency. And together, we function as the Department of Commerce's central bank of innovation.
Every unit of intellectual property we put into circulation is a potential job, a new business, a competitive advantage, an investable asset, a lifesaving drug, all flowing into the real economy, into the real world. And at scale, American ingenuity means national prowess and global reach. I can't thank the USPTO's highly educated and talented workforce enough for their dedication and commitment. I say to everyone, they are the best in the world at what they do, because quite simply, they are. And none of this would be possible without the fee-setting authority so thoughtfully provided by Congress, allowing us to operate like a business, maintain long-term financial stability, and achieve our statutory mission.
We also greatly appreciate the continued authority to spend anticipated fee collections, which lies at the heart of our U.S. global leadership. We look forward to working together to maintain both it and our global lead. Indeed, we lead today because our founders did the extraordinary two centuries ago, enshrining IP protection into our Constitution. And with it, the American experiment itself, the American experience itself. Last month, I told the head of the UK IPO how our constitutional charge allows us to lean into AI, to quantum, to medical diagnostics, wherever the onrush of technology is going.
His candid reply, I know. Wish I had that. Think about that. The very empire we want our independence from, two democracies, two outcomes, but only one clearly atop the IP world today. That's why it's incumbent upon the USPTO to have an America-first IP agenda built atop the unique legacy our founders bestowed upon us.
And we're doing exactly that with the urgency of now. As I'm for you today, our first priority was slashing the unacceptable backlog by 50,000, another 100,000 to come this year. By the end of my tenure, and with your continued fee-setting authority, choking backlogs will be a thing of the past, and improved quality, a confidence indicator. I'm confident because we just announced our first agentic AI trademark classification tool. Five months of manual searching is now a five-second outcome.
In patents, our AI search assistant delivers a top 10 list of prior art before the first office action, providing quicker pathways to allowance. And across both, AI fraud detections helped us purge 70,000-plus baseless filings in just under a year. You see, AI tools will become our examiner superpowers, supplying them with a cadre of agents to deploy as they see fit. On policy, Congress affords us discretion, and our North Star to its exercise is always both the letter and the spirit of the AIA, balancing, as instructed, economic impact, resource efficiency, and the integrity of our IP system. We are restoring balance and fairness on both the front end with eligibility determinations, and the back end as to trials and error corrections with new feedback loops in between.
Mister chairman, I am humbled and proud to lead this unique and vibrant agency. We are back on our front foot and delivering the brilliant tomorrows American ingenuity affords, tinker by tinker, breakthrough by breakthrough, dream by dream. Just as a central bank stabilizes the flow of capital into the real economy, the USPTO stabilizes the flow of innovation into the knowledge economy. And with born strong protection, new ideas soon blossom in a marvelous virtuous cycle that has delivered prosperity and better people's lives for over 250 years, like no nation before, like no nation ever. Thank you again, and I look forward to your questions.
Speaker 1
So brief. So, very brief. I thank you. We now recognize the gentleman from Kentucky, Mr. Massey, for five minutes.
Speaker 6
Well, the last member of the administration that I was very nice to was Christie Nome, and she was removed forty-eight hours later. But at that risk, I want to thank you for the great job that you're doing. I'd like your analogy of intellectual property to currency, but let's don't compare the Central Bank to the patent office because some of the founders, all of the founders, were unanimous in understanding that the patent and copyrights were the foundation that would allow our country to grow, and I appreciate you doing that. But it is an appropriate analogy because of intellectual property to currency, because we've had a crisis in our currency over the last decade, I believe, of intellectual property. If your currency is called into doubt, if the Federal Reserve notes in your wallet, when you present them, even though they were issued by the government, if they're called into question when you try to use that currency, you have a problem.
And that's the way it's been with patents. The, you know, the PTAB ostensibly was created to make it easier to adjudicate validity on the back end of a patent issuance and enforcement. The problem is it's created too much uncertainty, and I very much appreciate the steady hand that you've put on the tiller. I would disagree with my Democrat colleague who said that policy shouldn't change when administrations change. I would argue that elections should matter.
Laws should not change. The patents that have issued should not change. They should still be valid. But we need somebody in charge. We need somebody to exercise common sense in the application of the laws that we have passed.
And it seems to me that you're doing a very good job of that. And, could you tell us about the rule that you're proposing, and the actions that you've taken in terms of exercising discretion on the IPRs?
Speaker 5
Thank you, Congressman. I'm happy to speak to the notice of a proposed rulemaking we have put forward. Basically, it's intended to restore fairness and balance to the IPR process. There have been instances where there have been as many as seven serial filings, and it's intended to be able to have the matter adjudicated once and for all early. And it's been termed, I will say, as one undone.
But I think that's a misnomer. There's liberal joinder provisions that carry through into the rule. And so I would say it's one join and done. And the facility is provided for if there's a petition filed, after there has been an adjudication, that excuse me. Physicians filed. People can join.
The answer isn't serial filings. We think the answer should be gang-tackling. At the time when it could be had, the preference would be to have a PGR-like process where things are laid open. That's not always possible, as has been discussed, things sneak through. But there should be a point in time where there's quiet title, there's finality, and people could have that chance and do it together, but it's gotta be adjudicated once and for all.
Speaker 6
I agree. I think once you have the imprimatur of the government and you've survived a challenge, that's important because what I've noticed the last ten years, a lot of people are shying away from companies that would have been based on intellectual property. I've heard people, inventors say, I'm not even gonna file the patent. I'm just gonna try to rely on trade secrets. That creates a world of haves and have nots when everybody can just keep all of their stuff secret, and that's incentivized because of a patent system that's not working.
And, you know, the PTAB, I do think it was probably, at least from the people who voted on it, originally intended to expedite this adjudication, but it's created uncertainty that has hurt our country, hurt our inventors. And, I'm glad to see that you're exercising some common sense in the application of it. Any law can be weaponized, and we saw that the PTAB law has been weaponized. And I appreciate you taking it back and using it for common sense. That, I'm give you my last 15 seconds.
Speaker 5
Thank you very much, sir. And, also, to be reminded, there, IPRs are one avenue. There's always reexamination. There's post grant reviews that are district court. What we had found was, particularly with respect to IPRs, that it was intended to be as an alternative to litigation, yet 80% of the filers already had a district court action with, also instituting an IPR.
Speaker 6
I think, yeah. And thank you for taking out much of the redundancy that existed, because it doesn't get cheaper when people keep getting subjected to continuous IPRs or survive the IPR and then go to court, and I'll yield to Mister Eisen.
Speaker 1
Thank you. And just to clarify, that 80% includes a dramatic amount who have been sued and then come to the patent office, because the first notice of infringement is when they're sued. So the chicken or egg often starts with a lawsuit, and you go to the PTAB in order to shortcut the time it takes to show invalidity. Correct?
Speaker 5
Yes, sir. There's a one-year window, if you've been sued at district court, from which to avail yourself to the PTOP.
Speaker 1
Thank you. We now recognize the ranking member of the subcommittee for 5 minutes.
Speaker 3
Thank you, Mr. Chairman. Director Squires, I would hope that you would agree with me when I say that the greatest asset of the USPTO is its employees. And employees at USPTO have described the environment as, quote, rife with rumors, paranoia, and disillusionment, end quote. Just last week in a government-wide survey, only 13.8% of PTO employees reported that they were satisfied with their job. What factors have contributed to such dissatisfaction by your employees?
What specific actions have you taken to address this collapse in employee morale? And, my office received a call just the other day echoing these and other troubling allegations. What mechanisms are in place to ensure employees can report issues without fear of retaliation?
Speaker 5
Thank you, Congressman. We have robust facilities for reporting violations through our EEOC department. They are fantastic as examiners, and I do agree with you. They are the crown jewel of the USPTO. They are the best in the world at what they do, and we're trying to make even better equipped to deal with the what's become a crushing backlog of work that they've so dedicatedly and decisively have chipped down on.
We've increased awards, financial awards to examiners, and we're working on the personnel. I have made myself.
Speaker 3
What factors have contributed to the dissatisfaction, that is evidenced by the survey?
Speaker 5
I'm equally interested in making sure morale improves and have offered engagement. My, I think the biggest factor has been the backlog getting out of control. It rose to a historic high of 837,932 applications unexamined. And this is, you know, just unacceptable, as the secretary had said.
Speaker 3
So it's not the volume in and of itself, but it must be something that the agency has done to address that that has caused the lack of morale or the morale to plummet. What are those factors?
Speaker 5
The specific factors we just concluded an employee survey last week, and we'll be working on those and examine them. I, myself, host a, using I did them weekly, now monthly, for people to tell us what they think. That's been my mantra coming in. And there are forums for people to tell us where there are problems. One of the issues that's been unhappy was the cause of unhappiness has been not having deploying people on the front lines of primary examiners, and having oversight and training and not having signature authority at that point in time.
We have found that this is the first interaction that the applicants have had with the office, and supervisory has been very important. It's consistent with other international offices, and there's been some adjustment to that. There's some initial unhappiness with that, but we've been at that now for over 6 months, and I think morale is getting better.
Speaker 3
Okay. I'm gonna move on. After the success of the four regional offices created in the American Events Act of 2011. Republicans and Democrats worked together to pass the Unleashing American Innovation Act in 2022 to establish a Southeast Regional Outreach Office, among others. Atlanta, Georgia was chosen as the Southeast location after a lengthy process.
And last year, the Trump administration reversed course, announcing that the Southeast office would instead be at USPTO's headquarters. This change was announced with no explanation, and no search process was conducted, as required by law. Director Squire's regional offices were created to expand access and reach a more diverse set of stakeholders at a more local scale. How does placing the Southeast regional outreach office at headquarters advance that mission? And isn't it true that placing a regional outreach office in the literal headquarters of the PTO undermines the very purpose Congress had in creating it?
Speaker 5
Congressman, that decision, of course, was made and effectuated before I took office. I took office in September. However, my ongoing responsibilities are, as you've indicated, access, making sure there's access. Now we have literal compliance with the regional office footprint, in having four. And we recently had five, and the Denver office was closed down, resulting in a savings of over 3,800,000 per year.
But savings isn't the issue. Access is. And in favor of that, we've launched a community engagement office model. And we've invited, we just released a request for comment to the Southeast Region, including Georgia, including all the states that were part of that defined region. And we've had great success with the Mountain West Region in this to the tune where we are able to increase access, engage with universities, widen our footprint, and be able to do it at literal no cost to the office.
So we're moving to a model of the future. We're hopeful.
Speaker 3
And you're doing it based on executive authority undermining legislative authority, and that's a trend in your agency that is upsetting. And with that, I'll yield back.
Speaker 1
Thank you, gentlemen. And I'm gonna just join you on one thing. Director Esquires, would you agree to have a separate lengthy briefing for the ranking member and myself on that plan, how it is to work, and how it can accomplish what was legislatively in place. I, for one, would not wanna see San Jose closed for savings purposes, no matter how, it might be without congressional approval. Would you agree to that?
Speaker 1
Then we'll make that arrangement. We now go to the general from Wisconsin for 5 minutes.
Speaker 4
Thank you, chairman. Director Squires, thanks for being here today. Last congress, I introduced legislation to limit the enforceability of patents by entities on certain national security-related sanctions lists. This is because, I believe, many members believe state sponsored entities like Huawei can and do use protected patent litigation to slow or stop critical technologies from being developed in the US. Do you see that as the present or future national security threat?
And where do you stand on limiting the enforceability of patents in those types of cases?
Speaker 5
As to limiting enforceability, one thing I would point to is we recently added a couple things in the PTAP. So we restored the real party interest requirement. And with that, we just issued a decision called Tienna last week, which concludes under the AIA that American government entities and agencies are not persons and cannot be in the PTAB, neither may foreign sovereigns or state actors. And so if a real party in interest is identified, they are not allowed to be in the PTAB, and they can't bring challenges. Challenges.
To protect, with that in the discretion of instituting IPRs, we have also just released guidance that looks to whether it's a small business in The US or American manufacturing is occurring in The US as part of whether a challenge should be instituted. So to protect American manufacturing and have them choose here. So both sides of the equation we're trying to take into account, what the real world is and the process for filing a petition, we say, tell us your story and so we can take these into account.
Speaker 4
Very good. Another area where I know many members have concern is about foreign exploitation, and it's all about the patent prosecution highway, right, as it's referred to. Under this program, the USPTO will expedite review of certain patent applications that have received a favorable exam in a foreign patent office. We know that China participates in the program, and therefore, an entity like Huawei could receive expedited examinations of its patents so long as it first gets a favorable exam in China, which is effectively a rubber stamp. Right?
So, should we not kind of allow, or shouldn't we be concerned, I guess, about the kind of the way that's playing out?
Speaker 5
Thank you for the question, Congressman. That is a great concern, and, on and it's a bilateral concern. In general, when cases come in through the patent prosecution highway, they've already been examined, but there is always the risk of rubber stamping. We do an independent analysis. If it doesn't pass the snout smell tests, then we kick it, and it goes back in line, and the prosecution is lost.
On the other side, we found for US companies, the PPAH has helped them in other countries. So we're trying to always maintain that balance where American companies going into other offices are receiving the favorable treatment. They have behind them the examination that's occurred and, hopefully, you know, born strong in the US. Right. But we're always on the watch for incoming low-quality patents.
Speaker 4
Very good. Let me quickly turn to kind of another area. According to American Intellectual Property Law Association, the average cost of patent litigation in a district court is $5,000,000, whereas the cost for adjudicating patent disputes before the patent trial and appeal board on average, is about 10 times less or around half $1,000,000. Critics of the proposed changes to the PTAB process have said the result will be more patent cases being litigated by the courts. And, assuming that could be true, did the USPTO take into consideration the increased litigation costs when conducting an economic analysis of your IPR rule?
And if you didn't, then how did you handle that, and why didn't you maybe look at that?
Speaker 5
Thank you for the question. Yes. We are taking we're still in the process of finalizing the rule. We have received over 11,800 comments, which we're very excited about because people care. About 2,800 were unique, you know, clearing out all the me too ones or clearing out the ones that, you know, we don't like the patent office.
But, substantively, there are about 2,800. And by under the AIA, we are required to consider economic efficiency, resource allocation to the office, and effects of those sort. And so, by all means, we are looking at what the costs are in the rule. I think I'm optimistic the rule will be finalized, and I believe people will be very happy with the outcome.
Speaker 5
Yes. We are looking at all of that in the rule. Judge's caseload, but it's also not just a district court forum. What's the effect on reexamination? What's the effect on PGR?
And what's the effect also on ITC cases?
Speaker 1
Thank you, gentlemen. And my understanding is it was about nine to one opposing the rule in that 2,800. A 2,500 to about 300 sounds about right?
Speaker 5
Again, we're still working through it, but now I've seen the numbers. I've seen 97 to 3. I've seen 80 20. Our role under the rulemaking process is to go through and respond substantively to comments. Comments have been very helpful.
And, again, I'm of the firm belief that we're gonna see a rule that will be workable.
Speaker 1
Okay. Hopefully, the ranking member of the full committee has read all 2,800 and can opine on what he saw as the ratio, recognize the gentleman from Maryland.
Speaker 2
Mister chairman, thank you. Director Squires, how did you come to file those trademark applications for the Board of Peace?
Speaker 5
Thank you for the question, Congressman. We came to file. I had them filed in response to an immediate cyber squatting land grab the domain name. And for those who are unaware of the term cybersquatting, it's like identity theft. Sir, were you acting as
Speaker 2
a lawyer for the board of peace at that point? No. So in what capacity were you acting?
Speaker 5
Well, the board of peace, this is exactly the issue, and I'm glad to have the opportunity to explain it and respond to your letter. The board of peace has not yet been formed as an international organization. And the cybersquatters, eight minutes into the president's speech announcing it, registered the domain name. And so.
Speaker 5
At this point, I'm not sure if it's formed or not. We acted as a custodian so that they could have the.
Speaker 5
You come to act as a custodian for that trademark? Under 35 USC, section three, it's my responsibility to advise the president, through the secretary of commerce, on matters of national security and all matters of intellectual property. That's.
Speaker 2
So the board of peace is a public entity. It's a governmental organization, even though Congress has not created it.
Speaker 5
Is that right? Sir, I don't know the status of whether it's an entity form.
Speaker 2
or not. Okay. But how did you get involved in it? Did the president call you about the cybersquatting incident?
Speaker 5
No. The president did not call me. It came up through several organizations about the cyber squatting, and the action needed to be taken.
Speaker 2
To attack. About the cyber squatting, you noted that there were lots of other organizations that were already using some variation of the peace organization, peace committee, world peace, and so on. Right?
Speaker 2
There are dozens of them. I mean, I found them this morning just on the way in.
Speaker 5
Well, again, you know, the reference was made to Shakedown. This was registered this particular boardofpeace.org. And without that,
Speaker 2
But you don't have to talk about a cyber squadron. There are dozens of other groups that have peace in their name. Right? Well, look, where does your legal authority come from to file trademark applications on behalf of this board of peace, whether it's a public or private group?
Speaker 5
It comes from the combination of 35 USC 3 and 35 USC 2 under Linim Act, and in your opening statement. Wait. Do you usually act as a custodian for the intellectual property rights of other entities?
Speaker 5
This was to protect the name board of peace, as the entity gets booted up to act as custodian in a very narrow capacity with a bona fide intent to use the name, and then it's a tend to use application.
Speaker 5
In the very limited services that we define there, which are fraud, prevention, misuse.
Speaker 2
But is that a service you offer to all American citizens? In other words, if I'm thinking about maybe creating a group one day and we might want to have a trademark, and I'm afraid somebody else has a competing trademark, you will go ahead and file the application for me?
Speaker 5
My responsibilities are, again, under 35 USC section three to advise a president on matters of national security.
Speaker 2
So this is a matter of national security? Okay. And let me ask you this. You've emphasized today, and rightfully so, the importance of people.
Speaker 2
Are applying for patents or trademarks to pay a fee because yours is a fee paid off this. How much does it cost for someone to seek a trademark? When you applied for that trademark for the board of peace, how much did that cost? It's.
Speaker 2
It's not expensive. Okay. And one of the bowlers of my staff just passed me this. The you filed a petition on 01/21/2026 to waive that fee for the board of Then you granted that petition the very next day, which underscores the bizarre conflict of interest you're in now acting both as a representative of the board of peace and also the trademark office that's gonna pass upon the petition. But why did you seek a waiver for the $350 for the board of peace, and why did you grant it?
Speaker 5
The waiver was sought under the particulars of the intent to use application as the custodial file, and I did not grant my own application.
Speaker 2
Well, your signature is I'm reading it. You filed this on the 21st, and then you approved it on the 22nd.
Speaker 2
Okay. We will get you those documents. Are you saying you would not have approved it had you seen it?
Speaker 5
I'm saying I don't recall this particular situation. But I do believe it's your signature. Yep.
Speaker 2
Okay. It was approved by Dan Vovanisi, but your signature is on the petition. And I guess yes. Why did you request that waiver of the $350 payment for the Board of Peace?
Speaker 5
Again, given that this is gonna be an international organization, given the situation with the intent to use and the bona fide limited scope that we had, I made that petition just as I signed the application, and it was granted to. And then finally,
Speaker 2
You know that the Lanham Act forbids anyone from submitting an application unless they're the owner of the mark or the legal representative of the mark. So were you representing yourself as the owner of the mark or the legal representative when you filed the petition?
Speaker 5
No. We are very clear. It's on a custodial basis. We are not the owners. It will be transferred to the entity once it's formed.
Speaker 2
Okay. Well, you're listed as the owner on the petition, both for the waiver and also for the application. So, I mean, that's the way the Leminak works. In other words, if I'm asking for your advice, could I get another company to apply for a trademark for me? What's the answer to that?
Speaker 2
The president of the United States could have somebody else. The president of The United States has tons of trademarks. So you're saying that he doesn't have to submit himself? Where does it say in Latin America that the president of the United States is exempt from the general rule that you cannot have a third party seeking an application on your behalf.
Speaker 5
I'm, again, directing you back to USC 35, 35 USC section 3, where it's the undersecretary of commerce and director of the patent office shall advise the president on national and certain international intellectual property policies.
Speaker 2
Those are matters of public policy. They're not questions of representing the president before the trademark office, which obviously creates a stark conflict of interest.
Speaker 5
Sir, I was not representing the president of the United States in this regard. I was representing a, filing an application to address a cybersquatting issue under my authority under 35 USC.
Speaker 1
Thank you, gentlemen. Just one question for understanding. The gentleman from Maryland mentioned a number of other uses for peace, and so on. Under both common law and any marks they have, those marks are previous, superior, and are not eclipsed by this new mark. Is that correct to your understanding?
Speaker 5
That is my understanding. It's very narrow filing for the logo and the name. And, again, it was intent to use the application. If nothing happens, it expires on its own way. Is it because?
Speaker 1
It just one thing because I'm a little new to government, but you're in the article two. You're in the government that's headed by one person, the president. Right? And no matter how many pockets you have in your suit, it's still one suit jacket. Right?
So the $350, if it had to be paid for by the government, can you tell me the difference between all these different places in the government that would transfer $350 to another pocket of the same suit? I because I'm just not quite understanding the gentleman's question.
Speaker 2
Mister chairman, are you saying that it is a governmental body in that case?
Speaker 1
Well, it appears as though the president of The United States made a statement that either it would be a government entity or Voice of America. And many of these other entities that are government sponsored, it would be government sponsored. I think there's been no assertion that this was a for-profit private entity or anything of the.
Speaker 2
The Voice of America doesn't get 1 billion dollars from the Saudi government. That would make it an illegal, unconstitutional foreign emolument. Where I mean, this is just getting more confusing by the moment. It shares.
Speaker 1
With the ranking member questions of other monies that are not necessarily associated today. And I'm quite candidly willing to participate in all the fact finding on anything related to money. But the gentleman came here, with tremendous expertise, and I think your line of questioning was very good as to how, at times, the trademark office does in fact institute protection, against cyber squatting. You're also very helpful in delineating the fact that there are these entities that aren't quite government, but are government that have trademarks, one of which was the Voice of America and many other highly recognized US entities, which are solely funded by the federal government. I think it's been productive.
I will join with you to continue looking at questions of monies from other governments, whether or not they're coming to the government or that they're going to a third party, because I think that's a fair area. I just don't think it's within the gentleman's expertise.
Speaker 2
Alright. Well, I would welcome a thorough ventilation of all these issues, just so we don't go down a dark road here.
Speaker 1
Thank you. Thank you. And with that, we go to the gentleman from Virginia, Mr. Klein.
Speaker 7
Thank you, Mr. Chairman. Director Squires, third party litigation funding allows outside investors, including foreign entities and sovereign wealth funds, to finance patent litigation in exchange for a share of any recovery, with no disclosure to the court or defendant. You called foreign-backed litigation funding at the PTAB unacceptable during your confirmation and committed to stronger transparency requirements. But this is an important concern. When disputes are pushed out of PTAB and into district court, discovery becomes a weapon.
Yangtze Memory Technologies, which is on the BIS entity list as a national security threat, is currently suing Micron and has used discovery to compel disclosure of highly sensitive trade secrets. Does the USPTO support transparency requirements for third-party litigation funding, and what role should the office play in preventing foreign adversaries from using opacity in litigation funding to drive American companies into discovery that exposes sensitive technology?
Speaker 5
Thank you for the question, Congressman. In terms of litigation funding and disclosure, for district courts, those would be my understanding, would be handled by local rules and requirements. But for the PTAB, what we did is, impose the real party and interest disclosure requirements by reinstituting the Corning optical precedent. And then, you, ensuring when real parties are identified and they're foreign sovereigns or state actors, they're not allowed to participate in the PTAB because they're not persons, just as the US government is not considered a person in the PTAB. So, RPIs are critically important.
They go to the issues of estoppel. They go to issues of fairness, and they will also go to issues where foreign sovereigns or state actors try to undermine the US patent holders in system.
Speaker 7
Okay. Nonpracticing entity district court filings rose 18.7% in 2025, two consecutive years of increases before your proposed IPR restrictions have even taken effect. And consider who benefits from that. Four of the top five US patent recipients in 2025 were foreign entities. Huawei, which previously sued Verizon for over $1,000,000,000, has transferred nearly 1,000 US patents to assertion entities targeting American companies.
BOE, Tencent, and CATL, all formally designated by the Department of War as Chinese military companies, are also among the top recipients. What evidence does the USPTO have that the proposed rulemaking will not further drive patent litigation cost American innovators and manufacturers?
Speaker 5
Thank you for the question. Again, we're working through all the comments and the rules, including the justifications that were required under the AIA such as economic effect. But to your question, at the PTAB, we have considerations which were just instituted in guidelines for people to tell their story. There are many American manufacturers and they're being pursued by foreign entities or these holders of patents, NPEs in particular, foreign entities. Tell us your story, and we can make sure that that's considered an instituting and proceeding, or not an instituting proceeding.
It works both ways. So we're trying to look at the real world picture on the ground and take that into account when a request comes for proceeding to be instituted or not.
Speaker 7
Okay. Switching to trademarks. You may know I'm the co-chair of the congressional trademark caucus, and I hear concerns from American brand owners about the growing backlog in processing trademark applications and the impact on the ability to secure foreign trademark priority rights under the Paris convention. As I understand it, to benefit from the US filing date under the Paris convention, an applicant has to file a foreign trademark application within six months of the US filing date, supported by a PTO issued certified copy of the US application. I'm told the PTO's stated goal is to issue such certified copies within seven days, but current processing times exceed three months.
That appears to be getting worse. I'm concerned that the inability of the PTO to timely process these requests threatens to jeopardize the ability of American trademark owners to claim and defend foreign trademark priority rights. Can you tell us what you're doing to reverse the disturbing trajectory of this backlog and to ensure that the ability of American companies to protect their trademarks against foreign competitors is not jeopardized by staffing issues at the PTO?
Speaker 5
Thank you for the question. That has been a concern. It's been unacceptable as the backlog has increased. And one area, we've had, as I understand, and we looked into it, data processing issues that have been remedied. I've invited people to send me the request for the copies directly, and they've done so.
I think the word has gotten out among paralegals that there's redress here. And so I get half a dozen emails a week, which we get through. But longer term, we just announced, and I think you'll be happy with this, our international search classification tool, which takes five months' worth of work, normally getting up that six, down to five seconds literally. And so, these are gonna be the sort of first agentic entry to equip our examiners with this type of tools. International search classification is just a bear, especially if you have pseudo-marks and the like.
So the future looks very bright there, but we have to make sure we have our houses in order on our own day blocking and tackling and getting certificates out.
Speaker 1
If I could clarify or have you clarify what you answered the gentleman. You talked about some of these protections and rules, and so on, but you seem to be talking both about defendants and plaintiffs. So some of the things that I heard, which sounded like protections, in fact, are limitations on the defendant in PTAB proceedings.
Speaker 1
American manufacturing and foreign entity and the like was the question.
Speaker 5
So if there's a petition filed against a patent holder in the PTAB, and part of the complexion there is that this is an action against a US manufacturer, we wanna know that. Tell us that, and that will go to the discretionary component decision whether to institute or not.
Speaker 1
I understand. It's just that also works for Huawei effectively when they have a straw manufacturer and, you know, they say, well, you know, here it is, but it's still a Huawei pack. Point of order.
Speaker 1
I asked I only asked the gentleman to clarify what he had answered to the other gentleman. I appreciate, you can take it up at a future time if Mr. Massey is in a hurry. With that, I go to the gentle lady from California for her questions.
Speaker 8
Thank you, Mister Chairman and Director Squires. You know, under prior practice, decisions were made by the PTAB. And when an IPR petition was filed, a three-member panel of expert administrative patent judges decided whether to institute a review under the AIA's, quote, reasonable likelihood standard. You first centralized power over discretionary denials, in the director in March 2024. And then last October 17, your memorandum went further by consolidating authority over institution decisions in the director as well.
As you know, we only have 5 minutes here. So these two questions really have either a yes or a no answer. Do you intend to continue this policy instead of restoring that responsibility to a three-member PTAB panel of expert judges? Would that be a yes or no?
Speaker 8
Okay. We'd like to know further if, as you ponder this, because under your current policy, I'm wondering whether you consult with at least three PTAB judges before making an institutional decision.
Speaker 8
Okay. That's helpful. What concerns me is not just the centralization of the authority, and therefore the potential for abuse. It's that the office now regularly denies requests for PTAB review of patents that may have been improperly granted without giving any written explanation. I have an example.
This is a denial. It's two pages, and it just says no. Right? Here's the way it used to be, which is yes or no, and the reasoning, and people knew where they stood. So, I'm just sort of wondering, under the standard operating procedure manual, it says the significant writing assignments in AIA proceedings include decisions on institutions, and it goes on and on.
The expectation is that there would be a detailed explanation for whatever the decision is. Now I'm just wondering in these bare bones summary denials where someone would find the reasoning in the arguments raised by petitioners. And do you think that practice is really consistent with the principles of transparency and fairness?
Speaker 5
I do think so. There's a body of over 600 decisions that have been issued, and where there are matters where we have something to say or a particular story needs to be told, we do issue those decisions and opinions. So to provide guidance, the REVO line of cases has been one where there's been inconsistent claims offered from district court, and there's, in fact, unsettled expectations. It's worth the other way where a patent holder had their patent lapse before it asserted against the defendant.
Speaker 8
I'd just like to ask unanimous consent, mister chairman, to put into the record a letter from the Alliance for Automotive Innovation, the Business Software Alliance, the High-tech Inventors Alliance, United for Patent Reform, SI I a, and US made along with the study that really shows their dissatisfaction with the current practice. And I think, you know, both on the winning end and the losing end, if you don't have insight into the reasoning of the decision, it's problematic. And so.
Speaker 8
I'd like to just recall. I mean, creating the patent law was the American Advance Act took a long time. It was not easy. I participated, and I think some other members of the committee did as well. And the idea was really straightforward.
High-quality patents drive innovation and growth. Low quality, overbroad patents do the opposite. They drive up prices. They impede competition. They expose businesses to abusive litigation.
And we designed IPR as a streamlined, expert-driven mechanism to catch the patents that should never have been granted to begin with. It was, in short, the kind of efficient, targeted administrative correction that good government looks like. Now if there are flaws with that system, we're willing to address those flaws and work through them. But the agency's institution rate has, I think, collapsed, not because the petitions lack merit, but there are barriers that are being applied that Congress never authorized, just as Congress never envisioned that the IPR process that we crafted and are willing to work on further if it's flawed would be supplanted by the director just seizing control of the whole operation. So, I see my time has expired, but you have discretionarily denied 64% of all petitions, and the institution rate sits at about 20%.
So, mister chairman, I think although my time has expired, I'm looking forward to delving into this further because I do think there is a problem here not only in the administration of the office, but the lack of enthusiasm for the process among innovators in America. With that, I yield back.
Speaker 1
I think the general lady yields back. We now go to the gentleman from Texas for 5 minutes.
Speaker 9
Thank you, Mr. Chairman. And unlike everyone before me, I will be under the time limit. Director Squire, I'd like to inquire about an IPR that was recently brought to my attention. This IPR concerns a challenge against a patent owned by VLSI on behalf of NXP, which is a semiconductor company based in Texas. And based on the record, it seems this case might have been mishandled by the previous administration.
Does this ring a bell?
Speaker 9
I'll keep going. Under this IPR, VLSI's patent was challenged by two entities called OpenSky and PQA, and continues to be tied up in proceedings. These entities were formed around the same time VLSI won a jury trial before a US district court in Texas regarding the same patent that OpenSky and PQA challenged later. PQA and OpenSky's founders and backers remain largely unknown to the public. And director Vidal found this to be an abusive process, but the cases were still allowed to continue.
And since that director Vidal is no longer in charge, would you happen to know who is behind PQA and OpenSky?
Speaker 5
I do not know, but that is one of the reasons we instituted the RPI process.
Speaker 9
Your answer is the same as mine because I don't know, and neither does anyone I've spoken to. And people keen on using the American patent system are worried about the safety of their patents, especially those in Texas. If unknown entities backed by unknown individuals start emerging out of thin air and tying up patents and endless proceedings, it's not a good look for the transparency and reliability of the American patent system. And I believe you've been acting in the interest of promoting American innovation, and I thank you for that. And we'd really appreciate it if you would look into this, take appropriate action, and get back to me with the answers I can't seem to find.
Speaker 5
Thank you for the question. We will look into it and be happy to speak further.
Speaker 9
Thank you. We've also heard concerns from a lot of folks in the patent process about the lack of predictability between administrations. Is there something Congress can or should do to help with transitions in the future?
Speaker 5
Well, one of the things that would be of great value would be to continue the fee setting authority and fee collection authority, which will be expiring September. We especially saw that, to the dramatic benefit of our stakeholders, this year with the government shutdown of 43 days. The patent office did not shut down. We operated on reserves because we were able to do so, run like a business from this peace-setting authority. So my number one ask would be for that to continue.
Speaker 9
Noted, and thank you. And thank you for all the work you're doing. I yield back. I will yield to Mr. Massey the balance of my time.
Speaker 6
I thank the gentleman. Can you talk about how important it is that patent holders be able to get injunctions and that, you know, the relief that comes after years of finally recovering some kind of royalty isn't enough to dissuade infringers?
Speaker 5
Thank you for the question. I think it's very important, and we've said so. Now in three instances, we formed a standards essential patent working group. But before that, we've come in three cases, as partners with the Department of Justice or cofilers with the partner of Justice Antitrust Division, regarding the injunctive factors. So we're intending to use our office as a policy voice for what's important for strong patents and to not only be born strong, but to remain strong because they can get injunctive relief across all the factors.
Filed in the ITC. We filed in district court, and, you know, expect to see us there to articulate the reasons why strong patents and strong injunctions for valid patents are important.
Speaker 6
Isn't it true that the situation we have now is the result of court rulings and not congressional action? And is there something that Congress could do to restore injunctive relief?
Speaker 5
We're aware, certainly, of and have looked into the provisions of the restore act, as I understand it's called, which would rebalance injective relief considerations. It's been hodgepodge in district court, and that's been part of the problem, especially if you're in arm's length negotiation. And there's, you know, the holdout problem as it's called in standards-essential patents. Having predictability, I think, would have a great market effect. But the provisions, like those in the restore act, I think, is something that only congress can take up, and we'd be willing to have further dialogues as to what that might look like.
Speaker 1
Would the gentleman further yield, Mr. Gordon? Yeah. Just one question, very quickly. You said a hodgepodge of district court. Isn't the eBay decision a High Court decision?
Speaker 1
The high court has ruled on injunctive relief, and we live under a guideline produced in interpretation of the law and the constitution. Right?
Speaker 5
The eBay case sets forth the factors which the district courts have to apply. They've implied them in a hodgepodge fashion.
Speaker 1
Now that's why we like PCHAB. With that, I recognize the gentlelady from North Carolina for 5 minutes.
Speaker 10
Thank you, Mister Chairman and Ranking Member Johnson, for organizing this hearing, and thank you, Director Squires, both for your service and your testimony today. I'm proud to represent North Carolina's Research Triangle, home to companies and startups that have built thriving businesses from a single idea or an invention. This type of innovation and growth couldn't happen without strong intellectual property protections that we enjoy here in the United States, and that came from our constitution. And yet, small inventors are having a much harder time defending their patents. The PTAB file allows, as we've heard, multiple challenges even from the same party to a patent's validity, forcing a patent holder to defend their invention again, often until the patent holder gives up and settles, mostly because they don't have the resources.
Not only that, but challengers often file parallel suits against the patent's validity in federal district court, which we've heard about, hedging their bets and hoping to get a finding of invalidity in one venue or the other. And, of course, the challengers have more money to do that. And as we know and we've discussed, the USPTO filed a notice, a proposed rulemaking last fall to help address this problem of repeated challenges to a patent's validity. And I really appreciate Mr. Massey's comments on this earlier in this hearing. I just want you from the perspective of a small inventor to tell us what you've heard about the difficulty of defending their patent in different venues or having multiple parties come after them?
Speaker 5
Thank you for the question. Before I took office, I represented start ups and small entities and small inventors for about ten years. I may be the only director who's had that direct experience. And it's been a terrible problem as you've referenced. Sometimes we've seen as much as seven petitions, keep coming in waves.
That's why under the NPRM, we're saying we have to have some clarity, quiet title, finally. And if you wanna still have multiple filings or multiple parties, join it. One join and done. But to your question on the individual, small mentors experience, it is a killer. People are not able to become, you know, I'm aware of a funny little patent in everything out of Stanford in 1999.
The page rank patent, that is now, of course, Google. So, you know, where our next Googles are coming from, where our next big companies and big tech are coming from, start in someone's garage, and they're small inventors, and they need to have the same respect as afforded everybody in the system.
Speaker 10
Great. Well, I am a cosponsor of the bipartisan bicameral prevail act along with Congressman Moran from Texas, and then, of course, Senator Tillis and Senator Koons. And we're hoping that that bill will get a hearing, and then congress can have it say. I do wanna ask a question that was mentioned in some of the opening statements. As we know, there have been reports that the USPTO and the Department of Commerce are considering plans to institute a value based patent fee.
And last fall, I led a bipartisan effort with several members of this subcommittee to Secretary Lutnick, urging the department not to move ahead with the patent tax because, again, I believe it will hurt small inventors more. Although Secretary Lutnick recently said in a Senate hearing that this was not the plan, his answer appeared to leave open the possibility of extracting more value from patents by other means. At any point in your tenure at commerce or with the PTO, have you considered this value based patent tax, and how would you implement it if you did it?
Speaker 5
Thank you for the question. I echo Secretary Lutnick's statements. He at the end he explained, how would you do that? How would you value that? So, no, I have never been in those discussions where value had any consideration.
It's not something that's on the table or even could be done, I think. And certainly, the patent office would not be in the business of providing market valuations for people on their patents. We're in the business of granting them, making sure they're born strong, and letting the market work.
Speaker 1
I thank the gentlelady. Now recognize the gentlelady from Florida for 5 minutes.
Speaker 6
Ask unanimous consent to submit a five-page letter from US inventor to the record.
Speaker 1
Without objections, are ordered. Thank you. Now the gentlelady may proceed.
Speaker 11
Thank you, Mr. Chairman. And director Squires, thank you for being here with us today. The work of the US Patent and Trademark Office plays such a critical role in supporting innovation, protecting intellectual property, and ensuring our patent system functions effectively for businesses and inventors. I appreciate your time with us here today. So I continue to hear from retailers and manufacturers and main street businesses that they are being sued for widely used off-the-shelf technology like Wi-Fi systems or point of sale devices, and being forced into settlements because the expense associated with litigating in our Article Three courts is simply too high.
How do you respond to concerns that limiting access to PTAB is increasing litigation costs and forcing small businesses into these settlements?
Speaker 5
Thank you for the question. And the high cost of litigation is, of course, a concern, and that's why, under the AIA, IPRs were designed as an alternative to lower cost litigation. But IPR is not the only game in town. People also tend to conflate PTAB, limiting PTAB, and that's not what's intended to happen. That's not what we're intending with the rule.
There's always the avenue of reexamination. We would love to see people utilize PGRs more effectively, sooner in time, clearer title. In general, we were preferring a more laid open model where you take your shot, but take it now, and take it once and for all. And as I said, instead of one and done, people need to think about as one join and done. So there's the ability for collective action, and there's also then, of course, the district court.
But there's at least three alternatives available under the PTAB.
Speaker 11
One of the other things I think is important on that front and trying to minimize that down the road litigation, you touched on in your opening testimony, and that really is the quality of the initial examination. And I want to hear more about what you are doing with artificial intelligence and how AI is being used in the initial patent examination. Particularly, I'd like to hear you've emphasized human-in-the-loop approach using AI, but also having humans involved. Tell us a little bit more about that and what safeguards you have in place to ensure that using AI tools is not introducing any sort of bias or narrowing the scope of prior art considered.
Speaker 5
Thank you for the question. It has multiple touchpoints, of course, in the office. But, I'll give you one example. We have launched a, what we call ASAP, AI-generated pilot program, which takes the prior art, gets it to the applicant before the first office action. So literally, the examiners and the applicant are on the same page with the prior art beforehand.
So they have some agency as to what they wanna do. They can make an amendment. They can, you know, marshal their arguments or decide this is not going to go well. We're not gonna waste our resources and refile with something, you know, something direct the resources to something that might be more productive. So we're trying to get information in the hands of people at the soonest possible point where they can do something with it, and have people be on the same page.
On the eligibility side, we've performed a one on one working group, and we are starting to deploy AI agents to assist in some of the areas where there are the thornier issues to decide on one on one and to give some assistance to the examiners. There will always be a human in the loop. The larger vision is, as I mentioned in my opening statement, to have the examiners be able to manage a cadre of agents, deploy them as they see fit to their cases, and be able to do thousands of hours in the hundreds of hours' time, but still remain expert in their field and be just as equipped as the private sector applications coming in to meet the examination challenge.
Speaker 1
I thank the gentlelady. Couple of quick things. You know, you keep talking about these off-ramps, these other opportunities. Just between two people who have dealt with patents for a long time, an ex parte reexamination is exactly that. It's the inventor and an examiner, sometimes the same examiner, sometimes someone different, talking about whether some third party allegation is correct or not.
It's a one-sided process that favors dramatically the same or substantially same patent. It's not an even playing field. The PTAB exists because ex parte was ending up almost always successfully favoring the reinstatement or the continuation of the patent compared to the outcome of PTAB. Isn't that true? It's not a place that really, if you've been accused, it makes any sense to throw it and hope for the best without seeing anything until it comes out.
Speaker 5
Pardon me. That may have been the case in the past with reexamination. I don't believe it's the case now. And in fact, it's become a quicker and almost the same outcome experience as the PTAB has been.
Speaker 1
I appreciate that. I'd love to have a longer dialogue, but I don't have the time. The gentlelady from California is recognized for 5 minutes.
Speaker 12
Thank you, Mr. Chair. Director Squires, before we get into your recent policies, I just wanna make sure that we're grounded in the basics, because much of this debate seems to move past them too quickly. So to my understanding, IPR is an administrative process allowing parties to ask the Patent Trial and Appeal Board to reexamine whether an already issued patent is valid. It was created to provide a faster, more cost-effective alternative to litigating patent validity in federal court, recognizing that initial patent review can be imperfect. And instituting a review means the board agrees there's enough merit to examine the challenge, while denying institution means the challenge does not move forward.
Is that correct?
Speaker 5
In general, the IPR process has two components, one discretionary and one merits. Right.
Speaker 12
Okay. But at the end of the day, it is ultimately about protecting US companies and ventures and those patents. I mean, that's what we're here to.
Speaker 5
We're trying to make sure where there's been, especially when there's been error in examination, there's readjust available.
Speaker 12
Okay. So there are concerns raised that IPR may disproportionately impact individual inventors and small entities. There's been discussion about nonpracticing entities, entities that assert patents but do not manufacture products, and their role in patent litigation, including some that may have foreign ownership or backing. So does the US PTO distinguish between different types of patent holders when evaluating how PTAB policies affect stakeholders?
Speaker 5
It's certainly a discretionary consideration that we invite people to tell their story. As I said, we just recently announced guidance that for American manufacturers or if they're patent holders and there are petitions filed against us, tell us about that. We wanna know. Conversely, if they're state actors or foreign sovereigns, they can't be in the PTAB under the recent return mail application to foreign sovereigns and state actors. So we need to know who's there and what their particular situation is.
Also, with the guidance on the manufacturing, we reference small businesses. We wanna know what the dynamic, whatever side you're on, is before instituting proceeding.
Speaker 12
Okay. So you're saying if there are sovereign funds, if there are foreign actors, you do wanna know?
Speaker 12
Okay. And so that means that you also have collected this data. So you have done data collection on this, so you know?
Speaker 5
So the RPIs have to be identified at the time of filing. And so that's a disclosure if it can be raised by a patent holder in response to a petition. And, so it's a disclosure type process. But we do have data on the number of foreign state actors who, collectively from foreign countries, have appeared in the PTAP historically. And if you aggregate them, they would rank number 4.
Speaker 12
Okay. So if I asked you to provide to this committee a breakdown of that data, broken down by entity type, domestic versus foreign ownership, whether the patent holder manufactures anything, you would be able to do that?
Speaker 5
I don't know to what extent or granularity we have. Mhmm. But I can provide you a list of who the filers are. Yes.
Speaker 12
Alright. Well, that would be helpful because, I think the question is, are different entities treated differently? And I think small versus big is always going to be an issue. But when there's also concern that a company has foreign backing, for me, that also raises national security concerns. Right?
And I wouldn't want Huawei, for example, getting in the mix and playing a role in seeking or holding a patent that should be for a US inventor or a company.
Speaker 5
I understand. We're happy to work with your office. I would direct your attention to the Corning optical memo that I issued, which did have a list, listing of IPR petitioners, in aggregate, by IPR petition.
Speaker 12
Okay. Great. So, we are on the record saying we're requesting that information. We'd love for you to be able to share that with the committee. And I do have, thank you.
I'm sorry.
Speaker 12
Yes. I do, Chair. Ask unanimous consent to enter it into the record. Trump appointees are hijacking the patent system. This is dated May 2025.
Speaker 12
Uh-huh. And next one, enter into the record. Trump's PTO picks, fortress ties, signal big tech patent fights. So that objection. Thank you.
Speaker 1
At this time, I'll also put into the record by unanimous consent a copy of the docket for the patent and trademark office, revised proposed rules that we've been alluding to. Additionally, a number of letters, and I'll ask them be placed in block, which they do include but are not limited to patents for affordable drugs, general action patent, crypto council on innovation, and a number of others. Without objections, so ordered, we now go to the gentleman from South Carolina for.
Speaker 3
This appointment. I have unanimous consent. I'd like to enter into the record a letter from the Council for Innovative Innovation Promotion dated 03/24/2026 addressed to yourself and me regarding this hearing.
Speaker 1
Without objections to the order, the very patient gentleman from South Carolina is recognized.
Speaker 13
Thank you, Mr. Chairman. Director, thank you for being here. The PPAC and TPAC have served as effective vehicles for the private sector and subject matter experts to offer specialized guidance to the PTO. I'd like to commend you and Secretary Lutnick for appointing new members to these bodies last fall. When do you anticipate the remaining vacancies to be filled, and the committees will reconstitute and begin their work?
Speaker 5
Thank you for the question. Very soon, the as you've seen both on the PPAC and TPAC side, is really an all star roster. And we just extended an offer last night to the individual inventor, which is the statutorily required person that crystallizes everything. So we're hopeful, very soon.
Speaker 13
Great. Thank you for that. I'm gonna move on to a separate issue on US research and development. Obviously, we're competing with China on any number of things across many fields: medicine, telecommunications, manufacturing, emerging technologies. In the context of patents, how do China and foreign competitors undermine our system, and, in your view?
Very briefly.
Speaker 5
Brief as I can. In several ways, one is known as flooding the zone. We've seen a lot of low-quality applications emanating from areas. Others are fraudulent filings, which we've deployed some AI tools to identify. As I said, we've removed, especially on the trademark register, tens of thousands of fraudulent applications.
And the third, arrow in our quiver, we just announced is a rule that you must be a US practitioner before the patent office and to file papers. So, accountability is, of course, important, and those are ways we're trying to address these issues.
Speaker 13
Regarding pharmaceuticals, what steps has your office taken or plans to take to ensure that the US remains a global leader in pharmaceutical innovation?
Speaker 5
Again, our number one goal is to have patents born strong, make sure they receive rigorous and thorough examination, and get to market in a timely manner.
Speaker 13
Switching gears again on the IPR. I know we've talked about that a lot today. How is the office thinking about striking the right balance related to IPR, ensuring that manufacturers and strategic industries can effectively defend against questionable patents, while also preserving the strong protections and access for small businesses, startups, and independent inventors?
Speaker 5
Thank you for the question. Yes. It's a balance is the keyword. It's a unitary system. I like to quip sometimes.
That means that someone is always unhappy. But, nevertheless, we're trying to strike the balance, especially on the discretionary side, as I mentioned, where there are small business factors or manufacturing that cuts both ways. Tell us a story. We've even had issues where things that have been controversial, like settled expectations, cut both ways. There have been assertions where patents have lapsed, and then come into being again, or licenses have been issued against the settled expectations, and those get taken into account whether to institute or not.
Speaker 13
Thank you for that. You would agree that China, you said, flood the zone earlier. So you would agree with me that nation states like China challenge current patents or trademarks pretty frequently. Is that fair to say?
Speaker 13
Okay. How do we deal with domestic companies that do that? I'll give you an example. So Monster Energy Drinks is the number one filer against existing trademark applications. They're like, far and away above everybody else.
They've been labeled as a trademark bully of the year multiple times, at least since 2012. And I don't wanna single them out, but I do think it's a little problematic. Like, some of these cases, like a camping gear because the name is For Monster, a craft brewery company. What I am concerned about is, like, big companies with a lot of assets that come in and swing at small restaurant owners. I guess there was a restaurant in Ohio.
It's a swarma restaurant, and they are called the monster swarma. And somehow that's like a patent or a trademark infringement on Monster. It's just really aggressive. And so how do we protect small businesses against trolls like Monster Energy Drinks?
Speaker 5
It's a difficult question. The way we protect them is, I, you know, early access files they can. Monster, of course, has a famous mark and has a wide berth, in courts and assertions. But, the trademark system is a registration system. It levers off of use in commerce, often from state rights, and they register or federalize that.
So, you know, the part of the solution is to let people know we're here. You should file.
Speaker 13
What about rule 11 sanctions? I mean, if they're filing frivolous things and they're obviously like, I'm not suggesting that all of their cases are not meritorious. What I am suggesting is it's a little bit alarming that they're the number one company in the country filing against small businesses. They're really aggressive in their tactics. And when I what I'd like to know is, like, you've got tools at your tool belt to rein in some of these practices.
You've already got a full docket. So how do we rein in companies like that from abusing the system?
Speaker 5
Again, thank you for the question. On the rule 11 basis, that's, of course, more of a district court litigation dynamic. In terms of utilizing our office in terms of oppositions per se, those are something that, you know, we do have a tab, we do have discretion around those types of matters. And, again, just like the patent side, tell us a story that is often compelling. We're trying to be responsive to the real world on MXN.
Speaker 13
I appreciate you doing that. This isn't a criticism of you or the office. I just wanna make sure, obviously, we wanna focus on China and the things that they're doing to undermine our competitiveness, but, we also have some problems domestically too, some of these people that have used the system. So thank you, mister chairman.
Speaker 1
It's great. Just one clarification. You used the term famous mark. IBM's a famous brand. Ford Motor is a famous brand.
Monster cable doesn't, Monster drinks doesn't meet that requirement, does it? You used it, but I don't think you meant to use it.
Speaker 1
Order to be a famous mark, the word monster all by itself would have to have secondary meaning. Right?
Speaker 1
Yes. Okay. So monster movie, monster cable, which every professional musician uses and predates monster drinks. I'm trying to understand because it's important for this hearing. Do you wanna go back and revise for the record your statement that that monster drinks is somehow a famous mark?
Because it is obviously a huge difference in how you and the courts deal with an allegation. Right?
Speaker 5
I would revise my sentence. If monster's a famous mark, then these are the type of things that they could do in court.
Speaker 1
I absolutely agree with you. I've certainly seen a blue oval without the word Ford be considered as important, because it is a famous mark, and I appreciate that. And now he has unanimous consent in block that a number of submissions including from Arnold Ventures, from Entertainment Software Association, from the ES, that's the same one. Hang on one second. Yeah.
Okay. From the Business Software Alliance, some of these are long. They really have things to say to you, mister secretary. From the most famous of all, like the CTA, the Consumer Technology Association, who opines in the negative, to say the least, and others too numerous. We'll be giving them all to you without objection, so ordered.
I now recognize myself for a number of questions. Isn't it true that the number of so-called serial applications of the repeat use of PTAB was less than 1%, and yet your rule applies to 100%. Is that correct? The historical serial attacks using PTAB is less than 1%.
Speaker 5
Of PTAB actions filed? Of IPR action filed? I don't know the exact figure.
Speaker 1
Okay. That's the figure that staff on this side come up with. Please give us your answer for the record. I already discussed ex parte. We are going to agree to disagree that you've reformed anything, simply because it is still a process that there are only two people in the room, and one of them is not the person who submitted the documentation.
They're not part of the process. That's why it's ex parte. Correct?
Speaker 1
I've got a great many items, to say the least, as you could tell. But probably the largest one is currently, when I mentioned that you've taken cases in which they were discretionarily allowed, process had nearly reached a conclusion, and then you've pulled them back, essentially, retroactively, discretionarily said they never existed. Where do you believe you get that authority?
Speaker 5
I don't know which specific cases you're referring to or the particular facts that matter. But as the federal circuit is it.
Speaker 1
Would be the interactive communications is one example that we have that you did that too. And I cite this because when it goes to a final decision, if you wanna reverse it, you can, but there has to be essentially, it's not without paper. When you simply do a denial, there's no paper, as we've seen today. So retroactively doing it makes a huge difference because that discretionary denial after the fact, after the facts have been laid out, act after it's gone through the process and expense, then denies the individuals either an outcome, possibly reversible, or an explanation, which you did not give in that case.
Speaker 5
Again, I'm not familiar with the underlying case, even by caption. However, there is wide discretion afforded, and I believe the discretion would include changing your mind.
Speaker 1
Well, I don't believe you have that discretion once a process begins. And so, we'd like you to cite, as you did very eloquently and others, where you believe in the Americans Invent Act that you believe you have that discretion, because we disagree. And, additionally, since that discretion is not challengeable in court, and yet the final decision would be, you see where the ambiguity is. You've taken away the ability to have additional appeals because you've denied them by using the discretionary denial after the fact, which takes away their ability to actually have any further redress. Correct?
Speaker 5
I don't agree with that. The authority is 316, 35 USC 316 b, and I'm required by statute and rulemaking. And we use this in our decisions to take into account the economy, integrity of the patent system, and the efficient use of resources in the discretionary part of what we do. The merits part is different, of course, but discretion piece is the one component before you get to merits.
Speaker 1
Okay. I'm gonna use my final time to ask some very tough questions. You mentioned Secretary Ludnick having 500 patents. Is it true that, to your knowledge, the secretary during his tenure was often a plaintiff suing in district court? Directly or indirectly?
Speaker 5
I'm recalling days of eSpeed and broker tech, and there were several suits back in February around then.
Speaker 1
To say that from a monetary standpoint, he benefited from lawsuits and may or may not have an opinion on the where whether he likes PTAB or not since he began reducing PTAB's effectiveness during his tenure before you came on board. Directing the acting. Have you had any discussions with the secretary concerning any of these policies?
Speaker 5
I would the NPRM that we've issued is the secretary's first and signature rule. So he is absolutely behind this.
Speaker 1
Okay. So as you sit here today, the secretary has a role. Let me ask one last question. To your knowledge, has the secretary eliminated all owned assets that could in any way benefit from these changes?
Speaker 1
Okay. Would you, to the best of your ability, answer for the record, or perhaps we'll ask the secretary directly by subpoena? It is my understanding that he may not have eliminated all of his holdings, and therefore, there could genuinely be a conflict, as you, whether right or wrong, whether you have authority or not, dismantle PTAB, cutting by 80 judges and continuing to cut by discretionary, both regular and retroactive. There's a lot more to ask. I'll ask the rest of them for the record and ask that you agree to answer them if we send them to you within five days.
That's actually a question we normally do at the end, by unanimous consent. But if you'll agree to take written questions from the record from all members.
Speaker 1
In conclusion, this has been an illustrative hearing. I will say, and this is usually something a minority would say, that it's been too long. It took too long. We are now over 15 months into an administration, and this is the first visit of a committee that is to the committee of jurisdiction. It is our hope that prior to the close of this congress, we will have you back for at least one additional hearing, not to repeat the subjects, but to follow-up on them.
It is the normal practice to have a regular dialogue with the patent and trademark office, and it is my personal hope, I believe the ranking member's personal hope, that that dialogue will continue so that by the time we come to the next one, we won't be talking in single digits how often we've been able to have interactions with your office directly. And with that, I am required to say this concludes today's hearing, and I want to thank our witness for appearing before the congress. Without objection, all members will have five legislative days to submit additional written questions and the witness and additional materials for the record. And without objection, we stand adjourned.
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