Director’s Kathi Vidal Vision and Mission for the US Patent and Trademark Office
Since she took office on April 13th, USPTO’s director, Kathi Vidal, has made several public appearances, expressing her remarks on the patent system and describing her vision on the current issues. Her nomination by President Joe Biden received bipartisan support from the Senate Judiciary Committee and was praised by many IP professionals. Kathi Vidal is the second woman to hold this position after Michelle K. Lee. Before practicing law and being a partner at Winston & Strawn, she came from an engineering background with a master's thesis on AI, which is one of USPTO’s current focuses, and held different positions at General Electric and Lockheed Martin. USPTO has been without a director since January 2021, and Vidal’s appointment is a great relief at a time when there are many key IP issues that need to be decided as we explore below.
The Supreme Court Arthrex decision – One of the concerns regarding the nomination was how would the new USPTO director act with a new power granted by the Supreme Court’s recent decision. Arthrex challenged the constitutionality of the appointment of administrative patent judges (APJs) on the Patent Trial and Appeal Board (PTAB). In its decision, the Court decided that in order for an APJ appointment to be constitutional, their decisions must be subject to review by the USPTO’s director. In other words, both parties in an IPR case might petition for their case decision to be reviewed. The USPTO has already implemented the system in accordance with the Supreme Court’s decision by allowing parties to file petitions within 30 days from the date of the IPR decision’s final written decision entry. Not only that but the director themselves may initiate a review sua sponte, without the need for a petition from either side. Several IPR review petitions have been accepted so far from the new director, though she hasn’t yet exercised her right for initiating a review. Up until now, there has been no review published so it is yet to be seen how these cases will be ultimately decided. What is notable, however, is the fact that the former USPTO director Andrei Iancu had discretion in accepting and handling review requests since the Supreme Court decided the Anthrex case while he held the position. Indeed, according to the recent updates from Kathi Vidal regarding the review procedure, it is clear that she views the process as consisting of three phases: panel rehearing, internal review, and the Precedential Opinion Panel (POP).
The patent eligibility opinion – The appointment of Kathi Vidal came at a moment when the Supreme Court might clarify how to determine if an invention is worth a patent in a case involving manufacturing driveline propeller shafts and eliminating the noise. This has become especially important after the Alice Corp. v CLS Bank International case. However, recently, the Supreme Court refused to deal with patent eligibility, rejecting American Axle's appeal. It is tricky to define a process on how to draw a line between what is patentable and non-patentable. In a recent article, USPTO’s director Kathi Vidal doesn't give her opinion. She has argued both for and against patent eligibility in different cases in the U.S. Court of Appeals for the Federal Circuit. Instead, her approach is to move forward with discussions about patent eligibility. It’s still impossible to determine her opinion based on her past. However, given her experience in litigation where patent eligibility issues have arisen, she is in a unique position to mark her stay in office with important insights. While testifying before the Senate Judiciary Committee, she expressed that more clarity is needed on patent eligibility law, whether it comes from Congress or the Supreme Court, and that her experience litigating cases at the Patent Trial and Appeal Board positions her well for reforming it.
PTAB denials – One major ongoing issue that needs to be addressed is the so-called NHK-Fintiv rule. Essentially, it’s a policy first implemented by the former director Iancu that allows PTAB to decline the review of a patent, based on several discretionary factors, including whether the patent is being asserted in ongoing parallel district court litigation. This policy is supported by patent owners and they advocate for it to be maintained, while those who want to challenge patents find this frustrating. So far, their efforts to deny the PTAB’s efforts to exercise this policy haven't proven successful in different appellate courts, which maintain that they lack the jurisdiction to judge this matter. Kathi Vidal’s decision in this matter is definitely going to be closely watched. Just a week ago, director Vidal provided clarity to the denials by releasing a memorandum. As outlined in the guidance memo, to benefit the patent system, the public good, and limit unnecessary litigation expenses, the PTAB will not deny the institution of an IPR or PGR under Fintiv (i) when a petition presents compelling evidence of unpatentability; (ii) when a request for denial under Fintiv is based on a parallel ITC proceeding; or (iii) where a petitioner stipulates not to pursue in a parallel district court proceeding the same grounds as in the petition or any grounds that could have reasonably been raised in the petition. Additionally, when the PTAB is applying Fintiv factor two, the PTAB will consider the speed with which the district court case may come to trial and be resolved. The PTAB will weigh this factor against exercising discretion to deny institution under Fintiv if the median time-to-trial is around the same time or after the projected statutory deadline for the PTAB’s final written decision. The consequence of this decision is yet to be determined, thus seeming to favor the patent challenger’s side. However, the clarification was based on a study by USPTO to discover the effects of PTAB denials in cases of parallel litigation. Now that it is clear when the Fintiv rule applies, it is definitely a step in the right direction helping the IP professionals decide their strategy.
Focus on patent quality – One of the very first issues Kathi Vidal wants to address before the Patent Public Advisory Committee is patent quality. According to her, this is the USPTO's main job. In her own words: “Often, examiners don’t have insight into the downstream impacts of the patents they issue. They are often not aware of post-grant challenges and litigation. They often do not hear about the success of patents they examined years earlier in the marketplace. So, we are in the early stages of discussing a collaboration with the American Intellectual Property Law Association and the Intellectual Property Owners Association to develop a training initiative for patent examiners to understand and appreciate the impact that their daily work has on the IP ecosystem.” Depending on how this training program will go, the numbers but also the quality of patents will change.
Innovation to impact – Another issue raised by Vidal at the 15th Annual Design Day was innovation. She plans to roll back to the “first principles”, making the IP system and innovation work for the public good. Job creation and economic prosperity while also supporting and protecting innovation to solve world problems are her main goals in this area. In order to ensure these goals, Kathi Vidal plans to continue supporting the big companies with IP protection, but also equally support the small inventors. As she remarked: “Number one, we need as a country to incentivize more innovation. We need to do it from the K-12 level. We need to do it beyond that. We need to do it, as Lakiya said, in underrepresented communities, in geographic regions that haven't had as much innovation, and we also need to do it even more in our big companies to make sure that we are continually being innovative.”
Further issues – While all of the above make the big headlines, Kathi Vidal has raised many more issues in her public remarks along with how she may approach the role. Gender diversity is a key issue for her as many studies show that only a small fraction of patents are given to women. The USPTO’s new director has been part of a nonprofit group for women in law and technology and has worked on diversity initiatives at Winston & Strawn. This puts her in an ideal position to improve the current situation. Modernization, or as she called it “providing 21st-century service”, is something that also needs to be addressed. Improving the electronic filing system by accepting new formats of data and issuing electronic registration certificates are the top priorities here.
It is safe to say that the IP sector is facing several challenges at the moment. Most of those require a direct contribution as well as coordination from the USPTO’s director. Having a person with the background of Kathi Vidal, who is very familiar with litigation and engineering due to her experience, is the best place to start. Her vision translated into action will be effective in improving the current IP landscape. Her diverse technical past experiences give her a unique insight into the matters that are of great interest to all of the stakeholders. So, the general consensus in the IP industry is that she is well-qualified and the industry is looking forward to seeing what she does.