[Ip-health] Washington Post (The Switch): How patent reform’s fraught politics have left USPTO still without a boss

Thiru Balasubramaniam thiru at keionline.org
Mon Aug 25 08:45:49 PDT 2014


http://www.washingtonpost.com/blogs/the-switch/wp/2014/07/30/how-patent-reforms-fraught-politics-have-left-uspto-still-without-a-boss/

The Switch <http://www.washingtonpost.com/blogs/the-switch>
How patent reform’s fraught politics have left USPTO still without a boss

By Nancy Scola <http://www.washingtonpost.com/people/nancy-scola> July 30

The directorship of the United States Patent and Trademark Office has sat
vacant for more than 16 months, at once a reflection the fact that the
world of patents has long been what one veteran observer calls a
"backwater" and that it isn't anymore — especially as the technology world
has rapidly gained political might and turned its attention to figuring out
how to pull the levers of government.

The first round in the fight over who should fill that chair ended when the
Obama administration's reported pick to run the agency was derailed after
an outcry from the technology world, particular those in the Internet
sector of it. The skirmish was over in less than two weeks, but the
conflict highlighted how the once-sleepy agency nestled in northern
Virginia has, quickly, become a battleground for who will control how
government and innovation intersect in the United States. On Wednesday, the
fate of the patent office will be the subject of a House Judiciary hearing
<http://judiciary.house.gov/index.cfm/hearings?ID=5EC97276-AA17-4A2F-82FF-9C842C2C2AFF>
.

The controversy began in late June when rumors started to trickle out that
the White House would nominate Philip S. Johnson
<https://www.linkedin.com/pub/phil-johnson/7/77a/640> to lead the USPTO. On
paper, Johnson seemed like a shoo-in: a patent lawyer with more than 30
years of experience, he is currently the head of the patent practice for
pharmaceutical giant Johnson & Johnson. But tech company leaders, venture
capitalists, and allies in Congress objected. White House officials will
not comment on the episode publicly. But by all accounts the administration
gave up on Johnson's nomination, leaving the U.S.'s patent agency with no
obvious next director since former IBM executive David J. Kappos resigned
on the first day of February last year.

"There is a politicization to the position now," says Robert L. Stoll, the
Commissioner for Patents from 2009 through 2012, "and it can seem like
Google vs. the pharmaceutical industry." Stoll, a 29-year veteran of the
USPTO, has stayed in the thick of the patent debate as a partner in the
Washington, D.C. office of the law firm Drinker Biddle & Reath. "Everybody
recognizes that things could be better, and maybe there has been some
overreaching. But we need somebody who has the gravitas to represent the
country internationally and be a measured voice on patents inside the
[Obama] administration."

The stakes are now enormous, with patents — which under the Constitution
give creators time-limited rights to their inventions — crucial to the
fates of two of the largest, best performing sectors of the U.S. economy.

For bio-pharmaceuticals companies like Pfizer and Merck, a single patent
can protect a hugely lucrative investment. When, for example, in 2011 the
20-year patent expired on Lipitor, sales of the cholesterol-fighting drug
dropped from $8 billion a year to about a quarter of that.

But in the tech world, patents are often attached to obsolete inventions
and used to squeeze money from innovators. In 2012, Etsy, a site that
allows people to trade homemade and crafted goods, was slapped with a
"troll" lawsuit for allegedly infringing upon an obscure electronic
messaging patent, shortly after completing a $40 million fundraising round.
The plaintiff has also gone after AT&T, Google, Twitter and Facebook. "It
really just feels like a tax on innovation," said Althea Erickson, Etsy's
policy director.

Those situations, to many in tech, highlight the absurdity of a patent
system that seems to reflexively rubber-stamp the most trivial applications.

"Twenty years ago," says John M. Whealan, the Associate Dean for
Intellectual Property Studies at the George Washington University, "patent
law was a tier three issue. It was niche. Now you see not just company
patent lawyers get involved, but it's their CEOs, their heavy hitters."

Johnson, as a leader of a group called the Coalition for 21st Century
Patent Reform, was seen by many as unduly resistant to upending the way
patents are issued and enforced. When his name was floated, Johnson's
opponents in the tech world responded with a tally of complaints. Johnson
could be personally prickly, some tech advocates said. Moreover, Johnson
might even be a Republican; in 2012, the Pennsylvania-based lawyer gave
$2,500 to the Romney campaign.

But mostly Johnson was seen as insufficiently committed to smashing "patent
trolls," or people or companies who hold patents simply so they can extract
money from those who allegedly infringe upon them, critics said. In public,
he was carefully calibrated. "The innovation ecosystem in the country is
extremely sensitive to changes in our patent system," testified Johnson in
Congress last winter, added that it would be "best to table" a proposal
pushed for by Senator Chuck (D-NY) Schumer that would expand challenges to
the sort of "business method" patents common in the software-reliant
financial services sector. But Johnson, fumed the tech critics, was at
heart a "patent maximalist."

One detail particularly annoyed Johnson's critics. This spring, Schumer and
Sen. John Cornyn (R-Tex.) were attempting to craft a compromise
"troll"-targeting bill, that would have, among other things, forced those
who file complaints to detail exactly how their patent was infringed. When
it fell apart, many in tech placed responsibility on Johnson and others
from the pharmaceutical world. When Johnson's name popped up, foes passed
around a Word document said to show Johnson's tracked edits that, as they
saw it, would gut patent troll legislation circulating on Capitol Hill.

Johnson's fans argue that his critics are guilty of a serious misreading of
what Johnson's advocacy work, which, they say was aimed preventing a
destabilization of the whole U.S. patent system. Andrew S. Baluch, former
White House Director of International Intellectual Property Enforcement,
argued in an e-mail that those who opposed Johnson won't be satisfied
"unless a nominee supports 100% of what is contained in all the bills as
introduced."

The tech community, adds George Washington University professor John
Whealan, himself a deputy General Counsel for Intellectual Property Law at
the USPTO from 2001-2008, "has, with all due respect, become an anti-patent
community. It wants what it wants, and it doesn't want to compromise."

And the tech world has found reason to be encouraged about its growing
influence in Washington. In the winter of 2012, companies like Google,
Reddit, and Craigslist helped brought down the digital copyright bill
called the Stop Online Piracy Act. The SOPA fight served as a baptism in
the ways of the Beltway, and through it technologists found allies, formed
relationships, and came to a growing sophistication about their power in
shaping public policy.

The left, and Obama in particular, has benefited a great deal from that
partnership. It's not just about Democrats fundraising millions in Silicon
Valley. The president has also gained geek cred from the glamour of having
dinner in San Mateo with Steve Jobs and Mark Zuckerberg, participating in
"Twitter town hall" with Twitter co-founder Jack Dorsey in the East Room of
the White House, and getting campaign strategy on the trail from Google's
Eric Schmidt.

So on patents issues, reformers were beginning to believe that they had a
strong ally in the Oval Office.

The White House championed the reform-minded America Invents Act that
passed Congress in September, and advocates were thrilled when, in his 2014
State of the Union, the Obama took a moment to hammer "costly and needless
[patent] litigation." Days later, their glee only rose when, during a
social media "hangout," an uncharacteristically pointed Obama slammed those
"trying to essentially leverage and hijack somebody else's idea and extort
some money out of them."

And so when Johnson's supposed nomination was floated — mostly through the
e-mail list of Florida patent lawyer Hal Wegner, who, on June 27,
presented Johnson
as "director-designate"
<http://www.laipla.net/under-secretary-of-commerce-for-ip-and-pto-director-designate-philip-johnson/>
—
it felt like an unexpected slap in the face. Says W. Nicholson Price, an
assistant professor at the University of New Hampshire Law School who has
written widely on the intersection of patents and the pharmaceutical
industry: "There was an anger over, 'Why in the world would you appoint
someone to run an agency who would be vehemently opposed to your reforms
for it?'" (Moreover, many in that world believed that the Obama
administration had a perfectly good nominee close at hand in Michelle K.
Lee, a former "head of patents and patent strategy" at Google and current
USPTO Deputy Director.)

But if the tech world's successful fight against SOPA fight was a populist
movement, the opposition to Johnson was pure inside Washington. "The
technology world," said Julie Samuels, the executive director of the
tech-oriented Engine Advocacy, "was able to make enough noise to make its
feelings known," even if the vast majority of it happened behind closed
doors. Engine Advocacy helped rally entrepreneurs and venture capitalists
to express their disappointment with the Johnson pick.

Schumer, meanwhile, stressed to the White House that he would oppose
Johnson if the White House nominated him to the Senate-confirmed post,
according to a person familiar with the matter who spoke on condition of
anonymity because of the private nature of the conversation. In public,
Schumer said, "We needed somebody who understood that the patent trolls,
which are hurting so many tech start ups, had to be reigned in, and Mr.
Johnson was unsympathetic to that viewpoint."

The White House by all appearances backed away the nomination, and
Johnson's opponents declared victory. On July 9, for instance, the Consumer
Electronics Association, a Virginia-based technology advocacy group that
counts Google, Pandora, and Apple among its members, issued a
celebratory release: "CEA Praises White House Decision to Bypass Johnson at
PTO Nominee."

The unfolding of events was a jolt to both sides of the patent debate. Some
of Johnson's supporters continue to express amazement that someone with
Johnson's sparkling resume, a seasoned and valued member of the close-knit
patent community well positioned to manage the apparatus of
the 10,000-employee organization and its considerable backlog of patent
applications, was somehow found to be unfit to lead it; Robert Stoll, the
patent veteran, describes the gauntlet Johnson faced as "terrible."

Those in the tech community can still hardly believe that Obama would have
been so tone-deaf in the first place.

"Was [Johnson] a bright, qualified lawyer? Yes. Is he the right person? No.
The issue is that he has worked diligently against the president's reform
agenda," said Michael Petricone, the senior vice president of regulatory
affairs at the Consumer Electronics Association, which had deemed Johnson's
nomination "absurd."

The symbolism of who will next head the U.S. Patent and Trademark Office
has political implications, too. In 2013, the tech industry and the
pharmaceutical manufacturing industry both spent about $140 million on
lobbying, according to the Center for Responsive Politics. Tech has leaned
Democratic, but of late Republicans are finding more success in Silicon
Valley. Billionaire and one-time Facebook president Sean Parker, for
example, recently made news for making six-figure donations to Republicans
across the country.

Many in the tech world stress, though, that they won't insist on a nominee
who will champion their vision of patent reform, only one who will accept
that their concerns now have to be taken into consideration alongside those
of the pharmaceutical world and other players. All those involved though,
seem to agree on one point, says Erika Harmon Arner, the head of the patent
practice at the law firm Finnegan, Henderson, Farabow, Garrett & Dunner.

"It seems to me there's broad consensus that there needs to be someone at
the head of the Patent Office," says Arner, adding, "Given the
importance of innovation in this economy, it seems irresponsible to leave
it open."



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