New Patent Ownership Rule to Improve Innovation, USPTO Says

"We need as much transparency as possible to get IP rights into the hands of those who are best able to make the investments and create the jobs and drive growth and generate economic activity that, after all, is the purpose of having a patent system in the first place.” Kappos and other USPTO officials held the roundtable to collect public input on how the USPTO should change its rules on collecting and publishing real-party-in-interest (RPI) patent ownership information.

Better RPI information collection would improve the marketplace for innovation, reduce “gamesmanship and litigation strategies” and improve the USPTO’s operations, Kappos said. “With a more complete ownership record, the public has a more comprehensive understanding of what patent rights are being maintained -- and by whom,” he said. “The financial markets have more complete information about the valuable assets being generated by patent owners and inventors have a better understanding of the competitive environment in which they are operating, allowing them to be more efficient in obtaining and allocating resources that they need.” Friday’s roundtable came a month after the Department of Justice and the Federal Trade Commission held a joint workshop on ways the federal government can minimize what they believe are the harmful effects of patent litigation and patent-assertion entities.

The USPTO proposed two versions of the new RPI disclosure rules, said Stuart Graham, USPTO chief economist. The rules, included in a November Federal Register notice announcing the initiative and roundtable, propose two different levels of RPI scope. The first rule would require disclosure of any entity that had the legal right to enforce a patent. The second, narrower rule would only require RPI disclosure of the legal title holders of a patent and their parent entities (http://xrl.us/boaep8). The second rule “may limit the entities that need to be identified based on the assumption that although not every interested entity would be listed, information about these other parties, if needed, could in most cases be deduced from the information provided,” Graham said.

Justice’s Antitrust Division has “considerable enthusiasm” for the USPTO’s potential new RPI rules, said Jeffrey Wilder, the division’s assistant chief. “Making information about the true controlling owner of a patent available is likely to improve the notice function of our patent system and promote competition and innovation to the benefit of U.S. consumers by facilitating bilateral licensing, increasing design freedom and allowing firms to better manage risk,” he said. While new RPI rules will not completely prevent “patent hold-ups,” they are a step in the right direction, Wilder said. While the rules should improve transparency, and therefore make clear which entities own which patents, Wilder cautioned that the final rule should not require so much transparency that it reduces companies’ incentive to invest in IP. “At a minimum ... in all cases we should require identification of the ultimate parent entity,” he said. “Now I would go even further and say that there would be clear benefits to requiring recordation with each change in the RPI. ... That would ensure that the RPI data at hand in a particular point are never stagnant."

Representatives from Google, Hewlett-Packard and IBM said they supported the USPTO’s efforts to improve RPI collection. “Accurate ownership information is integral to clearing patent rights, and assessing risk from a family of patents or a specific patentee,” along with determining who to license a patent from or who to collaborate with, said Lisa Marks McIntye, a Google patent lawyer. “It is unfair for patent holders to hold their patents in secret and preserve the element of surprise for its assertion campaign, or to otherwise insulate its patents from reexamination or post-grant review challenges. The PTO’s proposal helps level this playing field.” It’s reasonable for the USPTO and the public to expect the disclosure of accurate ownership information, said Scott Pojunas, HP’s patent development director. Pojunas said he favored the USPTO’s second, narrowly defined version of the rule, since the parent entity is easily identified in most cases.

Other industry representatives generally favored at least somewhat more stringent requirements for providing RPI information to the USPTO, though some expressed concern that a new rule would increase the burdens placed on all parties -- practitioners, companies and law firms. Such burdens would outweigh the benefits of the proposed new rule, said Kenneth Nigon, an IP law attorney with RatnerPrestia who has been patent counsel to three U.S. laboratories of a major Japanese consumer electronics company. While RPI information is important, it’s already requested at multiple points in the life of a patent, he said, saying a less burdensome procedure would be preferable.

The USPTO needs to investigate whether it has the authority to require additional RPI disclosure -- and if it does, the rules should not dismiss companies’ legitimate motivations for maintaining patent confidentiality in some cases, said Herbert Wamsley, executive director of the Intellectual Property Owners Association. Courtenay Brinckerhoff, a partner with the law firm Foley & Lardner who has represented clients before the USPTO and its appeals board, said she questions whether the USPTO has the authority to institute the new rules. “The patent statute has traditionally made identification and recordation of ownership information optional, and that has not changed with the [America Invents Act (AIA)],” she said. “I think that the tradition of optional recordation, optional disclosure of information, needs to be kept in mind. “ Congress would be better suited to changing policy on this issue, Brinckerhoff said.

The USPTO has also been accepting written comments on the proposed RPI rules. The comments, which can be submitted online or in print, are due by Jan. 25, the USPTO said.