Rader, Michel Weigh in on the Patent System and Patent Reform

Matthew Dowd, a litigation and appellate attorney in Wiley Rein's Intellectual Property and Food & Drug practices, recently interviewed Chief Judge Randall R. Rader and former Chief Judge Paul R. Michel of the U.S. Court of Appeals for the Federal Circuit. Matthew discussed various topics with the judges, including issues of proposed patent reform legislation, inequitable conduct, Patent Office procedures, international patent law, and other aspects of the court.

Some choice excerpts:

MICHEL: I think there are many, in particular, in the academic world, who seem to assume that nearly all useful innovation would occur anyway, in the absence of the patent system. Certainly some individual inventors don’t need big labs, big staffs, big budgets and years and years of R&D effort. They might create a particular new invention without the incentive of a patent. And there may be individual scientists who likewise might invent without the incentive of a patent. But for most inventions, it seems clear that signifi cant investment of money up front is needed, and it can only come from two sources - either from government grants or from private finance. And it seems clear that, in the current environment, our national budget is in disastrous shape. The defi cits and total indebtedness of the country are enormous. So I don’t see how we can look to public funds being invested in R&D to save the country’s economy from steady decline that I think it otherwise will experience. It will have to be private money. And it seems absolutely clear that you often can’t get significant private money to finance R&D, except by the prospect of powerful patents. So I think the economic future of the country really is going to turn out to rest primarily on the strength of the patent system.

On patent litigation and PTO salaries:

MICHEL: [I]f you’re talking about litigation, I think American civil litigation in general, commercial litigation of which patent enforcement is a part, could be improved by reforms in discovery and in motions practice. My impression is there’s a lot of excess discovery—very costly, very time consuming, and very disruptive to the companies involved. Millions and millions of dollars in a patent case can be spent on just complying with discovery demands. I’m very impressed by the comments of magistrate judges, for example, who talk about how, after all the discovery and disputes are complete, 99.99% of the discovered material turns out not to be relevant to trial, and not used at trial. In a way, it was all a waste, looking at it in hindsight. So, if I could redesign the American litigation system to be more like the British high court in London, where most of the patent cases are tried much faster and cheaper than here, I’d favor that. So, to that extent, I’d favor imitating some other jurisdiction but not generally.

In terms of the patent office itself, I’m told that the salaries of patent examiners in the European Patent Office are better than the salaries of examiners here in the United States. So in that way, I’d like to imitate some foreign Patent Office practices. I’m told they have vastly more experience and vastly better paid examiners. Not only the primary examiners but supervisory levels as well and I certainly would favor that amount of imitation of foreign practices. But in general, I think our system is very good. Not perfect. No system is perfect. But I certainly can’t think of any country’s patent law that I would say “Let’s swap because country ‘X’ has better patent law than we do.”

On Director Kappos:

MICHEL: I think Director Kappos has been a breath of welcome fresh air in every way, and has done everything humanly possibly within the horrible constraints that he’s working under, but he can’t do anything more. He needs more people, better people, people to stay longer, vastly better computers and better fees, none of which he can give himself. They all have to come from the Congress. I think that Director Kappos is much too polite to complain, but I think when he took this job, he expected he would get heavy support from Congress of every sort, financial and otherwise. Instead what’s happened is that they’ve cut his budget by using the early, too-low estimate of fee income to set the budget ceiling. It turns out the estimate of fees was wrong and the later estimate showed more fees coming in. But the way Congress set the ceiling, now there will be more PTO money dumped into the general treasury instead of supporting the horribly underfinanced Patent Offi ce. If I were David Kappos—and I’m not saying what he thinks or feels because I don’t know, he doesn’t complain, I don’t ask him, it’s none of my business—I would feel very ill-treated by the Congress with this effective cut in his budget, which is already way too low, and now it’s cut even further.

The interview is being published in a special Summer Issue of Medical Innovation & Business Journal. The special issue is devoted to the question of patent reform and the current legislation pending before the House and Senate.
 
A preview of the interview can be downloaded here (link)