September 01, 2014

Introduction

Robert (Bob) Stoll spent 29 years working at the United States Patent and Trademark Office (“USPTO”). He started as a patent examiner and worked his way up to become the Commissioner for Patents. Bob dedicated his career to improving the patent system and was the 2012 recipient of Managing Intellectual Property magazine’s lifetime achievement in intellectual property award. As Commissioner, Bob was instrumental in the passage of the America Invents Act (“AIA”). He also led the USPTO’s legislative efforts and was a key leader in developing the U.S. government’s positions on international intellectual property issues. Bob retired from public service in 2011 to become a partner at Drinker Biddle & Reath LLP where he co-chairs the firm’s Intellectual Property Practice Group. In this interview, Stout Journal contributors David Haas, Kristopher Boushie, and Stephen Holzen sat down with Bob to discuss his career at the USPTO and his thoughts on the most important issues facing the intellectual property community today.

Interview

Stout Journal: Please tell us something interesting that most people would not know about you.

Bob Stoll: Almost my entire family is in the intellectual property business. My father was a patent attorney, my wife worked for the World Intellectual Property Organization, my brother is a patent attorney with Boeing, and his wife is a managing partner at Finnegan Henderson. My sister was a patent examiner at the Patent and Trademark Office and retired to raise kids. Her husband is a managing partner at Nixon & Vanderhye. My other brother examined golf club handles at the USPTO.

Stout Journal: Did you ever expect to have a career at the USPTO?

Bob Stoll: I was in law school when I went to the Patent and Trademark Office and they paid for most of my credits. I thought I would work there for a few years and then go off to a law firm or a corporation, but my wife and I had two kids while we were in law school, and I wanted to spend time with my family. So we made a deal that I would stay at the government and she would continue to work.

Stout Journal: How did you progress through the ranks?

Bob Stoll: I started off as a junior examiner, I was promoted to primary examiner, and then again to a supervisor examiner. After that I was noticed by the front office by taking on details. The front office brought me up there after I did a detail running the Combined Federal Campaign and then I just moved up from there. I worked as the Administrator of External Affairs, which is a really cool job because they do all the legislative initiatives and all of the international negotiations relating to intellectual property (“IP”) for the Patent Office. After that, I had a series of different jobs, including Director of Enforcement and Head of the Global Academy. Finally, I was named the Commissioner for Patents.

Stout Journal: Looking back to your time as the Commissioner, how do you define your legacy?

Bob Stoll: I had two goals as the Commissioner. The first was to be part of a cultural change. At the outset of my tenure, the USPTO was known as an organization that said “no” to a lot of applicants instead of working with the inventors to help identify allowable subject matter. I also wanted to make sure the people working there were happy and wanted to stay. I’m very proud of the fact that I was involved in significantly reducing the attrition rate, and in 2013 the USPTO was rated the number one Best Places to Work in the Federal Government. While I was at the USPTO, our annual rankings increased over time. I’m really proud of these improvements and successes.

Stout Journal: Can you explain how you were able to convince the examining corps that they should be working with the applicants to identify patentable subject matter?

Bob Stoll: I had a very good relationship with Robert Budens, head of Patent Office Professional Association, and we worked on projects together to demonstrate our support for the examining corps. For example, we expanded the work-at-home program, so now the USPTO has 3,000 to 5,000 examiners working from home. I also fought for examiner bonuses during the lean times. I met with the examiners frequently. I had brown-bag lunches where people would come in and talk to me about their problems and issues and I followed up with them. I had a great group working with me. I also had an outstanding team working with me!

Stout Journal: What was your view on the risks of a “brain drain” when the senior examiners elected to work from home, leaving the junior examiners with less face-to-face mentoring opportunities?

Bob Stoll: That is an excellent question. I think what suffered from the work-at-home program was that employees could not benefit from the “water cooler” mentoring, which happens when people spontaneously get together to ask questions and learn from each other. The solution to this problem, of course, is networking and electronic connectivity. We offered our examiners a number of electronic tools that were compatible with a remote location and connected patent examiners with their peers. That is a very difficult issue and the USPTO is still not as good as they could be, so I think there is room to grow.

The second problem was that you lose the sense of community when you have a lot of people working from home, and I think that’s troubling. You compensate as best you can with the technology, but I think there still is a loss.

Stout Journal: There continues to be a push on pendency and to reduce the amount of time that applications languish before they are picked up by an examiner.

Bob Stoll: Yes, that is a backlog issue and, as Commissioner, there were approximately 1.2 million applications that were either in process or in the backlog. I made a concerted effort to start reducing that backlog. I thought we could reduce the backlog by bulking up on examiners and by reducing attrition rates.

That said, the more important thing to focus on is patent quality. I am in favor of providing more time to the examiners and more time for training so they can do a better job and issue higher quality patents. The USPTO still has some room to improve. The America Invents Act did a lot of things and it did allow for a revolving account to be set up for the PTO, but it did not take the budget for the PTO out of appropriations. This was an oversight issue with which I did not personally agree because the USPTO has a large number of stakeholders all looking to make sure the USPTO’s money is being spent in the proper manner. It’s important for the USPTO to know that it will have funding available in succeeding years because it is critical to being able to take those funds and train the examiners in order to get better patents out the door.

Stout Journal: You’ve been in private practice for three years now. What is the biggest difference between private practice and your work at the USPTO?

Bob Stoll: Billable hours. Everyone will know that. I mean, I’m billing in six-minute intervals. That is just incredible in my mind.

Stout Journal: What have you enjoyed the most since entering private practice?

Bob Stoll: I really enjoy troubleshooting patent applications where somebody runs into problems at the USPTO. Clients will call me and say, “Hey, help me. I’ve got a problem at the PTO. Can you fix it for us?” Or I really like advising on the new post-grant procedures.

I’m also working on some litigation and licensing work and doing a lot of policy work. With regard to the policy work, I help our clients formulate their opinions on different IP issues of the day, analyze whether certain legislative provisions are something that the client should support or look to modify. I like that I can do something different every day. I never know what’s going to happen when I come in.

I am also a big fan of my partners and colleagues at Drinker Biddle and enjoy working on projects with them.

Stout Journal: What do you see as the main issues, concerns, or challenges in U.S. patent law today?

Bob Stoll: Well, we talked about one. I think patent quality is something that we need to focus on. Improving patent quality would address a number of the other issues, so it is a very important piece.

Everyone knows there has been legislation and initiatives with respect to trolls. I don’t feel the same way a lot of people do. Personally, I can’t easily define a troll. I know the legislation was geared to trolls, and I don’t think that’s exactly the way we should be focusing. So I think that’s another big issue on the horizon.

My top issue would be the patent eligibility issue, which is coming to the forefront out of Supreme Court decisions. I think that something should be done with respect to patent eligibility and perhaps we should refocus our attention on quality and patent eligibility instead of on trolls.

There are other problems in the system, like when someone can send thousands of vague demand letters to mom and pop stores, who don’t understand IP, to scare them when there’s no real understanding of what they’re doing or intent to take them to court. There are many other problems like frivolous suits, but all of these other problems are not related to trolls. Anybody abusing the system is a problem. Referring to it as just a troll problem is not the way we should be looking at it. But taking a step back from that, if the claims are well-searched, well-examined, well-defined, clear, and you know what you’ve got, and everybody else knows what you’ve got — you can’t go to court on a vague patent and scare major corporations or scare small entrepreneurs. If a patent is clear, companies may still have to take a license, but at least they know what they’ve got and they can make an informed decision to invent around or take a license. I think improved patent quality fixes a lot of problems.

Stout Journal: Do you believe any more legislation is needed to deal with the activities of patent trolls?

Bob Stoll: I don’t like that we’re focusing only on patent trolls. I don’t think that is a healthy analysis of the system. Are there improvements that need to be made? I think there are many things that can be done better, but I don’t even know who a troll is now. I mean, technically, a university could be considered a troll. They are non-practicing entities. They only license, and I don’t think anybody that I know considers universities to be trolls.

Sometimes you have companies that spin off some of their unused patents to other companies. Are they trolls? They’re trolls with respect to those patents, but they’re operating companies.

You’ve got other very large American companies that have an entire division that only procures patents for the purpose of assertion. Trolls? I’m not sure. Lady Justice is blind for a reason. Let’s not look at the character of the plaintiff. Let’s look at the action and let’s see whether or not it’s something we as a country should support.

I think focusing on trolls is not focusing on bad pieces of the system, and that’s what we need to do. There is a legitimate basis for a secondary market in the United States. We have advocated for that. It is part of our system. The secondary market is for an inventor who does not want to go out and build a plant and manufacture his/her invention yet can still monetize their invention, go back to the workbench and invent the next thing, and our system is doing quite well. Let’s get the problems out of the litigation system and I think we’ll all do better.

Stout Journal: Do you view the activities of Congress as being more of a witch-hunt than an attempt to really improve the system?

Bob Stoll: First of all, Congress is petitioned by people on all sides of the issue. So you’ve got lobbyists up there representing everybody — the universities, independent inventors, the tech people, the IP experts, and the trolls.

There are issues. There are problems. Everybody knows it. Trolls seem to have taken the brunt of it, and it’s because some of them employ tactics that need to be curbed.

I think Congress is being told things. They’re not patent experts, so they have people coming up there saying, “Hey, this is a big problem.” And, you know, it’s one of their familiar friends, and they recognize that there is a problem there because these people are feeling passionate that there is a problem. And maybe they’ve been focusing a little too closely on the fact that it’s a troll and not that nobody should be doing that.

I think that there is a little pause going on; the Senate didn’t move forward. And I think the pause is recognition that maybe there was an initial overreach and the legislation was just going a little too far. Eventually we’ll reach a good conclusion. It will take a little more discussion. People on both sides recognize that there can be improvements to the system.

Stout Journal: Are there any other main issues, concerns, or challenges in U.S. patent law that should be addressed?

Bob Stoll: Limiting patent eligibility is a concern. I think the Supreme Court has not fully considered that the United States is a leader in diagnostic methods, personalized medicine, and software. This is something our country is really good at and we lead the world in these areas. It is a mistake to start limiting patentability in this subject matter when it is driving our economic recovery, our long-term economic growth, and creating jobs. So I do not share the Supreme Court’s position on Myriad, Prometheus, and that line of cases. We should be focusing in more on the parts of the statute related to indefiniteness, written description and enablement, and on whether the claimed invention is in the prior art and focusing less on the patent eligibility sections.

Stout Journal: There have been many articles in the press about the first-to-file rule and how it is better for big corporations and how it hurts the small inventor community. Have you seen any evidence showing that to be true?

Bob Stoll: I tend to think that some of the independent inventors are unfamiliar with how slowly things move through a large corporation. Independent inventors think that the corporations are going to beat them to the PTO’s door, when that really does not happen. Being a small inventor or a small organization is actually an advantage, in my opinion, because it allows them to make fast decisions and to file patent applications quicker.

I do believe that our cutting-edge inventions frequently come from independent inventors or people who are more willing to take risks like those in small companies. I think it is really important to protect independent inventors and startups and to make sure that they are not losing their ability to capitalize on their ideas because they are major contributors to the successful commercialization of new ideas.

Stout Journal: Do you think we will see another round of patent reform in the near future?

Bob Stoll: I think we have established a permanent cadre of lobbyists who are going to have something to do in this area for the rest of my life. There are too many people now steeped in the nuances of patent law. I think you’re going to see legislation probably pop up at the beginning of 2015, and I think there will be legislation for every successive Congress until I die.

Stout Journal: What advice would you give to companies that are attempting to protect their intellectual property rights in China? Should they file patent applications in China?

Bob Stoll: Yes, they should file in China. You can’t ignore a country with a population that large. You absolutely should be filing your patent applications in China. They do have enforcement laws on the books. They’ve got a plethora of laws that are very difficult to understand and navigate, as their system is very complicated. I suggest that companies join with like-minded, like-interest companies and share resources in China for enforcing their IP rights. Join the groups that are formed in China to do the research and to do the litigation, if necessary. I would also join together with industries — the apparel industry, the pharmaceutical industry — and try to leverage my resources to deal with Chinese exports.

Remember, the Chinese have their own domestic intellectual property and I really believe that a country doesn’t choose to enforce intellectual property rights until there is domestic intellectual property to protect. Pirates and counterfeiters are going to rip off everybody, not just foreigners. So I see China evolving to protect intellectual property and that’s why you need to be engaged in China.

Stout Journal: Were there any provisions of the America Invents Act as it was initially drafted that didn’t make it into law that you wished had gone through?

Bob Stoll: I think taking the PTO out of appropriations would have been very important.

There were many different provisions that could have been better. For example, I am not happy with the covered business method language that did get through. I have a problem when we differentiate a certain technology from others. I don’t like differentiation because I’m concerned that foreign governments will do that in areas where the United States is pretty good and I don’t want to fan that fire.

I think that the current first-to-invent provision could have been better. It is more of a first-to-file or disclose system. I think people are confused because the disclosure has to match what your eventual claim is going to be in order to avail yourself of that disclose. I think that is not what the university community wanted and those provisions were drafted to provide some domestic protection for academics who like to publish quickly.

Stout Journal: One of the things that you touched on earlier was the inter partes review that now exists for invalidating patents. So far, they’ve been quite popular and from what we’ve seen from the PTAB, they’ve been quite lethal in most cases.

Bob Stoll: I think Chief Judge Rader called it “a killing field.”

Stout Journal: Why are so many patents being invalidated through this process?

Bob Stoll: I think there are in excess of 1400 IPRs that have been filed so far. But there haven’t been so many decisions at this point that I have enough to make an intelligent analysis. It seems a little high to me to be blunt about it, so I think that when we’ve had it run for a while, we need to take another look and see if there’s a problem with the system because, as I said, it seems high. Once we have enough decisions coming out of there, I will want to know if it’s a killing field. If we do have a killing field, then that is a problem.

I do know that the PTO is really striving to meet the statutory obligations to complete the review within one year, with the six months of additional time for good cause. I think that they are being a little rigorous in their understanding of the law. I am concerned about never, or almost never, having any additional discovery available. I think that there are some circumstances where additional discovery may be reasonable.

I’m also not happy with the idea of not being able to amend your claims more easily, at least the first time, as I think is provided for in the statute. This is brand new in this form and I think it’s going to need some tweaking. I think Chief Judge James Smith is doing a good job putting together a team, but I think we need to take a look at this a couple of years after it’s been tested to see whether or not it should be changed.

Stout Journal: Do you believe there is a tension between the USPTO and the District Courts when there are parallel disputes at the PTAB and in District Courts?

Bob Stoll: This is a problem. First of all, there are different standards for claim interpretation at the PTO than in the court. The USPTO uses the broadest reasonable interpretation standard and the District Courts use something much narrower. I think we’re seeing more judges stay District Court litigation than they did in previous years. It was about 50 percent before the new procedures were in place. I think it’s significantly increased because judges would rather have somebody else handle the difficult nature of determining whether a patent is valid and they know there will be a decision from the USPTO within a year of instituting the process.

The Baxter decision was interesting because the case was almost final, except for damages. Then the PTO invalidated the patent and the Court of Appeals for the Federal Circuit (“CAFC”) said the award should not stand. Should that be happening? I don’t know, but I think the decision was probably right, although maybe a little troublesome because of how late in the process the award was vacated.

Stout Journal: Do you think the courts should defer to the PTO in these matters?

Bob Stoll: Far be it from me to tell a judge what they should be doing. However, if you are in a process that will conclude with some certainty in a reasonable period of time, maybe it is reasonable to wait for a decision out of the PTO. I think that a lot of judges are feeling that way. But if they feel the case is already way down the line, for example, if you are already beyond a Markman hearing, then maybe you don’t stay the District Court action.

Stout Journal: If a court awards damages on a patent that the PTO later invalidates, should the defendant have the right to
retry the case?

Bob Stoll: Our system says no. If the District Court case is concluded, it is done. It is over and you pay. I understand the concerns, but that’s the way the system is.

Stout Journal: The Supreme Court has been very active this spring with a number of the rulings, such as Alice v. CLS Bank, Limelight v. Akamai, the case of Nautilus v. Biosig, Octane Fitness v. Icon. What is your reaction to the Alice v. CLS Bank decision and how significant do you think the impact will be?

Bob Stoll: I think it was a fairly narrow decision. I don’t think the decision provided much guidance. It did say that those business method claims were not patentable subject matter. I’m okay with that. I think that those claims, in fact, were not patentable.

I think it was clear from Alice and some of the previous cases that business methods can be patentable subject matter. Particularly if the invention is solving a technological problem or is drawn to a technological solution. It is clear as a bell that software is patentable subject matter. Software is in everything. It’s in airplanes. It’s in chemical plants. It’s in your automobiles. So this whole question of computer-implemented patents is kind of strange to me.

Stout Journal: What is your reaction to the Limelight v. Akamai decision and how significant do you think the impact will be?

Bob Stoll: My own opinion is that I think that Supreme Court actually sent it back to the CAFC to make a determination whether they need to revisit the way they look at the entire activity, the steps, and possibly steps done by other people that may be a problem. So I think they may fix this at the CAFC, not through 271 (b) but through (a), possibly by revisiting Muniauction.

Stout Journal: What is your reaction to the Nautilus v. Biosig decision and how significant do you think the impact will be?

Bob Stoll: One vague definition of indefiniteness for another vague definition of indefiniteness. I do believe this and other recent decisions gives the PTO an opportunity to put out guidelines that can better define what indefiniteness is through examples and hopefully they will, with a lot of input from the user community. I am hopeful that the PTO would use the recent decisions as an opportunity to clarify indefiniteness through many examples.

Stout Journal: What is your reaction to the Octane Fitness v. Icon Health and Fitness decision and how significant do you think the impact will be?

Bob Stoll: I think it went a long way to doing what needs to be done to allow for payment of attorneys’ fees in frivolous cases. The courts have been too reluctant to grant attorneys’ fees, and it’s possible that the standards need to be lowered so that the judges have more flexibility to grant fees.

I am concerned with some of the language that was going forward as legislative proposals in this area. I believe that a judge who is the trier of fact is best able to make the determination as to whether or not the case is frivolous and fees should be awarded when plaintiffs bring frivolous cases. I don’t like the presumption of flipping of the fees, and I think that maybe we should have the judicial conference to come up with some rules for when the circumstances should allow for payment of attorneys’ fees. Going forward, I see that the courts will be more willing to grant attorney fees.

Stout Journal: I don’t know if you got a chance to read our interview with Attorney General Sorrell from Vermont, but the legislation that Vermont has adopted is under its consumer protection laws. Do you think Vermont’s law and the laws passed by other states are at odds with Federal preemption?

Bob Stoll: Let me answer a different question. I think that maybe federal legislation is necessary because what you’re going to get is a patchwork of laws across the country that makes it really complicated for legitimate patent owners to actually put out demand letters with respect to things that they know are problematic.

Do I believe that there needs to be more detail and less harassment with respect to demand letters? Yes, I do. I also believe that federal action in this area is necessary, but it needs to be measured so we don’t catch legitimate patent owners. And it needs to be uniform so that we’re not running in with criminal penalties in some states and different requirements in Nebraska and different requirements in Vermont.

Stout Journal: One other issue that we wanted to touch on today was the RAND (reasonable and non-discriminatory) or FRAND (fair, reasonable, and non-discriminatory) royalties for standard essential patents. There has been a lot of court attention paid to these types of patents. There has also been a lot of time spent in determining appropriate royalty rates for standard essential patents. What do you think that the courts, the standard setting organizations, or companies that are competing in these industries that use standard essential patents can do to simplify the process of defining RAND or FRAND royalty rates?

Bob Stoll: This is an exploding area of intellectual property law in which I’m very much engaged. I’ve written and spoken on it. I have gone to Japan at their request to consult with the Japanese government on how to set up their laws with respect to FRAND rates and standard essential patents. I have read Judge Robart’s 207-page decision — it gives a thorough analysis for determining a FRAND rate. He did an excellent job translating the commonly accepted licensing approach to an approach for determining FRAND rates.

I wish we had some way to set up FRAND rates early and fairly, but that might be too difficult for the multitude of SSOs to do. I think companies need to be aware that they need to be a part of the SSO and they need to be engaged in setting up the standard. You should be able to get the benefit of your invention but not the benefit of the standard. We have to work our way through this and there’s going to be a lot of different solutions.

Stout Journal: Do you think there’s a larger role that the SSOs can take in defining these rates without running afoul of antitrust laws?

Bob Stoll: I am not sure because they’re set up by the participants who are focusing on setting up the standard. Maybe they could agree to some separate group determining the rates. The SSOs have management structures and are aware of antitrust rules, and you’ve got a real intersection of intellectual property and antitrust there. We could also investigate the idea of having some sort of umbrella group that talks about what the boundaries of the SSO should be. Maybe there’s some sort of government involvement in setting up SSOs, generally, to make sure they don’t run afoul of antitrust rules, and yet provide for what’s needed to set decent standards. We need to look at all of these issues more closely.

Stout Journal: We understand that some Chinese courts have begun to step into this territory as well and have issued some of their own rulings in terms of what RAND or FRAND rates are for use of their technologies. This seems to be at odds with similar disputes going on between similar parties in the United States. How do these things get reconciled if you have different courts and different countries who are essentially trying to come up with the answer to the same question?

Bob Stoll: Well, that goes to my earlier job when I was Administrator for External Affairs and had these types of discussions and did these types of negotiations everywhere. What usually happens, and it’s a progressive process, is you’ll get a couple of countries who are focusing in on the problem. These are usually the more developed countries who are now dealing with the SSO issue. These countries sit down and start dialogues and that’s really how it starts.

And then, after an exchange of information, you try to set up some sort of discussion about best practices, never really singling out one country’s way of doing it as opposed to another’s, but setting out what are best practices as models. Maybe the participants agree on the best way to do something.

Eventually you take this information to some sort of international organization, maybe WIPO for a body to discuss some sort of treaty. That is taking this way down the line, but you are progressing that way and that’s how these things eventually evolve. It starts with an exchange of information and ideas.

I have seen some papers, and I don’t recall the group, but they have started looking at standard essential patents and FRAND rates and how they are handled in different countries. So, it is starting to happen. I think you will see more discussions between countries as to what they believe are the best ideas for setting these things up. I think it’s an interesting area of patent law that I like and in which I want to remain involved.

Stout Journal: Looking at your career over the next five years, what are some of your goals?

Bob Stoll: I want to continue to troubleshoot patent applications. I really like that. I want to remain involved in the post-grant procedures. I was there advocating for the different provisions when I was the Commissioner for Patents, so I know how they work. I also enjoy strategizing on litigation, serving as an expert on USPTO procedures, and engaging in opinion work. Another area that I find interesting is helping a company evaluate its patent portfolio to make sure it has the necessary coverage of its products and to look for additional areas to cover.

I also want to be involved in policy. I really like the policy piece of it too. I think that’s fun. As long as the days are interesting, I’ll continue to do this for as long as I’m physically able to.

Stout Journal: Excellent. Thank you for participating in our interview.

Bob Stoll: Absolutely.