▶ 0:04:39Good morning. The subcommittee will come to order. Without objection, the chair is authorized to declare a recess at any We welcome everyone here to today's hearing on the United States Patent and Trademark Office. And I want to make it clear that at the stroke of 10 we started, which is practically a record. Uh but also that uh this is an extremely busy day. Most members serve on two or three committees. So, you'll see them coming in and out. Mr.
▶ 0:05:08Squires, that's not any uh reflection on you because there are equivalent people in at least two other hearing rooms for many of our people. Uh but I I suspect you'll see in and out virtually every member of the
▶ 0:05:24Also, in addition, it's the uh policy of the subcommittee, should any members of the full committee come, uh they will be waved on uh on either side without objection. I now recognize myself for an opening statement. Did you
▶ 0:05:42Mr. Chairman, just to be clear, the any member who arrives from the committee will be waved on the side.
▶ 0:05:46we wave on. The uh the specifics of the committee of rules are that uh they still have to be yielded time from a member of the subcommittee.
▶ 0:05:55Um but I I always say that so that everyone understands in advance. Also, that uh pursuant to the rules of the full committee, we won't wave on people who are not members of the Judiciary Committee. Thank you, Mr. Chairman. Thank you. And we welcome the ranking member of the full committee here, too. Um Normally, I make relatively short opening statements, but this is a particularly important hearing.
▶ 0:06:25It's important because there's never been a time in our history in which getting it right uh not just on patents as we've known them, but patents are as they are emerging. I want to thank uh the under secretary for, among other things, clarifying in AI the pathway to patentability.
▶ 0:06:48I certainly think that the when we look at the ambitious uh agenda set out by President Trump, he has selected well an under secretary to make sure that we can reach that. One of the first uh actions of Mr. Squires was, in fact, as director, to take step steps to move the President's AI agenda and to strongly support it.
▶ 0:07:14This meant going above and beyond and with some changes to the Biden-Harris policy, which came out late in the administration. This thoughtful change, I believe, will will bear well for the foreseeable future.
▶ 0:07:28But like everything else in AI, I will expect it will not be the last time the guidance will have to come either from the director or, if necessary, from And in fact, as we as we speak, we still live with the memory of the Copyright Office saying that AI is not copyrightable. Um and the idea that that AI-assisted production is not copyrightable or patentable, of course, is now in our taillights, but it will not leave our memory.
▶ 0:08:01under the uh director's uh guidance, uh he set forth these forth these clear guidelines for innovation. This, I believe, will accelerate the but it comes with a price. As we know, AI is a wonderful tool, but AI can, in fact, extend and uh elongate patents.
▶ 0:08:25Patents that might have had 10 claims and a few dependent claims now might have thousands of claims. That means that it one of the things that the director has asked for that we have to take serious consideration on is how we deal with long or particularly complex patents. Should there be a multi-tiered and this will be discussed today.
▶ 0:08:48Should there be a multi-tiered process for Uh as many on this committee know, when the Congress, on a bipartisan basis, bicameral basis, made it two decisions. One was that fee setting would be transferred substantially to the Trademark Office, Patent and Trademark Office, but also that fees collected would be embargoed, meaning they are not to be spent anywhere else in any agency, including Commerce, in which the Trademark and Patent Office
▶ 0:09:18is nestled. That means that that there is an obligation to raise enough funds to modernize the Patent Office. Federal workers are stressed today in the Patent Office because they currently do not have the tools to keep up with demand. In 18 human hours, uh 17-18 human hours, the question is, do we get it all right on a thousand claim uh including dependent claim uh patent application? And the answer, of course, is no.
▶ 0:09:49One of the goals set out by the director, which I completely agree with and I believe everyone on the dais does, is that we have to work hard to continue to sustain or improve patent quality. And I say sustain because as they become longer, if we do not have the tools to patent examiners to do their job, or if in fact we do not supplement technologies that may not be available to the examiners.
▶ 0:10:17And I say that specifically because historically the examiners are skilled in the technology they're evaluating. But many of the technologies are so short of people that in fact to recruit those people or to train them in an emerging technology is virtually That means that not only do we have to embrace AI in the patenting process, but we have to embrace AI in the patent office.
▶ 0:10:45This will cause the patent office to spend vast amounts of money. Whether it's done in in in concert and collaboration with other AI companies or substantially an in-house production, it will cost a great deal deal to produce and maintain.
▶ 0:11:03However, when in the foreseeable future we are dealing with more than a million patent applications a year, more than half of which come from countries outside the US, the largest of which is China, a country that does not respect the rules of how we create and qualify inventors, we're going to need sophisticated tools to spot whether in fact true invention is being submitted to us.
▶ 0:11:29So, implementing the President's executive orders is going to be a daunting task. Fortunately, he has selected someone that is highly qualified, someone that has the respect in the Senate particularly of both Republicans and Democrats, and I believe today you're going to see that we're very pleased with your selection. That does not mean, Mr. Squires, that we are pleased with everything that is going on.
▶ 0:11:58uh you had to deal with a clear conflict of interest, uh but also with a policy that was ambiguous as to where a conflict lies. The particular case does not need to be discussed here because it it rose to criminal activity and a dismissal.
▶ 0:12:17But let's understand patent examiners with even a small amount of stock cannot and should not be evaluating a patent that could benefit that company or that stock. That level of of conflict of interest now is zero under your leadership, and I want to particularly commend you for that.
▶ 0:12:37If somebody had asked me, as someone who has followed the patent office for decades, if that was a policy, I would have said, "Well, of course it is." Only to discover that in my entire career both in and out of government, it was not. And so again, I want to commend you because that's the kind of hands-on decision-making that we need to have. I want to make it clear. The President has an agenda.
▶ 0:13:08That agenda is not in conflict on either side of the dais. That is that although sometimes when you say MAGA is pejorative in this that making America and keeping America great is the goal of every aspect of this body and of the Patent and Trademark Office.
▶ 0:13:27Onshoring of manufacturing of all sorts, mining, agriculture, conventional manufacturing, and yes, intellectual property manufacturing is not just a goal of this administration, but it should be a goal of everyone that wants America to have 250 years that in fact resemble the first 250 years.
▶ 0:13:49Therefore, any policy that isn't helping and supporting the ability for companies to make a decision, whether they be US companies or global companies located outside the US, to make, use, and sell in the United States is adverse to the President's policy and adverse to to the best interest that we on this side of the dais enjoy. That brings up a particular point, and it's one that I think is important.
▶ 0:14:20Under the policies of Acting Director Stewart, and quite frankly, as far as I can tell, the continued policies, I see a real threat to that. At the end of the Biden administration, there were approximately 280 slots for patent examiners under PTAB. My understanding is that more than 80 of those slots are now vacant.
▶ 0:14:45The systematic change from 80 to 90% of PTAB reexaminations being granted to just the opposite, somewhere in the neighborhood of 80% being rejected, including a policy in draft form that I will push back on is not within the discretion, and I repeat, not within the discretion of the Patent and Trademark Office, is one that determines that if a patent is beyond a certain number of years, it simply will be automatically
▶ 0:15:15discretionarily rejected. I was here and some others on the dais that will talk today, we were here on a bipartisan, bicameral basis under former Senator Leahy, we came to a compromise. That compromise was worked out by parties far and wide, not to everyone's complete satisfaction, but to overwhelming support.
▶ 0:15:40That meant that PTAB did not completely displace ex parte reexamination, that it still has a valid use. It also means that the so-called one and done was never in place.
▶ 0:15:54But in order to compromise between one and done, which was asked for by a number of companies, not the least of which were the leaders in bio and pharma, we said that if you get past the first reexamination, which was assumed if it came in with credible arguments, would be would go through reexamination, that it would be discretionary thereafter.
▶ 0:16:18The law was unclear, and I have to take some credit and blame for that, that when you look back it doesn't actually say that the first one will automatically be more favorably considered, but the intention was clear, and the the spokespeople on both sides of the capital and on both sides of the aisle were speaking specifically that the bias would be toward yes on the first one, and then there would be a higher standard when either the same company or another company came in with substantially the same
▶ 0:16:49information based on substantially the same accusation. And I and I say that because obviously sometimes you have diverse and different views. One of them, for example, is one patent has been asserted against Intel Corporation and Gillette for razors.
▶ 0:17:13I have to believe that the arguments in why that would be invalid, unsupported, or uninfringed could in fact be different between a microprocessor and a and a a razor. When I was shaving this morning, that was all I could think about was what could possibly be the The reality is we have to balance that. And Director Squires, you have the hardest job.
▶ 0:17:41You have to balance that with a reasonable expectation that a patent is what it says it is. The question is, if our patents in fact not of the quality we'd like them to be, I'm going to opine for a moment that if patents tomorrow became perfect, and in no case was there any ambiguity, it would still be up to 26 years before the last bad patent could no longer be asserted
▶ 0:18:11against somebody for for for damages. That is a long time. Director Squires, if you manage to serve that long, you will clearly be the So, that means that we have to continue dealing with the legacy of the past, with periods of time in which new technologies came in, they were not fully understood, or in fact, on occasions, one examiner is loose.
▶ 0:18:37But we also will always have to deal with the reality that somebody will get a patent, which means X, and then assert it maybe against Intel and Gillette as though it means X, Y, Z, and the like. This is not something that often is done well in the pat in the Article 3 courts.
▶ 0:18:58Article 3 courts, when I arrived here before the patent pilot legislation and before modernization including PTAB, were running as much as 40% reversal at the Fed Circuit. The Fed Circuit was taking an amazing amount of cases because it was almost a coin flip. We have been working to reduce that, and I must tell you we're down to about 35%.
▶ 0:19:23Uh it is not an easy job because Article 3 judges, all 677 of them, almost exclusively come from technology non-technology backgrounds. They are prosecutors, they are public defenders, they are civil lawyers, but they are seldom patent attorneys or knowledgeable in intellectual property. That is not their fault. On top of that, from for more than half of the judges, they will be lucky to get one patent case. Let me phrase that.
▶ 0:19:50They will be unlucky to get one patent case. It will be their first, and after that they will try to find another judge to take their patent And that means that that first Markman is their first Markman ever. It is on a technology they don't understand, and a patent that says things that have to be explained to them. That is not true at the PTAB. The 200 now 180, but but once nearly 280 uh patent examiners are technical specialists.
▶ 0:20:20They will look at dozens of cases uh both sequentially and in parallel. They adjudicate these over a year. So, by the time they've been on the job for a couple of years, they may have done 60 or 70 uh patents. They have brought them to a close, and they seldom have any reason at all not to meet their their deadlines. That means they do a better job.
▶ 0:20:43The proof of that is that they run about a 12% total reversal, even in part, meaning if you lose at the patent uh and trademark office or you win, you can pretty well take it to the bank and either move into Article 3 or move into another uh place with that patent. That means that we have to find a way to reinvigorate the Patent and Trademark Office.
▶ 0:21:10As I go through my questions today, I will be asking exactly that to the director. How do we restore the ability for people who have been accused of patent infringement to rudimentary, particularly on the first uh time it's been asserted, be able to get the in front of an examiner. There are other problems in in the law that I want to make clear. We never believed that it would be 100% discretionary.
▶ 0:21:38We believed that the under secretary would in fact, at the end of the day, be reviewing the work of those those judges, and expected it there to be a process if there was a Under Trump 1, we discovered that in fact one person could, without any uh simply overturn uh a uh a decision by an Article 1 judge.
▶ 0:22:04That still becomes a bit of a a problem, and I know we'll hear from uh Director Squires of how he is determining that and handling it. But additionally, we have discovered that a full trial that is nearing its 1-year, that is ready to go to decision, can in fact be pulled back and undone.
▶ 0:22:24Director Squires, I have to tell you, it is my belief, and it will be my legislative last act if I can, that that either will be undone or we will undo it. Once a process of determination is even if you, at the end of it all, choose to not agree with the decision, to undo it, to you to in retrospect undo it, is in fact to have less than the fair process
▶ 0:22:55be appeared, and in fact both parties have spent money in the process. It should be allowed to go to decision. You can then evaluate the That is a particular concern, and it'll be the one that I spend most of my time on the dais, there will be people who don't know the meaning of trolls, and there will be people who don't know the meaning of trolls. It is a difficult uh gasp.
▶ 0:23:22There are non-practicing entities who are great inventors, who invent things sometimes that have exactly one customer. That does not invalidate the ability for them to take their invention and say, "If you'd like to use it, you will in fact have to work out a royalty." At the same time, there are non-practicing entities who are simply in the financial gain business.
▶ 0:23:45Unfortunately, third-party funding has made it very possible to buy old patents, particularly those that have been around for more than 6 years, and assert them either for the first time or for the first time against a particular uh defendant. That means that any deadline, any time out that says a patent can no longer be considered, cannot possibly be accurate.
▶ 0:24:11Not because fair warning shouldn't cause someone to use a process earlier, even if not accused, I share with many that view. you don't know you're going to be sued in many cases until somebody redefines what that patent means.
▶ 0:24:30Again, in closing, I'm going to go back to if you looked at a patent, any one of you in this audience, and thought that it applied to Intel and Gillette, please raise your hand. If not, then in fact that makes my case that you cannot know that your patent is going to be asserted against you in a particular way until it is.
▶ 0:24:54Without at least a constructive notice, a letter from the inventor or the like, you really are not on notice. That's why we have latches, but it's also why 6, 8, 10, or even in the 20th year, we may need to use the ability to properly find out if, as asserted, the patent is valid and enforceable against that defendant. I've taken a lot of time. I've done so for a reason, for the first and only time probably in my career.
▶ 0:25:25Nothing is more important to making a decision to onshore than knowing that in fact you're going to get a fair opportunity to defend yourself against patent and other legal accusations. I make the case in purely monetary terms.
▶ 0:25:43If 20% of the world's market lies here in the United States, and you're currently making a product offshore, you have a 20% exposure in the US if you lose a patent case. If, on the other hand, you make, use, and sell in the United States, even if only 20% ends up in the United States, you have a 100% exposure. Under the law, making in America gives you worldwide exposure in America.
▶ 0:26:14Who in the world would risk 80% of their market when they could make the product in a country that they are trust they trust or multiple countries where they trust they would not be shut down. Unfortunately, that's the real world we live in.
▶ 0:26:29We have to make it safe or at least predictable that if you make if you're Intel, if you're uh uh Nvidia, if you're any of the companies Taiwan Semiconductor, and you onshore here, you are not putting at risk your worldwide sales against a nefarious and quite frankly lengthy uh accusation that may may or may not be valid.
▶ 0:26:54Does it mean that you don't have an obligation to quickly dispense with those that are valid, but it does mean that we have to maintain a system that typically in a year gets it more or less 90 plus percent right. And with that, I'd recognize the ranking uh member of the subcommittee for his opening statement. Well, thank you Chairman Issa, and um Director Squires, thank you for being here today.
▶ 0:27:21Um We customarily don't take intermissions between uh opening statements, but I would be remiss not to offer you the opportunity for at least a bathroom break if
▶ 0:27:35Are you okay? All right. Okay, thank you. Uh Directors of the US Patent and Trademark Office appear before this subcommittee every 2 years or so. And I've had the honor of being present for many of uh those hearings. Uh you are the sixth director I've had the opportunity to talk with in a forum like this.
▶ 0:28:00Hearings like today's give us the opportunity not just to provide meaningful oversight, but also inform the legislative process so members of Congress can make the best decisions when considering legislation.
▶ 0:28:15In the many USPTO director hearings I've had an opportunity to experience, I've witnessed occasional policy missteps from USPTO directors, and we've discussed administrative failures ranging from modernization growing pains to too long examination We've certainly had our differences, but never have I had reason to doubt that the director was acting independently from the president.
▶ 0:28:46Until today. There was a time when the USPTO was removed from the politics of today. Now, it has been drawn squarely into it. I'm going to take this opportunity to go over a few of uh the concerns I've heard over the past Keep in mind, this is not in any way an exhaustive list.
▶ 0:29:11Under the Trump administration, the Patent Office's workplace morale has plummeted, likely because of the administration's layoffs, which were bizarrely characterized as an attempt to save money, even though the USPTO is self-funded.
▶ 0:29:30You've also stood by as USPTO employees' collective bargaining rights were undermined by President Trump, destabilizing your already fragile And under your leadership, the USPTO has publicly explored implementing a patent that by all accounts would have a devastating effect on innovation in the United States.
▶ 0:29:57These are just some of the few examples of the partisanship and inserted into an agency that prides itself on stability. When politics begin to shape a traditionally non-partisan agency, the result is predictable. You at You are at the helm of an institution that has lost touch with its mission.
▶ 0:30:20This lost mission is most obvious in the USPTO's cancellation of its planned Southeast Regional Outreach Office in Atlanta, Georgia. The USPTO chose Atlanta after a long process as prescribed under the law.
▶ 0:30:38Instead of going forward, the Trump administration canceled this outreach to the Silicon Valley of the South and instead opened it within USPTO headquarters in Alexandria, Virginia. American innovation can thrive only when opportunity to participate is accessible to all.
▶ 0:31:01By placing the Southeast Office at USPTO your agency has limited its reach and concentrated opportunity among those already both best positioned to access I encourage you, Director, to reconsider this move. Because while it may not violate the letter of the law, it most certainly violates the spirit of it.
▶ 0:31:26As you can see, I strongly disagree with the Trump I also believe you want to do right by those who rely on the patent system. Your notice of proposed rulemaking to reform the Patent Trial and Appeals Board reflects ideas this subcommittee examined when I was subcommittee chair and has similarities to those proposed in my colleague Congresswoman Ross's Prevail Act
▶ 0:31:56legislation. And while these administrative changes are certainly worth discussing, agency action is not the same as legislation. When the director changes, so can agency Patents exist to ensure that research and development rests on firm, predictable ground.
▶ 0:32:19This kind of inconsistency between [clears throat] presidential administrations undermines the stability that is essential to a functioning patent Ultimately, these are questions for Congress to decide, not the agency. They are questions I look forward to addressing if it became if I became uh chairman of this uh subcommittee in the next Congress.
▶ 0:32:45A healthy USPTO requires clear rules, consistent leadership free from political influence, and a steadfast commitment to protecting those who take the risks to create. It is incumbent upon us to get these questions right because inventors and job creators are not asking for favors. They are asking for a predictable and stable system they can rely on.
▶ 0:33:13When policy shifts with the political whims of an administration, it is American innovation that pays the price. I yield back the balance of my time. I thank the gentleman for his brevity. And as I go to the chairman of the full committee, I might note that apparently uh Mr. Johnson is considering a party change, so I hope you'll favorably consider him to replace me in the next Congress. And I recognize the full committee chairman. No one can replace you, Mr. Raskin, that's for sure.
▶ 0:33:43Um the uh I just wanted to thank the chairman for this hearing and want to thank the secretary and the director um those those titles for being with us today and answering the committee's questions. And I think the record will show after the comments of the ranking member that the chair's comments were the brief most brief of all I I I haven't heard from Mr. Raskin, but I will bet he'll be a little longer than my opening statement. With that, I would yield back. I thank the gentleman. We now go to the ranking member of the full committee. Thank you, Mr. Chairman, and I'll be somewhere in between the chairman of the full committee and the distinguished chairman of the subcommittee.
▶ 0:34:13Um thank you, Director Iancu, for joining us today. As head of the PTO, uh your job is to promote stability in the market for goods and services by protecting trademarks that are used in interstate commerce. In pursuit of the mission, the USPTO has for decades been removed from political intrigue, favoritism, and controversy. By keeping politics out, prior presidents and USPTO directors ensured that applicants had a fair and honest system to rely on.
▶ 0:34:42It seemed to change last year. You and President Trump injected partisan politics into the work of the PTO. From working to strip trademark examiners of any right to collective bargaining, a right that they'd enjoyed for many decades, and firing the members of the Patent and Trademark Oversight bodies to refusing to respond to congressional requests for information, your tenure seems to be threatening the traditional integrity uh and non-political nature of our system.
▶ 0:35:11You recently took an extraordinary and unprecedented action earlier this year. The USPTO itself filed trademark applications on behalf of Donald Trump's ill-defined private multi-billion-dollar global project called the Board of President Trump has declared himself chairman for life of this elusive entity. He's promised billions of dollars from the taxpayers to the board, although Congress has not voted a single dollar for it.
▶ 0:35:41And he has secured billions of dollars from mostly corrupt foreign governments, including Saudi Arabia, Kazakhstan, Azerbaijan, United Arab Emirates, Morocco, Bahrain, Qatar, Uzbekistan, and Kuwait. Beyond that, there's not much we know about this shadowy venture. We don't know its basic corporate structure. We don't know whether it's a registered entity anywhere in the United States or in any other country. We don't know who controls the billions of dollars in its bank accounts.
▶ 0:36:08We don't know what countries those bank accounts are located in. We don't know who will conduct audits and oversight of the board, if anyone. And we don't know what the president intends to do with this massive, secret, unaccountable slush fund while he's in office and after he leaves.
▶ 0:36:27Yet, when the Board of Peace decided it wanted to secure a trademark for its name and for its logo, a move that should have required it to identify the legal entity that actually runs it and controls its billions of dollars, you stepped in.
▶ 0:36:45You personally filed the trademark applications allowing USPTO to stand in as a straw trademark holder to cover up for this slush fund that appears to put both billions of US taxpayer funds and billions in payments from foreign governments into the pocket of the chairman for life, Donald Trump, who will control it. The president set up a board that likely violates both the foreign and the domestic emoluments clauses.
▶ 0:37:15And now you're helping to run the operation, as far as we can tell. What's more, I'm not sure that either you or the Trump administration realize what you're confessing by filing a trademark application. You're admitting that the Board of Peace is not a legitimate governmental body, but rather a commercial enterprise set up by President Trump. Our trademark law began in 1879 when the Supreme Court struck down a trademark law that applied to any and all organization designations.
▶ 0:37:46The court ruled that Congress could do so only under the commerce clause. So, when Congress passed the Trademark Act of 1881, it was written to apply only to marks used in interstate commerce. The modern version of the Lanham Act in 1946 makes clear it only protects trademarks used in interstate commerce.
▶ 0:38:05Section 1052B specifically forbids the registration of any insignia of the United States or any state or municipality or any foreign nation or any other uh governmental body. So, by filing for a trademark, you're admitting that the Board of Peace is not really a governmental entity at all. It's a purveyor of influence operating for profit with apparently a billion-dollar admission fee, at least that's what's been reported in the press.
▶ 0:38:34A money-laundering scheme to pocket the billions all made in a global shakedown in the name of peace. Now, as far as I can tell, the USPTO has just nine trademarks. Four are various logos for your office, some of which read USPTO, others have the full name of the agency written out. Um US Patent and Trade Office.
▶ 0:38:58Three more are for the phrases Go For Real and Your Smart Buy Smart, phrases that were part of a public awareness campaign that the USPTO itself ran with the National [clears throat] Crime Prevention Council. The other two are now for the mysterious Board of Peace, which has no organizational relationship, I believe, whatsoever to the USPTO.
▶ 0:39:21So, by agreeing to act as President Trump's phone a friend and using the PTO to register a trademark on behalf of a third party, it would seem you're violating a cardinal principle of the Lanham Act, which explicitly lays out in subsection B that only, quote, a person who has a bona fide intention under circumstances showing the good faith of such person to use a trademark in who may request registration of the trademark.
▶ 0:39:49That's quite a problem for the agency whose role it is to administer and police the registration of trademarks and to administer disputes about them.
▶ 0:39:59One can only imagine this decision will get challenged and there will be litigation over the mark that you have now claimed as your own for the PTO before your agency which is charged with being the neutral adjudicator of disputes about trademarks. The only reason anyone ever registers a trademark is to prevent competing uses. Why would the Trump administration tell you to file for this registration except to suppress anyone else's trademark related to the word peace.
▶ 0:40:28The field is crowded with existing registrations by other educational pervasion purveyors of global peace. To give a few examples I found online this morning. World Peace Table, World Peace Network, Project Peace, Peace Vision Global, Global Peace Initiative, Global Peace Foundation, International Peace Center, Peace Network, Peace Action, The Peace Trust, Greenpeace.
▶ 0:40:52Any one of these organizations would have a strong case to sue for cancellation of Trump's Board of Peace trademark on the grounds that it dilutes and infringes their own pre-existing trademarks for peace facilitation services. And also of course that this mark is not registerable at all since it purports to identify a governmental entity and not an organization in interstate commerce.
▶ 0:41:18Not only would you have to decide whether Trump has a defense to prior uses users opposition to his marks, you would have to rule on any offensive use of trademark law by Trump against any of the other groups. Let's say he moves to attack Greenpeace for infringement of his commercial trademark or opposes registration of any new organization that uses peace in its name. Who would adjudicate this? You would. Your office.
▶ 0:41:46You're both the and you're the judge of any rights that you have as an owner against anyone who wants to identify their organization with the word peace. This is not just a disreputable use of the trademark registration process. It's the first step in giving Donald Trump and his subordinates a monopoly on use of the word peace to make the very notion of peace unthinkable if it departs from control of the new Big Brother who now owns it.
▶ 0:42:14If President Trump can't win the Nobel Peace Prize he craves because he plunged us into an aggressive war of choice in the Middle East, now he'll just own the word peace instead. I wrote to you last week Director Iancu asking about this elusive entity and unprecedented baffling situation.
▶ 0:42:33If there's a reasonable explanation for the USPTO's conduct here, we'd like to hear it today because if you simply file on behalf of the Board of Peace as a favor to the President, then that's a serious A decision like that doesn't just drag the USPTO into covering up for a slush fund that may violate both the foreign and domestic emoluments clauses, it's bad for the integrity of our trademark laws. When people lose faith in the fairness and objectivity of our system, it begins to fall apart.
▶ 0:43:01So I'm not just troubled that you may be violating the basic trademark rules, I'm troubled that in violating the rules to help Donald Trump, you may be acting as a political operative in a way that will destroy our neutral system for regulating source identifying trademark rights. The trademark system is designed to protect everyone. If applicants think that the rules change for the wealthy and the politically well-connected, they're much less likely to believe the system can work for them.
▶ 0:43:28I look forward today to finding out how you justify your agency registering a commercial mark for this alleged governmental entity if that's what it is, how you intend to resolve disputes with the dozens of past and future registrants of peace organizations, and what you intend to do to restore the professional non-partisan reputation of the USPTO. Thank you, Mr. Chairman. I yield back. Thank the gentleman. Without objection, all other opening statements will be included in the record.
▶ 0:43:57Before I introduce uh the director, uh I'd ask unanimous consent that we place into the record the uh Wiki uh delineation of the Voice of America which is a US government-owned international broadcast with trademarks including Voice of America, VOA, uh VOA News, etc. which is owned by the US government was trademarked in 2007. Without objection, so ordered.
▶ 0:44:28We now introduce the honorable director of the Patent and Trademark Office, the Under Secretary of Commerce for Intellectual Property and the Director of the Patent and Trademark Office. Prior to joining the USPTO, uh Director Iancu was a partner and chair of IP at Emerging Companies Practiced uh particularly at Dilworth Paxton LLP which is a longer name than when they had three names instead of two.
▶ 0:44:58Uh we welcome our witness here and thank him for appearing. Uh pursuant to the rules, I'd ask you to stand uh and take the oath. Do you solemnly swear or affirm under penalty of perjury the testimony you're about to give will be true and correct to the best of your knowledge, information, and belief, so help you God? I do, Mr. Chairman. So help me God. Thank you. Let the record reflect the witness answered in the affirmative.
▶ 0:45:28Director, our normal rule is 5 minutes. Uh considering the ranking member and myself, I will be lenient on if you go over. Very lenient. Uh but uh and since you're the only witness we came here to hear what you have to say. Uh however, the your entire opening statement if you don't use it all will in fact be placed in the record along with any other supplemental information you choose. You're now recognized. Thank you, Mr. Chairman.
▶ 0:45:57Chairman Issa, Ranking Member Johnson, Chairman Jordan, Ranking Member Raskin, members of the Good morning and thank you for this opportunity to discuss the USPTO's operations and initiatives. I thank President Trump for his confidence in me to lead America's innovation agency and for his steadfast commitment to intellectual property reaffirmed yet again with his national AI policy framework released on Friday.
▶ 0:46:25It's also the honor of a lifetime to serve Secretary Ross a phenomenal leader with boundless energy and unparalleled experience himself an inventor on over nearly 500 patents. I'm honored today to provide the subcommittee an overview of the USPTO's recent activities and accomplishments. America's innovation agency has two foundries. For patents, we have America's invention agency and for trademarks, we have America's branding agency.
▶ 0:46:54And together, we function as the Department of Commerce's central bank of Every unit of intellectual property we put into circulation is a potential job, a new business, a competitive advantage, an investable asset, a life-saving drug all flowing into the real economy, into the real world. And at scale, American ingenuity means national prowess and global reach.
▶ 0:47:20I can't thank the USPTO's highly educated and talented workforce enough for their dedication and commitment. I say to everyone, they are the best in the world at what they do because quite simply, they are. And none of this would be possible without the fee-setting authority so thoughtfully provided by Congress allowing us to operate like a business, maintain long-term financial stability, and achieve our statutory mission.
▶ 0:47:47We also greatly appreciate the continued authority to spend anticipated fee collections which lies at the heart of our US global leadership. We look forward to working together to maintain both it and our global lead. Indeed, we lead today because our founders did the extraordinary two centuries ago enshrining IP protection into our Constitution. And with it, the American experiment itself, the American experience itself.
▶ 0:48:15Last month, I told the head of the UKIPO how our constitutional charge allows us to lean into AI, to quantum, to medical diagnostics, wherever the onrush of technology is going. His candid reply, I know. Wish I had that. Think about that. The very empire we won our independence from, two democracies, two outcomes, but only one clearly at top the IP world today.
▶ 0:48:42That's why it's incumbent upon the USPTO to have an America first IP agenda built atop the unique legacy our founders bestowed upon us. And we're doing exactly that with the urgency of now. As I'm before you today, our first priority priority was slashing the unacceptable backlog by 50,000. Another 100,000 to come this year.
▶ 0:49:07By the end of my tenure and with your continued fee-setting authority, choking backlogs will be a thing of the past and improved quality a confidence indicator. I'm confident because we just announced our first agentic AI trademark classification tool. Five months of manual searching is now a five second outcome.
▶ 0:49:29In patents, our AI search assistant delivers a top 10 list of prior art before the first office action providing quicker pathways to allowance. And across both, AI fraud detections helped us purge 70,000 plus baseless filings in just under a year. You see, AI tools will become our our examiner's superpowers, supplying them with a cadre of agents to deploy as they see fit.
▶ 0:49:57On policy, Congress affords us discretion, and our North Star to its exercise is always both the letter and the spirit of the AIA, balancing, as instructed, economic impact, resource efficiency, and the integrity of our IP system. We are restoring balance and fairness on both the front end with eligibility determinations and the back end as to trials and error corrections with new feedback loops in between. Mr.
▶ 0:50:26Chairman, I am humbled and proud to lead this unique and vibrant agency. We are back on our front foot and delivering the brilliant tomorrows American ingenuity affords, tinker by tinker, breakthrough by breakthrough, dream by dream. Just as a central bank stabilizes the flow of capital into the real economy, the USPTO stabilizes the flow of innovation into the knowledge economy.
▶ 0:50:51And with born strong protection, new ideas soon blossom in a marvelous virtuous cycle that has delivered prosperity and bettered people's lives for over 250 years like no nation before, like no nation ever. Thank you again, and I look forward to your questions. So brief, so very brief. I thank you. We now recognize the gentleman from Kentucky, Mr. Massie, for 5 minutes.
▶ 0:51:21Well, the last member of the administration that I was very nice to was Kristi Noem, and she was uh removed 48 hours later, but at that risk, uh I want to thank you for the great job that you're doing. I'd like your analogy of intellectual property to currency, but um let's don't compare the central bank to the patent office because some of the founders, all of the founders were unanimous in in understanding that the patent and copyrights were the
▶ 0:51:52that would allow our country to grow, and I appreciate you doing that. But the it isn't appropriate analogy because of intellectual property to currency because we've had a crisis in our [clears throat] currency the last decade, I believe, of intellectual property. If your currency is called into doubt, if the Federal Reserve notes in your wallet, when you present them, even though they were issued by the government, if they're called into question when you try to use that currency, you have a problem.
▶ 0:52:21And that's the way it's been with patents. The you know, the PTAB ostensibly was created to make it easier to adjudicate validity on the back end of a patent issuance um and enforcement. The problem is it's created too much uncertainty. And I very much appreciate the steady hand that you put on the tiller.
▶ 0:52:46I would uh um I would disagree with my um Democrat colleague who said that policy shouldn't change when administrations change. I would argue that elections should matter. Laws should not change. The patents that have issued should not change. They should still be valid. But we need somebody in charge. We need somebody to exercise common sense in the application of the laws that we have passed, and it seems to me that you're doing a very good job of that.
▶ 0:53:16And um could you tell us about the rule that you're proposing um and the actions that you've taken in terms of exercising discretion on um the IPRs? Thank you, Congressman. I'm happy to speak to the uh notice of a pro-proposed rulemaking we have um put forward.
▶ 0:53:41Uh basically, it's intended to uh restore fairness and balance to the IPR process. There have been instances where there have been as many sev- as seven uh serial filings, and it's intended to be able to have the matter adjudicated uh once and for all early. Um and it's been termed uh I will say as one and done. Um but I think that's a misnomer.
▶ 0:54:11There's liberal joinder provisions that are carried through into the rule, and so I would say it's uh one join and done. And the facility is provided for if there's a petition filed um uh after there's been an adjudication uh that excuse me, petitions filed, people can join. Uh the answer isn't serial filings. We think the answer should be gang tackling.
▶ 0:54:34At the time uh when it could be had, the preference would be to have a PGR-like process where things are laid open. That's not always possible uh as has been discussed, things sneak through. But there should be a point in time where there's quiet title, there's finality, um and uh people can have that chance and and do it together. Uh but it's got to be adjudicated once and for all. I agree.
▶ 0:55:01But I think you once you have the imprimatur of the government and you've survived a a challenge, um that's important because what I've noticed the last 10 years, a lot of people are shying away from companies that would have been based on intellectual property. I've heard people, inventors, say, "I'm not even going to file the patent.
▶ 0:55:19I'm just going to try to rely on trade secrets." That that creates a world of haves and have-nots when when everybody can just keep all of their stuff secret, and that's incentivized because of a patent system that's not And uh you know, the PTAB I do think it was probably, at least from the people who voted on it, originally intended to expedite this adjudication, but it's created uncertainty that has hurt our country, hurt our inventors, and um
▶ 0:55:49I'm glad to see that you're exercising some common sense in the application of it. Any law can be weaponized, and we saw that the PTAB law has been weaponized, and I appreciate you taking it back and using it for common sense. That um give you my last 15 seconds. Thank you very much, sir. And also to be reminded, there uh IPRs are but one avenue. There's always uh reexamination, there's uh post-grant reviews, and there's district court.
▶ 0:56:18What we had found was particularly with respect to IPRs that it was intended to be an alternative to litigation, yet 80% of the filers already had a district court action with uh with the also instituting an IPR. I think uh and thank you for taking out much of the redundancy that existed because it doesn't get cheaper when people keep getting subjected to continuous IPRs or you survive the IPR and then go to court. And I'll yield to Mr. Issa. Thank you.
▶ 0:56:47And just to clarify, the 80% includes a dramatic amount who have been sued and then come to the patent office cuz that is the first notice of infringement is when they're sued. So it the chicken or egg often starts with a lawsuit, and you go to the uh PTAB in order to shortcut the time it takes to show invalidity, Yes, sir. There's a 1-year window uh if you've been sued at district court from which to avail yourself to the PTAB. Thank you.
▶ 0:57:14We now recognize the ranking member of the subcommittee for 5 Thank you, Mr. Chairman. Uh Director Squires, I would hope that you would agree with me when I say that the um greatest asset of the USPTO are its employees. And employees at USPTO have described the environment as, quote, "rife with rumors, paranoia, and disillusionment," end quote.
▶ 0:57:42Just last week in a government-wide survey, only 13.8% of PTO employees reported that they were satisfied with their job. What factors have contributed to such by your employees?
▶ 0:58:01What specific actions have you taken to address this collapse in employee And um my office received a call just the other day these and other troubling allegations. What mechanisms are in place to ensure employees can report issues without fear of uh retaliation?
▶ 0:58:32Thank you, Congressman. Uh we have robust facilities for reporting uh violations through our um EEOC department. Uh they are fantastic as to examiners, and the I do agree with you, they are the crown jewel of the USPTO.
▶ 0:58:50They are the best in the world at what they do, uh and we're trying to make them even better equipped to deal with the uh what's become a crushing backlog of work that they've so dedicatedly uh and decisively have chipped down on. We've increased uh uh awards, financial awards, to examiners, and we're working on the personnel. I have made myself
▶ 0:59:13what factors have contributed to the uh that is evidenced by the uh survey? I I'm I'm equally interested in making sure morale improves, and I've offered engagement. Uh my um I think the biggest factor had been the backlog getting out of control. It rose to a historic high of 837,932 applications unexamined.
▶ 0:59:42And this is just unacceptable as the secretary had said. So
▶ 0:59:47it's not the volume in and of itself, but it's must be something that the agency has done to address that that has caused the uh lack of morale or the morale to plummet. What are those factors?
▶ 1:00:10The specific factors we just concluded an employee survey survey last week and we'll be working on those and examine them. I myself hold host a using I did them weekly now monthly for people to tell us what they think. That's been my mantra coming in.
▶ 1:00:28And there's forms for people to tell us where there are One of the issues that's been unhappy the cause some unhappiness has been not having deploying people on the front lines of primary and having oversight and training and not having signature authority at that point in time.
▶ 1:00:52We have found that this is the first interaction that the applicants have had with the office and supervisory has been very important. It's consistent with other other international offices and there's been some adjustment to that. Just some initial unhappiness with that, but we've been at that now for over 6 months and I think morale is getting better. Okay, I'm going to move on.
▶ 1:01:15After the success of the four regional offices created in the American Invents Act of Republicans and Democrats worked together to pass the Unleashing American Innovation Act in 2022 to establish a Southeast regional outreach office among others.
▶ 1:01:36Atlanta, Georgia was chosen as the Southeast location after a lengthy and last year the Trump administration reversed course announcing that the Southeast office would instead be at USPTO's This change was announced with no explanation and no search process was conducted as required by law.
▶ 1:02:01Director Squires regional offices were created to expand and reach a more diverse set of stakeholders at a more local scale. How does placing the Southeast regional outreach office at headquarters advance that mission and isn't it isn't it true that placing a regional outreach office in the literal headquarters of the PTO undermines the
▶ 1:02:31very purpose Congress had in creating Congressman, the that decision of course was made and effectuated before I took office. I took office in September. However, my ongoing responsibilities are as you indicated access making sure there's access.
▶ 1:02:51Now we have literal compliance with the regional office footprint in having four and we recently had five and the Denver office was closed down resulting in a savings of over 3.8 million per year. But savings isn't the issue. Access is and in favor of that we've launched a community engagement office model and we've invited just released a request for comment to the Southeast region including Georgia including all the states that were part of that part of that definite defined region.
▶ 1:03:21We've had great success with the Mountain West region in this to the tune where we are able to increase access we engage with universities widen our and be able to do it at little or no cost to the office.
▶ 1:03:36So we're moving to a model of We're hopeful And you're doing it based on executive authority undermining legislative authority and that's a trend in your agency that is And with that I'll yield back. Thank the gentleman and I'm going to just join with you on one thing.
▶ 1:04:01Director Squires, would you agree to have a separate lengthy briefing for the ranking member and myself on that plan, how it is to work and how it can accomplish what was legislatively in place. I for one would not want to see San Jose closed for savings purposes no matter it might be without congressional approval. Would you agree to that? We would be happy to work with the chairman and ranking member. Then we'll make that arrangement.
▶ 1:04:32We now go to the gentleman from Wisconsin for 5 minutes. Thank you Director Squires, thanks for being here today. Last Congress I introduced legislation to limit the enforceability of patents by entities on certain national security related sanctions This is because I believe I think many members believe state sponsored entities like Huawei can and do use protected patent litigation to slow or stop critical technologies from being developed in the Do you see
▶ 1:05:02that as the present or future national security threat?
▶ 1:05:07where do you stand on limiting of patents in those types of cases? As to limiting enforceability, one thing I would point to is we recently a couple things in the PTAB.
▶ 1:05:23So we restored the real party in interest requirement and with that we just issued a decision called TiVo last week which um concludes under the AIA as with American government entities and agencies are not persons and cannot be in the PTAB. Neither may foreign sovereigns or state And so if a real party in interest is identified, they are not allowed to be in the PTAB and they can't bring challenges.
▶ 1:05:50To protect with that in the discretion of instituting IPRs, we have also just released guidance that looks to whether it's a small business in the US or American manufacturing manufacturing is occurring in the US as part of whether a challenge should be instituted. So to protect American manufacturing and have them choose here.
▶ 1:06:10So both sides of the equation we're trying to take into account what the real world is and the process for filing petition we say tell us your story and so we can take these into account. Very good. Another area where I know many members have concern is about foreign exploitation. And it's all about the patent prosecution highway, right? As it's referred to.
▶ 1:06:37Under this program the USPTO will expedite review of certain patent applications that have received a favorable exam in a foreign patent We know that China participates in the program and therefore an entity like Huawei could receive expedited examinations of its patents so long as it first gets a favorable exam in China. Which is effectively a rubber stamp, right?
▶ 1:07:03So should we not kind of allow or shouldn't we be concerned I guess about kind of the way that's playing Thank you for the question That is of great concern on on and it's a bilateral concern.
▶ 1:07:23In general when cases come in through the patent prosecution highway, they've already been examined but there's always is the risk of rubber stamping. We do an independent analysis. If if it pass the smell test, then we kick it and it goes back in line and the the prosecution is lost. On the other side we found for US companies the PPH has helped them in other countries.
▶ 1:07:50So we're trying to always maintain that balance where American companies going into other offices are receiving the favorable treatment. They have behind them the examination that's occurred and hopefully you know born strong in the but we're always on the watch for incoming low quality patents. Very good. Let me quickly turn to kind of another area. According to American Intellectual Property Law Association, the average cost of patent litigation in a district court is $5 million.
▶ 1:08:21Whereas the cost for adjudicating patent disputes before the Patent Trial and Appeal Board on average is about 10 times less or around a half a million Critics of the proposed changes to the to the PTAB process have said the result will be more patent cases being litigated by the courts and assuming that that could be true did the USPTO take into consideration increased litigation costs when conducting an economic analysis of
▶ 1:08:51your IPR rule? And if you didn't, then how did you handle that and why why didn't you maybe look at that? Thank you for the question. Yes, we have we are taking we're still in the process of finalizing the rule. We have received over 11,800 comments which we're very excited about because people care.
▶ 1:09:13About 2800 were You know, clearing out all the the me too ones or or clearing out the ones that you know, we don't like the patent office. But the substantively they're about 2,800. Uh and by uh under the AIA, we are required to consider economic efficiency, uh resource allocation to the office, um and and effects of those sort. And so, by all means, we are looking at what the costs are in the rule.
▶ 1:09:44Uh I think I'm optimistic the rule will be finalized, and I believe people will be very happy with the outcome. What about judges' caseload? Did you take a look at that as well? Yes, we are looking at all that in the rule. Uh judges' caseload, but it's also not just district court forum, what's the effect on reexamination, what's the effect on PGR, uh and what's the effects also on ITC cases. Thank you. I yield back. Thank you, gentlemen. In my understanding is it was about 9 to 1 opposing the rule in that 2,800.
▶ 1:10:16A 2,500 to about 300. Sound about right? Um again, we're still working through it, but now that I've seen those numbers, I've seen 97 to 3, I've seen 80 20. Um our role under under the rulemaking process is to go through and respond substantively to the comments. Comments have been very helpful. Uh and again, I'm I'm of the firm belief that we're going to uh see a rule that will be workable.
▶ 1:10:42Okay, hopefully the the uh ranking member of the full committee has read all 2,800 and can opine on what he saw as the ratio. Recognize the gentleman from
▶ 1:10:51Mr. Chairman, thank you. Uh Director uh how did you come to file those trademark applications for the Board of Thank you for the question, Congressman. Uh we came to file I had them filed in response to a uh immediate cybersquatting land grab of the domain name. And for those who are unaware of the term cybersquatting, it's like identity theft. Sir, were you acting as a lawyer for the Board of Peace at that point? No. So, in what capacity were you acting?
▶ 1:11:22Well, the Board of Peace uh this is this is exactly the issue, and I'm glad to have the opportunity to explain it and respond to your letter. Uh the Board of Peace has uh has not yet been formed as international organization. And the cybersquatters 8 minutes into the president's speech announcing it registered the domain name. And so,
▶ 1:11:40public entity, the Board of Peace, or is it a private entity? Uh at this point, I'm not sure if it's formed or not. We acted as a custodian so that they could have the mark
▶ 1:11:49you come to act as a custodian for that that trademark? Uh under 35 USC uh section 3, it's my responsibility to advise the president uh through the Secretary of Commerce on matters of uh national security and all matters of intellectual property. That's the
▶ 1:12:06so the Board of Peace is a public entity, it's a governmental organization even though Congress has not created it? Is that right? Sir, I I don't know the status of whether it's an entity formed or not.
▶ 1:12:18Okay, well well we How did you get involved in it? Did the president call you about the cybersquatting incident? Uh no, the president did not call me. It came up through uh several organizations about the cybersquatting um and the action need uh needed to be taken to
▶ 1:12:35about the cybersquatting, you noted that there were lots of other organizations that were already using some variation of peace organization, peace committee, world peace, and so on, right? The uh There are dozens of them. I mean, I found them this morning just on the way in. Well, again, you know, reference was made to shakedown. This was registered this particular boardofpeace.org um and without that, you don't have the
▶ 1:13:00registered that? No, no. Who Who reg- A cybersquatter did. I mean, 8 minutes into the president's
▶ 1:13:06don't have to talk about a cybersquatter, there are dozens of other groups that that have peace in their
▶ 1:13:11Right? Well, look, where does your legal authority come from to file trademark applications on behalf of this Board of Peace, whether it's a public or private It comes from um the combination of 35 USC 3 and 35 USC 2 under Lanham Act and uh in your opening statement. Well, wait, do you usually act as a custodian for the intellectual property rights of other entities, or is this just for President Trump?
▶ 1:13:38This was to protect the name Board of Peace uh as the entity gets uh uh booted up to act as a custodian in a very narrow capacity with a bonafide intent to use uh the name, and then it's intent to use application.
▶ 1:13:52Who has the bonafide Who has the bonafide intent to use it? The USPTO. The USPTO's What are you going to do with it? In the very limited services that we define there, uh which is fraud prevention, misuse, uh But is that a service you offer to all American citizens? In other words, if I'm thinking about maybe creating a group one day, and we might want to have a trademark, and I'm afraid somebody else has a competing trademark, you will go ahead and file the application for me?
▶ 1:14:19Um my my responsibilities are again under 35 USC section 3 to advise the president on matters of national So, this is a matter of national Okay, well, let me ask you this. You've emphasized today, and rightfully so, the importance of uh people who are applying for patents or trademarks to pay a fee because yours is a fee fee paid uh office. How much does it cost for someone to seek a trademark?
▶ 1:14:46When you applied for that trademark for the Board of Peace, how much does that cost? It's It's not an expensive fee depending upon uh The website says 350 bucks, is that right? Generally, yes.
▶ 1:14:59It's not expensive. Okay. And my one of the able lawyers on my staff just passed me this the the you filed a petition on January 21st, 2026 to waive that fee for the Board of Peace. Then you granted that petition the very next day, which underscores the bizarre conflict of interest you're in now acting both as a representative of the Board of Peace and also the Trademark Office that's going to pass upon the petition.
▶ 1:15:28But why did you seek a waiver for the $350 for the Board of Peace, and why did you grant it? Um the waiver was sought uh under the um particulars of the uh intent to use application as the custodial filer, and I did not uh grant my own application.
▶ 1:15:44Well, your your signature, huh, as it is as I'm reading it, you filed this on the 21st, and then you approved it on the 22nd. Well, I I would like to see the document to which you're referring, but it's
▶ 1:15:59Okay, we we will get you those documents. Are Are you saying you would not have approved it had you seen it? I I'm saying I don't recall this particular situation.
▶ 1:16:08Okay, well, but
▶ 1:16:08But I do believe it's in my file. Okay, it was approved by Dan Bovinisi, but your signature is on the the petition. And I guess why did you request that waiver of the $350 payment for the Board of Peace? I Again, given that this is going to be an international organization, given the uh um situation with the intent to use and the bonafide limited scope that we had, I made that petition just as I signed the application, and it was uh granted by my office.
▶ 1:16:37you know that the the Lanham Act forbids anyone from submitting an application unless they're the owner of the mark or the legal representative of the mark. So, were you representing yourself as the owner of the mark or the legal representative when you filed the No, we are very clear it's uh on a custodial basis. We are not the owner. It will be transferred to the entity once it's formed.
▶ 1:17:02Okay, well, you're listed as the owner on the petition uh both for the waiver and also the So, I mean, that's the way the Lanham Act works. In other words, if I'm asking for your advice, could I get another company to apply for a trademark for me? What's the answer to that?
▶ 1:17:22If you're the president of the United States, yes. The president of the United States could have somebody else The The president of the United States has tons of trademarks. You're saying that he doesn't have to submit himself? Well, where does it say in the Lanham Act that the president of the United States is exempt from the general rule that you cannot have a third party seeking an application on your behalf?
▶ 1:17:42I'm again um directing you back to USC 35 uh 35 USC section 3, where it's the Under Secretary of Commerce and Director of the Patent Office shall advise the president on national and certain international intellectual property
▶ 1:17:56Those are matters of public policy, they're not questions of representing the president before the Trademark Office, which obviously creates a stark conflict of interest. The gentleman's time has expired, but you may answer. Uh sir, I was not representing the president of the United States uh in this regard. I was representing a um filing an application to address the cybersquatting issue under my authority under 35 USC. I appreciate it. Thank you. I yield back, Mr. Chairman.
▶ 1:18:21Thank you, gentlemen. Just one underst- one question for understanding. The uh gentleman from Maryland mentioned a number of other uses for peace and so on. Under both common law and any marks they have, those marks are previous, superior, and are not eclipsed by this new mark. Is that correct to your That is my understanding. Uh it's very narrow filing for the logo and the um and the name. Uh and it again, it was intent to use application.
▶ 1:18:50Uh if nothing happens, it expires of its own weight. It's a custodial filing.
▶ 1:18:53one thing because I'm cuz I'm a little new to government, but you're you're you're in the Article 2. You're you're in the government that's headed by one person, the president, And no matter how many pockets you have in your suit, it's still one suit jacket, right?
▶ 1:19:10So, the $350, if it had to be paid for by the government, can you tell me the difference between all these different places in the government that would transfer $350 to another pocket of the same suit. Cuz I'm just I'm not quite understanding the gentleman's question. Mr. Chairman, are you saying that it is a governmental body in that case?
▶ 1:19:30Well, it appears as though the President of the United States made a statement that either he either it would be a government entity or like Voice of America and many of these other entities that are government sponsored, it would be government sponsored. I I think there's been no assertion that this was a for-profit private entity or anything
▶ 1:19:50The Voice of America doesn't get a billion dollars from the Saudi government. That would make it an illegal, unconstitutional foreign emolument. Where Where I mean, this is just getting more confusing by the moment here. I I disagree with the ranking member questions of other monies that are not necessarily associated today and I'm quite candidly willing to participate in all the fact-finding on anything related to money, but the gentleman came here with tremendous expertise
▶ 1:20:20and I think your line of questioning was very good as to how at times the the trademark office does in fact institute protection against cybersquatting. You're also very helpful in in delineating the fact that there are these entities that aren't quite government but are government that have trademarks, one of which was is the Voice of America and many other highly recognized US entities which are solely funded by the federal government.
▶ 1:20:50I think it's been productive. I will join with you to to continue looking at questions of monies from other governments, whether or not they're coming to the government or that they're going to a third party cuz I think that's a fair area. I just don't think it's within the gentleman's
▶ 1:21:06All right. Well, I would welcome a thorough ventilation of all these issues just so we don't go down a darker road here. Thank you.
▶ 1:21:11Thank you. And with that, we go to the gentleman from Virginia, Mr. Klein. Thank you, Mr. Chairman. Director Squires, third-party litigation funding allows outside investors, including foreign entities and sovereign wealth funds, to finance patent litigation in exchange for a share of any recovery with no disclosure to the court or defendant. You called foreign-backed litigation funding at the PTAB unacceptable during your confirmation and committed to stronger transparency requirements. But this is an important concern.
▶ 1:21:40When disputes are pushed out of PTAB and into district court, discovery becomes a weapon. Yangtze Memory Technologies, which is on the BIS entity list as a national security threat, is currently suing Micron and has used discovery to compel disclosure of highly sensitive trade Does the USPTO support transparency requirements for third-party litigation funding and what role should the office play in preventing foreign adversaries from using opacity in litigation funding
▶ 1:22:10to drive American companies into discovery that exposes sensitive technology? Thank you for the question, Congressman. In terms of litigation funding and disclosure for district courts, those would be my understanding we we would be handled by local rules and requirements.
▶ 1:22:28But for the PTAB, what we did is impose the real party in interest disclosure requirements by reinstituting reinstituting the Corning Optical precedent and then you ensuring when real parties are identified and they're foreign sovereigns or state actors, they're not allowed to participate in the PTAB because they're not persons just as the US government is not considered a person in the PTAB. RPIs are critically important.
▶ 1:22:57They go to issues of estoppel, they go to issues of fairness and they also go to issues where foreign sovereigns or state actors under try to undermine the US patent holders and system. Okay. Non-practicing entity district court filings rose 18.7% in 2025, two consecutive years of increases before you proposed IPR restrictions have even taken taken effect and consider who benefits from that. Four of the top five US patent recipients in 2025 were foreign entities.
▶ 1:23:27Huawei, which previously sued Verizon for over a billion dollars, has transferred nearly 1,000 US patents to assertion entities targeting American companies. BOE, Tencent, and CATL, all formally designated by the Department of War as Chinese military companies, are also among the top recipients. What evidence does the USPTO have that the proposed rulemaking will not further drive up patent litigation costs for American innovators and manufacturers? Thank you for the question.
▶ 1:23:57Again, we're working through all the comments and the rules, including the justifications that were required to under the AIA, such as economic effect. But to your question, the at the PTAB, we have the considerations which were just instituted in guidelines for people to tell their story if they're American manufacturers and they're being pursued by foreign entities or or these holders of patents, NPEs in particular, foreign entities, tell us your story
▶ 1:24:28and we can make sure that that's considered in instituting a or not instituting proceeding. It works both ways. So, we're trying to look at the real world picture on the ground and take that into account when a request comes for proceeding to be instituted or Okay, switching to trademarks.
▶ 1:24:46You may know I'm the co-chair of the trademark the congressional trademark caucus and I hear concerns from American brand owners about the growing backlog in processing trademark applications and the impact on the ability to secure foreign trademark priority rights under the Paris As I understand it, to benefit from the US filing date under the Paris Convention, an applicant has to file a foreign trademark application within 6 months of the US filing date supported by a PTO-issued certified copy of the US application. I'm told the PTO's stated goal is to issue such certified copies within 7 days.
▶ 1:25:16But that current processing times exceed 3 months. That appears to be getting worse. I'm concerned that the inability of the PTO to timely process these requests threatens to jeopardize the ability of American trademark owners to claim and defend foreign trademark priority Can you tell us what you're doing to reverse the disturbing trajectory of this backlog and to ensure that the ability of American companies to protect their trademarks against foreign competitors is not jeopardized by staffing issues at the PTO?
▶ 1:25:46Thank you for the question. That has has been a concern. It's been unacceptable as the as the backlog has increased and one area we've had, as I understand and we looked into it, data processing issues that have been remedied. I've invited people to send me the requests for the copies directly and they've done so. I think the word has gotten out among paralegals that there's redress here and so I I get half a dozen emails a week which we get through.
▶ 1:26:14But longer term, we just announced and I think you'll be happy with this, our international search classification tool which takes 5 months worth of work normally eating up that six down to 5 seconds literally. And so, these are going to be this are first to equip our examiners with these type of tools. International search classification is just a bear, especially if you have pseudo marks and the like.
▶ 1:26:40So, the future looks very bright there but we have to make sure we are our houses in order on our own day blocking and tackling and getting certificates out. All right. Thank you for the gentleman yield for just a second. I yield. If I could clarify or have you clarify what you answered the gentleman, you talked about some of these protections and rules and so on, but you seem to be talking both about defendants and plaintiffs.
▶ 1:27:04So, some of the things that I heard which sounded like protections in fact are limitations on the defendant in PTAB proceedings. Again, the
▶ 1:27:17American manufacturing and and foreign entity and the like was the question. So, if there's a petition filed against a patent holder in in in the PTAB and part of the complexion there is that this is a action against the US manufacturer, we want to know that. Tell us that and that will go to the discretionary component of decision whether to institute or not. I understand.
▶ 1:27:41It's just that also works for Huawei effectively when they have a straw manufacturer and you know, they say, well, you know, here it is, but it's still a Huawei patent. How many times does the chairman get to take 5 minutes?
▶ 1:27:56I asked I only asked the gentleman to to clarify what what he had answered to the other gentleman. I appreciate you can take it up at a future time if Mr. Massie is in a hurry. With that, I go to the gentlelady from California for her questions. Thank you, Mr. Chairman and Director Squires.
▶ 1:28:16You know, under prior practice, decisions were made by the PTAB when an IPR petition was filed, a three-member panel of expert administrative patent judges decided whether to institute a review under the AIA's quote reasonable likelihood standard.
▶ 1:28:34You first centralized power over discretionary denials in the director in March of 2025 and then last October 17th, your memorandum went further by consolidating authority over institution decisions in the director as well. You know, we only have 5 minutes here.
▶ 1:28:52So, these two questions really have either a yes or no Do you intend to continue this policy instead of restoring that responsibility to a three-member PTAB panel of expert judges? Would that be a yes or a no? I can give you a maybe.
▶ 1:29:14we'd like to know further if as you ponder this because under your current policy I'm wondering whether you consult with at least three PTAB judges before making an institutional decision. Yes. Okay, that's helpful.
▶ 1:29:29What concerns me is not just the centralization of the authority and therefore potential for abuse at it's at the office now regularly denies requests for PTAB review of patents that may have been improperly granted without giving any written explanation. I have an example. This is a denial. It's two pages and it just says no, right?
▶ 1:29:54Here's the way it used to be which is yes or no and the reasoning and people knew where they stood. So I'm just sort of wondering under the standard operating procedure manual it says the significant writing assignments in AIA proceedings include decisions on institutions and it goes on and on and the expectation is that there would be a explanation for whatever the decision is.
▶ 1:30:24Now I'm just wondering in these bare-bones summary denials where someone would find the reasoning in the arguments raised by petitioners and do you think that practice is really consistent with principles of transparency and fairness? I I do think so.
▶ 1:30:44There's a body of over 600 decisions that have been issued and where there's matters of where we have something to say or a particular story needs to be told, we do issue those and opinions so to provide guidance.
▶ 1:30:58The Revo line of cases has been one where there's been an inconsistent claims offered from District Court and there's in fact unsettled It's worth the other way where a patent holder had their patent lapse before the surgery against the defendant. I just like to ask unanimous consent Mr.
▶ 1:31:20Chairman to put into the record a a letter from the Alliance for Automotive Innovation, the Business Software Alliance, the High-Tech Inventors United for Patent Reform, SIIA and US Made along with the study that really shows their dissatisfaction with the current practice and I think you know both on the winning end and the losing end, if you don't have a insight into the reasoning of the decision, it's problematic
▶ 1:31:50and so
▶ 1:31:51Without objection, so ordered.
▶ 1:31:52I'd like to just recall, I mean creating the the patent law was the American Invents Act took a long time. It was not I participated and I think some other members of the committee did as well and the and the the idea was really straightforward. High quality patents drive innovation and growth. Low quality over broad patents do the opposite.
▶ 1:32:17They drive up prices, they impede competition, they expose businesses to abusive litigation and we designed IPR as a streamlined expert driven mechanism to catch the patents that should never have been granted to begin with. It was in short the kind of efficient targeted administrator correction that good government looks like.
▶ 1:32:39Now if there are flaws with that system, we're willing to address those flaws and work through it, the agency's institution rate has I think collapsed not because the petitions lack merit, but there are barriers that are being applied that Congress never authorized just as never Congress never envisioned that the IPR process that we crafted and are willing to work on further
▶ 1:33:09if it's flawed would be supplanted by the director just seizing control of the whole operation. So I see my time is expired, but you have discretionarily denied 64% of all petitions and the institution rate sits at about 20%. So Mr.
▶ 1:33:28Chairman, I think although my time is expired, I'm looking forward to delving into this further because I do think there is a problem here not only in the administration of the office, but the lack of um enthusiasm for the process among innovators in America and with that I yield back.
▶ 1:33:45the general general general lady yields back. We now go to the gentleman from Texas for 5 minutes. Thank you Mr. Chairman and unlike everyone before me, I will be under the time limit. Director Squires, I'd like to inquire about an IPR that was recently brought to my attention.
▶ 1:34:03This IPR concerns a challenge against a patent owned by VLSI on behalf of NXP which is a semiconductor based in Texas and based on the record it seems this case might have been was handled by the previous administration. Does this ring a bell? I have read in the papers about that
▶ 1:34:22I'll keep going. Under this IPR, VLSI's patent was challenged by two entities called OpenSky and PQA and continues to be tied up in proceedings. These entities were formed around the same time VLSI won a jury trial before a US District Court in Texas regarding the same patent that OpenSky and PQA challenged later. PQA and OpenSky's founders and backers remain largely unknown to the public.
▶ 1:34:48And Director Vidal found this to be an abuse of process, but the cases were still allowed to continue and since that Director Vidal is no longer in charge, would you happen to know who is behind PQA and OpenSky? I do not know, but that is one of the reasons we instituted the RPI process. Your answer is the same as mine because I don't know and neither does anyone I've spoken to. And people keen on using the American patent system are worried about the safety of their patents especially those in Texas.
▶ 1:35:16If unknown entities backed by unknown individuals start emerging out of thin air and tying up patents in endless proceedings, it's not a good look for transparency and reliability of the American patent system and I believe you've been acting in the interest of promoting American innovation and I thank you for that and we'd really appreciate it if you would look into this, take appropriate action and get back to me with the answers I can't seem to find. Thank you for the question. We will look into it and I'm be happy to to speak further. Thank you.
▶ 1:35:46We've also heard concerns from a lot of folks in the patent process about the lack of predictability between administrations. Is there something Congress can or should do to help with transitions in the future? Well, one of the things that would be of great value would be to continue the fee setting authority and fee collection authority which will be expiring in We especially saw that to the dramatic benefit of our stakeholders this year when the government shut down
▶ 1:36:16for 43 days, the patent office did not shut down. We operated on reserves because we were able to do so, run like a business from the fee setting authority. So my number one ask would be for that to Noted and thank you and thank you for all the work you're doing. I yield back. I will yield to Mr. Massie the balance of my time. I thank the gentleman.
▶ 1:36:36Um can you talk about how important it is that patent holders be able to get injunctions and that you know the relief that comes after years of of finally recovering some kind of royalty isn't enough to dissuade Thank you for the question. I think it's very important and we've said so now in three instances.
▶ 1:36:59We formed a a standards essential patent working group, but before that we've come in in three cases as partners with the Department of Justice or co-filers with the Department of Justice Antitrust Division regarding the injunctive factors. So we're intending to use our office as a policy voice for what's important for strong patents and to not only be born strong, but to remain strong because they are can get injunctive relief across all the factors.
▶ 1:37:27We filed in the ITC, we filed in District Court and you know expect to see us there to articulate the reasons why strong patents and strong injunctions for valid patents are important. Isn't it true that the situation we have now is the result of court rulings and not congressional action and is there something that Congress could do to restore injunctive relief?
▶ 1:37:52We're aware certainly and have looked into the provisions of the Restore Act as I understand it's called which would rebalance um rebalance injunctive relief considerations. It's been hodgepodge in District Court and that's been part of the problem especially if you're in arms length negotiation and there's you know the holdout problem as it's called in standards essential patents.
▶ 1:38:18Having predictability I think would would have a great market effect, but the provisions like those in the Restore Act I think is something that only Congress can take up and we'd be willing to have further dialogues as to what the that might look like. Thank you. I yield
▶ 1:38:32Will the gentleman further yield Mr. just one question really quickly. You you said a hodgepodge of District Court. Isn't the eBay decision a high court Yes, it is. So the high court has ruled on injunctive relief and we live under a guideline produced in interpretation of law and the Constitution. The eBay case sets forth the factors which the District Courts have to apply.
▶ 1:39:00They've applied them in a hodgepodge Well, that's where we like PTAB. With that I recognize the general lady from North Carolina for 5 minutes. Thank you Mr. Chairman and ranking member Johnson for organizing this hearing, and thank you, Director Squires, both for your service and your testimony today.
▶ 1:39:19I'm proud to represent North Carolina's Research Triangle, home to companies and startups that have built thriving businesses from a single idea or an This type of innovation and growth couldn't happen without strong intellectual protections that we enjoy here in the United States and that came from our Constitution.
▶ 1:39:45And yet, uh, small inventors are having a much harder time defending their The PTAB file allows, as we've heard, multiple challenges, even from the same party, to a patent's validity, forcing a patent holder to defend their invention again and again, often until the patent holder gives up and settles, mostly because they don't have the resources.
▶ 1:40:11Not only that, but challenges often challengers often file parallel suits against the patent's validity in federal district court, which we've heard about, hedging their bets and hoping to get a finding of invalidity in one venue or the other. And of course, the challengers have more money to get to do that.
▶ 1:40:31And as we know and we've discussed, uh, the USPTO filed a notice of proposed rulemaking last fall to help address this problem of challenges to a patent's validity. And I really appreciate Mr. Massie's comments on this earlier in this hearing.
▶ 1:40:50I just want you, from the perspective of a small to tell us what you've heard about the difficulty of defending their patent in different venues or having multiple parties come after them. Thank you for the question. Uh, before I took, uh, office, I represented, uh, startups and small entities and small inventors for about 10 years. I may be the only director who's had that, uh, direct experience.
▶ 1:41:19Uh, and it's been a, uh, a terrible problem, as you've referenced. Uh, sometimes we've seen as much as seven, uh, petitions keep coming in waves. That's why under the NPRM, we're saying we have to have some clarity, quiet title, finally. Uh, and if you want to still, um, have, uh, multiple filings or multiple parties, join it. Uh, one join and done. But to your question on the, uh, individual, uh, small inventor's experience, it it is it's a killer.
▶ 1:41:48People are not able to become, you know, I'm aware of a, funny little patent and, uh, emanating out of Stanford 1999, the PageRank patent, uh, that is now, of course, Google. So, you know, where our next Googles are coming from, where our next, uh, big companies and big tech are coming from, start in someone's garage, and they're small inventors, and they need to have the same respect, uh, as afforded, uh, everybody in the system. Great.
▶ 1:42:17Um, well, I am a co-sponsor of the Bipartisan Bicameral PREVAIL Act along with Congressman Moran from Texas and then, of course, Senator Tillis and Senator Coons, and we're hoping that that, uh, that bill will get a hearing and then Congress can have its say. Um, I do want to ask a question that was mentioned in some of the opening statements.
▶ 1:42:42As we know, there have been reports that the USPTO and the Department of Commerce are considering plans to in institute a value-based patent fee. Um, and last fall, I led a bipartisan effort with several members of this subcommittee to Secretary Lutnick, urging the department not to move ahead with a patent tax because, again, I believe it will hurt small inventors more.
▶ 1:43:09Although Secretary Lutnick recently said in a Senate hearing that this was not the plan, his answer appeared to leave open the possibility of extracting more value from patents by other means. Um, at any point in your tenure, uh, at Commerce or with the PTO, have have you considered this value-based patent tax and, um, how would you implement it if you did it? Uh, thank you for the question.
▶ 1:43:37Uh, I echo, um, Secretary Lutnick's statements. Uh, he at the and he explained, how would you do that? How would you value that? So, no, I've never been in those discussions where value had any consideration. It's not something that's on the table or, uh, even could be done, I think. Uh, and certainly the Patent Office would not be in the business of providing market valuations for people, uh, on their patents. We're in the business of granting them, making sure they're born strong, and letting the market work.
▶ 1:44:05Well, thank you, and I hope it remains that way. I yield back. I thank the gentle lady. Now, recognize the gentle lady from Florida for 5 minutes. I ask unanimous consent, Mr. The I gentleman's recognized for unanimous consent.
▶ 1:44:19Uh, ask unanimous consent to submit a five-page letter from US inventor to the
▶ 1:44:23Without objection, so ordered. Now, the gentle lady may proceed. Thank you, Mr. Chairman, and Director Squires, thank you for being here with us today. Uh, the work of the US Patent and Trademark Office plays such a critical role in supporting innovation, protecting intellectual property, and ensuring our patent system functions effectively for businesses and inventors. I appreciate your time with us here today.
▶ 1:44:48So, I continue to hear from retailers and manufacturers and Main Street businesses that they are being sued for widely used off-the-shelf technology, like Wi-Fi systems or point-of-sale devices, and being forced into settlements because the expense associated with litigating in our Article 3 courts is simply too high.
▶ 1:45:10How do you respond to concerns that limiting access to PTAB is increasing litigation costs and forcing small businesses into these settlements? Thank you for the question. Uh, and the high cost of litigation is, of course, a concern, and that's why, um, under the uh, IPRs were designed as an alternative to litigation, lower-cost litigation. Um, but IPR is not the only game in town.
▶ 1:45:35People also tend to conflate PTAB limiting PTAB, and that's not what's intending to happen. That's not what we're intending with the rule. There's always the avenue of, uh, reexamination. Uh, we would love to see people, um, utilize PGRs, uh, more effectively, uh, sooner in time, clearer title. Um, in general, we were preferring a more laid-open model, where you take your shot, but take it now and take it once and for all.
▶ 1:46:04And as I said, instead of one and done, uh, people need to think about as one join and done. So, there's ability for collective action, and, um, and there's also then, of course, district court, uh, but there's at least three alternatives available under the And one of the other things I think is important on that front in trying to minimize that down-the-road litigation, you touched on in your opening testimony. And And that really is, uh, the quality of the initial examination.
▶ 1:46:31And I want to hear more about what you are doing with artificial intelligence, uh, and how AI is being used on the initial, uh, patent examination. Um, particularly, I'd like to hear You've emphasized human-in-the-loop approach, using AI but also having humans involved.
▶ 1:46:51Uh, tell us a little bit more about that and what safeguards you have in place to ensure that using AI tools, uh, is not introducing any sort of bias or narrowing the scope of prior art Thank you for the question. Uh, it has multiple touch points, of course, in the office. But, uh, I'll give you one example.
▶ 1:47:11We have launched a, uh, what we call ASAP, uh, AI-generated pilot program, which takes the prior art, gets it to the applicant, um, uh, before the first office action. So, literally, the examiners and the applicant are on the same page with the prior art, uh, beforehand. So, they have some agency as to as to what they want to do.
▶ 1:47:33They can make an amendment, uh, they can, uh, you know, marshal their arguments, or decide this is not going to go well, uh, we're not going to waste our resources and refile with something, um, you know, uh, something, uh, direct resources to something that might be more productive. So, we're trying to get information in the hands of people at the soonest possible point where they can do something with it and have people be on the same page.
▶ 1:47:56On the eligibility side, um, we've formed a, uh, 101 working group, uh, and we've have our starting to deploy, uh, AI agents to assist in some of the areas where there are the thornier issues to decide on 101, uh, and to give some assistance to the examiners. Always will be human-in-the-loop.
▶ 1:48:16Uh, the larger vision, uh, is, as I mentioned in my opening statement, to have the examiners be able to manage, um, a cadre of agents, deploy them as they see fit to their cases, uh, and be able to do thousands of hours in the hundreds of hours time, but still remain expert in their field, and be just as equipped as the private sector applications coming in to meet the examination challenge. Thank you, Director. I yield the balance of my time to the chairman. I thank the gentle lady.
▶ 1:48:45Uh, couple of quick things. You know, you keep talking about these off-ramps, these other opportunities. Just between two people who have dealt with patents for a long time, an ex parte reexamination is exactly that.
▶ 1:49:00It's the inventor and and the examiner, sometimes the same examiner, sometimes someone different, talking about whether or not some third-party allegation is correct or It's a one-sided process that favors dramatically a same or substantially same patent. It's not an even playing field.
▶ 1:49:20The PTAB exists because ex parte was ending up almost always successfully favoring the reinstatement or the continuation of the patent compared to the outcome of PTAB. Isn't that true? It's not It's not a place that really, if you've been accused, it makes any sense to throw it and hope for the best without seeing anything until it comes Pardon me? That may have been the case in the past with the reexamination. I don't believe it is the case in the now.
▶ 1:49:50In fact, it's become a quicker almost the same outcome experience as the PTAB has been. I appreciate that. I'd love to have a longer dialogue, but I don't own the time. The gentlelady from California is recognized for 5 minutes. Thank you, Mr. Chair. Director Squires, before we get into your recent policies, I just want to make sure that we're grounded in the basics because much of this debate seems to move past them too quickly.
▶ 1:50:18So, to my understanding, IPR is an administrative process allowing parties to ask the Patent Trial and Appeal Board to reexamine whether an already issued patent is valid. It was created to provide a faster, more cost-effective alternative to litigating patent validity [clears throat] in federal court, recognizing that initial patent review can be imperfect.
▶ 1:50:42And instituting a review means the board agrees there's enough merit to examine the challenge while denying institution means the challenge does not move forward. Is that In general, the IPR process is has two components, one discretionary and one merits. Right. Okay.
▶ 1:51:05But at the end of the day, um it is ultimately about protecting US companies, inventors, and those patents. I mean, that's that's what we're here to We're we're trying to make sure where there's been especially when there's been error in the examination, there's redress available. Okay.
▶ 1:51:28So, there are concerns raised that IPR may disproportionately impact individual inventors and small entities. There's been discussion about non-practicing entities, entities that assert patents, but do not manufacture products, and their role in patent litigation, including some that may have foreign ownership or backing.
▶ 1:51:50So, does the USPTO distinguish between different types of patent holders when evaluating how PTAB policies affect stakeholders? It's certainly a a discretionary consideration that we invite people to tell their story. As I said, we just recently announced guidance that for American manufacturers or if they're patent holders and there's petitions filed against us, tell us about that.
▶ 1:52:20We want to know. Conversely, if they're um state actors or foreign sovereigns, they can't be in the PTAB under the recent return mail application to to foreign sovereigns and state actors. So, we need to know who's there and what their particular situation is. Also, with the guidance on the manufacturing, we reference small businesses. We want to know what the dynamic whatever side you're on is before instituting proceeding. Okay.
▶ 1:52:48So, you're saying if if there are sovereign funds, if there are foreign actors, you do want to know. Well, we need to know cuz they're not allowed in the PTAB. Okay. And so, that means that you also have collected this data. So, you do You've done data collection on this, so you know There's a real party in interest requirement. Uh-huh.
▶ 1:53:14The RPIs have to be identified at the time of filing. Um and so, that's a disclosure. If it can be raised by patent holder in response to a petition, and so, it's a um a disclosure type process, but we do have data on the number of um foreign state actors who collectively from foreign countries who've appeared in the PTAB historically, and
▶ 1:53:45if you aggregate them, they would rank number four. Okay. So, if I asked you to provide to this committee a breakdown of that data, so, broken down by entity type, domestic versus foreign ownership, whether the patent holder manufactures anything, you would be able to do that? I don't know to the extent of what granularity we have, but I can provide you a list of who the filers are. Yes. All right.
▶ 1:54:13Well, that that would be helpful because I think the question is are different entities treated differently? And I think small versus big is always going to be an issue, but when there's also concern that a company has foreign backing, for me, that also raises national security concerns, And I wouldn't want a
▶ 1:54:43Huawei, for example, getting in the mix and playing a role in seeking or holding a patent that should be for a US inventor or company. I understand we're happy to work with your office. I would direct your attention to a the Corning optical memo that I I issued, which did have a list listing of IPR petitioners in aggregate by IPR petition.
▶ 1:55:13Okay, great. So, we are on the record as saying we're requesting that information. We'd love it for you to be able to share that with the committee. And I do have
▶ 1:55:24Oh, sorry. Yep. Unanimous consent?
▶ 1:55:25Yes, I do, Chair. Um uh ask unanimous consent to enter into the record Trump appointees are hijacking the patent system. This is dated May 2025 prospect. With some objection, so ordered. Um and next one enter into the record Trump's PTO picks fortress ties signal big tech patent fights. So ordered. Without objection. Thank you.
▶ 1:55:54At this time, I'll also put into the record by unanimous consent a copy of the docket for the Patent and Trademark Office revised proposed rules that we've been alluding to. Uh additionally, a number of letters and I'll I'll ask them be placed in block, uh they do include, but not limited to uh patents for affordable drugs, uh general action patent, crypto console on innovation, and a number of others. Without objection, so ordered.
▶ 1:56:23We now go to the gentleman from South Carolina for his time.
▶ 1:56:26I have a unanimous consent I'd like to enter into the record a letter from the Council for Innovative Innovation Promotion dated March 24, 2026 addressed to yourself and me regarding this hearing. Without objection, so ordered. The very patient gentleman from South Carolina is recognized. Thank you, Mr. Chairman. Director, thank you for being here. Um the PPAC and TPAC have served as effective vehicles for the private sector and subject matter experts to offer specialized guidance to the PTO.
▶ 1:56:56Uh I'd like to commend you and Secretary Lutnick for appointing new members to these bodies last fall. Uh when do you anticipate the remaining vacancies uh to be filled uh and and the committees uh will reconstitute and begin their work? Thank you for the question.
▶ 1:57:12Uh very soon uh the the as you've seen both on the PPAC and TPAC side uh is really an all-star roster, and we just extended an offer uh last night to uh the individual inventor, which is the uh statutorily required person that crystallizes everything. So, we're hopeful very soon. Great. Thank you for that. I'm going to move on to a separate issue on US research and development.
▶ 1:57:36Obviously, we're competing with China on any number of things uh across many fields, medicine, telecommunications, manufacturing, emerging technologies. Uh In the context of patents, how do China and foreign competitors undermine our system and and uh in your view? Very briefly. Um as brief as I can. Um In several ways, uh one is is known as flooding the zone. Uh we've seen a lot of low-quality applications emanating from areas.
▶ 1:58:04Others uh are fraudulent filings, um which we've deployed some AI tools and identified. Uh as I said, we've removed especially in the trademark register tens of thousands of fraudulent applications. And the uh arrow in our quiver uh we just announced is a a uh rule that you must be a US practitioner before the patent office and and uh to file papers. So, uh accountability is of course important, and those are ways we're trying to address these issues.
▶ 1:58:32Regarding pharmaceuticals, do you what steps has your office taken uh or plans to take to ensure that the US remains a a global um leader in pharmaceutical innovation? Uh again, um our our number one goal uh is to have patents born strong, uh make sure they receive rigorous and thorough examination, uh and get to market in a timely manner. Uh switching gears again on on the IPR. I know we've talked about that a lot today.
▶ 1:59:00How is the office thinking about striking the right balance uh related to IPR ensuring that manufacturers and strategic strategic industries can effectively defend against questionable patents while also preserving the strong protections and access for small businesses startups and independent Thank you for the question. Yes, it's it's a balance is the keyword. It's a unitary system.
▶ 1:59:22I like to equip sometimes that means that someone is always unhappy, but nevertheless we're trying to strike the balance especially on the discretionary side as I mentioned where there are small business factors or manufacturing that cuts both ways. Tell us a story. We've even had issues where things that have been um controversial like settle expectations cut both ways.
▶ 1:59:47There have been assertions where patents have lapsed and then come into being and again or licenses have been issued against the settle expectations and those get taken to account whether to institute or not. Thank you for that. You you would agree that you said flood the zone earlier. So you would agree with with me that nation states like China current patents or trademarks pretty frequently.
▶ 2:00:16Is that is that is that fair to say? They have but the new president will end that practice. Okay. How do we deal with domestic companies that do that? I'll give you an example. So Monster Energy drinks is like the number one filer against existing trademark applications. They're like far and away above everybody else.
▶ 2:00:42They've been labeled as a trademark bully of the year by multiple times at least since 2012 and I don't want to single them out but I do think it's a real problematic like some of these cases like a camping gear because the name is for a craft brewery company. What I what I am concerned about is like big companies with a lot of assets that come in and swing at small restaurant owner.
▶ 2:01:06I guess there was a restaurant in as a swarmer restaurant and they they're called the Monster Shawarma and somehow that's like a a patent or a trademark infringement on Monster. It's just really aggressive. And so how do how do we protect small businesses against trolls like Monster Energy drinks? It's a it's a difficult question. The way we protect them is I you know early access files they can.
▶ 2:01:31Monster of course has a famous mark and has a wider birth in courts and assertions but trademark system is a registration system. It levers off of use in commerce often from state rights and they register federalize that. So you know the part of the solution is to let people know we're here. You should file um What about rule 11 sanctions? I mean if if they're filing frivolous things and they're obviously like I'm not I'm not suggesting that all of their cases are not meritorious.
▶ 2:01:59What I am suggesting is a little bit alarming that they're the number one company in the country filing against small businesses. They're really aggressive on their tactics and when I what I would like to know is like you've got tools in your tool belt to rein some of these practices in. You've already got a full docket. So how do we rein in companies like that from abusing the Again, thank you for the question.
▶ 2:02:21On the rule 11 basis that's of course more of a district court litigation dynamic in terms of utilizing our office in terms of oppositions per se. Those are something that you know we do have a TTAB and we do have discretion around those type of matters. And again, just like the patent side tell us a story that is often compelling. We're trying to to be responsive to the real world dynamics. I appreciate you doing that. This isn't a criticism of you or the office.
▶ 2:02:51I just want to make sure obviously we want to focus on China and the things that they're doing to undermine our competitiveness but we also have some some problems domestically too. Some of these people that abuse the system. So thank you so Mr. Chairman. Okay, that's great. You just one clarification. You use the term famous mark. IBM's a famous mark. Ford Motor is a famous mark. Monster Cable doesn't Monster drinks doesn't meet that requirement, does it? You used it but I don't think you meant to use it.
▶ 2:03:22I I have not come to that conclusion. In order to be a famous mark the word Monster all by itself would have to be have secondary meaning, That's would be for a court to decide but those are the parameters. Yes.
▶ 2:03:36Okay, so Monster movie Monster Cable which every every professional musician uses and predates Monster drinks. I'm trying to understand because it's it's important for this hearing. Do you want to go back and revise for the record your statement that that Monster drinks is somehow a famous mark because it it obviously is a huge difference in how you and the courts deal with an allegation, right? I absolutely agree with you.
▶ 2:04:03I've certainly seen a blue oval without the word Ford be considered as important cuz it is a famous mark and I appreciate that. I now ask unanimous consent in block that a number including of submissions including from Arnold Ventures from Entertainment Software Association from the ES that's the same one.
▶ 2:04:34Hang on one second. Yeah, okay. From the Business Software Some of these are long. They really have things to say to you Mr. Secretary the most famous of all the CTA the Consumer Technology who opines in the negative to say the others too numerous will be giving them all
▶ 2:05:04to you without objection so ordered. I now recognize myself for a number of of questions. Isn't it true that the number of so-called serial applications of the repeat use of PTAB was less than And yet your rule applies to 100%. Is that correct? The historical serial attacks using PTAB is less than 1%.
▶ 2:05:31Of PTAB actions filed of IPR actions I don't know the exact figure. Okay, that's the figure that staff on this side comes up with. Please give us your answer for the record. I already discussed ex parte. We are going to agree to disagree that you've reformed anything simply because it is still a process there's only two people in the room and one of them is not the person who submitted the documentation. They're not part of the process. That's why it's ex parte, correct?
▶ 2:06:01That's correct. That's ex parte. Um I've got a great many items to say the least as you could tell. But probably the the the largest one is currently when I mentioned that you've taken cases in which they were discretionarily process had nearly reached a conclusion and then you've pulled them back essentially retroactively discretionarily said they never
▶ 2:06:32existed. Where do you believe you get that I don't know which specific cases you're referring to or the particular facts of the matter but as the federal circuit has recently
▶ 2:06:45the Interactive Communications is one example that we have that you did that And and I cite this because when it goes to a final decision if you want to reverse it you can but there has to be essentially it's not without paper. When you simply do a denial there's no paper as we've seen today.
▶ 2:07:06So retroactively doing it makes a huge difference because that discretionary denial after the fact after the facts have been laid out after it's gone through the process and then denies the individuals either an outcome possibly reversible or an explanation which you did not give in that case. Again, I'm not familiar with the underlying case even by caption. However, there is wide discretion afforded and I believe the discretion would include changing your mind.
▶ 2:07:36Well, I don't believe you have that discretion once a process begins and so we'd like you to cite as you did very eloquently in others where you believe in the Americans Invent Act that that you believe you have that discretion because we disagree and additionally since that discretion is not challengeable in court and yet the final decision would be you see where the ambiguity is.
▶ 2:08:05You've taken away the ability to have additional appeals because you've denied them by using the discretionary denial after the fact which takes away their ability to actually have any further redress, correct? I don't agree with that.
▶ 2:08:22The authority is 316 35 USC 316b and I'm required by statute and rule making and we use this in our decisions for to take into account the economy, integrity of the patent system and the efficient use of resources in the discretionary part of our what we do. The merits part is different of course but discretion piece is the is the is the one component before you get the merits. Okay, I'm going to use my final time to ask some very tough questions.
▶ 2:08:51You mentioned Secretary Luddy having 500 Is it true that if to your knowledge that the secretary during his tenure was often a plaintiff suing in district Directly or indirectly. Um, I'm recalling days of eSpeed and BrokerTec and there were several suits back in the 2000s around then.
▶ 2:09:18But it's fair to say that from a monetary standpoint he he benefited from lawsuits and may or may not have an opinion on the where whether he likes PTAB or not since he began reducing PTAB's effectiveness during his tenure before you came on And directing the acting uh Have you had any discussions with the secretary concerning any of these Um, I would
▶ 2:09:48that the NPRM that we've issued is the secretary's first and signature rule. So he was actually behind this.
▶ 2:09:56Okay, so as you sit here today the secretary has a a role. Let me ask one last question. To your knowledge has the secretary eliminated all owned assets that could in any way benefit from these I have no knowledge one way or the Okay, would you to the best of your ability answer for the record or perhaps we'll ask the secretary directly by subpoena.
▶ 2:10:19It is my understanding that he may not have eliminated all of his his holdings and therefore there could genuinely be a conflict as you you whether whether right or wrong whether you have authority or not dismantle PTAB cutting by 80 judges and continuing to cut by discretionary both regular and retroactive. Um, there's a lot more to ask.
▶ 2:10:45I'll ask the rest of them for the record and ask that you uh agree to answer them uh if we send them to you within 5 days. That's actually a question we weren't going to do at the end by unanimous consent. But if you'll agree to take written questions from the record from all members. I we would welcome the chance to interact with this body.
▶ 2:11:07Thank you. In conclusion, this has been an illustrative hearing. Uh I will say uh and this is usually something a minority would be saying that it's been too long. It took too Uh we are now over 15 months into an administration and this is the first uh visit uh of a committee that is uh to the committee of jurisdiction.
▶ 2:11:34Uh it is our hope that prior to the close of this Congress that we will have you back for at least one additional hearing not to repeat the subjects but to follow up on them. It is the normal practice to have a regular dialogue with the Patent and Trademark Office and it is my personal hope and I believe the ranking member's personal hope uh that that dialogue will continue so that by the time we come to the next one we won't be talking in single digits how
▶ 2:12:04often we've been able to have interactions with your office directly. Uh and with that I am required to say this concludes today's hearing and I want to thank our witness for appearing before the Congress. Without objection all members will have five legislative days to submit additional written questions and uh the witness uh to the witness and additional materials for the record. And without objection we stand