The U.S. Senate Committee on the Judiciary conducted a nomination hearing on July 29, 2009 from 10:00 a.m. to 11:14 a.m. for David J. Kappos to be Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.  Beverly Baldwin Martin (to be United States Circuit Judge for the Eleventh Circuit) and Jeffrey L. Viken (to be United States District Judge for the District of South Dakota) also appeared before the Committee.

Here are some of the Kappos highlights:

• Kappos stated that he is familiar with all of the constituencies of the PTO and vowed to serve all of their interests.  He expressed appreciation for all of the employees of the PTO.

• Kappos admitted that an important mission is advancing innovation in these trying economic times.

• Of course, he stressed that PTO reform is a big issue, especially solving the backlog of pending patent applications.  Somewhat lower on the list appeared to be patent reform legislation, but he was careful not to offend Senators Leahy and Hatch.

• Senator Franken asked about IP counterfeiting in the entertainment industry, e.g., piracy of movies in China.  Kappos gave polite answers.  Apparently, Stuart Smalley isn’t interested in the patent system.

• Kappos hates fee diversion and believes the entire patent community feels the same (in other breaking news, scientists discover water in the Atlantic Ocean).  He would like to have the ability to set fees as Director.

• Senator Specter had a good question about expediting applications directed to helping the environment (green/clean tech).  Applicants formerly could use a petition to make special to expedite examination, but this category went away when the PTO started the accelerated examination program (the same happened with the anti-terrorism-related inventions).  Kappos stated that he would like to do more to expedite applications that would help the environment but would provide more details to the Committee in writing.

Note to Mr. Kappos:  please restore the original categories for petitions to make special so applicants won’t have to trudge through the claim-limiting and estoppel-producing process that is accelerated examination.  Is that too much to ask to help applicants who want to help the environment and keep crazy people from blowing us up?

• Kappos reassured the senators that his career at IBM would not create conflicts as PTO Director (“my job is to watch out for the U.S., not IBM”).

• Senator Klobuchar asked about improving efficiency at the PTO.  Kappos replied that “many things need to be done” and that a “major morale issue” is the count system.  Kappos vowed to work with the unions to re-make the count system (“priority 1 of several priority 1s”).  He has support from Commerce Secretary Locke.

• Besides giving the Director the ability to set fees, Kappos also wants to “refashion the fee system.”  This was said in view of the decrease in application and maintenance fees that the PTO is experiencing.  Such a system would look at the relationship between fees and the work being done (can you say EPO-like excess claim fees?).

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The House voted overwhelmingly late Wednesday to establish new U.S. policy in opposition to any global climate change treaty that weakens the intellectual property rights of American green technology as part of the Foreign Relations Authorization Act.  The vote comes as diplomats prepare for December negotiations as part of the U.N. Framework Convention on Climate Change.  “American innovations in clean energy technology create good-paying jobs today and will fuel our country’s economic growth in the future,” said Rep. Rick Larsen, D-Wash., who offered the amendment with Rep. Mark Kirk, R-Ill. Kirk, a member of the U.S. delegation to Kyoto in 1997, emphasized that jobs will not be created if foreign competitors are allowed to seize U.S. inventions.

House Foreign Affairs Chairman Howard Berman’s core bill included language to increase resources and training for enforcement of intellectual property rights.  Berman is a longtime leader on IP issues and chaired the House Judiciary Subcommittee on Courts, the Internet, and Intellectual Property in the 110th Congress.  Under the bill, the Secretary of State would appoint 10 new IP attachés to serve in embassies or other diplomatic missions with priority placement given to countries with particularly egregious IP regimes.  “This legislation will play a vital role in efforts to protect job-creating intellectual property abroad,” said Mark Esper, executive vice president of the U.S. Chamber of Commerce’s Global IP Center.

Source:  National Journal – Online 6/11/09

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The American Institute of Certified Public Accountants applauded Representative Rick Boucher, a Democrat from Virginia, and Representative Bob Goodlatte, a Virginia Republican, for introducing legislation that would prohibit patents on tax planning methods.

“We need this bill so that U.S. tax laws will be applied equally to all taxpayers,” AICPA President and CEO Barry Melancon said.  “Tax strategies that are patented by the U.S. Patent and Trademark Office can only be used by some taxpayers.  That’s not fair and not how Congress intended the tax laws to be administered.”

He said the 77 tax strategy patents that have been approved and the 129 that are pending apply to a broad range of areas affecting regular taxpayers, including charitable contributions, estate and gift taxes, pension plans and deferred compensation.

For example, Melancon said, a patent has been granted for the process of computing and disclosing the federal income tax consequences involved in the conversion from a standard Individual Retirement Account (IRA) to a Roth IRA.

“We thank Representative Boucher for leading the effort in the House this Congress and last Congress to halt tax strategy patents,” Jamie Walker, CPA, incoming chair of the Virginia Society of Certified Public Accountants, said.  “We appreciate the leadership of Representative Boucher and Representative Goodlatte. It is more difficult for CPAs to give their clients tax advice when tax strategies are patented.”

Representative Boucher and Representative Goodlatte are senior members of the House Judiciary Committee, which has jurisdiction over patent legislation.

Last Congress, language to prohibit tax strategy patents was passed by the U.S. House of Representatives as part of H.R. 1908, the Patent Reform Act of 2007.  A bill containing similar language on tax strategy patent prohibition, S. 2369, was introduced in the U.S. Senate last Congress by Senate Finance Committee Chairman Max Baucus and by Senator Chuck Grassley, the ranking minority member of the Finance Committee.

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