The Senate Judiciary Committee on Wednesday appeared to look favourably upon David Kappos, the Obama administration nominee for undersecretary of Commerce and director of the US Patent and Trademark Office. But in the process, Kappos showed possible weaknesses in separating himself from his job at IBM and the need for international diplomacy on IP enforcement.

Several senators asked questions of Kappos, who appeared most confident on matters of patents and technology, his area of expertise. Kappos helped build IBM’s enormous patent portfolio, and told the committee he has spent his entire career in technology and innovation, most of it as an intellectual property attorney, before that as an electrical and computer engineer.

The event was webcast live, and may be viewed here.

While the hearing was not confrontational, Kappos was directly questioned on how he would handle in an unbiased manner the many issues he would undoubtedly be confronted with involving IBM, one of the world’s top patent filers.

“It’s a matter of some delicacy,” said Sen. Arlen Specter, a Pennsylvania Democrat, who added that some rules with which Kappos would be confronted would favour IBM, to the disadvantage of others.

Kappos responded that it is a “very clear situation, involving conflicts actual or apparent” that he would have absolutely nothing to do with any matters involving IBM. He would recuse himself.

But Specter said, “But how do you avoid the issue beyond that?” He cited a current legal case called Tafas v. Dudas, involving patent extensions. Kappos said IBM has no stake in that case. Specter countered that it would appear one outcome in the case would benefit IBM more than another, so how would Kappos deal with that. To which Kappos took a different tack, saying, “I don’t know if I see it that way.”

If appointed, he concluded, “I will put my previous role behind me. I will do the right thing for the American people.” To which Specter relented, calling it a “good answer.”

Kappos also was asked whether he would expedite applications for green technologies. He said it is “very straightforward” to “reinvigorate” the system where environmentally oriented applications are given priority. Kappos agreed to supplement his answer on the environment issue in writing.

Kappos appeared slightly less certain on matters pertaining to anti-counterfeiting and anti-piracy, when asked about the concerns of the entertainment industry by Minnesota Democratic Sen. Al Franken, a former television comedian. In reply, Kappos spoke rather broadly about the importance of taking “aggressive” action against these problems, and said there is some “new capability” in the administration that would help.

Kappos mentioned the need to engage with countries in Asia, Eastern Europe and Africa in order to put a new emphasis on counterfeiting and piracy. He said the administration’s annual Special 301 process for naming countries it feels are not adequately protecting US IP rights needs to be supplemented with education and working with other countries to get them to put in place laws and actions to deter the problem.

Kappos also said the Patent Office “faces many challenges.” Most immediate are those resulting from the economic downturn, he said, as well as the need for a stable funding model, and to attract and retain skilled workers.

Refashioning Patent Examinations, Fees

Kappos said he has been asked by Commerce Secretary Gary Locke to “refashion the patent examination process.” He said he will “completely remake” the count system, which will help morale and to get to applications that matter. A key focus, he said, is the huge backlog in patent applications, and to “refashion the fee system” to make it more accurately associate fees with the work that is being done. He also would work on “fixing” fee diversion from USPTO.

Other challenges he named were the rapidly globalising trade environment, and “respect for intellectual property,” which has become a catchword for enforcement of IP rights.

Kappos promised to take into account equally all stakeholders, particularly those representing public interest. “I’ll reach out to all of them.”

He said he is “mindful” of challenges globally from other leading economies, and will use his international experience to represent US interests. But most of all, he will focus on domestic innovation and economic growth.

The committee leaves the record open for a week before deciding, Committee Chairman Patrick Leahy (Democrat, Vermont) said. The Senate is expected to go out on recess after the first week of August, and return in September, according to sources. After the committee approval, the nomination will go before the full 100-member Senate.

Committee member Orrin Hatch (Republican, Utah) praised Kappos’ “eminent” experience and said he would support him.

Reactions

Andrew Valentine, co-chair at DLA Piper’s Patent Litigation Practice, highlighted afterward the key points made by Kappos. He said, for example, that Kappos opposes fee diversion, as does much of the IP community, and that fees would go toward patent applications.

He also hinted, Valentine said, “that if the IP community had comfort that fees were not being diverted, higher fees may be possible and necessary.” On the IBM background, Valentine said, “this is an area where, as the person responsible for IBM’s global IP interests, Mr. Kappos’ track record will serve him well.”

Steve Maebius, partner in Foley & Lardner’s IP practice in the Washington, DC office, said before the hearing, “The new director will face a number of immediate challenges – dealing with a declining user fee base caused by a fall-off in filing fees, providing immediate input on the pending patent reform legislation that is likely to begin moving in Congress after the August recess, coping with increased use of reexamination as an alternative to litigation, and a rising rate of appeals creating a backlog at the Board of Appeals.”

“Kappos enjoys widespread support based on his independent stance on patent reform while at IBM and his involvement with such creative approaches as the peer-to-patent program for increasing patent quality,” Maebius said.

And Richard Lazarus, Of Counsel in Barnes & Thornburg’s Washington, DC office, said a key issue will be that, “as the number of examiners leave the office to work at home, the ability of examiners to talk with each other and view an application under examination for issues like where to search for prior art, help with understanding technical aspects in the patent application or prior art, the state of the law regarding how the prior art is to be applied, what are – and where to find – the present USPTO procedures applicable to a particular patent application, etcetera, is lost.”

Separate Hearing Addresses IP and Innovation

In a separate congressional event Wednesday, Mark Esper, executive vice president of the US Chamber of Commerce’s Global Intellectual Property Center, testified before Congress about the importance of protecting intellectual property rights and highlighted the role IP will play in solving global climate change challenges.

“Technology is the key to addressing climate change, and protecting intellectual property rights is essential if we want such innovation to flourish,” Esper told the House Select Committee on Energy Independence and Global Warming. “We must safeguard a time-proven system that not only incentivises breakthrough solutions to global challenges, but that will also create jobs and spur economic growth here in the United States.” Esper highlighted the United Nations Framework Convention on Climate Change as the “latest front where some are attempting to portray IP rights as a barrier to addressing climate change.”