“Oversight of the U.S. Patent and Trademark Office”

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34                    OVERSIGHT OF THE U.S. PATENT AND5                            TRADEMARK OFFICE6=======================================================================78                                HEARING910                               BEFORE THE1112                  SUBCOMMITTEE ON COURTS, INTELLECTUAL13                 PROPERTY, ARTIFICIAL INTELLIGENCE, AND14                              THE INTERNET1516                                 OF THE1718                       COMMITTEE ON THE JUDICIARY1920                     U.S. HOUSE OF REPRESENTATIVES2122                    ONE HUNDRED NINETEENTH CONGRESS2324                             SECOND SESSION2526                               __________2728                       WEDNESDAY, MARCH 25, 20262930                               __________3132                           Serial No. 119-623334                               __________3536         Printed for the use of the Committee on the Judiciary37[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3839               Available via: http://judiciary.house.gov4041                               __________4243                      U.S. GOVERNMENT PUBLISHSING OFFICE4463-299                       WASHINGTON : 202645=======================================================================4647                       COMMITTEE ON THE JUDICIARY4849                        JIM JORDAN, Ohio, Chair5051DARRELL ISSA, California             JAMIE RASKIN, Maryland, Ranking52ANDY BIGGS, Arizona                      Member53TOM McCLINTOCK, California           JERROLD NADLER, New York54THOMAS P. TIFFANY, Wisconsin         ZOE LOFGREN, California55THOMAS MASSIE, Kentucky              STEVE COHEN, Tennessee56CHIP ROY, Texas                      HENRY C. ``HANK'' JOHNSON, Jr.,57SCOTT FITZGERALD, Wisconsin              Georgia58BEN CLINE, Virginia                  ERIC SWALWELL, California59LANCE GOODEN, Texas                  TED LIEU, California60JEFFERSON VAN DREW, New Jersey       PRAMILA JAYAPAL, Washington61TROY E. NEHLS, Texas                 J. LUIS CORREA, California62BARRY MOORE, Alabama                 MARY GAY SCANLON, Pennsylvania63HARRIET M. HAGEMAN, Wyoming          JOE NEGUSE, Colorado64LAUREL M. LEE, Florida               LUCY McBATH, Georgia65WESLEY HUNT, Texas                   DEBORAH K. ROSS, North Carolina66RUSSELL FRY, South Carolina          BECCA BALINT, Vermont67GLENN GROTHMAN, Wisconsin            JESUS G. ``CHUY'' GARCIA, Illinois68BRAD KNOTT, North Carolina           SYDNEY KAMLAGER-DOVE, California69MARK HARRIS, North Carolina          JARED MOSKOWITZ, Florida70ROBERT F. ONDER, Jr., Missouri       DANIEL S. GOLDMAN, New York71DEREK SCHMIDT, Kansas                JASMINE CROCKETT, Texas72BRANDON GILL, Texas73MICHAEL BAUMGARTNER, Washington74Vacancy75                                 ------7677             SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY,78               ARTIFICIAL INTELLIGENCE, AND THE INTERNET7980                    DARRELL ISSA, California, Chair8182THOMAS MASSIE, Kentucky              HENRY C. ``HANK'' JOHNSON, Jr.,83SCOTT FITZGERALD, Wisconsin              Georgia, Ranking Member84BEN CLINE, Virginia                  ZOE LOFGREN, California85LANCE GOODEN, Texas                  TED LIEU, California86LAUREL LEE, Florida                  JOE NEGUSE, Colorado87RUSSELL FRY, South Carolina          DEBORAH ROSS, North Carolina88MICHAEL BAUMGARTNER, Washington      ERIC SWALWELL, California89Vacancy                              SYDNEY KAMLAGER-DOVE, California9091               CHRISTOPHER HIXON, Majority Staff Director92                ARTHUR EWENCZYK, Minority Staff Director9394                           C O N T E N T S9596                              ----------9798                       Wednesday, March 25, 202699100                           OPENING STATEMENTS101102                                                                   Page103The Honorable Darrell Issa, Chair of the Subcommittee on Courts,104  Intellectual Property, Artificial Intelligence, and the105  Internet from the State of California..........................     1106The Honorable Henry C. ``Hank'' Johnson, Ranking Member of the107  Subcommittee on Courts, Intellectual Property, Artificial108  Intelligence, and the Internet from the State of Georgia.......     7109The Honorable Jim Jordan, Chair of the Committee on the Judiciary110  from the State of Ohio.........................................     8111The Honorable Jamie Raskin, Ranking Member of the Committee on112  the Judiciary from the State of Maryland.......................     8113114                                WITNESS115116The Hon. John A. Squires, Under Secretary of Commerce,117  Intellectual Property and Director, U.S. Patent and Trademark118  Office119  Oral Testimony.................................................    12120  Prepared Testimony.............................................    14121122          LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING123124All materials submitted for the record by the Subcommittee on125  Courts, Intellectual Property, Artificial Intelligence, and the126  Internet are listed below......................................    57127128Materials submitted by the Honorable Zoe Lofgren, a Member of the129  Subcommittee on Courts, Intellectual Property, Artificial130  Intelligence, and the Internet from the State of California,131  for the record132    A letter to the Honorable John Squires, Under Secretary of133        Commerce, Intellectual Property and Director, U.S. Patent134        and Trademark Office entitled, ``Additional Discretionary135        Institution Considerations,'' from Alliance for136        Automotive Innovation, Business Software Alliance, High137        Tech Inventors Alliance, Software & Information Industry138        Association, United for Patent Reform, and US139        Manufacturers Association for Development & Enterprise140        (US*MADE), Mar. 24, 2026141    A report entitled, ``Analysis of Unpatentability Findings in142        Inter Partes Review Final Written Decisions (2013-143        2025),'' Gaetan de Rassenfosse (EPFL) & Laura Sheridan144        (Google), Mar. 15, 2026145A letter to the Honorables Howard Lutnick, John Squires, Scott146  Bessent, Susie Wiles, Kevin Hassett, Russell Vought, and Peter147  Navarro, from Randy Landreneau, President, and Dirk Tomsin,148  COO, US Inventor, Inc., submitted by the Honorable Thomas149  Massie, a Member of the Subcommittee on Courts, Intellectual150  Property, Artificial Intelligence, and the Internet from the151  State of Kentucky, for the record152Materials submitted by the Honorable Kamlager-Dove, a Member of153  the Subcommittee on Courts, Intellectual Property, Artificial154  Intelligence, and the Internet from the State of California,155  for the record156    An article entitled, ``Trump Appointees Are Hijacking the157        Patent System,'' May 15, 2025, The American Prospect158    An article entitled, ``Trump PTO Pick's Fortress Ties Signal159        Big Tech Patent Fights,'' Mar. 11, 2025, Bloomberg160        Government161Materials submitted by the Honorable Darrell Issa, Chair of the162  Subcommittee on Courts, Intellectual Property, Artificial163  Intelligence, and the Internet from the State of California,164  for the record165    A letter to the Hon. John A. Squires, Under Secretary of166        Commerce, Intellectual Property and Director, U.S. Patent167        and Trademark Office, from the Alliance for Automotive168        Innovation, Business Software Alliance, High Tech169        Inventors Alliance, Software & Information Industry170        Association, United for Patent Reform, and US171        Manufacturers Association for Development & Enterprise172        (US*MADE), Mar. 24, 2026173    A comment entitled, ``Comment by Anonymous,'' Dec 3, 2025,174        U.S. Patent and Trademark Office175    A comment entitled,``Comments of SIIA Regarding the Notice of176        Proposed Rulemaking:Revision to Rules of Practice Before177        the Patent Trial and Appeal Board,'' Dec. 2, 2025,178        Software and Information Industry Association (SIAA)179    A letter to the Hon. John A. Squires, Under Secretary of180        Commerce, Intellectual Property and Director, U.S. Patent181        and Trademark Office, from Arnold Ventures, Dec. 1, 2025182    A letter to the Hon. John A. Squires, Under Secretary of183        Commerce, Intellectual Property and Director, U.S. Patent184        and Trademark Office, from BadVR, Inc., Nov. 13, 2025185    A comment entitled, ``Comments on Notice of Proposed186        Rulemaking: Revision to Rules of Practice Before the187        Patent Trial and Appeal Board,'' from Business Software188        Alliance (BSA) (FR 2025-19580), Dec. 2025189    A letter to the Hon. John A. Squires, Under Secretary of190        Commerce, Intellectual Property and Director, U.S. Patent191        and Trademark Office, from the Consumer Technology192        Association (CTA) (90 FR 48,335)193    A letter to the Hon. John A. Squires, Under Secretary of194        Commerce, Intellectual Property and Director, U.S. Patent195        and Trademark Office, from Crypto Council for Innovation196        (CCI), Dec. 2, 2025197    A comment to the Hon. John A. Squires, Under Secretary of198        Commerce, Intellectual Property and Director, U.S. Patent199        and Trademark Office, from Entertainment Software200        Association (Docket PTO-P-2025-0025), Dec. 2, 2025201    A comment entitled, ``Comment by e-td55 llc,'' to the Hon.202        John A. Squires, Under Secretary of Commerce,203        Intellectual Property and Director, U.S. Patent and204        Trademark Office (Docket PTO-P-2025-0025-1514), Nov. 26,205        2025206    A comment entitled, ``Revision to Rules of Practice Before207        the Patent Trial and Appeal Board,'' Generation Patient208        (Docket PTO-P-2025-0025)209    A letter to the Committee on the Judiciary, from Software &210        Information Industry Association (SIIA)211    A comment from the National Retail Federation (NRF), Dec, 2,212        2025213    A letter to the Hon. John A. Squires, Under Secretary of214        Commerce, Intellectual Property and Director, U.S. Patent215        and Trademark Office, from Patients For Affordable Drugs216        (P4AD), Nov. 21, 2025217    A comment to the Hon. John A. Squires, Under Secretary of218        Commerce, Intellectual Property and Director, U.S. Patent219        and Trademark Office, from Senseeker Corp. (PTO-P-2025-220        0025-0894), Dec. 3, 2025221    A letter to the Hon. Chuck Grassley, Chair of the Committee222        on the Judiciary, the Hon. Jim Jordan, Chair of the223        Committee on the Judiciary, the Hon. Dick Durbin, Ranking224        Member of the Committee on the Judiciary, and the Hon.225        Jamie Rasking, Ranking Member of the Committee on the226        Judiciary, from the Hon. John A. Squires, Under Secretary227        of Commerce, Intellectual Property and Director, U.S.228        Patent and Trademark Office, Dec. 9, 2025229    A comment from the U.S. Manufacturers Association for230        Development and Enterprise (PTO-P-2025-0025), Dec. 2,231        2025232    A letter to the Honorable Darrell Issa, Chair of the233        Subcommittee on Courts, Intellectual Property, Artificial234        Intelligence, and the Internet from the State of235        California, and the Honorable Henry C. ``Hank'' Johnson,236        Ranking Member of the Subcommittee on Courts,237        Intellectual Property, Artificial Intelligence, and the238        Internet from the State of Georgia, from Alliance for239        Automotive Innovation, Mar. 23, 2026240A letter to the Honorable Darrell Issa, Chair of the Subcommittee241  on Courts, Intellectual Property, Artificial Intelligence, and242  the Internet from the State of California, and the Honorable243  Henry C. ``Hank'' Johnson, Ranking Member of the Subcommittee244  on Courts, Intellectual Property, Artificial Intelligence, and245  the Internet from the State of Georgia, from the Council for246  Innovation Promotion, Mar. 24, 2026, submitted by the Honorable247  Henry C. ``Hank'' Johnson, Ranking Member of the Subcommittee248  on Courts, Intellectual Property, Artificial Intelligence, and249  the Internet from the State of Georgia, for the record250251                 QUESTIONS AND RESPONSES FOR THE RECORD252253Questions for the Hon. John A. Squires, Under Secretary of254  Commerce, Intellectual Property and Director, U.S. Patent and255  Trademark Office, submitted by the Honorables Ben Cline from256  the State of Virginia; the Honorables Thomas Massie from State257  of Kentucky; the Honorable Zoe Lofgren from the State of258  California; the Honorable Joe Neguse from the State of259  Colorado; the Honorable Henry C. ``Hank'' Johnson from the260  State of Georgia; and the Honorable Kamlager-Dove, from the261  State of California; the Honorable Darrell Issa from the State262  of California, the Members of the Subcommittee on Courts,263  Intellectual Property, Artificial Intelligence, and the264  Internet, for the record265    No response at the time of publication266267           OVERSIGHT OF THE U.S. PATENT AND TRADEMARK OFFICE268269                              ----------270271                       Wednesday, March 25, 2026272273                        House of Representatives274275           Subcommittee on Courts, Intellectual Property, and276277               Artificial Intelligence, and the Internet278279                       Committee on the Judiciary280281                             Washington, DC282283    The Committee met, pursuant to notice, at 10 a.m., in Room2842141, Rayburn House Office Building, the Hon. Darrell Issa285[Chair of the Subcommittee] presiding.286    Members present: Representatives Issa, Jordan, Massie,287Fitzgerald, Cline, Gooden, Kiley, Lee, Fry, Johnson, Raskin,288Lofgren, Ross, and Kamlager-Dove.289    Mr. Issa. Good morning. The Subcommittee will come to290order. Without objection, the Chair is authorized to declare a291recess at anytime.292    We welcome everyone here to today's hearing on the United293States Patent and Trademark Office, and I want to make it clear294that at the stroke of 10 we started which is practically a295record, but also that this is an extremely busy day. Most296Members serve on two or three Committees, so you will see them297coming in and out.298    Mr. Squires, that is not any reflection on you because299there were equivalent people in at least two other hearing300rooms for many of our people, but I suspect you will see in and301out virtually every Member of the Subcommittee.302    Also, in addition, it is the policy of the Subcommittee,303should any Members of the Full Committee come, they will be304waived on either side without objection.305    I now recognize myself for an opening statement.306    Mr. Raskin. Mr. Chair, just to be clear, any Member who307arrives from the Committee will be waived on.308    Mr. Issa. We waive on. The specifics of the Committee rules309are that they still have to be yielded time from a Member of310the Subcommittee.311    Mr. Raskin. Got you.312    Mr. Issa. I always say that so that everyone understands in313advance. Also, that pursuant to the rules of the Full314Committee, we won't waive on people who are not members of the315Judiciary Committee.316    Mr. Raskin. Thank you, Mr. Chair.317    Mr. Issa. Thank you. We welcome the Ranking Member of the318Full Committee here, too.319    Normally, I make relatively short opening statements, but320this is a particularly important hearing. It is important321because there has never been a time in our history in which322getting it right, not just on patents as we have known them,323but patents are as they are emerging. I want to thank the Under324Secretary for, among other things, clarifying in AI the pathway325to patentability. I certainly think that when we look at the326ambitious agenda set out by President Trump, he selected well327an Under Secretary to make sure that we can reach that.328    One of the first actions of Mr. Squires was, in fact, as329Director, to take steps to move the President's AI agenda and330to strongly support it. This meant going above and beyond and331with some changes to the Biden era's policy which came out late332in the administration. This thoughtful change, I believe, will333bear well for the foreseeable future. Like everything else in334AI, I will expect it will not be the last time that guidance335will have to come either from the Director or, if necessary,336from Congress. In fact, as we speak, we still live with the337memory of the Copyright Office saying that AI is not338copyrightable and the idea that AI-assisted production is not339copyrightable or patentable, of course, is now in our tail340lights, but it will not leave our memory.341    Additionally, under the Director's guidance, he set forth342these clear guidelines for innovation. This, I believe, will343accelerate the examination, but it comes with a price. As we344know, AI is a wonderful tool, but AI can, in fact, extend and345elongate patents, patents that might have had ten claims and a346few dependent claims, now might have thousands of claims. That347means that one of the things that the Director has asked for348that we have to take serious consideration on is how we deal349with long or particularly complex patents should there be a350multitiered, and this will be discussed today, should there be351a multitiered process for billing?352    As many on this Committee know, when the Congress on a353bipartisan basis, bicameral basis, made it two decisions. One354was that fee setting would be transferred substantially to the355Trademark Office, Patent and Trademark Office, but also that356fees collected would be embargoed, meaning they are not to be357spent anywhere else in any agency, including Commerce, in which358the Trademark and Patent Office are nestled. That means that359there is an obligation to raise enough funds to modernize the360Patent Office.361    Federal workers are stressed today in the Patent Office362because they currently do not have the tools to keep up with363the demand. In 18 human hours, 17-18 human hours, the question364is do we get it all right on a 1,000 claim, including dependent365claim patent applications, and the answer, of course, is no.366    One of the goals set out by the Director which I completely367agree with, and I believe everyone on the dais does, is that we368have to work hard to continue to sustain or improve patent369quality. I say sustain because as they become longer, if we do370not have the tools to allow patent examiners to do their job,371or if, in fact, we do not supplement technologies that may not372be available to the examiners, and I say that specifically373because historically, the examiners are skilled in the374technology they are evaluating.375    Many of the technologies are so short of people that, in376fact, to recruiting those people or to train them in emerging377technology, is virtually impossible. That means that not only378do we have to embrace AI in the patenting process, but we have379embraced AI in the Patent Office. This will cause the Patent380Office to spend vast amounts of money, whether it is done in381concert and collaboration with other AI companies or382substantially an in-house production. It will cost a great deal383to produce and maintain.384    However, when in the foreseeable future we are dealing with385more than a million patent applications a year, more than half386of which come from countries outside the U.S., the largest of387which is China, a country that does not respect the rules of388how we create and qualify inventors, we are going to need389sophisticated tools to spot whether, in fact, true invention is390being submitted to us.391    Implementing the President's Executive Orders is going to392be a daunting task. Fortunately, he has selected someone that393is highly qualified, someone that has the respect in the394Senate, particularly, of both Republicans and Democrats and I395believe today you are going to see that we are very pleased396with your selection. That does not mean, Mr. Squires, that we397are pleased with everything that is going on.398    Recently, you had to deal with a clear conflict of399interest, but also with a policy that was ambiguous as to where400a conflict lies. The particular case does not need to be401discussed here because it has risen to criminal activity and a402dismissal. Let's understand, patent examiners, with even a403small amount of stock, cannot and should not be evaluating a404patent that could benefit that company or that stock. That405level of conflict of interest now is zero under your406leadership, and I want to particularly commend you for that. If407somebody had asked me, as someone who has followed the Patent408Office for decades, if that was the policy I would have said409well, of course it is, only to discover that in my entire410career both in and out of government it was not. Again, I want411to commend you because that is the kind of hands on412decisionmaking that we need to have.413    Additionally, I want to make it clear the President has an414agenda. That agenda is not in conflict on either side of the415dais. That is that although sometimes when you say MAGA is416pejorative in this body, that making America and keeping417America great is the goal of every aspect of this body and of418the Patent and Trademark Office. Onshoring of manufacturing of419all sorts, mining, agriculture, conventional manufacturing, and420yes, intellectual property manufacturing, is not just the goal421of this administration, but it should be the goal of everyone422that wants America to have 250 years that, in fact, resemble423the first 250 years.424    Therefore, any policy that isn't helping and supporting the425ability for companies to make a decision, whether they be U.S.426companies or global companies located outside the U.S., to427make, use, and sell in the United States is adverse to the428President's policy and adverse to the best interests that we on429this side of the dais enjoy.430    That brings up a particular point, and it is one that I431think is important. Under the policies of Acting Director432Stewart and quite frankly, as far as I can tell, the continued433policies, I see a real threat to that. At the end of the Biden434Administration, there were approximately 280 slots for patent435examiners under PTAB. My understanding is that more than 80 of436those slots are now vacant. The systematic change from 80-90437percent of PTAB reexaminations being granted to just the438opposite, somewhere in the neighborhood of 80 percent being439rejected, including a policy in draft form that I will push440back on is not within the discretion and I repeat, not within441the discretion of the Patent and Trademark Office, is one that442determines that if a patent is beyond a certain number of443years, it simply will be automatically discretionarily444rejected.445    I was here and some others on the dais who will talk today,446we were here on a bipartisan, bicameral basis under former447Senator Leahy. We came to a compromise. That compromise was448worked out by parties far and wide, not to everyone's complete449satisfaction, but to overwhelming support. That meant that PTAB450did not completely displace ex parte reexamination, that it451still has a valid use. It also means that the so-called one and452done was never in place. To compromise between one and done453which was asked for by a number of companies, not the least of454which were the leaders in bio and pharma, we said that if you455get past the first reexamination, which was assumed, if it came456in with credible arguments, would go through reexamination,457that it would be discretionary thereafter.458    The law was unclear and I have to take some credit and459blame for that, that when you look back it doesn't actually say460that the first one will automatically be more favorably461considered, but the intention was clear and the spokespeople on462both sides of the capital and on both sides of the aisle were463speaking specifically that the bias would be toward yes on the464first one and then there would be a higher standard when either465the same company or another company came in with substantially466the same information based on substantially the same patent467accusation. I say that because, obviously, sometimes you have468diverse and different views. One of them, for example, is one469patent that has been asserted against Intel Corporation and470Gillette for razors. I have to believe that the arguments in471why that would be invalid, unsupported, or unin-fringed could,472in fact, be different between a microprocessor and a razor.473When I was shaving this morning, that was all I could think474about was what could possibly be different?475    The reality is we have to balance that and Director476Squires, you have the hardest job. You have to balance that477with a reasonable expectation that a patent is what it says it478is. The question is are patents, in fact, not of the quality we479would like them to be? I am going to opine for a moment that if480patents tomorrow became perfect and in no case was there any481ambiguity, it would still be up to 26 years before the last bad482patent could no longer be asserted against somebody for483damages. That is a long time.484    Director Squires, if you manage to serve that long, you485will clearly be the first. That means that we have to continue486dealing with the legacy of the past with periods of time in487which new technologies came in, they were not fully understood488or, in fact, on occasion, one examiner is loose. We will always489have to deal with the reality that somebody will get a patent490which means X and then assert it maybe against Intel and491Gillette as though it means XYZ and the like. This is not492something that often is done well in Article III courts.493    Article III courts, when I arrived here before the patent494pilot legislation and before modernization including PTAB, were495running as much as 40 percent reversal at the Fed Circuit. The496Fed Circuit was taking an amazing amount of cases because it497was almost a coin flip. We have been working to reduce that,498and I must tell you we are down to about 35 percent. It is not499an easy job because Article III judges, all 677 of them, almost500exclusively come from nontechnology background. They are501prosecutors. They are public defenders. They are civil lawyers,502but they are seldom patent attorneys or knowledgeable in503intellectual property. That is not their fault. On top of that,504for more than half of the Judges, they will be lucky to get one505patent case--let me rephrase that. They will be unlucky to get506one patent case. It will be their first and after that, they507will try to find another Judge to take their patent cases. That508means that the first Markman is their first Markman ever. It is509a technology they don't understand and a patent that says510things that have to be explained to them.511    That is not true with the PTAB. The 200--now 180, but once512nearly 280, patent examiners are technical specialists. They513will look at dozens of cases, both sequentially and in514parallel. They adjudicate these over a year, so by the time515they have been on the job for a couple of years, they have done51660 or 70 patents. They have brought them to a close, and they517seldom have any reason at all not to meet their deadlines. That518means they do a better job. The proof of that is that they run519about a 12 percent total reversal even in part, meaning if you520lose to the Patent and Trademark Office or you win, you can521pretty well take it to the bank and either move into Article522III or move into another place with that patent. That means523that we have to find a way to reinvigorate the Patent and524Trademark Office.525    As I go through my questions today, I will be asking526exactly that to the Director, how do we restore the ability for527people who have been accused of patent infringement to528rudimentary, particularly on the first time it has been529asserted, be able to get in front of an examiner?530    There are other problems in the law that I want to make531clear. We never believed that it would be 100 percent532discretionary. We believe that the Under Secretary would, in533fact, at the end of the day be reviewing the work of those534Judges and expected there to be a process if there was a535disagreement. Under Trump One, we discovered that, in fact, one536person could without any explanation simply overturn a decision537by an Article I judge. That still becomes a bit of a problem,538and I know we will hear from Director Squires about how he is539determining that and handling it. Additionally, we have540discovered that a full trial that is nearing its one year, it541is ready to go to decision, can in fact be pulled back and542undone.543    Director Squires, I have to tell you it is my belief and it544will be my legislative last act if I can that this either will545be undone or we will undo it. Once a process, a determination546is begun, even if you at the end of it all choose to not agree547with the decision to undo it, to in retrospect undo it is, in548fact, to have less than the fair process be appeared, and in549fact both parties have spent money in the process. It should be550allowed to go to decision. You can then evaluate the decision.551That is of particular concern, and it will be the one that I552spend most of my time on.553    Last, on the dais, there will be people who don't know the554meaning of trolls, and there will be people who don't know the555meaning of trolls. It is a difficult guess. There are556nonpracticing entities who are great inventors, who invent557things sometimes that have exactly one customer. That does not558invalidate the ability for them to take their invention and say559if you would like to use it, you will, in fact, have to work560out a royalty. At the same time, there are nonpracticing561entities who are simply in the financial gain business.562Unfortunately, third-party funding has made it very possible to563buy old patents, particularly those that have been around for564more than six years and assert them either for the first time565or for the first time against a particular defendant. That566means that any deadline, any time out that says a patent can no567longer be considered, cannot possibly be accurate, not because568fair warning shouldn't cause someone to use a process earlier,569even if not accused, I share with many that view. However, you570don't know you are going to be sued in many cases until571somebody redefines what that patent means.572    Again, in closing, I am going to back to, if you looked at573a patent, any one of you in this audience and thought that it574applied to Intel and Gillette, please raise your hand. If not,575then in fact, that makes my case that you cannot know that your576patent is going to be asserted against you in a particular way577until it is. Without, at least, a constructive notice, a letter578from the inventor or the like, you really are not on notice.579That is why we have laches, but it is also why 6, 8, 10, or580even in the 20th year we may need to use the ability to581properly find out if, as asserted, the patent is valid and582enforceable against that defendant.583    I have taken a lot of time. I have done so for a reason for584the first and only time probably in my career. Nothing is more585important to making a decision to onshore that knowing that in586fact you are going to get a fair opportunity to defend yourself587against patent and other legal accusations. I make the case in588purely monetary terms. If 20 percent of the world's market buys589here in the United States and you are currently making a590product offshore, you have a 20 percent exposure in the U.S. if591you lose a patent case. If, on the other hand, you make, use,592and sell in the United States, even if only 20 percent ends up593in the United States, you have a 100 percent exposure. Under594the law, making in America gives you worldwide exposure in595America. Who in the world would risk 80 percent of their market596if they could make the product in a country they trust or597multiple countries where they trust they would not be shut598down?599    Unfortunately, that is the world we live in. We have to600make it safe or at least predictable that if you are Intel, if601you are Nvidia, if you are any of the companies, Taiwan602Semiconductor, and you onshore here, you are not putting at603risk your worldwide sales against a nefarious and quite frankly604lengthy accusation that may or may not be valid. It doesn't605mean that you don't have an obligation to quickly dispense with606those that are valid, but it does mean that we have to maintain607a system that typically in a year gets it, more or less, 90608plus percent right. With that, I recognize the Ranking Member609of the Subcommittee for his opening statement.610    Mr. Johnson. Well, thank you, Chair Issa, and Director611Squires, thank you for being here today. We customarily don't612take intermissions between opening statements, but I would be613remiss not to offer you the opportunity for at least a bathroom614break. Are you OK? All right. Thank you.615    Directors of the U.S. Patent and Trademark Office appear616before this Subcommittee every two years or so and I have had617the honor of being present for many of those hearings. You are618the sixth Director I have had the opportunity to talk with in a619forum like this. Hearings like today, give us the opportunity620not just to provide meaningful oversight, but also inform the621legislative process so Members of Congress can make the best622decisions when considering legislation.623    In the many USPTO Director hearings I have had an624opportunity to experience, I have witnessed occasional policy625missteps from USPTO Directors, and we have discussed626administrative failures, ranging from modernization growing627pains to too long examination time. We certainly have had our628differences, but never have I had reason to doubt that the629Director was acting independently from the President until630today. There was a time when the USPTO was removed from the631politics of today. Now, it has been drawn squarely into it.632    I am going to take this opportunity to go over a few of the633concerns I have heard over the past year. Keep in mind this is634not in any way an exhaustive list. Under the Trump635Administration, the Patent Office's workplace morale has636plummeted, likely because of the administration's layoffs which637were bizarrely characterized as an attempt to save money, even638though the USPTO is self-funded.639    You have also stood by as USPTO employees collective640bargaining rights were undermined by President Trump,641destabilizing your already fragile workforce. Under your642leadership, the USPTO has publicly explored implementing a643patent tax that by all accounts would have a devastating effect644on innovation in the United States. These are just some of the645few examples of the partisanship inserted into an agency that646prides itself on stability. When politics begin to shape a647traditionally nonpartisan agency, the result is predictable.648You are at the helm of an institution that has lost touch with649its mission. This lost mission is most obvious in the USPTO's650cancellation of its planned Southeast Regional Outreach Office651in Atlanta, Georgia. The USPTO chose Atlanta after a long652process as prescribed under the law.653    Instead of going forward, the Trump Administration canceled654this outreach to the Silicon Valley of the South and instead,655opened it within USPTO headquarters in Alexandria, Virginia.656American innovation can thrive only when opportunity to657participate is accessible to all. By placing the Southeast658Office at USPTO headquarters, your agency has limited its reach659and concentrated opportunity among those already best660positioned to access it.661    I encourage you, Director, to reconsider this move because662while it may not violate the letter of the law, it most663certainly violates the spirit of it.664    As you can see, I strongly disagree with the Trump665Administration. I also believe you want to do right by those666who rely on the patent system. Your notice of proposed667rulemaking to reform the Patent Trial and Appeals Board668reflects ideas this Subcommittee examined when I was669Subcommittee Chair, and has similarities to those proposed in670my colleague, Congresswoman Ross' PREVAIL Act legislation.671    While these administrative changes are certainly worth672discussing, agency action is not the same as legislation. When673the Director changes, so can agency rules. Patents exist to674ensure that research and development rests on firm, predictable675ground. This kind of inconsistency between Presidential676administrations undermines the stability that is essential to a677functioning patent system. Ultimately, these are questions for678Congress to decide, not the agency. They are questions I look679forward to addressing if I became Chair of this Subcommittee in680the next Congress.681    A healthy USPTO requires clear rules, consistent leadership682free from political influence, and a steadfast commitment to683protecting those who take the risk to create. It is incumbent684on us to get these questions right because inventors and job685creators are not asking for favors. They are asking for a686predictable and stable system they can rely on. When policy687shifts with the political whims of an administration, it is688American innovation that pays the price.689    I yield back the balance of my time.690    Mr. Issa. I thank the gentleman for his brevity, and as I691go to the Chair of the Full Committee, I might note that692apparently Mr. Johnson is considering a party change, so I hope693you will favorably consider him to replace me in the next694Congress, and I recognize the Full Committee Chair.695    Chair Jordan. No one can replace you, Mr. Issa, that is for696sure. I just want to thank the Chair for this hearing and I697want to thank the Secretary and the Director, those titles, for698being with us today and answering the Committee's questions.699The record will show after the comments of the Ranking Member700that the Chair's comments were the most brief--I haven't heard701from Mr. Raskin, but I will bet it will be a little longer than702my opening statement. With that, I would yield back.703    Mr. Issa. I thank the gentleman. We now go to the Ranking704Member of the Full Committee.705    Mr. Raskin. Thank you, Mr. Chair, and I will be somewhere706in between the Chair of the Full Committee and the707distinguished Chair of the Subcommittee.708    Thank you, Director Squires, for joining us today. As head709of the PTO, your job is to promote stability in the market for710goods and services by protecting trademarks that are used in711interstate commerce. In pursuant of the mission, the USPTO has712for decades been removed from political intrigue, favoritism,713and controversy by keeping politics out. Prior Presidents and714USPTO Directors ensure that applicants had a fair and honest715system to rely on.716    It seemed to change last year. You and President Trump717injected partisan politics into the work of the PTO from718working to strip trademark examiners of any right to collective719bargaining, a right that they had enjoyed for many decades, and720firing the Members of the Patent and Trademark oversight bodies721to refusing to respond to congressional requests for722information. Your tenure seems to be threatening the723traditional integrity and nonpolitical nature of our system.724    You recently took an extraordinary and unprecedented725action. Earlier this year, the USPTO itself filed trademark726applications on behalf of Donald Trump's ill-defined, private,727multibillion global project called the Board of Peace.728President Trump has declared himself Chair for life of this729illusive entity. He has promised billions of dollars from the730taxpayers to the board, although Congress has not voted a731single dollar for it. He has secured billions of dollars from732mostly corrupt foreign governments including Saudi Arabia,733Kazakhstan, Azerbaijan, the United Arab Emirates, Morocco,734Bahrain, Qatar, Uzbekistan, and Kuwait.735    Beyond that, there is not much we know about this shadowy736venture. We don't know its basic corporate structure. We don't737know whether it is registered anywhere in the United States or738in any other country. We don't know who controls the billions739of dollars in its bank accounts. We don't know what countries740those bank accounts are located in. We don't know who will741conduct audits and oversight of the board, if anyone. We don't742know what the President intends to do with this massive,743secret, unaccountable slush fund while he is in office and744after he leaves.745    When the Board of Peace decided it wanted to secure a746trademark for its name and for its logo, a move that should747have required it to identify the legal entity that actually748runs it and controls its billions of dollars, you stepped in.749You personally filed the trademark applications allowing you750USPTO to stand in as a straw trademark holder to cover up for751this slush fund that appears to put both billions of U.S.752taxpayer funds and billions in payments from foreign753governments into the pocket of the Chair for Life Donald Trump754who will control it. The President set up a board that likely755violates both the foreign and the domestic emoluments clauses,756and now you are helping to run the operation as far as we can757tell.758    What is more, I am not sure either you or the Trump759Administration realize what you are confessing by filing a760trademark application. You are admitting that the Board of761Peace is not a legitimate governmental body, but rather a762commercial enterprise set up by President Trump. Our trademark763law began in 1879 when the Supreme Court struck down a764trademark law that applied to any and all organizational765designations. The Court ruled that Congress could do so only766under the Commerce clause. When Congress passed the Trademark767Act of 1881, it was written to apply only to marks used in768interstate commerce. The modern version of the Lanham Act in7691946 makes clear it only protects trademarks used in interstate770commerce. Section 1052(b) specifically forbids the registration771of any insignia of the United States or any State or772municipality or any foreign Nation or any other governmental773body.774    By filing for a trademark, you are admitting that the Board775of Peace is not really a governmental entity at all. It is a776purveyor of influence operating for profit with apparently a777billion-dollar admission fee, at least that is what has been778reported in the press. A money-laundering scheme to pocket the779billions all made in a global shakedown in the name of peace.780    Now, as far as I can tell, the USPTO has just nine781trademarks. Four are various logos for your office, some of782which read USPTO, others have the full name of the agency783written out, IS Patent and Trade Office. Three more are for the784phrases Go for Real, and You're Smart Buy Smart, phrases that785were part of a public awareness campaign that the USPTO itself786ran with the National Crime Prevention Council. The other two787are now for the mysterious Board of Peace which has no788organizational relationship, I believe, whatsoever to the789USPTO. By agreeing to act as President Trump's Phone a Friend790and using the PTO to register a trademark on behalf of a third791party, it would seem you are violating a cardinal principle of792the Lanham Act which explicitly lays out in Subsection B that793only ``a person who has a bona fide intention under794circumstances showing the good faith of such person to use a795trademark in commerce who may request registration of the796trademark.'' That is quite a problem for the agency whose role797it is to administer and police the registration of trademarks798and to administer disputes about them.799    One can only imagine this decision will be challenged.800There will be litigation over the mark that you have now801claimed as your own for the PTO before your agency which is802charged with being the neutral adjudicator of disputes about803trademarks. The only reason anyone ever registered a trademark804is to prevent competing uses. Why would the Trump805Administration tell you to file for this registration except to806suppress anyone else's trademark related to the word peace? The807field is crowded with existing registrations by other808educational purveyors of global peace. To give a few examples I809found online this morning: World Peace Table, World Peace810Network, Project Peace, Peace Vision Global, Global Peace811Initiative, Global Peace Foundation, International Peace812Center, Peace Network, Peace Action, the Peace Trust, and813Greenpeace. Any one of these organizations would have a strong814case to sue for cancellation of Trump's Board of Peace815trademark on the grounds that it dilutes and infringes their816own preexisting trademarks for peace facilitation services.817Also, of course, that this mark is not registerable at all818since it purports to identify a governmental entity and not an819organization in interstate commerce.820    Now, only would you have to decide whether Trump has a821defense to prior users' opposition to his marks, you would have822to rule on any offensive use of trademark law by Trump against823any of the other groups. Let's say he moves to attack824Greenpeace for infringement of his commercial trademark or825opposes registration of any new organization that uses peace in826its name. Who would adjudicate this? You would, your office.827You are both the owner and you are the judge of any rights that828you have as an owner against anyone who wants to identify their829organization with the word peace. This is not just a830disreputable use of the trademark registration process; it is831the first step in giving Donald Trump and his subordinates a832monopoly on use of the word peace to make the very notion of833peace unthinkable that departs from control of the new big834brother who now owns it. If President Trump can't win the Nobel835Peace Prize he craves because he plunged us into an aggressive836toward the Middle East, now he will just own the word peace837instead.838    I wrote to you last week, Director Squires, asking about839this illusive entity and unprecedented baffling situation. If840there is a reasonable explanation for the USPTO's conduct here,841we would like to hear it today because if you simply filed on842behalf of the Board of Peace as a favor to the President, then843that is a serious problem. A decision like that doesn't just844drag the USPTO into covering up for a slush fund that may845violate both the foreign and domestic emoluments clauses, it is846bad for the integrity of our trademark laws.847    When people lose faith in the fairness and objectivity of848our system, it begins to fall apart. I am not just troubled849that you may be violating the basic trademark rules. I am850troubled that in violating the rules to help Donald Trump, you851may be acting as a political operative in a way that will852destroy our neutral system for regulating source identifying853trademark rights.854    The trademark system is designed to protect everyone. If855applicants think that the rules change for the wealthy and the856politically well-connected, they are much less likely to857believe the system can work for them. I look forward today to858finding out how you justify your agency registering a859commercial mark for this alleged governmental entity, if that860is what it is, how you intend to resolve disputes with the861dozens of past and future registrants of peace organizations862and what you intend to do to restore the professional863nonpartisan reputation of the USPTO.864    Thank you, Mr. Chair, I yield back.865    Mr. Issa. I thank the gentleman. Without objection all866other opening statements will be included in the record. Before867I introduce the Director, I would ask unanimous consent that we868place into the record the Wiki delineation of the Voice of869America which is a U.S. Government owned international870broadcast with trademarks including Voice of America, VOA, VOA871News, et cetera, which is owned by the U.S. Government and was872trademarked in 2007. Without objection, so ordered.873    We now introduce the Hon. Director of the Patent and874Trademark Office, the Under Secretary of Commerce for875Intellectual Property and the Director of the Patent and876Trademark Office. Prior to joining USPTO, Director Squires was877a partner and Chair of IP at emerging companies' practice,878particularly Dilworth Paxson LLP which is a longer name than879when they had three names instead of two. We welcome our880witness here and thank him for appearing.881    Pursuant to the rules, I would ask you to stand and take882the oath.883    Do you solemnly swear or affirm under penalty of perjury884the testimony you are about to give will be true and correct to885the best of your knowledge, information, and belief so help you886God?887    Thank you. Let the record reflect the witness answered in888the affirmative.889    Director, our normal rule is five minutes. Considering the890Ranking Member and myself, I will be lenient if you go over,891very lenient. Since you are the only witness, we came here to892hear what you have to say. However, your entire opening893statement, if you don't use it all, will, in fact, be placed in894the record along with any other supplemental information you895choose. You are now recognized.896897               STATEMENT THE HON. JOHN A. SQUIRES898899    Mr. Squires. Thank you, Mr. Chair. Chair Issa, Ranking900Member Johnson, Chair Jordan, Ranking Member Raskin, and the901Members of the Subcommittee, good morning. Thank you for this902opportunity to discuss the USPTO's operations and initiatives.903    I thank President Trump for his confidence in me to lead904America's innovation agency, and for his steadfast commitment905to intellectual property, reaffirmed yet again with his906national AI policy framework released on Friday.907    It is also the honor of a lifetime to serve Secretary908Lutnick, a phenomenal leader with boundless energy and909unparalleled experience, himself an inventor on nearly 500910patents.911    I am honored today to provide the Subcommittee an overview912of the USPTO's recent activities and accomplishments. America's913innovation agency has two founders. For patents we have914America's Invention Agency, and for trademarks we have915America's Branding Agency. Together we function as the916Department of Commerce's central bank of innovation.917    Every unit of intellectual property we put into circulation918is a potential job, a new business, a competitive advantage, an919investible asset, a lifesaving drug, all flowing into the real920economy, into the real world. In its scale, American ingenuity921means national prowess and global reach.922    I can't thank USPTO's highly educated and talented923workforce enough for their dedication and commitment. I say to924everyone they are the best in the world at what they do925because, quite simply, they are. None of this would be possible926without the fee setting authority so thoughtfully provided by927Congress, allowing us to operate like a business, maintain928long-term financial stability, and achieve our statutory929mission.930    We also greatly appreciate the continued authority to spend931anticipated fee collections which lies at the heart of our U.S.932global leadership. We look forward to working together to933maintain both it and our global lead. Indeed, we lead today934because our Founders did the extraordinary two centuries ago,935enshrining IP protection into our Constitution and, with it,936the American experiment itself, the American experience itself.937    Last month, I told the head of the UKIPO how our938constitutional charge allows us to lean into AI, to quantum, to939medical diag-940nostics, wherever the onrush of technology is going. His candid941reply: I know. Wish I had that.942    Think about that. The very empire we won our independence943from, two democracies, two outcomes, but only one clearly atop944the IP world today. That is why it is incumbent on the USPTO to945have an America First IP agenda, build atop a unique legacy our946Founders bestowed on us. We are doing exactly that with the947urgency of now.948    As I am before you today, our first priority was slashing949the unacceptable backlog by 50,000; another 100,000 to come950this year. By the end of my tenure, and with your continued fee951setting authority, choking backlogs will be a thing of the952past, and improved quality a confidence indicator.953    I am confident because we just announced our first agentic954AI trademark classification tool. Five months of manual955searching is now a five-second outcome. In patents, our AI956search system delivers a top ten list of prior art before the957first office action, providing quicker pathways to allowance.958Across both, AI fraud protections helped us purge 70,000-plus959baseless filings in just under a year. You see, AI tools will960become our, our examiners' superpowers, supplying them with a961cadre of agents to deploy as they see fit.962    On policy, Congress affords us discretion. Our North Star963to its exercise is always both the letter and the spirit of the964AIA, balancing, as instructed, economic impact, resource965efficiency, and the integrity of our IP system. We are966restoring balance and fairness on both the front ends with967eligibility determinations, and the back end as to trials and968error corrections with new feedback loops in between.969    Mr. Chair, I am humbled and proud to lead this unique and970vibrant agency. We are back on our front foot and delivering971the brilliance tomorrow's American ingenuity affords, tinker by972tinker, breakthrough by breakthrough, dream by dream.973    Just as a Central Bank stabilizes the flow of capital into974the real economy, the USPTO stabilizes the flow of innovation975into the knowledge economy. With Born Strong protection, new976ideas can blossom in a marvelous virtuous cycle that has977delivered prosperity and bettered people's lives for over 250978years like no Nation before, like no Nation ever.979    Thank you again, and I look forward to your questions.980    [The prepared statement of the Hon. Squires follows:]981    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]982983    Mr. Issa. Briefly, so very brief. Thank you.984    We now recognize the gentleman from Kentucky Mr. Massie for985five minutes.986    Mr. Massie. Well, the last Member of the Administration987that I was very nice to was Kristi Noem. She was removed 48988hours later.989    At that risk, I want to thank you for the great job that990you do. I would like your analogy of intellectual property to991currency. Let's don't compare the Central Bank to the Patent992Office because some of the Founders, all of the Founders were993unanimous in understanding that the patents and copyrights were994the foundation that would allow our country to grow. I995appreciate you doing that.996    It is an appropriate analogy because of intellectual997property to currency because we have had a crisis in our998currency over the last decade, I believe, of intellectual999property. If your currency is called into doubt, if the Federal1000Reserve Notes in your wallet when you present them, even though1001they were issued by the government, if they are called into1002question when you try to use that currency, you have a problem.1003    That is the way it has been with patents. The PTAB1004ostensibly was created to make it easier to adjudicate validity1005on the back end of a patent issuance and enforcement. The1006problem is it has created too much uncertainty. I very much1007appreciate the steady hand that you put on the tiller.1008    I would disagree with my Democrat colleague who said that1009policy shouldn't change when administrations change. I would1010argue that elections should matter. Laws should not change. The1011patents that have issued should not change, they should still1012be valid. We need somebody in charge. We need somebody to1013exercise commonsense in the application of the laws that we1014have passed.1015    It seems to me that you are doing a very good job of that.1016Could you tell us about the rule that you are proposing and the1017actions that you have taken in terms of exercising discretion1018on the IPRs?1019    Mr. Squires. Thank you, Congressman. I am happy to speak to1020the notice of a proposed rulemaking we have put forward.1021Basically, it is intended to restore fairness and balance to1022the IPR process.1023    There have been instances where there have been as many as1024seven serial filings. It is intended to be able to have the1025matter adjudicated once and for all early. It has been termed,1026I will say, as one and done.1027    That is a misnomer. There are liberal joinder provisions1028that are carried through into the rule. I would say it is one1029join and done. The facility is provided for if there is a1030petition filed after there has been an adjudication that--1031excuse me, petitions filed, people can join. The answer isn't1032serial filings. We think the answer should be gang tackling. At1033the time it wasn't to be had.1034    The preference would be to have a PGR-like process where1035things are laid open. That is not always possible. As has been1036discussed, things sneak through. There should be a point in1037time where there is quiet title, there is finality, and people1038can have that chance and do it together, but it has got to be1039adjudicated once and for all.1040    Mr. Massie. I agree. Once you have the imprimatur of the1041government and you have survived a challenge that is important.1042Because what I have noticed in the last 10 years, a lot of1043people are shying away from companies that would have been1044based on intellectual property. I have people, inventors, say I1045am not even going to file the patent, I am just going to try to1046rely on trade secrets. That creates a world of haves and have1047nots when everybody can just keep all their stuff secret and1048that is incentivized because of a patent system that is not1049working.1050    The PTAB, I do think it was probably, at least from the1051people who voted on it, originally intended to expedite this1052adjudication. It has created uncertainty that has hurt our1053country, hurt our inventors. I am glad to see that you are1054exercising some commonsense in the application of it.1055    Any law can be weaponized. We saw that the PTAB law has1056been weaponized. I appreciate you taking it back and using it1057for commonsense.1058    I will give you my last 15 seconds.1059    Mr. Squires. Thank you very much, sir. Also, to be1060reminded, there--IPRs are but one avenue. There is always1061reexamination. There are post-grant reviews of the District1062Court.1063    What we had found was, particularly with respect to IPRs,1064that it was intended to be an alternative to litigation, yet 801065percent of the filers already had a District Court action with1066also doing an IPR.1067    Mr. Massie. Thank you for taking out much of the redundancy1068that existed. Because it doesn't get cheaper when people keep1069getting subjected to continuous IPRs or to survive the IPR and1070then go to court.1071    I will yield to Mr. Issa.1072    Mr. Issa. Thank you. Just to clarify, that 80 percent1073includes a dramatic amount who have been sued and then come to1074the Patent Office, because that is the first notice of1075infringement is when they are sued. The chicken or egg often1076starts with a lawsuit and you go to the PTAB to shortcut the1077time it takes to show invalidity. Correct?1078    Mr. Squires. Yes, sir. There is a one-year window if you1079have been sued in District Court from which to avail yourself1080of the point.1081    Mr. Issa. Thank you. I now recognize the Ranking Member of1082the Subcommittee for five minutes.1083    Mr. Johnson. Thank you, Mr. Chair. Director Squires, I hope1084that you will agree with me when I say that the greatest asset1085of the USPTO are its employees. Employees at USPTO have1086described the environment as ``rife with rumors, paranoia, and1087disillusionment.''1088    Just last week in a governmentwide survey, only 13.81089percent of PTO employees reported that they were satisfied with1090their job. What factors have contributed to such1091dissatisfaction by your employees? What specific actions have1092you taken to address this collapse in employee morale?1093    My office received a call just the other day echoing these1094and other troubling allegations. What mechanisms are in place1095to ensure employees can report issues without fear of1096retaliation?1097    Mr. Squires. Thank you, Congressman. We have robust1098facilities for reporting violations through our EEOC1099department. They are fantastic as to examiners.1100    I do agree with you, they are the crown jewel of the USPTO.1101They are the best in the world at what they do. We are trying1102to make even better equipped to deal with the what has become a1103crushing backlog of work that they have so dedicatedly and1104assiduously have chipped down on.1105    We have increased awards, financial awards for examiners.1106We are working on the personnel. I have myself--1107    Mr. Johnson. What factors have contributed to the1108dissatisfaction that is evidenced by the survey?1109    Mr. Squires. I am equally interested in making sure morale1110improves and have offered engagement. My, I think the biggest1111factor has been the backlog getting out of control. It rose to1112a historic high of 837,932 applications unexamined. This is1113just unacceptable, as the Secretary had said.1114    Mr. Johnson. It is not the volume in and of itself, but it1115must be something that the agency has done to address that this1116has caused the lack of morale, or morale to plummet.1117    What are those factors?1118    Mr. Squires. The specific factors, we just concluded an1119employee survey last week and we will be working on those and1120examining them.1121    I, myself, hold, host a, I am using I did them weekly, now1122monthly, for people to tell us what they think. That has been1123my mantra coming in. There's forums for people to tell us where1124there are problems.1125    One of the issues that has been unhappy that caused some1126unhappiness has been not deploying people on the frontlines,1127the primary examiners and having oversight and training and not1128having signature authority at that point in time.1129    We have found that this is the first interaction that the1130applicants have had with the office. Supervisory has been very1131important. It is consistent with other international offices.1132There has been some adjustment to that. There is some initial1133unhappiness with that, but we have been at that now for over1134six months and I think morale is getting better.1135    Mr. Johnson. OK. I am going to move on. After the success1136of the four regional offices created in the America Invents Act1137of 2011, Republicans and Democrats worked together to pass the1138Unleash-1139ing American Innovation Act in 2022 to establish a Southeast1140regional outreach office, among others.1141    Atlanta, Georgia was chosen as the Southeast location after1142a lengthy process. Last year the Trump Administration reversed1143course, announcing that the Southeast office would instead be1144at USPTO's headquarters. This change was announced with no1145explanation, and no search process was conducted, as required1146by law.1147    Director Squires, regional offices were created to expand1148access and reach a more diverse set of stakeholders on a more1149local scale. How does placing the Southeast regional outreach1150office at headquarters advance that mission? Isn't it true that1151placing a regional outreach office in the literal headquarters1152of the PTO undermines the very purpose Congress had in creating1153it?1154    Mr. Squires. Congressman, that decision, of course, was1155made and effectuated before I took office. I took office in1156September. However, my ongoing responsibilities are, as you1157have indicated, access, making sure there is access. Now, we1158have little compliance with the regional office footprint in1159having four. We recently had five and the Denver office was1160closed down, resulting in savings of over 3.8 million per year.1161    Savings are not the issue, access is. In favor of that we1162have launched a Community Engagement Office model. We have just1163released a Request for Comment to the Southeast region,1164including Georgia, including all the States that were part of1165that defined region.1166    We have had great success with the Mountain West region in1167this, to the tune where we are able to increase access, engage1168with universities, widen our footprint, and be able to do it at1169little or no cost to the office.1170    We are moving to a model of the future. We are hopeful I--1171    Mr. Johnson. You are doing it based on executive authority,1172undermining legislative authority. That is a trend in your1173agency that is upsetting. With that, I will yield back.1174    Mr. Issa. I thank the gentleman. I am going to just join1175the queue on one thing.1176    Director Squires, would you agree to have a separate1177lengthy briefing for the Ranking Member and myself on that1178plan, how it is to work, and how it can accomplish what was1179legislatively in place?1180    I, for one, would not want to see San Jose closed for1181savings purposes, no matter how it might be without1182congressional approval. Would you agree with that?1183    Mr. Squires. We would be happy to work with the Chair and1184the Ranking Member.1185    Mr. Issa. Then we will make that arrangement. We now go to1186the gentleman from Wisconsin for five minutes.1187    Mr. Fitzgerald. Thank you, Chair. Director Squires, thanks1188for being here today. Last Congress I introduced legislation to1189limit the enforceability of patents by entities on certain1190national security-related sanctions lists. This is because I1191believe, I think many Members believe, State-sponsored entities1192like Huawei can and do use protected patent litigation to slow1193or stop critical technologies from being developed in the U.S.1194    Do you see that as the present or future national security1195threat? Where do you stand on limiting enforceability of1196patents in those types of cases?1197    Mr. Squires. As to limiting enforceability, one thing I1198would point to is we recently--a couple things in the PTAB. We1199restored the real party-in-interest requirements. With that, we1200just issued a decision called Tianma last week which includes1201under the AIA, as with American Government entities and1202agencies are not persons and cannot be in the PTAB, neither may1203foreign sovereigns or State actors.1204    If a real party-in-interest is identified they are not1205allowed to be in the PTAB and they can't bring challenges.1206    To protect, with that, in the discretion of instituting1207IPRs we have also just released guidance that look to whether1208it is a small business in the U.S. or American manufacturing,1209manufacturing that is occurring in the U.S., as part of whether1210a challenge should be instituted, so to protect American1211manufacturing and have them choose here.1212    Both sides of the equation we are trying to take into1213account what the real world is. The process for filing a1214petition we say tell us your story, and so we can take these1215into account.1216    Mr. Fitzgerald. Another area where I know many Members have1217concern about foreign exploitation. It is all about the patent1218prosecution highway, right, as it is referred to.1219    Under this program the USPTO will expediate review of1220certain patent applications that have received a favorable exam1221in a foreign patent office. We know that China participates in1222the program and, therefore, an entity like Huawei could receive1223expediated examinations of its patent, so long as it first gets1224a favorable exam in China, which is effectively a rubber stamp;1225right?1226    Should we not allow, or shouldn't we be concerned, I guess,1227about the way that is playing out?1228    Mr. Squires. Thank you for the question, Congressman.1229    That is of great concern. It is a bilateral concern. In1230general, when cases come in through the patent prosecution1231highway they have already been examined, but there always is1232the risk of rubber stamping. We do an independent analysis. If1233it doesn't pass the smell test, then we kick it and it goes1234back in line and the prosecution is lost.1235    On the other side, we found for U.S. companies the PTH has1236helped them in other countries. We are trying to always1237maintain that balance where American companies going into other1238offices are receiving a favorable treatment. They have behind1239them the examination that has occurred and, hopefully, Born1240Strong in the U.S.1241    Mr. Fitzgerald. Right.1242    Mr. Squires. We are always on the watch for incoming low-1243quality patents.1244    Mr. Fitzgerald. Very good. Let me quickly turn to kind of1245another area. According to American Intellectual Property Law1246Association the average cost of patent litigation in a District1247Court is $5 million, whereas the cost for adjudicating patent1248disputes before the Patent Trial and Appeal Board on average is1249about 10 times less, or around a half a million dollars.1250    Critics of the proposed changes to the PTAB process have1251said the result will be more patent cases being litigated by1252the courts. Assuming that could be true, did the USPTO take1253into consideration increased litigation costs when conducting1254an economic analysis of your IPR rule?1255    If you didn't, then how did you handle that, and why didn't1256you maybe look at that?1257    Mr. Squires. Thank you for the question. Yes, we have. We1258are taking, we are still in the process of finalizing the rule.1259We have received over 11,800 comments, which we are very1260excited about because people care. About 2,800 were unique1261clearing out all the me too ones or, clearing out the ones that1262are we don't like the Patent Office. Substantively there are1263about 2,800.1264    By under the AIA we are required to consider economic1265efficiency, resource allocation to the office and effects of1266that sort. By all means we are looking at what the costs are in1267the rule. I am optimistic the rule will be finalized. I believe1268people will be very happy with the outcome.1269    Mr. Fitzgerald. What around judge's caseload, did you take1270a look at that as well?1271    Mr. Squires. Yes, we are looking at all that in the rule.1272Judge's caseload, but it is also not just District Court forum,1273what is the effect on reexamination, and what is the effect on1274PGR, and what is the effect also on ITC cases.1275    Mr. Fitzgerald. Thank you. I yield back.1276    Mr. Issa. I thank the gentleman. My understanding is it was1277about nine to one opposing the rule in that 2,800: 2,500 to1278about 300. Sound about right?1279    Mr. Squires. Again, we are still working through it. I have1280seen those numbers. I have seen 97 to three. I have seen 80:20.1281Our role under the rulemaking process is we go through and1282respond substantively to comments. Comments have been very1283helpful.1284    Again, I am of the firm belief that we are going to see a1285rule that will be workable.1286    Mr. Issa. OK. Hopefully, the Ranking Member of the Full1287Committee has read all 2,800 and can opine on what he saw as1288the ratio. I recognize the gentleman from Maryland.1289    Mr. Raskin. Mr. Chair, thank you. Director Squires, how did1290you come to file those trademark applications for the Board of1291Peace?1292    Mr. Squires. Thank you for the question, Congressman.1293    We came to file, I had them filed in response to an1294immediate cybersquatting land grab of the domain name. For1295those who are unaware of the term cybersquatting, it is like1296identity theft.1297    Mr. Raskin. Sure. Were you acting as a lawyer for the Board1298of Peace at that point?1299    Mr. Squires. No.1300    Mr. Raskin. In what capacity were you acting?1301    Mr. Squires. Well, the Board of Peace, this is exactly the1302issue. I am glad to have the opportunity to explain it and1303respond to your letter.1304    Mr. Raskin. Please.1305    Mr. Squires. The Board of Peace has not yet been formed as1306an international organization. The cybersquatters eight minutes1307into the President's speech announcing it registered the domain1308name. That is--1309    Mr. Raskin. Is it a public entity, the Board of Peace, or1310is it a private entity?1311    Mr. Squires. At this point I am not sure if it is formed or1312not. We acted as a custodian, so that they could have the1313mark--1314    Mr. Raskin. How did you come to act as a custodian for that1315trademark?1316    Mr. Squires. Under 35 U.S.C. 3 it is my responsibility to1317advise the President through the Secretary of Commerce on1318matters of national security and all matters of intellectual1319property. That is the--1320    Mr. Raskin. The Board of Peace is a public entity, it is a1321governmental organization even though Congress has not created1322it? Is that right?1323    Mr. Squires. Sir, I don't know the status of whether it is1324an entity formed or not.1325    Mr. Raskin. OK. Well, how did you get involved in it? Did1326the President call you about the cybersquatting incident?1327    Mr. Squires. No, the President did not call me. It came up1328through several organizations about the cybersquatting. The1329action needed to be taken to address the harm.1330    Mr. Raskin. When you talked about the cybersquatting you1331noted that there were lots of other organizations that were1332already using some variation of Peace Organization, Peace1333Committee, World Peace, and so on; right?1334    A dozens of them. I found them this morning just on the way1335in.1336    Mr. Squires. Well, again, reference was made to shakedown.1337This was registered, this particular boardofpeace.org. Without1338that you don't have--1339    Mr. Raskin. You registered that?1340    Mr. Squires. No, no.1341    Mr. Raskin. Oh, who registered?1342    Mr. Squires. A cybersquatter did. Eight minutes into the1343President's speech.1344    Mr. Raskin. Oh, but you don't have to talk about a1345cybersquat-1346ter, there are dozens of other groups that have peace in their1347name; right?1348    Well, look, where did your legal authority come from to1349file trademark applications on behalf of this Board of Peace,1350whether it is a public or a private group?1351    Mr. Squires. It comes from the combination of 35 U.S.C. 31352and 35 U.S.C. 2 under the Lanham Act. In your opening1353statement--1354    Mr. Raskin. Well, wait. Do you usually act as a custodian1355for the intellectual property rights of other entities or is1356this just for President Trump?1357    Mr. Squires. This was to protect the name Board of Peace as1358the entity gets booted up, to act as custodian in a very narrow1359capacity with a bona fide intent to use the name. Then, its1360attempt to use application to be changed forward.1361    Mr. Raskin. Who has the bona fide intent to use it?1362    Mr. Squires. The USPTO.1363    Mr. Raskin. The USPTO is. What are you going to do with it?1364    Mr. Squires. In the very limited services that we define1365there, which are fraud prevention, misuse.1366    Mr. Raskin. Is that a service you offer to all American1367citizens? In other words, if I am thinking about maybe creating1368a group one day and we might want to have a trademark, and I am1369afraid somebody else has a competing trademark, you will go1370ahead and file the application for me?1371    Mr. Squires. My responsibilities are, again, under 351372U.S.C. 3 to advise the President on matters of national1373security.1374    Mr. Raskin. So, this is a matter of national security?1375    OK, let me ask you this. You have emphasized today, and1376rightfully so, the importance of people who are applying for1377patents or trademarks to pay a fee, because yours is a fee paid1378office. How much does it cost for someone to seek a trademark?1379When you applied for that trademark for the Board of Peace, how1380much does that cost?1381    Mr. Squires. It is, it is not an expensive fee. Depending1382on--1383    Mr. Raskin. The website says 350 bucks. Is that right?1384    Mr. Squires. Generally, yes.1385    Mr. Raskin. It was not expensive. OK. My one of the able1386lawyers on my staff just passed me this, that you filed a1387petition on January 21, 2026, to waive that fee for the Board1388of Peace. Then you granted that petition the very next day,1389which underscores the bizarre conflict of interest you are in,1390now acting both as a representative of the Board of Peace and1391also the Trademark Office that is going to pass on the1392petition.1393    Why did you seek a waiver for the $350 for the Board of1394Peace? Why did you grant it?1395    Mr. Squires. The waiver was sought under the particulars of1396the intent to use application as the custodial filer. I did not1397grant my own application.1398    Mr. Raskin. Well, your signature, as I am reading it you1399filed this on the 21st, and then you approved it on the 22nd.1400    Mr. Squires. Well, I would like to see the document to1401which you are referring.1402    Mr. Raskin. OK. We will get you those documents. Are you1403saying you would not have approved of it had you seen it?1404    Mr. Squires. I am saying I don't recall this particular1405situation.1406    Mr. Raskin. OK, but your signature--1407    Mr. Squires. I do believe it is in my authority. Yes.1408    Mr. Raskin. OK, it was approved by Dan Vavonese but your1409signature is on the petition. I guess--1410    Mr. Squires. Yes.1411    Mr. Raskin. --well, why did you request that waiver of the1412$350 payment for the Board of Peace?1413    Mr. Squires. Again, given that this is going to be an1414international organization and given the situation with intent1415to use and the bona fide limited scope that we had, I made that1416petition just as I signed the application. It was granted by1417someone else.1418    Mr. Raskin. OK. Then, finally, you know that the, the1419Lanham Act forbids anyone from submitting an application unless1420they are the owner of the mark or the legal representative of1421the mark. Were you representing yourself as the owner of the1422mark or the legal representative when you filed the petition?1423    Mr. Squires. No. We are very clear it is on a custodial1424basis. We are not the owners. It will be transferred to the1425entity once it is formed.1426    Mr. Raskin. OK. Well, you are listed as the owner on the1427petition both for the waiver and also the application.1428    That is the way the Lanham Act works. In other words, if I1429am asking for your advice could I get another company to apply1430for a trademark for me? What is the answer to that?1431    Mr. Squires. If you are the President of the United States,1432yes.1433    Mr. Raskin. The President of the United States could have1434somebody else--the President of the United States has tons of1435trademarks. You are saying that he doesn't have to submit1436himself? Where does it say in the Lanham Act that the President1437of the United States is exempt from the general rule that you1438cannot have a third party seeking an application on your1439behalf?1440    Mr. Squires. I am, again, directing you back to U.S.C. 35,144135 U.S.C. 3, where it is the Under Secretary of Commerce and1442Director of the Patent Office shall advise the President on1443national and certain international intellectual property1444policies.1445    Mr. Raskin. Those are matters of public policy, they are1446not questions of representing the President before the1447Trademark Office which, obviously, creates a stark conflict of1448interest.1449    Mr. Issa. The gentleman's time has expired, but you may1450answer.1451    Mr. Squires. Sir, I was not representing the President of1452the United States in this regard, I was representing a--filing1453an application to address a cybersquatting issue under my1454authority under 35 U.S.C.1455    Mr. Raskin. I appreciate it. Thank you. I yield back, Mr.1456Chair.1457    Mr. Issa. I thank the gentleman. Just one question for1458understanding. The gentleman from Maryland mentioned a number1459of other uses for peace and so on. Under both common law and1460any marks they have, those marks are previous, superior, and1461are not eclipsed by this new mark. Is that correct to your1462understanding?1463    Mr. Squires. That is my understanding. It was a very narrow1464filing for the logo and the, and the name. Again, it was an1465intent to use application. If nothing happens, it expires of1466its own weight. It just goes away.1467    Mr. Issa. One thing, because I am a little new to1468government, but you are, you are in the Article II, you are in1469the government that is headed by one person, the President;1470right? No matter how many pockets you have in your suit it is1471still one suit jacket; right?1472    The $350, if it had to be paid for by the government, can1473you tell me the difference between all these different places1474in the government that would transfer $350 to another pocket of1475the same suit? Because I am just, I am not quite understanding1476the gentleman's question.1477    Mr. Raskin. Mr. Chair, are you saying that it is a1478governmental body in that case?1479    Mr. Issa. Well, it appears as though the President of the1480United States made a statement that either it would be a1481Government entity or, like Voice of America and many of these1482other entities that are government-sponsored, it would be1483government-sponsored. There has been no assertion that this was1484a for-profit private entity or anything of the sort.1485    Mr. Raskin. The Voice of America doesn't get a billion1486dollars from the Saudi Government. That would make it an1487illegal, unconstitutional foreign emolument. This is just1488getting more confusing by the moment here.1489    Mr. Issa. I share with the Ranking Member questions of1490other moneys that are not necessarily associated today. I am,1491quite candidly, willing to participate in all the fact finding1492on anything related to money.1493    The gentleman came here with tremendous expertise. Your1494line of questioning was very good as to how at times the1495Trademark Office does in fact institute protection against1496cybersquatting. You were also very helpful in delineating the1497fact that there are these entities that aren't quite1498government, that are government, that have trademarks, one of1499which is the Voice of America and many other highly recognized1500U.S. entities which are solely funded by the Federal1501Government.1502    It has been productive. I will join with you to continue1503looking at questions of moneys from other governments, whether1504or not they are coming to the government or whether they are1505going to a third party because I think that is fair area. I1506just don't think it is within the gentleman's expertise.1507    Mr. Raskin. All right. Well, I would welcome a thorough1508ventilation of all these issues just so--1509    Mr. Issa. Like we don't go down a dark road here. Thank1510you.1511    Mr. Raskin. Thank you.1512    Mr. Issa. With that, we go to the gentleman from Virginia,1513Mr. Cline.1514    Mr. Cline. Thank you, Mr. Chair. Director Squires, third-1515party litigation funding allows outside investors, including1516foreign entities and sovereign wealth funds, to finance patent1517litigation in exchange for a share of any recovery with no1518disclosure to the court or defendant.1519    You called foreign-backed litigation funding at the PTAB1520unacceptable during your confirmation and committed to stronger1521transparency requirements. This is an important concern. When1522disputes are pushed out of PTAB and into District Court,1523discovery becomes a weapon.1524    Yangtze Memory Technologies, which is on the BIS entity1525list as a national security threat, is currently suing Micron1526and has used discovery to compel disclosure of highly sensitive1527trade secrets.1528    Does the USPTO support transparency requirements for third1529party litigation funding? What role should the office play in1530preventing foreign adversaries from using opacity in litigation1531funding to drive American companies into discovery that exposes1532sensitive technology?1533    Mr. Squires. Thank you for the question, Congressman.1534    In terms of litigation funding and disclosure for District1535Courts, those would be my understanding would be handled by1536local rules and requirements.1537    For the PTAB what we did is imposed real party interest1538disclosure requirements by reinstituting the Corning Optical1539precedent. Then, ensuring when real parties are identified and1540they are foreign sovereigns or State actors they are not1541allowed to participate in the PTAB because they are not1542persons, just as the U.S. Government is not considered a person1543in the PTAB.1544    RPIs are critically important. They go to issues of1545estoppel, they go to issues of fairness, and they also go to1546issues where foreign sovereigns or State actors under--try to1547undermine the U.S. patent holders and the system.1548    Mr. Cline. OK. Nonpracticing entity District Court filings1549rose 18.7 percent in 2025, two consecutive years of increases1550before your proposed IPR restrictions have even taken effect.1551    Consider who benefits from that. Four of the top five U.S.1552patent recipients in 2025 were foreign entities. Huawei, which1553previously sued Verizon for over a billion dollars, has1554transferred nearly 1,000 U.S. patents to assertion entities1555targeting American companies. BOE, Tencent, and CATL, all1556formerly designated by the Department of War as Chinese1557military companies, are also among the top recipients.1558    What evidence does the USPTO have that the proposed1559rulemaking will not further drive-up patent litigation costs1560for American innovators and manufacturers?1561    Mr. Squires. Thank you for the question. Again, we are1562working through all the comments and rules, including the1563justifications that we are required to under the AIA such as1564economic theft.1565    To your question, at the PTAB we have considerations which1566was just instituted in the guidelines for people to tell their1567story if they are American manufacturers and they are being1568pursued by foreign entities or these holders of patents1569entities in particular, foreign entities. Tell us your story1570and we can make sure that this is considered in instituting a1571proceeding or not instituting a proceeding. It works both ways.1572    We are trying to look at the real-world picture on the1573ground and take that into account when a request comes for a1574proceeding to be instituted or not.1575    Mr. Cline. OK. Switching to trademarks, you may know I am1576the Cochair of the Trademark, the congressional Trademark1577Caucus. I hear concerns from American brand owners about the1578growing backlog in processing trademark applications and the1579impact on the ability to secure foreign trademark priority1580rights under the Paris Convention.1581    As I understand it, to benefit from a U.S. filing date1582under the Paris Convention an applicant has to file a foreign1583trademark application within six months of the U.S. filing date1584forwarded by a PTO-issued certified copy of the U.S.1585application.1586    I am told the PTO's stated goal is to issue such certified1587copies within seven days, but that current processing times1588exceed three months. That appears to be getting worse.1589    I am concerned that the inability of the PTO to timely1590process these requests threaten to jeopardize the ability of1591American trademark owners to claim and defend foreign trademark1592priority rights.1593    Can you tell us what you are doing to reverse the1594disturbing trajectory of this backlog, and to ensure that the1595ability of American companies to protect their trademarks1596against foreign competitors is not jeopardized by staffing1597issues at the PTO?1598    Mr. Squires. Thank you for the question. That has been a1599concern. It has been unacceptable as the backlog has increased.1600One area we have had, as I understand, and we looked into it,1601data processing issues that have been remedied. I have invited1602people to send me the request for the copies directly, and they1603have done so.1604    The word has gotten out among paralegals that there is1605redress here. I get half a dozen emails a week which we get1606through.1607    Longer term we just announced--and I think you will be1608happy with this--our international search classification tool1609which takes five months' worth of work, normally leading up to1610that six, down to five seconds, literally.1611    These are going to be the sort of first agentic entry to1612equip our examiners with these types of tools. International1613search classification is just a bear, especially if you have1614pseudo marks and the like. The future looks very bright there.1615We have to make sure our house is in order and our own blocking1616and tackling and getting certificates out.1617    Mr. Cline. Thank you very much.1618    Mr. Issa. Would the gentleman yield for just a second?1619    Mr. Cline. I yield.1620    Mr. Issa. If I could clarify or have you clarified what you1621answered the gentleman. You talked about some of these1622protections, rules, and so on. You seem to be talking both1623about defendants and plaintiffs.1624    Some of the things that I heard which sounded like1625protections, in fact are limitations on the defendant in PTAB1626proceedings.1627    Mr. Squires. Again, the--1628    Mr. Issa. American manufacturing and foreign entity and the1629like were the question.1630    Mr. Squires. If there is a petition filed against a patent1631holder in the PTAB, and part of the complexion there is that1632this is an action against a U.S. manufacturer, we want to know1633that. Tell us that and that will go to the discretionary1634component of the decision whether to institute or not.1635    Mr. Issa. I understand. It is just that it also works for1636Huawei effectively when they have a strong manufacturer and1637they say, well, here it is, but it is still a Huawei patent.1638    Mr. Massie. Point of order. How many times does the Chair1639get to take five minutes?1640    Mr. Issa. I only asked the gentleman to clarify what he had1641answered to the other gentleman. I appreciate you can take it1642up at a future time if Mr. Massie is in a hurry.1643    With that, I go to the gentlelady from California for her1644questions.1645    Ms. Lofgren. Thank you, Mr. Chair and Director Squires.1646Under prior practice, decisions were made by the PTAB. When an1647IPR petition was filed a three-member panel of expert1648administrative patent judges decided whether to institute a1649review under the AIA's reasonably likelihood standard.1650    You first centralized power over discretionary denials in1651the director in March 2025. Then last October 17th, your1652memoranda went further by consolidating authority over1653institution decisions in the director as well.1654    As you know, we only have five minutes here, so these two1655questions really have either a yes or no answer.1656    Do you intend to continue this policy instead of restoring1657that responsibility to a three-member PTAB panel of expert1658judges? Would that be a yes or a no?1659    Mr. Squires. I can give you a maybe.1660    Ms. Lofgren. OK. We would like to know further if you1661ponder this, because under your current policy I am wondering1662whether you consult with at least three PTAB judges before1663making an institutional decision?1664    Mr. Squires. Yes.1665    Ms. Lofgren. OK. That is helpful. What concerns me is not1666just the centralization of the authority and, therefore,1667potential for abuse. It is that the office now regularly denies1668requests through PTAB review of patents that may have been1669improperly granted, without giving any written explanation.1670    I have an example. This is a denial. It is two pages, and1671it just says no. Right? Here is the way it used to be, which is1672yes or no and the reasoning. People knew where they stood.1673    I am just sort of wondering, under the standard operating1674procedure manual it says the significant writing assignments in1675AIA proceedings include decisions on institutions. It goes on1676and on.1677    The expectation is that there will be a detailed1678explanation for whatever the decision is. Now, I am just1679wondering in these bare bones summary denials where someone1680would find the reasoning in the arguments raised by1681petitioners. Do you think that practice is really consistent1682with principles of transparency and fairness?1683    Mr. Squires. I do think so. There is a body of over 6001684decisions that have been issued. Where there is matters of1685where we have something to say, or if a story needs to be told,1686we do issue those decisions and opinions so to provide1687guidance.1688    The Revvo line of cases has been one where there have been1689inconsistent claims offered from District Court. There is, in1690fact, unsettled expectations, it has worked the other way where1691a patent holder had their patent lapse before it was served1692against the defendant.1693    Ms. Lofgren. I would just like to ask unanimous consent,1694Mr. Chair, to put into the record a letter from the Alliance1695for Automotive Innovation, the Business Software Alliance, the1696High Tech Inventors Alliance, United for Patent Reform, SIIA,1697and U.S. Made, along with a study that really shows their1698dissatisfaction with the current practice.1699    Both on the winning end and the losing end, if you don't1700have insight into the reasoning of the decision it is1701problematic.1702    Mr. Issa. Without objection, so ordered.1703    Ms. Lofgren. I would like to just recall creating the1704patent law was, the America Invents Act took a long time. It1705was not easy. I participated in it. Some other Members of the1706Committee did as well.1707    The idea was really straightforward: High quality patents1708drive innovation and growth; low quality over broad patents do1709the opposite, they drive up prices, they impede competition,1710they expose businesses to abusive litigation. We designed IPR1711as a streamlined, expert-driven mechanism that attacks the1712patents that should never have been granted to begin with. It1713ensured the kind of efficient, targeted administrative1714correction that good government looks like.1715    Now, if there are flaws with that system, we are willing to1716address those flaws and work through them. The agency's1717institution rate has lapsed, not because the petitions lack1718merit but there are barriers that are being applied that1719Congress never authorized. Just as never, Congress never1720envisioned that the IPR process that we crafted and are willing1721to work on further if it is flawed, would be supplanted by the1722director just seizing control of the whole operation.1723    I see my time has expired. You have discretionarily denied172464 percent of all petitions, and the institution rate sits at1725about 20 percent.1726    Mr. Chair, although my time has expired, I am looking1727forward to delving into this further because I do think there1728is a problem here, not only in the administration of the office1729but the lack of enthusiasm for the process among innovators in1730America.1731    With that, I yield back my time.1732    Mr. Issa. I thank the gentlelady. The gentlelady yields1733back. We now go to the gentleman from Texas for five minutes.1734    Mr. Gooden. Thank you, Mr. Chair. Unlike everyone before1735me, I will be under the time limit.1736    Director Squires, I would like to inquire about an IPR that1737was recently brought to my attention. This IPR concerns a1738challenge against a patent owned by VLSI on behalf of NXP,1739which is a semiconductor based in Texas.1740    Based on the record, it seems this case might have been1741mishandled by the previous administration. Does this ring a1742bell?1743    Mr. Squires. I have read in the papers about that.1744    Mr. Gooden. OK, I will keep going. Under this IPR, VLSI's1745patent was challenged by two entities called OpenSky and PQA1746continues to be tied up in proceedings. These entities were1747formed around the same time VLSI won a jury trial before a U.S.1748District Court in Texas regarding the same patent that OpenSky1749and PQA challenged later.1750    PQA and OpenSky's founders and backers remain largely1751unknown to the public. Director Vidal found this to be an abuse1752of process, but the cases were still allowed to continue. Since1753that Director Vidal is no longer in charge, would you happen to1754know who is behind PQA and OpenSky?1755    Mr. Squires. I do not know. That is one of the reasons we1756instituted the RPI process.1757    Mr. Gooden. Your answer is the same as mine because I don't1758know and neither do anyone I have spoken to. People keen on1759using the American patent system are worried about the safety1760of their patents, especially those in Texas.1761    If unknown entities backed by unknown individuals start1762emerging out of thin air and tying up patents in endless1763proceedings it is not a good look for transparency and1764reliability of the American patent system. I believe you have1765been acting in the interests of promoting American innovation.1766I thank you for that.1767    We would really appreciate it if you would look into this,1768take appropriate action, and get back to me with the answers I1769can't seem to find.1770    Mr. Squires. Thank you for the question. We will look into1771it and be happy to speak further.1772    Mr. Gooden. Thank you. We have also heard concerns from a1773lot of folks in the patent process about the lack of1774predictability between administrations. Is there something1775Congress can do or should do to help with transitions in the1776future?1777    Mr. Squires. Well, one of the things that would be of great1778value would be to continue with the fee setting authority and1779fee collection authority, which will be expiring in September.1780We especially saw that to the dramatic benefit of our1781stakeholders this year with the government shutdown of 43 days.1782    The Patent Office did not shut down. We operated on1783reserves because we were able to do so, running like a business1784from this fee setting authority. My No. 1 ask would be for that1785to continue.1786    Mr. Gooden. Noted and thank you. Thank you for all the work1787you are doing. I yield back. I will yield to Mr. Massie the1788balance of my time.1789    Mr. Massie. I thank the gentleman. Can you talk about how1790important it is that patent holders are able to get injunctions1791that the relief that comes after years of finally recovering1792some kind of royalty isn't enough to dissuade infringers?1793    Mr. Squires. Thank you for the question. It is very1794important. We have said so now on three instances. We formed a1795Standards Essential Patent Working Group. Before that we have1796come in three cases as partners with the Department of Justice,1797or co-filer with the Department of Justice Antitrust Division1798regarding the injunctive factors.1799    We intend to use our office as a policy voice for what is1800important for strong patents. To not only be Born Strong but to1801remain strong because they can get injunctive relief across all1802the factors.1803    We filed in the ITC. We filed in District Court. I will1804expect to see us there to articulate the reasons why strong1805patents and strong injunctions for valid patents are important.1806    Mr. Massie. Isn't it true that the situation we have now is1807the result of court rulings and not congressional action? Is1808there something that Congress could do to restore injunctive1809relief?1810    Mr. Squires. We are aware, certainly, of and have looked1811into the provisions of the RESTORE Act, as I understand it is1812called, which would rebalance injunctive relief considerations.1813It has been hodgepodge in District Court and that has been part1814of the problem. Especially if you are in an arm's length1815negotiation and there is the holdout problem as it is called in1816Standards Essential patents.1817    Having predictability would have a great market effect. The1818provisions, like those in the RESTORE Act, is something that1819only Congress can take up. We would be willing to have further1820dialogs as to what that might look like.1821    Mr. Massie. Thank you. I yield back.1822    Mr. Issa. Would the gentleman further yield, Mr. Gooden?1823    Mr. Gooden. Yes.1824    Mr. Issa. Just one question very quickly. You said a1825hodgepodge in District Court. Isn't the eBay decision a high1826court decision?1827    Mr. Squires. Yes, it is. The--1828    Mr. Issa. The high court has ruled on injunctive relief. We1829live under the guideline produced in interpretation of law and1830the Constitution; right?1831    Mr. Squires. The eBay case sets forth the factors which the1832District Courts have to apply. They have applied them in a1833hodgepodge fashion.1834    Mr. Issa. Well, that is why we like PTAB. With that, I1835recognize the gentlelady from North Carolina for five minutes.1836    Ms. Ross. Thank you, Mr. Chair and Ranking Member Johnson,1837for organizing this hearing. Thank you, Director Squires, both1838for your service and your testimony today.1839    I am proud to represent North Carolina's Research Triangle,1840home to companies and startups that have built thriving1841businesses from a single idea or an invention. This type of1842innovation and growth couldn't happen without strong1843intellectual property protections that we enjoy here in the1844United States and that came from our Constitution.1845    Yet, small inventors are having a much harder time1846defending their patents. The PTAB allows, as we have heard,1847multiple challenges even from the same party to a patent's1848validity, forcing the patent holder to defend their invention1849again and again, often until the patent holder gives up and1850settles, mostly because they don't have the resources.1851    Not only that, but challengers often file parallel suits1852against the patent's validity in Federal District Court, which1853we have heard about, hedging their bets and hoping to get a1854finding of invalidity in one venue or the other. Of course, the1855challengers have more money to get to do that.1856    As we know and we have discussed, the USPTO filed a Notice1857of Proposed Rulemaking last fall to help address this problem1858of repeated challenges to a patent's validity. I really1859appreciate Mr. Massie's comments on this earlier in this1860hearing.1861    I just want you from the perspective of a small inventor to1862tell us what you have heard about the difficulty of defending1863their patent in different venues or having multiple parties1864come after them?1865    Mr. Squires. Thank you for the question. Before I took1866office, I represented startups, small entities, and small1867inventors for about 10 years. I may be the only director who1868has had that direct experience.1869    It has been a terrible problem, as you have referenced.1870Sometimes we have seen as many as seven petitions keep coming1871in waves. That is why under the NPRM we are saying that we have1872to have some parity, quiet title finally. If you want to still1873have multiple filings or multiple parties, join it. One join1874and done.1875    To your question on the individual small entities'1876experience, it is a killer. People are not able to become I am1877aware of a funny little patent emanating out of Stanford in18781999, the PageRank patent. That is now, of course, Google.1879    Where our next Googles are coming from, where our next big1880companies and big tech are coming from start in someone's1881garage, and they are small inventors and they need to have the1882same respect as afforded everybody in the system.1883    Ms. Ross. Great. Well, I am a cosponsor of the bipartisan,1884bicameral PREVAIL Act along with Congressman Moran from Texas,1885and then, of course, Senator Tillis and Senator Coons. We are1886hoping that bill will get a hearing. Then Congress can have its1887say.1888    I do want to ask a question that was mentioned in some of1889the opening statements.1890    As we know, there have been reports that the USPTO and the1891Department of Commerce are considering plans to institute a1892value-based patent fee. Last fall I led a bipartisan effort1893with several Members of this Subcommittee to Secretary Lutnick1894urging the Department not to move ahead with the patent tax1895because, again, I believe it will hurt small inventors more.1896    Although Secretary Lutnick recently said in a Senate1897hearing that this was not a plan, his answer appeared to leave1898open the possibility of extracting more value from patents by1899other means.1900    At any point in your tenure at Commerce or with PTO have1901you considered this value-based patent tax? How would you1902implement it if you did it?1903    Mr. Squires. Thank you for the question. I echo Secretary1904Lutnick's statements. He explained how you would do that, how1905you would value that.1906    I have never been in those discussions where value had any1907consideration. It is not something that is on the table or even1908could be done.1909    Certainly, the Patent Office would not be in the business1910of providing market valuations for people on their patents. We1911are in the business of granting them, making sure they are Born1912Strong, and letting the market work.1913    Ms. Ross. Well, thank you. I hope it remains that way. I1914yield back.1915    Mr. Issa. I thank the gentlelady. I now recognize the1916gentlelady from Florida for five minutes.1917    Mr. Massie. I have an unanimous consent.1918    Mr. Issa. The gentleman is recognized for a unanimous1919consent.1920    Mr. Massie. I ask unanimous consent to submit a five-page1921letter from a U.S. inventor to the record.1922    Mr. Issa. Without objection, so ordered.1923    Mr. Massie. Thank you.1924    Mr. Issa. Now, the gentlelady may proceed.1925    Ms. Lee. Thank you, Mr. Chair. Director Squires, thank you1926for being here with us today.1927    The work of the U.S. Patent and Trademark Office plays such1928a critical role in supporting innovation, protecting1929intellectual property, and ensuring our patent system functions1930effectively for businesses and inventors. I appreciate your1931time with us here today.1932    I continue to hear from retailers and manufacturers, and1933Main Street businesses that they are being sued for widely used1934off-the-shelf technology like Wi-Fi systems or point of sale1935devices, and being forced into settlements because the expense1936associated with litigating in our Article III courts is simply1937too high.1938    How do you respond to concerns that limiting access to PTAB1939is increasing litigation costs and forcing small businesses1940into these settlements?1941    Mr. Squires. Thank you for the question. The high cost of1942litigation is, of course, a concern. That is why under the AIA1943IPRs were designed as an alternative to litigation, lower cost1944litigation. The IPR is not the only game in town. People also1945tend to conflate PTAB, limiting PTAB. That is not what is1946intending to happen, that is not what we were intending with1947the rule. There is always the avenue of reexamination. We would1948love to see people utilize PGRs more effectively, sooner in1949time, clearer title.1950    In general, we preferred a more laid open model where you1951take your shot but take it now and take it once and for all. As1952I said, instead of one and done, people need to think about as1953one join and done. There is the ability for collective action1954and there is also, then, of course, District Court. There is at1955least three alternatives available under the PTAB.1956    Ms. Lee. One of the other things I think is important on1957that front in trying to minimize that down the road litigation1958you touched on in your opening testimony. That really is the1959quality of the initial examination.1960    I want to hear more about what you are doing with1961artificial intelligence and how AI is being used on the initial1962patent examination.1963    Particularly I would like to hear you have emphasized1964human-in-the-loop approach using AI but also having humans1965involved. Tell us a little bit more about that and what1966safeguards do you have in place to ensure that using AI tools1967is not introducing any sort of bias or narrowing the scope of1968prior art consideration?1969    Mr. Squires. Thank you for the question. It has multiple1970touch points, of course, in the office. I will give you one1971example.1972    We have launched what we call ASAP!, an AI-generated pilot1973program which takes the prior art, gets it to the applicant1974before the first office action. Literally, the examiners and1975the applicant are on the same page as the prior art beforehand.1976    They have some agency as to what they want to do. They can1977make an amendment. They can marshal their arguments or decide1978this is not going to go well, we are not going to waste our1979resources, and refile with something direct to their resources1980to something that might be more productive.1981    We are trying to get information in the hands of people at1982soon as possible point where they can do something with it and1983have people be on the same page.1984    On the eligibility side we have formed a 101-working group.1985We had started to deploy AI agents to assist in some of the1986areas where there are the thornier issues to decide on 101 and1987to give some assistance to the examiners. Always it will be a1988human in the loop.1989    The larger vision is, as I mentioned in my opening1990statement, to have the examiners be able to examine a cadre of1991agents, deploy them as they see fit to their cases, and be able1992to do thousands of hours in hundreds of hours' time but still1993remain expert in their field, and be just as equipped as the1994private sector applications coming in to meet the examination1995challenge.1996    Ms. Lee. Thank you, Director. I yield the balance of my1997time to the Chair.1998    Mr. Issa. I thank the gentlelady. A couple of quick things.1999    You keep talking about these off-ramps, these other2000opportunities. Just between two people who have dealt with2001patents for a long time, an ex parte reexamination is exactly2002that, it is the inventor and an examiner, sometimes the same2003examiner, sometimes someone different, talking about whether or2004not some third-party allegation is correct or not.2005    It is a one-sided process that favors dramatically the same2006or substantially same patent. It is not an even playing field.2007The PTAB exists because ex parte was ending almost always2008successfully favoring the reinstatement or the continuation of2009a patent compared to the outcome of PTAB. Isn't that true?2010    It is not a place that really if you have been accused it2011makes any sense to throw it and hope for the best without2012seeing anything until it comes out?2013    Mr. Squires. That may have been the case in the past with2014reexamination. I don't believe it is that case now. In fact, it2015has become a quicker and almost the same outcome experience as2016the PTAB has been.2017    Mr. Issa. I appreciate that. I would love to have a longer2018dialog, but I don't own the time. The gentlelady from2019California is recognized for five minutes.2020    Ms. Kamlager-Dove. Thank you, Mr. Chair. Director Squires,2021before we get into your recent policies, I just want to make2022sure that we are grounded in the basics because much of this2023debate seems to move past them too quickly.2024    To my understanding IPR is an administrative process2025allowing parties to ask the Patent Trial and Appeal Board to2026reexamine whether an already-issued patent is valid. It was2027created to provide a faster, more cost-effective alternative to2028litigating patent validity in Federal court, recognizing that2029initial patent review can be imperfect.2030    Instituting a review means the board agrees there is enough2031merit to examine the challenge, while denying institution means2032the challenge does not move forward. Is that correct?2033    Mr. Squires. In general, the IPR process has two2034components, one discretionary and one merits.2035    Ms. Kamlager-Dove. Right. OK. At the end of the day, it is2036ultimately about protecting U.S. companies, inventors in those2037parents? That is what we are here to.2038    Mr. Squires. We are trying to make sure where there has2039been, especially when there has been error in examination--2040    Ms. Kamlager-Dove. Right.2041    Mr. Squires. --there is redress available.2042    Ms. Kamlager-Dove. OK. There are concerns raised that IPR2043may disproportionately impact individual inventors and small2044entities. There has been discussion about nonpracticing2045entities, entities that assert patents but do not manufacture a2046product, and their role in patent litigation, including some2047that may have foreign ownership or backing.2048    Does the USPTO distinguish between different types of2049patent holders when evaluating how PTAB policies affect2050stakeholders?2051    Mr. Squires. It is certainly a discretionary consideration2052that we invite people to tell their story. As I said, we just2053recently announced guidance that for American manufacturers, or2054if they are patent holders and there are petitions filed2055against us, tell us about that. We want to know.2056    Conversely, if they are State actors or foreign sovereigns2057they can't be in PTAB under the recent return mail application2058to foreign sovereigns or State actors. We need to know who is2059there and what their particular situation is.2060    Also, with the guidance on the manufacturing we reference2061small businesses. We want to know what the dynamic of whatever2062side you are on is before instituting proceedings.2063    Ms. Kamlager-Dove. OK. You are saying if there are2064sovereigns, if there are foreign actors, you do want to know?2065    Mr. Squires. Well, we need to know because they aren't2066allowed any feedback.2067    Ms. Kamlager-Dove. Yes. OK. That means that you also have2068collected this data. You have done data collection on this so2069you know?2070    Mr. Squires. There is a real party-in-interest requirement.2071    Ms. Kamlager-Dove. Uh-huh.2072    Mr. Squires. The RPIs have to be identified at the time of2073filing. That is a disclosure.2074    It can be raised by the patent holder in response to a2075petition, and so it's a disclosure type process. We do have2076data on the number of foreign State actors who collectively2077from foreign countries who have appeared in PTAB historically.2078If you aggregate them, they would rank No. 4.2079    Ms. Kamlager-Dove. OK. If I asked you to provide to this2080Committee a breakdown of that data, so, broken down by entity2081type, domestic versus foreign ownership, whether the patent2082holder manufactures anything, you would be able to do that?2083    Mr. Squires. I don't know the extent to what granularity we2084have.2085    Ms. Kamlager-Dove. Uh-huh.2086    Mr. Squires. I can provide you with a list of who the2087filers are, yes.2088    Ms. Kamlager-Dove. All right. Well, that would be helpful2089because I think the question is, are different entities treated2090differently? Small versus big is always going to be an issue.2091When there is also concern that a company has foreign backing,2092for me that also raises national security concerns; right?2093    I wouldn't want a Huawei, for example, getting in the mix2094and playing a role in seeking or holding a patent that should2095be for a U.S. inventor or company.2096    Mr. Squires. I understand. We are happy to work with your2097office. I would direct your attention to the Corning Optical2098memo that I issued, which did have a listing of IPR petitioners2099in aggregate by IPR petition.2100    Ms. Kamlager-Dove. OK, great. We are on the record as2101saying we are requesting that information. We would love it for2102you to be able to share that with the Committee.2103    Mr. Squires. Thank you.2104    Ms. Kamlager-Dove. I do have--I am sorry.2105    Mr. Issa. Do you have an unanimous consent?2106    Ms. Kamlager-Dove. Yes, I do, Chair. Ask unanimous consent2107to enter into the record, ``Trump appointees are hijacking the2108patent system.'' This is dated May 2025 prospect.2109    The next one, enter into the record ``Trump's PTO Pick's2110Fortress Ties Signal Base Tech Patent Fights.''2111    Mr. Issa. So ordered.2112    Ms. Kamlager-Dove. Without objection. Thank you.2113    Mr. Issa. At this time, I will also put into the record by2114unanimous consent a copy of the docket for the Patent and2115Trademark Office, the revised proposed rules that we have been2116alluding to.2117    Additionally, a number of letters. I will ask them to be2118placed en bloc which they do include, but not limited to,2119patents for affordable drugs, general action patent, Crypto2120Counsel on Innovation, and a number of others.2121    Without objection, so ordered. We now go to the gentleman2122from South Carolina for his five minutes.2123    Mr. Johnson. Mr. Chair, I have a unanimous consent. I would2124like to enter into the record a letter from the Counsel for2125Innovation Promotion, dated March 24, 2026, addressed to2126yourself and me regarding this hearing.2127    Mr. Issa. Without objection, so ordered. The very patient2128gentleman from South Carolina is recognized.2129    Mr. Fry. Thank you, Mr. Chair. Director, thank you for2130being here. The PPAC and TTAC have served as effective vehicles2131for the private sector subject matter experts to offer2132specialized guidance to the PTO. I would like to commend you2133and Secretary Lutnick for appointing new members to these2134bodies last fall.2135    When do you anticipate the remaining vacancies to be filled2136and the Committees will reconstitute and begin their work?2137    Mr. Squires. Thank you for the question. Very soon. As we2138have seen both on the PPAC and TTAC side there is really an2139all-star roster. We just extended an offer last night to the2140individual mentor which is the statutorily required person that2141crystalized everything. We are hopeful very soon.2142    Mr. Fry. Great. Thank you for that. I am going to move on2143to a separate issue on U.S. research and development.2144    Obviously, we are competing with China on any number of2145things across many fields: Medicine, telecommunications,2146manufacturing, and emerging technologies. In the context of2147patents, how do China and foreign competitors undermine our2148system in your view, very briefly?2149    Mr. Squires. As brief as I can. In several ways. One is2150known as flooding the zone. We have seen a lot of low-quality2151applications in different areas. Others are fraudulent filings2152which we have deployed some AI tools and identified.2153    As I said, we have moved, especially on the trademark2154register, and tens of thousands of fraudulent applications. The2155third arrow in our quiver that we just announced is a rule that2156you must be a U.S. practitioner before the Patent Office and to2157file papers. Accountability is, of course, important. Those are2158ways we are trying to address these issues.2159    Mr. Fry. Regarding pharmaceuticals, what steps has your2160office taken or plans to take to ensure that the U.S. remains a2161global leader in pharmaceutical innovation?2162    Mr. Squires. Again, our No. 1 goal is to have patents Born2163Strong, make sure they receive rigorous and thorough2164examination, and get to market in a timely manner.2165    Mr. Fry. Switching gears again, on the IPR, we have talked2166about that a lot today, how is the office thinking about2167striking the right balance related to IPR, ensuring that2168manufacturers and strategic industries can effectively defend2169against questionable patents while also preserving the strong2170protections in access for small businesses, startups, and2171independent ventures?2172    Mr. Squires. Thank you for the question. Yes, it is,2173balance is the key word. It is a unitary system. I like to quip2174sometimes that means that someone is always unhappy.2175Nevertheless, we are trying to strike the balance, especially2176on the discretionary side, as I mentioned, where there are2177small business factors or manufacturing, it cuts both ways.2178Tell us your story.2179    We even had issues where things that have been2180controversial, like I said, all expectations cut both ways.2181There have been assertions where patents have lapsed and then2182come into being, or licenses have been issued against the2183expectations, and those get taken into account whether to2184institute or not.2185    Mr. Fry. Thank you for that. You would agree that China--2186you said flood the zone earlier--so you would agree with me2187that nation-states like China challenge current patents or2188trademarks pretty frequently. Is that fair to say?2189    Mr. Squires. They have. The new precedent will end that2190process.2191    Mr. Fry. OK. How do we deal with domestic companies that do2192that?2193    I will give you an example. The Monster Energy drink is2194like the No. 1 filer against existing trademark applications.2195They are far and away above everybody else. They have been2196labeled as a trademark bully of the year by multiple times, at2197least since 2012.2198    I don't want to single them out, but I do think it is real2199problematic. Some of these cases are like camping gear because2200the name is 4Monster; a craft brewery company. What I am2201concerned about is big companies with a lot of assets that come2202in and swing at small restaurant owners.2203    I guess there was a restaurant in Ohio, it is a shawarma2204restaurant and they are called the Monster Shawarma. Somehow2205that is a patent or a trademark infringement on Monster. It is2206just really aggressive.2207    How do we protect small businesses against trolls like2208Monster Energy drinks?2209    Mr. Squires. It is a difficult question. The way we protect2210them is, I early access files if they can. Monster, of course,2211has a famous mark and it has a wider berth in courts in2212assertion. A trademark system is a registration system. It2213levers off of use in commerce, often from State rights. They2214register Federal as that.2215    The part of the solution is to let people know we are here.2216You should file.2217    Mr. Fry. What about Rule 11 sanctions? If they are filing2218frivolous things and they are, obviously, I am not suggesting2219that all their cases are not meritorious, but I am suggesting2220that it is a little bit alarming that they are the No. 12221company in the country filing against small businesses. They2222are really aggressive in their tactics.2223    What I would like to know is if you have got tools in your2224toolbelt to rein some of these practices in. You have already2225got a full docket. How do we rein in companies like that from2226abusing the system?2227    Mr. Squires. Again, thank you for the question. On the Rule222811 basis that is, of course, more of a District Court2229litigation dynamic.2230    In terms of utilizing our office in terms of oppositions2231per se, those are something that we do have a TTAB and we do2232have discretion around those types of matters. Again, just like2233the patent side, tell us your story. That is often compelling.2234We are trying to be responsive to the real-world dynamics out2235there.2236    Mr. Fry. I appreciate you doing that. This isn't a2237criticism of you or the office. I just want to make sure.2238Obviously, we want to focus on China and the things that they2239are doing to undermine our competitiveness. We also have some2240problems domestically, too, some of these people that abuse the2241system.2242    Thank you, Mr. Chair.2243    Mr. Issa. That is great. Just one clarification. You used2244the term famous mark. IBM is a famous mark. Ford Motor is a2245famous mark.2246    Monster Cable doesn't--Monster drinks don't meet that2247requirement, does it? You used it but I don't think you meant2248to use it.2249    Mr. Squires. I have not come to that conclusion, but--2250    Mr. Issa. To be a famous mark, the word monster all by2251itself would have a secondary meaning; right?2252    Mr. Squires. That would be for a court to decide. Those are2253the parameters, yes.2254    Mr. Issa. OK. Monster movie, Monster Cable, which every,2255every professional musician uses and predates Monster drinks, I2256am trying to understand because it is important for this2257hearing.2258    Do you want to go back and revise for the record your2259statement that Monster drinks is somehow because it, obviously,2260is a huge difference in how you and the courts deal with that2261allegation; right?2262    Mr. Squires. I would revise my saying and say if Monster is2263famous mark then these the types of things that they could do2264in court.2265    Mr. Issa. I absolutely agree with you. I have certainly2266seen a blue oval without the word Ford be considered as2267important because it is a famous mark. I appreciate that.2268    I now ask unanimous consent en bloc that a number including2269submissions includes from Arnold Ventures, from Entertainment2270Software Association, from the ES--that is the same one. Hang2271on for one second.2272    Yes, OK, from the Business Software Alliance. Some of these2273are long. They really have things to say to you, Mr. Secretary.2274    From the most famous of all, the CTA, the Consumer2275Technology Association, who opined in the negative, to say the2276least.2277    There are too numerous. We will be giving them all to you.2278Without objection, so ordered. I now recognize myself for a2279number of questions.2280    Isn't it true that the number of so-called serial2281applications, the repeat use of PTAB, was less than one2282percent? Yet, your rule applies to 100 percent. Is that2283correct? The historical serial attacks using PTAB is less than2284one percent?2285    Mr. Squires. Of PTAB actions filed, of IPR actions filed?2286    Mr. Issa. Correct, sir.2287    Mr. Squires. I don't know the exact figure. I will--2288    Mr. Issa. OK. That is the figure that staff on this side2289comes up with. Please give us your answer for the record.2290    I have already discussed the ex parte. We are going to2291agree to disagree that you performed anything, simply because2292it is still a process that there are only two people in the2293room and one of them is not the person who submitted the2294documentation, they are not part of the process. That is why it2295is ex parte; correct?2296    Mr. Squires. That is correct, ex parte.2297    Mr. Issa. OK. I have got a great many items to say the2298least, as you could tell.2299    Probably the largest one is currently when I mentioned that2300you have taken cases in which they were discretionarily2301allowed. Process had nearly reached a conclusion and then you2302pulled them back, essentially retroactively, discretionarily2303said they never existed.2304    Where do you believe you get that authority?2305    Mr. Squires. I don't know which specific cases you are2306referring to or the particular facts of the matter, but the2307Federal Circuit has--2308    Mr. Issa. It would be that Interactive Communications is2309one example that we have that you did that to. I cite this2310because when it goes to a final decision, if you want to2311reverse it you can, but there has to be, essentially, it is not2312without paper. When you simply do a denial there is no paper,2313as we have seen today.2314    Retroactively doing it makes a huge different because that2315discretionary denial after the facts have been laid out, after2316it has gone through the process and expense then denies the2317individuals either an outcome, possibly reversible, or an2318explanation, which you did not give in that case.2319    Mr. Squires. Again, I am not familiar with the underlying2320case even by caption. However, there is wide discretion2321afforded. I believe the use of discretion would include2322changing your mind.2323    Mr. Issa. Well, I don't believe you have that discretion2324once a process begins. We would like you to cite, as you did2325very eloquently in others, where you believe in the America2326Invents Act that you believe you have that discretion. Because2327we disagree.2328    Additionally, since that discretion is not challengeable in2329court and, yet, the final decision would be, you see where the2330ambiguity is. You have taken away the ability to have2331additional appeal because you have denied them by using the2332discretionary denial after the fact, which takes away their2333ability to actually have any further redress. Correct?2334    Mr. Squires. I don't agree with that. The authority is 316-233535 U.S.C. 316(b). I am required by statute in rulemaking, we2336use this in our decisions for to take into account the economy,2337integrity of the patent system, and the efficient use of2338resources in the discretionary part of our what we do.2339    The merits part is different, of course. The discretion2340piece is the one component before you get to the merits.2341    Mr. Issa. OK. I am going to use my final time to ask some2342very tough questions. You mentioned Secretary Lutnick having2343500 patents. Is it true that, to your knowledge, that the2344Secretary during his tenure was often a plaintiff suing in2345District Court, directly or indirectly?2346    Mr. Squires. I am recalling days of eSpeed and BrokerTec,2347and there were several suits back in the 2000s around that.2348    Mr. Issa. It is fair to say that from the monetary2349standpoint he benefited from lawsuits and may or may not have2350an opinion on whether he likes PTAB or not, since he began2351reducing PTAB's effectiveness during his tenure before you came2352onboard directing the acting?2353    Have you had any discussions with the Secretary concerning2354any of these policies?2355    Mr. Squires. The NPRM that was issued is the Secretary's2356first and signature rule. He was absolutely behind those.2357    Mr. Issa. OK. As you sit here today the Secretary has a2358role. Let me ask one last question. To your knowledge has the2359Secretary eliminated all owned assets that could in any way2360benefit from these changes?2361    Mr. Squires. I have no knowledge one way or the other.2362    Mr. Issa. OK. Would you to the best of your ability ask for2363the record, or perhaps we will ask the Secretary directly by2364subpoena. It is my understanding that he may not have2365eliminated all his holdings. Therefore, there could genuinely2366be a conflict as you, whether right or wrong, whether you have2367authority or not, dismantle PTAB cutting by 80 judges and2368continuing to cut by discretionary, both regular and2369retroactive.2370    There is a lot more to ask. I will ask the rest of them for2371the record and ask that you agree to answer them if we send2372them to you within five days?2373    That is actually a question we normally ask at the end by2374unanimous consent. If you will agree to take written questions2375from the record from all Members?2376    Mr. Squires. I would welcome the chance to interact with2377this body.2378    Mr. Issa. Thank you. In conclusion, this has been an2379illustrative hearing. I will say, and this is usually something2380the Minority would be saying, that it has been too long, it2381took too long. We are now over 15 months into an2382Administration, and this is the first visit of a Committee that2383to the Committee of jurisdiction.2384    It is our hope that prior to the close of this Congress2385that we will have you back for at least one additional hearing,2386not to repeat the subjects but to followup on them. It is the2387normal practice to have a regular dialog with the Patent and2388Trademark Office. It is my personal hope, and I believe the2389Ranking Member's personal hope, that this dialog will continue2390so that by the time we come to the next one we won't be talking2391in single digits how often we have been able to have2392interactions with your office directly.2393    With that, I am required to say this concludes today's2394hearing. I want to thank our witness for appearing before the2395Congress.2396    Without objection, all Members will have five legislative2397days to submit additional written questions, and to the2398witness, and additional materials for the record.2399    Without objection, we stand adjourned.2400    [Whereupon, at 12:08 p.m., the Subcommittee was adjourned.]24012402    All materials submitted for the record by Members of the2403Subcommittee on Courts, Intellectual Property, and the Internet2404can2405be found at: https://docs.house.gov/Committee/Calendar/ByEvent2406.aspx?EventID=119088.24072408                                 [all]