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Tonight at 8 00 eastern and civic on q a. Cspan gives you the best access to congress. Live congress coverage. Bringing you events that shape public holocene. Every morning, washington journal his life. Cspan. Created by americas Cable Companies and brought to you as a public service. The center for strategic and International Studies discussed the u. S. Patent system. Speakers include michelle lee. Other topics include Patent Infringement and intellectual property issues in china russia and africa. This is about 90 minutes. Jim well, good afternoon. My name is jim lewis. Welcome to csis. Were very lucky today to have with us michelle lee, the undersecretary who is responsible for the u. S. Patent and Trademark Office, usbto, and with her also a very distinguished panel of experts. The format for today, as michelle will give opening remarks, and then the other panelist also join us up here. Well have an interactive session and then well turn to you, the audience, for questions. So im looking forward to this event. Udience for a question. I am looking forward to this event. I think we can have a good discussion of a timely topic we have bios available on web site and i will do a brief introduction. Michelle lee is the undersecretary for commerce for intellectual property and director of the u. S. P t o which i would did not realize was 12,000 employees. It has grown she directs this daytoday operation, and not unique in silicon valley. And p t os first director of the silicon office and worked at google and patent, after getting a law degree but i got the order wrong but you will have to live with it. And now come back to washington and east coast and director of the Patent Office and introduce other speakers but let me turn it over to michelle lee. [applause] good afternoon, it is of pleasure to be here to talk about something that is important to me and i think to all of you as well and that is the topic of innovation. I would like us to consider the Critical Role, to make the american economy, and the increasingly Global Innovation economy. To give historical perspective, it wasnt long ago patent law was considered niche topic, the most valuable asset for the company often times tangible. And their inventory, the most valuable asset leading companies were the intangible assets. The algorithms, the prophecies, and the brands of the company. What we like to call intellectual property and because these tangible assets are more easily copied, protecting them for investment and competitiveness. Pants which provide the Market Exclusivity for a limited time are an important part of that protection. It is a fact that our economic competitors recognize appreciate and mention in my meetings with them. Last may i traveled to beijing, china for meetings with ministers and vice ministers of chinas trade, patents, copyright and Trademark Offices but began my trip, with senior officials in the Chinese Government and young. During the meeting we emphasize chinas desire to strengthen protection and enforcement system. Not just because it is trading partners are asking for these changes but because china used as necessary in their desired transformation from a Manufacturing Based economy of inventions developed elsewhere with technologies developed in china to provide products and Services Higher up the value chain. Put another way, china wants and economy like ours in when joy intangible assets play a greater role and they recognize the need for a cotton system more like ours. From that meeting in china and other encounters i had with leaders around the world i repeatedly here United States is a globe will be here when it comes to protecting and enforcing intellectual Property Rights. Despite all of our discussions and debate here at home our high tease system is what many countries to when designing their own system and while we can and should take pride in this we also need to take heed that as china and other countries seek to move from a Manufacturing Base economy to and innovation based economy, we will face more and more competition. We cannot afford to standstill as other nations seek to catch up. We cannot idol as other manufacturing economy is seek to move up the value chain and we cannot remain immobile as american in of a receipt to compete in the 21st global economy. We are faced with a question. Do we believe our patent system as it is or do we strive to make it even better at incentivizing and promoting innovation and investment . Is worth noting our patent system itself is quite innovative. It is a bargain between inventors and the rest of society is invested in joy progress clause of the constitution. The inventor gets an exclusive right for a limited period of china and invention in exchange for Teaching Society howled that invention works. That exclusivity makes it easier to secure investment and commercialize the invention. As Public Disclosure of how the invention works allows others to begin working on improvements and letting others know which technologies require a licenses or work arounds. But the constitution only provided a very broad level framework for our patent system. It left the specifics to congress to update through legislation andovers the years that the golf framework has further developed. And in these circumstances, earth through the work of the United States patent and Trademark Office but that work continues to this day. In an information economy where patents were reviewed as assets, i saw this firsthand during my time in the private sector. In the past operating companies with at portfolios sometimes across licenses with other companies. Today in contrast there is a much greater market for patent, a greater chance of assets in debt in the hands of somebody else. With the patent system such as oursimposes meaningful penalties for infringement, we are seeing a rise in behavior of truly monetizing the value of a patent from another, without contributing anything inventive and without making or providing any product or service. This can and has led to increased threats and to the extent that panting from joy and claims i made merely to coerce settlements from the merits of a claim this is inefficient and costly for everyone involved particularly Small Companies and start ups who often times have limited financial resources. I can tell you from my time in the private sector litigating hand cases is very expensive. Defending against patenting fringe and suit can cost on average depending on a variety of factors anywhere from 3 million to 5 million for a case that is not very complicated. For us start up with an initial round of funding of 10 million that is a devastating cost on innovation. Taking a patent case to trial can burnt through one or even two rounds of funding at a time when the Young Company should be spending ltd. A precious amount of money, hiring employees investing in research and development for growing its business and lets be clear this is not bad for Small Businesses and start ups. Is bad for all of us. Inventors, consumers, jobs and the american economy. Worst of all it reduces the publics face in our paten a i patent protection to incentivize innovation high to examining and issuing patents. Our patent examiners have the duty of examining Patent Applications and issuing patents is the requirements that are met and rejecting applications when they are not. Every one of our examiners understands ands accurately and a clear stroke is more important now than ever before so that inventors can better understand the scope of their invention. So that others including competitors can have the information they need to make better informed Business Decisions on how to invest their limited research and Development Dollars and taking a patent license. This is why we launched our enhanced pet Quality Initiative at the end of last year soliciting an unprecedented amount of input and feedback from the public on how but agency can enhance the quality of the paths that it issues. Trial appeal boards also play an effective war role as a quality check on patents. Patents that are already issued. The board provides a faster and lowercost alternative to District Court litigation where the validity of the pact claim is in question. It will also have an important impact on the front end of patent system. By making patent applicants think more carefully about pursuing broad claims that may not ultimately be upheld, this is good. It ultimately drives down needless expensive and timeconsuming District Court litigation while also encouraging africans to seek patent rights of appropriate scope. But the accord still have an Important Role to play in bringing about needed improvements for the patent system. Recent decisions have tightened the standards of clarity for patent claims and made it easier for judges to award attorneys fees in pant infringement cases. These are welcome changes but we want to remember it, they are also incremental. Judges can only decide the cases before them and can do so only one case at a time and because their rulings can be appealed all the way to the Supreme Court judicial willingness to take time to propagate throughout our entire patent system and if we want changes that are uniform, systemic come and timely that save our Small Businesses and start ups, targeted and balanced legislation needed. They can be achieved via legislation. Which was wild pleas by patent reform legislation in congress. And these exchanges reduced the incentives by abusive Patent Litigation tactics. Can target and balanced reforms constrained and and level the Playing Field for all innovators. And patent suits, about patents allegedly infringed by providing financial incentives for parties both plaintiffs and defendants to take reasonable positions in litigation. By providing opportunities for manufacturers who are best suited and incentivized to step in and defense against infringement suits on behalf of their customers and end users and providing increased transparency of pant ownership to reduce barriers to patent licensing and patent sales. These reforms combined with other changes that are occurring in the judiciary and administratively, attributing the pant system to continue to remain an engine of innovation with strong, clear and balanced Property Rights of appropriate scope that are enforceable. These reforms will contribute to our competitiveness in todays increasingly global economy. Reallocating resources from wasteful litigation to productive Research Development and commercialization. These reforms will ensure of american innovators will continue to define the top of the global value chain. Even as the rest of the world rushes to catch up. Reform is not a crisis of faith about our patent system but a way of keeping faith with its goal of promoting innovation and technological progress. If i have learned anything in my experience in the private sector it is that no good Company Effort rest on its laurels. Is always looking for new ways to improve, streamline and adapt to the new realities of an everchanging environment. From my Vantage Point as head of the United States patent and Trademark Office i believe we should treat our patent system is the same way. We need to maintain what is best in our system but we must also strive to improve what can be improved guided by the constitutional mandate to incentivize innovation and the convictions that the best days of American Innovation are still ahead of us. Thank you for your attention and i look forward to continuing the discussion with my fellow panelists. [applause] thank you, michele. Please have a seat. But invite our other panelists to come on up. I have known both of these people for quite a long time. Take your cares, seats please. First, victoria, and many of you know, Victoria Espinel, president of p s a, but before that as the first intellectual property enforcement coordinator at the white house which was kind of a patent breaking job and before that you probably knew her from u. S. T r where she handled many negotiations and broke a lot of new ground in all three jobs so thank you for being here and also a known michael for a long time, Michael Waring is director of the Washington Office and executive director of federal relations with university of michigan, someone i have worked with many years of innovation topics and a real expert both in how washington works and how washington policies might help us about innovation. What i told them for the format and thinking of changing it while michele was speaking but i wont. Victoria and michael to briefly say something, respond to michelle ng and we will go into questions. At that point if you have something i will ask you to raise your hand please identify yourself, keep it as a question, not a speech and we will move ahead but victoria, why dont we turn to you . Thank you for inviting me to be here today, a pleasure to be here i thank you and michele for pulling together this event, and congratulations to you and your confirmation. Enduing great work that you have for many years and it is fantastic. It is an honor to be up here with michael so our university, an incredibly important part of the innovation system and the prior job for the university, a pleasure to be with you. I of Victoria Espinel and my organization represents the Software Industry worldwide and one of the reasons my job is fun is because our companies are among the most Innovative Companies in the world and because of that they offer the largest hand holders in the world so we really believe in and clearly understand a well functioning patent system. We also believe what you said about keeping faith with the patent system that is important that our litigation system be set up in a way that doesnt allow bad actors to get our halfwit system id our patent system and so it is very important that there be changes to the litigation system to avoid the kind of abuses that has been happening today. It is hard for bad actors. And joy various pieces of legislation moving into the system, four things to focus on so i will mention this briefly and turn things over, we want to make sure that if anyone gets for the Patent Infringement they get genuine notice that a suit filed against them clearly lays out what the actual allegations are against them. That notice is important to having official litigation system and feared litigation system. Second with respect to where this is, cases of robbing the right chords and avoid form shopping, and bake litigation and discovery specifically as efficient as possible so therefore we think it would be best discover was delayed to be addressed to get them out of the way. We want to beat her frivolous cases being brought. Is important to be awarded in cases that are objectively unreasonable and an efficient mechanism to be awarded. Financial incentives have shifted some is not so easy and cost 40, they are better for the system as a whole and it will be stronger and better than it is today. And could talk at earthlink, to turn the mike over. Thank you very much for the invitation, always a pleasure to be here with michele and victoriana and talk about a topic we seem to be talking about for a long time, we went through three congresses where we wrestled with the notion of a patent system, what should depend system be, how to update it to make it fit with the international, our understanding of the patent system and did three congresses to pass the act and here we are less than four years later trying to make major changes to that legislation so that is an interesting dynamic interesting place to be and i shall also say before i get too far down the road, i worked for the university of michigan but i am not speaking on their behalf just representing the Higher Community at large including six associations that have banded together to work on behalf of the University System around the country and i am also not an attorney. As far as my colleagues here on the lot, haven