Key Takeaways
- •John Squires (Under Secretary of Commerce for Intellectual Property and Director, U.S. Patent and Trademark Office) announced a 50,000-case backlog reduction and the deployment of new agentic AI tools.
- •Squires defended a proposed rule to limit serial Inter Partes Review filings to "one join and done" to ensure quiet title and finality for patent holders.
- •Rep. Raskin (D, MD-8) questioned Squires on his authority to file a "Board of Peace" trademark application and fee waiver as a "custodial" representative for the President.
- •Rep. Massie (R, KY-4) praised the USPTO's exercise of discretion to protect inventors, while Rep. Johnson (D, GA-4) criticized the agency for undermining legislative authority regarding regional offices.
- •Rep. Issa (R, CA-48) announced the subcommittee will investigate potential conflicts of interest regarding the Secretary of Commerce's patent holdings as the USPTO moves to finalize new rules.
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Hearing Analysis
Overview
This hearing examined the operations and policy initiatives of the U.S. Patent and Trademark Office (USPTO) under Director John Squires. Discussions centered on the agency's efforts to reduce a historic application backlog through artificial intelligence, controversial reforms to the Patent Trial and Appeal Board (PTAB), and allegations of political interference regarding trademark filings for a presidential initiative.
Key Testimony & Policy
Director John Squires (Under Secretary of Commerce for Intellectual Property) testified that the USPTO is implementing an "America-first IP agenda" to stabilize the knowledge economy. He reported a reduction of 50,000 in the patent application backlog, with a goal of another 100,000 this year. To achieve this, the agency is deploying "agentic AI" tools, including a trademark classification tool that reduces manual search time from five months to five seconds and the AI-generated pilot program (ASAP) to provide prior art to applicants before the first office action. Squires emphasized a "human-in-the-loop" approach to ensure AI assists rather than replaces examiners.
A major focus was the Notice of Proposed Rulemaking (NPRM) regarding Inter Partes Review (IPR) proceedings at the PTAB. Squires defended a "one join and done" policy to prevent serial filings and "gang tackling" of patent holders. He also highlighted new guidance requiring the disclosure of the "real party in interest" (RPI) to prevent foreign state actors, such as those from the People's Republic of China, from challenging American patents. Squires noted a recent decision, Tianma, which established that foreign sovereigns are not "persons" eligible to bring PTAB challenges. Furthermore, he urged Congress to renew the USPTO’s fee-setting authority, which expires in September, noting its importance for maintaining operations during government shutdowns.
Notable Exchanges & Partisan Dynamics
Rep. Jamie Raskin (D, MD-8) aggressively questioned Director Squires regarding trademark applications and fee waivers he personally filed for the "Board of Peace," an entity associated with the President. Rep. Raskin characterized the Director acting as both the applicant and the adjudicator as a "stark conflict of interest." Squires defended the action as a "custodial" filing under 35 U.S.C. § 3 to prevent "cybersquatting" by third parties.
Rep. Henry Johnson (D, GA-4) raised concerns about a "collapse in employee morale," citing a survey where only 13.8% of USPTO staff reported job satisfaction. He also criticized the reversal of plans to establish a Southeast regional office in Atlanta, Georgia. Rep. Zoe Lofgren (D, CA-18) and Chairman Darrell Issa (R, CA-48) scrutinized the Director's use of "discretionary denials" at the PTAB, with Rep. Lofgren noting that the institution rate for challenges has dropped to 20%. Chairman Issa also questioned whether Secretary of Commerce Howard Lutnick had a conflict of interest regarding PTAB reforms due to his own extensive patent holdings and history of patent litigation with companies like eSpeed, Inc. and BrokerTec Global L.L.C.
Organizations Mentioned
- **Patent Trial and Appeal Board (PTAB):** Discussed extensively regarding proposed IPR reforms and the Director's use of discretionary denials to limit patent challenges. - **United States Patent and Trademark Office (USPTO):** The primary agency under review, focused on its 837,000-application backlog and declining employee morale. - **Board of Peace:** An unformed organization for which Director Squires filed trademark applications and fee waivers, leading to conflict-of-interest allegations. - **Huawei Technologies Co., Ltd. (Huawei):** Cited as a national security threat that uses patent litigation to target American companies. - **Monster Energy Company (Monster):** Criticized by Rep. Russell Fry (R, SC-7) as a "trademark bully" for aggressively opposing small business trademarks. - **United States Department of Commerce:** Mentioned regarding Secretary Lutnick’s role in shaping IP policy and his personal patent portfolio. - **OpenSky Industries, LLC and Patent Quality Assurance, LLC (PQA):** Identified as entities that allegedly abused the PTAB process to challenge patents held by VLSI Technology LLC.
What's Next
The USPTO is reviewing over 11,800 comments on the proposed IPR rule, with finalization expected later this year. Director Squires committed to providing a briefing to the subcommittee on the "community engagement office" model and the Southeast regional office. The agency’s fee-setting authority expires in September, requiring legislative action. Chairman Issa indicated the subcommittee may seek further testimony from Secretary Lutnick regarding potential conflicts of interest.
Transcript
...And with it, the American experiment itself, the American experience itself. Last month, I told the head of the UK IPO how our constitutional charge allows us to lean into AI, to quantum, to medical diagnostics, wherever the onrush of technology is going. His candid reply: I know, wish I had that. Think about that. The very empire we won our independence from, two democracies, two outcomes, but only one clearly atop the IP world today. That's why it's incumbent upon the USPTO to have an America-first IP agenda built atop the unique legacy our founders bestowed upon us. And we're doing exactly that with the urgency of now. As I'm before you today, our first priority was slashing the unacceptable backlog by 50,000. Another 100,000 to come this year. By the end of my tenure and with your continued fee-setting authority, choking backlogs will be a thing of the past and improved quality, a confidence indicator. I'm confident because we just announced our first agentic AI trademark classification tool. Five months of manual searching is now a five-second outcome. In patents, our AI search assistant delivers a top 10 list of prior art before the first office action, providing quicker pathways to allowance. And across both, AI fraud detections helped us purge 70,000 plus baseless filings in just under a year. You see, AI tools will become our examiner superpowers, supplying them with a cadre of agents to deploy as they see fit. On policy, Congress affords us discretion and our North Star to its exercise is always both the letter and the spirit of the AIA, balancing, as instructed, economic impact, resource efficiency, and the integrity of our IP system. We are restoring balance and fairness on both the front end with eligibility determinations and the back end as to trials and error corrections with new feedback loops in between. Mr. Chairman, I am humbled and proud to lead this unique and vibrant agency. We are back on our front foot and delivering the brilliant tomorrows American ingenuity affords, tinker by tinker, breakthrough by breakthrough, dream by dream. Just as a central bank stabilizes the flow of capital into the real economy, the USPTO stabilizes the flow of innovation into the knowledge economy. And with born strong protection, new ideas soon blossom in a marvelous virtuous cycle that has delivered prosperity and bettered people's lives for over 250 years, like no nation before, like no nation ever. Thank you again and I look forward to your questions.
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