Commerce Secretary Gary Locke (above) was advised on patent issues by Kappos. Critics raise concerns at Commerce

Two former high-level managers at IBM and Microsoft are playing key roles in the Obama administration’s patent reform efforts, leading critics to question whether their involvement constitutes a breach of the administration’s ethics policy.

Opponents of the Obama administration’s position on patent reform say that David Kappos and Marc Berejka, who recently took top jobs in the Commerce Department, are wielding too much influence over a policy that stands to benefit both of their former companies.


As recently as March, Kappos, who was vice president and assistant general counsel for intellectual property at IBM, appeared before a Senate panel to express the company’s support for patent reform legislation making its way through Congress. And for more than a decade, Berejka worked in senior government affairs roles at Microsoft, including eight years as a lobbyist for the high-tech giant.

Now they are once again influencing the debate but from within the Commerce Department, where Kappos has been in charge of the patent and trademark office since August and Berejka serves as a top policy adviser.

As one of the Obama administration’s chief negotiators on the bill and the main adviser to Commerce Secretary Gary Locke on patent issues, Kappos is a central figure in formulating the administration’s policy. Berejka has helped coordinate the department’s efforts to reach out to stakeholders involved in the debate and has been involved with the department’s patent reform messaging efforts.

Both officials were among the high-level aides who had a hand in drafting an Oct. 5 letter signed by Locke that announced the administration’s provisional support for the Senate’s patent reform bill — the same piece of legislation that Kappos promoted seven months earlier as an employee of IBM.

The letter, addressed to Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), who sponsored the patent bill, and the committee’s ranking member, Sen. Jeff Sessions (R-Ala.), was greeted with public statements of support from both Microsoft and IBM.

At Kappos’s July confirmation hearing for the Commerce post, Sen. Arlen Specter (D-Pa.) grilled him on his ties to IBM. He pledged to steer clear of any issues that involved the company.

“To me, it’s extraordinarily important that I have absolutely nothing to do with any particular decision that involves my former employer if I am confirmed for this job,” Kappos said at the time.

He added: “Like other people who are in private industry and move to the government, I will put my previous role behind me and focus entirely on doing the right thing for the United States of America.”

Berejka’s job at the Commerce Department did not require Senate confirmation.

The involvement of Kappos and Berejka in the patent reform process provides an example of how former lobbyists and appointees with corporate ties can exert power even in an administration that swept into Washington with promises of curbing their influence.

On his first full day in office, President Barack Obama issued an executive order banning appointees of his administration from working on any matter “involving specific parties that is directly and substantially related” to their former employers for a period of two years. Former lobbyists entering government are subject to even stricter ethics rules. Still, a number of appointees who did not meet the guidelines managed to find their way into the executive branch; some were issued waivers allowing them to serve in key roles.

Yet neither Kappos, who was not a registered lobbyist, nor Berejka, who records show was last registered to lobby in 2007, sought or received waivers. According to the Commerce Department, that was because no issues have come up that would have required a waiver. Locke, who previously acted as a lawyer for Microsoft himself, also did not seek or receive a waiver.

“Everybody’s experience comes from somewhere, and good people serve the nation in government from all walks of life. President Obama set an unprecedented standard for ethical conduct, and Secretary Locke has emphasized that standard for everyone at the Commerce Department,” said Nick Kimball, a Commerce spokesman. “The administration is assisting Congress as it seeks to pass patent reform legislation that will encourage innovation and help the economic recovery for all Americans.”

But critics — including government watchdog groups, a variety of stakeholders in the intellectual property community and some lawmakers — disagree. They contend that the two officials have brought their corporate perspective to Commerce, providing an advantage to their former employers.

Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, an organization that monitors ethics in government, said that, at the very least, Kappos should have recused himself from the patent reform matter.

“I don’t understand why someone who testified on this issue for IBM is working on the exact issue in Commerce,” Sloan said. “It’s completely in violation of the rules.”

She added: “Even if you get past your technical ethics problem, you can’t get past your appearance problem. Appearance counts.”

While Kappos has recused himself from matters that directly affect IBM, the Commerce Department asserted that his past affiliation should not prevent him from working on patent reform issues. The department said that Berejka has recused himself from matters directly involving Microsoft.

Both companies, however, have been among the most vocal advocates for patent reform for years, and both are among the country’s most prolific patent filers. Records show that, in recent years, Microsoft and IBM have spent millions lobbying Congress, the Commerce Department and other agencies on patent reform issues.

The Commerce Department declined to make Kappos or Berejka available for an interview.

Opponents of the administration’s policy include some smaller technology and manufacturing firms, universities and individual inventors. They tend to dislike proposals, as outlined in Locke’s letter, aimed at changing from a “first to invent” to a “first to file” system, allowing patents to be awarded to whichever company or inventor submits paperwork faster. They also oppose an idea, backed by the administration, known as “post-grant review,” which would create more opportunities to challenge patents after they are approved. In general, technology behemoths like IBM and Microsoft are better positioned to take advantage of such changes than smaller firms.

Steve Perlman, a Silicon Valley entrepreneur and inventor and former executive at Microsoft, who is best known for co-founding WebTV, said big technology companies have much to gain from both proposals. He argued that the process within Commerce has been tainted by Kappos and Berejka, who was a colleague of his at Microsoft.

“I worked to elect Obama to curtail the kinds of things that Marc Berejka is doing,” Perlman said. “It is astounding to me that he is now in the administration.”

Perlman said the Commerce Department was “pushing all sorts of things which are very specific to IBM’s agenda and to Microsoft’s agenda,” like the first-to-file system and post-grant review, “both of which strongly favor large companies.”

The interest that IBM and Microsoft have in the patent reform debate is clear: Last year, IBM received more than 4,000 patents — more than any other company — and Microsoft topped 2,000 patent awards.

Last month, Horacio Gutierrez, vice president and deputy general counsel at Microsoft, issued a statement commending Locke for “supporting balanced patent reform legislation that benefits all segments of American industry.” Soon after, IBM followed suit with its own statement urging “swift passage” of the bill.

On Oct. 15, a dozen Republican lawmakers wrote a letter to Senate leaders that was critical of the administration-backed patent bill, saying that it “threatens to diminish the value and enforceability of U.S. patent rights at a time when America’s economic recovery is dependent on the strength of U.S. innovations.”

But opponents are generally reluctant to call attention to Kappos’s and Berejka’s past corporate ties, according to one lobbyist who is involved with negotiations over the bill.

“There is an unwritten code, particularly among large companies, that one company doesn’t criticize the other in terms of public policy if they can avoid it,” the lobbyist said.

Rep. Marcy Kaptur (D-Ohio), an outspoken opponent of the patent reform bill, told POLITICO it did not appear that Kappos and Berejka had sufficiently distanced themselves from their corporate roots to be objective on patent reform issues.

“I think the president’s got a problem with his personnel office. Somebody is not protecting his flank,” Kaptur said. “By moving these people inside, to me, you jaundice the whole process."