[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
U.S. PATENT AND TRADEMARK OFFICE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, THE INTERNET,
AND INTELLECTUAL PROPERTY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 27, 2008
__________
Serial No. 110-115
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California LAMAR SMITH, Texas
RICK BOUCHER, Virginia F. JAMES SENSENBRENNER, Jr.,
JERROLD NADLER, New York Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina ELTON GALLEGLY, California
ZOE LOFGREN, California BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas STEVE CHABOT, Ohio
MAXINE WATERS, California DANIEL E. LUNGREN, California
WILLIAM D. DELAHUNT, Massachusetts CHRIS CANNON, Utah
ROBERT WEXLER, Florida RIC KELLER, Florida
LINDA T. SANCHEZ, California DARRELL ISSA, California
STEVE COHEN, Tennessee MIKE PENCE, Indiana
HANK JOHNSON, Georgia J. RANDY FORBES, Virginia
BETTY SUTTON, Ohio STEVE KING, Iowa
LUIS V. GUTIERREZ, Illinois TOM FEENEY, Florida
BRAD SHERMAN, California TRENT FRANKS, Arizona
TAMMY BALDWIN, Wisconsin LOUIE GOHMERT, Texas
ANTHONY D. WEINER, New York JIM JORDAN, Ohio
ADAM B. SCHIFF, California
ARTUR DAVIS, Alabama
DEBBIE WASSERMAN SCHULTZ, Florida
KEITH ELLISON, Minnesota
Perry Apelbaum, Staff Director and Chief Counsel
Sean McLaughlin, Minority Chief of Staff and General Counsel
------
Subcommittee on Courts, the Internet, and Intellectual Property
HOWARD L. BERMAN, California, Chairman
JOHN CONYERS, Jr., Michigan HOWARD COBLE, North Carolina
RICK BOUCHER, Virginia TOM FEENEY, Florida
MARTIN T. MEEHAN, Massachusetts LAMAR SMITH, Texas
ROBERT WEXLER, Florida F. JAMES SENSENBRENNER, Jr.,
MELVIN L. WATT, North Carolina Wisconsin
SHEILA JACKSON LEE, Texas ELTON GALLEGLY, California
STEVE COHEN, Tennessee BOB GOODLATTE, Virginia
HANK JOHNSON, Georgia STEVE CHABOT, Ohio
BRAD SHERMAN, California CHRIS CANNON, Utah
ANTHONY D. WEINER, New York RIC KELLER, Florida
ADAM B. SCHIFF, California DARRELL ISSA, California
ZOE LOFGREN, California MIKE PENCE, Indiana
BETTY SUTTON, Ohio
Shanna Winters, Chief Counsel
Blaine Merritt, Minority Counsel
C O N T E N T S
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FEBRUARY 27, 2008
Page
OPENING STATEMENTS
The Honorable Howard L. Berman, a Representative in Congress from
the State of California, and Chairman, Subcommittee on Courts,
the Internet, and Intellectual Property........................ 1
The Honorable Howard Coble, a Representative in Congress from the
State of North Carolina, and Ranking Member, Subcommittee on
Courts, the Internet, and Intellectual Property................ 3
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, Chairman, Committee on the
Judiciary, and Member, Subcommittee on Courts, the Internet,
and Intellectual Property...................................... 4
The Honorable Robert Wexler, a Representative in Congress from
the State of Florida, and Member, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 5
WITNESSES
The Honorable Jon Dudas, Undersecretary of Commerce for
Intellectual Property, and Director of the U.S. Patent and
Trademark Office, U.S. Department of Commerce, Washington, DC
Oral Testimony................................................. 7
Prepared Statement............................................. 10
Ms. Robin M. Nazzaro, Director of Natural Resources and
Environment, U.S. Government Accountability Office, Washington,
DC
Oral Testimony................................................. 31
Prepared Statement............................................. 33
Mr. Robert D. Budens, President, Patent Office Professional
Association (POPA), Arlington, VA
Oral Testimony................................................. 53
Prepared Statement............................................. 55
Mr. Alan J. Kasper, First Vice President, American Intellectual
Property Law Association, Sughrue, Mion, PLLC, Washington, DC
Oral Testimony................................................. 100
Prepared Statement............................................. 102
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan,
Chairman, Committee on the Judiciary, and Member, Subcommittee
on Courts, the Internet, and Intellectual Property............. 4
APPENDIX
Material Submitted for the Hearing Record........................ 141
U.S. PATENT AND TRADEMARK OFFICE
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WEDNESDAY, FEBRUARY 27, 2008
House of Representatives,
Subcommittee on Courts, the Internet,
and Intellectual Property,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 1:34 p.m., in
Room 2141, Rayburn House Office Building, the Honorable Howard
Berman (Chairman of the Subcommittee) presiding.
Present: Representatives Conyers, Berman, Wexler, Watt,
Jackson Lee, Johnson, Coble, Sensenbrenner, Goodlatte, Chabot,
and Issa.
Staff present: Shanna Winters, Majority Chief Counsel; Eric
Garduno, Majority Counsel; Christal Sheppard, Majority Counsel;
Rosalind Jackson, Majority Professional Staff Member; Blaine
Merritt, Minority Counsel.
Mr. Berman. This hearing of the Subcommittee on Courts, the
Internet, and Intellectual Property will come to order. I would
like to begin by welcoming everyone to this hearing.
I have to remember now which hearing is it that I am
chairing. Right, Oversight Hearing on the U.S. Patent and
Trademark Office.
I will recognize myself for an opening statement.
For over 200 years, inventors have relied on U.S. patents
to protect their inventions from unauthorized use and copy.
Patents play a essential role in spurring innovation. With the
exclusive rights granted by patents, investors are rewarded for
the inventions they create and are encouraged to further
innovate. While the degree of importance that intellectual
property plays varies by industry, patents are crucial to many
of the industries that the U.S. economy depends on.
That is why I take seriously threats to the patent system.
One threat, the issuance of poor quality patents, has been a
problem I have tried to address since at least 2002. Poor
quality patents undermine the value of patents generally. They
lead to a waste of resources, hinder development of new
products as companies are forced to either take out licenses on
junk patents or spend millions fighting them in court.
Addressing this problem is the primary impetus of the
patent reform legislation passed by the House last year and
currently under consideration in the Senate. But another
problem is the patent application backlog and the resulting
increase in patent pendency. The number of patent applications
awaiting initial review by an examiner has increased every year
for the last 10 years and totaled over 760,000 applications by
the end of 2007.
Today, it takes on average over 25 months for a first
office action to be issued, and almost 32 months for an
application to complete its course through the USPTO. Average
pendency in some of the more important technology areas like
biotechnology, chemicals and computer architecture and software
are well above 32 months. By the USPTO's own account, if steps
are not taken to address patent pendency, total average
pendency could increase to roughly 52 months by 2012.
The implications of long patent pendency periods are
sobering. The value in a patent is being able to use it to
exclude others from making, using or selling an invention.
While patent rights must be perfected through the
application and examination process, the term of an issued
patent begins the day the patent application is submitted.
Thus, long pendency periods cut directly into the time an
inventor has to make commercial use of his invention.
If this period becomes too long, inventors may give up
relying on the patent system altogether and use trade secrecy
as a means to protect their inventions. This will reduce the
technical information available to society, since some
inventors will no longer provide public disclosure of their
inventions through the patent system.
Over the last few years, GAO has issued various reports
analyzing practices of the USPTO. The most important recent
report makes several points related to patent examiner hiring
and retention, two of which I will highlight, and leave the
rest to our GAO witness to discuss.
Thanks in large part, the first part to pressure from this
Subcommittee, there has been no diversion of USPTO fees since
fiscal year 2005. And as a result, the USPTO has been able to
plan and make examiner hiring decisions based on their
projected fee collections.
Secondly, the GAO report found there is little hope of
diminishing the patent application backlog through hiring
efforts. This may be due to a number of factors--examiner
retention issues, flawed examiner production goals, the lack of
capacity to train enough examiners, and because actions to
address this problem are too late in coming.
The Subcommittee is committed to make sure the USPTO has
the resources it needs to address both patent quality and
pendency. For instance, I introduced H.R. 2336 earlier this
Congress, which would ensure that the USPTO permanently retains
all fees it collects. I believe Mr. Caldwell is a co-sponsor of
that legislation.
Our support of the USPTO should not be misconstrued as
giving the USPTO carte blanche to pursue any course it chooses
and, conversely, to ignore warning signs that impact efforts to
reduce the patent backlog. For instance, while I understand
that the USPTO has agreed to study whether the current
production goals are indeed unreasonable, I have to question
why this was not done sooner, given that this very problem had
already been identified by the GAO in 2005.
Additionally, I am troubled about the recently promulgated
continuation and claims rules, and wonder why a compromise
couldn't be reached that patent users could live with and that
would still address the pendency problem. I am very familiar
with the difference between rhetoric and substance.
I can't count the ways the patent reform legislation that
passed the House last year has been unfairly criticized and
misconstrued. Nevertheless, there may be some truth to the
public criticisms regarding the claims and continuation rules.
As such, there would be some middle ground that the USPTO has
not fully considered.
And finally, as part of our oversight responsibilities, we
must look into all assertions being made about the USPTO. I
have recently been made aware that there may be problems with
various management decisions made by the USPTO leadership.
For instance, last year the USPTO eliminated an office
dedicated solely to intellectual property enforcement. This
seems counter-intuitive, given the Subcommittee's actions to
strengthen intellectual property enforcement efforts through
the--Chairman Conyers' Pro IP Act legislation.
The USPTO has characterized this change as a realignment
instead of a reprogram that would require prior congressional
notification. Regardless of the semantics, it should be clear
that the Subcommittee would like to understand the USPTO's
reasons behind any such decision prior to its implementations.
I look forward to what promises to be a vigorous discussion
with our witnesses on these and related issues, and I would now
like to recognize our distinguished Ranking Member, Howard
Coble, for his opening statement.
Mr. Coble. Thank you, Mr. Chairman, and thank you, as well,
for having scheduled this hearing. A healthy U.S. Patent and
Trademark Office is essential for our patent system to thrive.
Unfortunately, there is no true measure or statistic to
evaluate the office or the system as a whole.
On the one hand, we have some report that there may be
troubles over the horizon. The time for average patent pendency
and the backlog of patent applications are steadily increasing.
And while we are losing experienced examiners, it appears
there may be no solution in sight. Also, fairly recent internal
reorganizations and rule changes have led to some controversy,
which may lead to some additional concern.
On the other hand, the U.S. Patent & Trademark Office is
showing successes in many other areas, including projections
for more than $2 billion in fee revenue in 2009, record numbers
of patents being processed, and other indications that
examiners are improving their reviews of applications,
including a substantially lower percentage of applications
being approved. Some think that the U.S. Patent & Trademark
Office are obviously going well.
Address the increasing patent pendency and the growing
backlog of applications is a perennial challenge for the
office, but the length of time for pendency and the magnitude
of the backlog have grown to what some have viewed as alarming
proportions.
Recent improvements in examiner performance are enormous
accomplishments. They should be recognized, but they alone will
not overcome these historic challenges. I am hopeful that
today's panel will help everyone better understand how the
pendency and backlog issues can be managed.
Also, Mr. Chairman, I am interested to hear about changes
within the patent office and how they have or have not improved
efficiencies. If changes were made that triggered a notice to
Congress, that notice should have been sent. I hope we can
clarify today when notice to Congress is required, that what
constitutes notice or what actions trigger a notice so there is
no confusion in the future.
In order to work together, we must be kept abreast of these
important changes within the office, and we must furthermore
maintain an open dialogue, it seems to me.
Finally, I greatly appreciate the effort of Mr. Berman, of
you, in having scheduled this hearing. We have spent
considerable time and resources in the first session of the
110th Congress developing comprehensive patent reform. No
reform, however, will be successful unless our patent system is
strong and robust, which largely depends on the ability and the
performance of the U.S. Patent & Trademark Office.
Unfortunately, there are no predictions that demands our
patent system are going to recede. As a result, the office, as
users of the Congress, are going to have to continually and
honestly assess the performance of the office to protect and
ensure the future of our innovations. This honest assessment is
essential for Members of this Subcommittee and for the future
of the U.S. Patent & Trademark Office.
I look forward, Mr. Chairman, as do you, to today's panel
and learning any new sights on how we may improve or assist the
U.S. Patent & Trademark Office in meeting its growing
challenges.
And I yield back, Mr. Chairman.
Mr. Berman. Well, thank you, Mr. Coble.
And the Chairman of the Committee on Judiciary, Mr.
Conyers, is recognized.
Mr. Conyers. Thank you, Chairman. I am happy to associate
myself with the remarks of both you and Howard Coble, and I
would ask unanimous consent to put my statement in the record.
The only point that I would like to make is to Mr. Dudas,
our distinguished Undersecretary. I was out at the Patent
Office earlier this year and there is a question about hiring--
as many people as we hire, we have got a lot of people going
out the back door.
I was impressed with the quality of the young men and women
that are trained out there. They were energetic and committed.
Now, these were people going into the system. The question is,
what happened somewhere along the way, or what goes on to
change that enthusiasm? And I am sure we will get into that.
And so, I am happy to join the distinguished Chairman of
the Committee, Mr. Berman, and I look forward to the testimony
of the witnesses.
The prepared statement of Mr. Conyers follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative
in Congress from the State of Michigan, Chairman, Committee on the
Judiciary, and Member, Subcommittee on Courts, the Internet, and
Intellectual Property
Thank you, Chairman Berman, for holding this oversight hearing on
the USPTO.
The GAO report, and general commentary throughout the patenting
community is essentially unanimous that the increasing length of patent
pendency is a serious and growing problem that harms our nation's
competitive advantage both at home and abroad.
However, there's much less than unanimity when it comes to figuring
out the root causes of the increase in the time it takes to obtain a
patent and the mechanisms that are necessary to reverse that trend.
Many place the blame squarely on the shoulders of either the USPTO
administration or the USPTO employees represented before us today by
Department of Commerce Undersecretary Jon Dudas and Robert Budens,
President of the patent examiners union, POPA.
However, it is clear to me that the patenting community and
advances in the complexity of technology must also shoulder some of the
blame/burden.
The USPTO has directly taken, head-on, the issue of patent
pendency, patent quality and employee retention through several bold
initiatives that we will hear more about today. Some of these efforts
have not been met with applause--but rather with lawsuits. Others have
been instituted and carried out without much fanfare. I speak of the
new continuation rules, aggressive new examiner hiring efforts and the
USPTO examiner training academy.
Whether or not these initiatives are the optimal way to achieve our
collective goals will be examined today; however, we all agree that a
patent system that does not take into account the realities of the
world around us can not survive, thus sometimes minor or major tweaks
are necessary--doing nothing is not an option. We may disagree with the
changes but we all see the need for correction.
In the case of this committee, we proposed and passed the Patent
Reform Act of 2007, which is essential to the continued vitality of
American intellectual property in the increasingly competitive global
marketplace.
In the case of the USPTO, Undersecretary Dudas saw a problem with
pendency and laid out a solution that the Administration felt would
address the issues.
I went to the USPTO this past January to not only to meet and speak
with Undersecretary Dudas about his initiatives but also to meet and
speak directly with a graduating class of new USPTO examiners. I saw,
directly, the sincere and profound investment in training for the new
hires.
However, investment in increased training and additional hiring can
not cure the problem of pendency and quality unless we also address the
problem of attrition.
The September 2007 GAO report stated that despite aggressive hiring
efforts for new examiners by the USPTO that the new hires will not be
sufficient to reduce the patent application backlog mainly due to the
inability to retain those examiners. For nearly every two patent
examiners that the USPTO hires and trains, at least one has left the
agency. Between 2002 and 2006, the USPTO hired 3,672 examiners and
1,643 left the agency during that same time period. High attrition
levels clearly offset the increased examiner hiring.
POPA stated that the reason is the unrealistic production goal
schedule--insufficient time to meet production goals--which results not
only in examiner attrition but poor quality patents.
The USPTO states that attrition is for reasons personal to the
examiner, such as the job is not a good fit or having to move to a new
city because of a spouse.
As for the GAO results, they polled people who were still at the
agency for reasons why they would consider leaving. Although 67%
indicated that it was the production goal schedule as POPA also stated,
GAO is polling the wrong people. They asked people who chose to stay.
Not those who left.
We have to ensure that the patent laws stay relevant with the
changing times and that the USPTO has the resources and regulations in
place that assist in that process. I look forward to hearing the panels
commentary today on how to maintain the US as one of the, if not the,
best Patent Office in the World.
Mr. Berman. I thank the Chairman.
Okay. Without objection, I recognize the gentleman from
Florida, Mr. Wexler, for opening comments.
Mr. Wexler. Thank you, Mr. Chairman.
I just want to read a list of senior title positions.
Commissioner for Patents. Commissioner for Trademarks. Deputy
Commissioner for Patents. Deputy Commissioner for Patent
Operations. Administrator for External Affairs. Chief of Staff
for the Undersecretary of Commerce. Chief Financial Officer.
Deputy Financial Officer. Director of Patent Quality. Chief
Information Officer. Deputy Information Officer. Director of
Enforcement.
All of these positions were filled, as I understand it, by
career professionals. Collectively, they represent literally
hundreds of years of experience, Federal experience in
scientific, legal and technical fields. And if I have the right
information, they have all been removed by Mr. Dudas or his
predecessor, most by the current occupant.
The numbers are disturbing, and I hope that the hearing
will tell us why this is happening.
And thank you, Mr. Chairman, for holding the hearing.
Mr. Berman. Thank the gentleman.
And we will now go to the witnesses.
John Dudas is Undersecretary of Commerce for Intellectual
Property and Director of the United States Patent & Trademark
Office, a post he has held since 2004. Prior to that, Mr. Dudas
served as acting undersecretary and director and deputy
undersecretary and deputy director.
Before joining the Bush administration, Mr. Dudas served
for 6 years as counsel here to the U.S. House Judiciary
Committee's Subcommittee on Courts and Intellectual Property,
and staff director and deputy general counsel to the House
Judiciary Committee. Mr. Dudas holds a law degree from the
University of Chicago.
Robin Nazzaro is a director with the Natural Resources and
Environment team of the United States Government Accountability
Office. She is currently responsible for GAO's work on Federal
land management issues--so it is obvious why you are here. No.
Recently, she oversaw GAO's work on federally funded R&D,
which includes responsibility for the USPTO and other
Government programs. Ms. Nazzaro received a bachelor's degree
from the University of Wisconsin and a certificate in senior
management and government from the John F. Kennedy School of
Government at Harvard University.
Robert Budens is president of the Patent Office
Professional Association, and has served on this executive
committee since 1998. He also currently serves on the Patent
Public Advisory Committee.
Mr. Budens has been with the USPTO since 1990 and has been
a primary patent examiner since 1994. He holds advanced degrees
in microbiology and immunology from Brigham Young University
and the University of Texas Southwestern Medical Center,
respectively.
Alan Kasper is first vice president of the American
Intellectual Property Law Association. He is also the director
of Sughrue Mions International Department, and a member of the
firm's management committee. Mr. Kasper's practice includes
domestic and international patent law.
Prior to joining Sughrue Mions, Mr. Kasper was an attorney
for the Communications Satellite Corporation, and was a patent
examiner in the U.S. Patent & Trademark Office. He received his
law degree from the Georgetown University Law Center.
Gentlemen and lady, your written statements will be made
part of the record in their entirety. I would ask you to
summarize your testimony in 5 minutes or less. To help you stay
within that time, there is a timing light at your table. When 1
minute remains, the light will switch from green to yellow, and
then red when the 5 minutes are up.
Mr. Dudas, would you lead the panel with your testimony?
TESTIMONY OF THE HONORABLE JON DUDAS, UNDERSECRETARY OF
COMMERCE FOR INTELLECTUAL PROPERTY, AND DIRECTOR OF THE U.S.
PATENT AND TRADEMARK OFFICE, U.S. DEPARTMENT OF COMMERCE,
WASHINGTON, DC
Mr. Dudas. Thanks very much, Chairman Berman. Thank you,
Ranking Member Coble, Congressman Wexler, and Congressman Issa.
It has been over 2 years since I have had the opportunity to
update this Subcommittee officially at an oversight hearing,
and I appreciate this opportunity to do so today.
Mr. Chairman, I am pleased to report that both fiscal year
2006 and fiscal year 2007 were record-breaking years for the
USPTO, due in part to the women and men at the United States
Patent & Trademark Office. For 2 years in a row we have met or
exceeded our highest production goals ever with a 21 percent
increase in production in the last 2 years.
We have the highest hiring in the history of the office,
both in terms of percentage and in terms of raw numbers. Over
1,200 examiners hired in Patents each of the last 2 years.
We have the highest number of examiners working from home.
In the last 2 years, we went from zero working almost full-time
from home to over 1,000, and we are adding 500 a year.
We now have the highest usage of electronic filing. We used
to measure in terms of 2 and 3 percent. We are up to 70 percent
in electronic filing, and the highest percentage of electronic
processing in the history of the office.
For each of these accomplishments in 2006, we met or
exceeded those records in 2007. And for those achievements, it
is clear we must thank the 8,500 hard-working women and men of
the United States Patent & Trademark Office. They are high
achievers. We are a performance-based organization. They are
performance-focused, and they are always up for the challenge.
On behalf of our employees, I also want to thank this
Subcommittee, and the Chairman and Ranking Member in
particular, all of your colleagues. We are pleased especially
that the Administration and Congress have worked together to
ensure that the USPTO has had access on a yearly basis to all
anticipated fee collections. The President's budget request
continues full funding for the fifth consecutive year this
year.
Full access to fees gives us the resources we need to
continue to improve upon our record-breaking successes, but
there certainly are challenges ahead.
Mr. Chairman, my written statements describes the wide
range of initiatives that we have underway and updates our
activity since our last oversight hearing. Quality is the
driving force in everything we do, from our daily activities to
our long-term strategic planning.
All of us in the room and all stakeholders want a quality
examination process that results in quality patents and quality
trademarks. That quality starts with the highest quality
people, and I am proud that our 8,500 employees do this on a
daily basis with true dedication to their jobs.
We recognize that, to recruit and retain the highest
quality people, we must provide an employment package with
benefits and a working environment that beats--not just meets,
but beats what our competitors are offering, and we do have
competitors within Government and the private sector who are
constantly looking to hire the people with the same skill sets
that we are looking for, and also hiring people that have the
experience after having been a patent examiner.
Quite frankly, I believe the offerings that we have are
more than competitive, and we seek to improve them. Others find
our environment to be good, as well.
We have been honored for 2 years in a row, that Business
Week Magazine chose the United States Patent & Trademark Office
as one of the best places in the United States to launch a
career. We have been chosen by Business Week magazine as one of
the best places to round out your career, and one of the best
places to have an internship. Washington Families magazine
called the USPTO one of the best places to work in the
Washington area if you have a family.
Our flex time, our tele-work and Hotelling programs
continue to be a model for Federal agencies. Eight-five percent
of eligible trademark examining attorneys work from home.
As I mentioned, we now have over 1,000 patent examiners
working from home, and we are adding 500 per year. Our vision
is to create a workplace where an examiner has every
opportunity and every flexibility to succeed as they want to
succeed, and they can do that, we hope, from anywhere in the
country. They can choose where they go, is our vision.
But we have some legislative hurdles. We want examiners to
be able to work from home in Detroit, Austin, Florida, Los
Angeles, Greensboro, Roanoke, for that matter, Mr. Goodlatte.
Good to see you.
Mr. Chairman, we recognize the importance of making every
reasonable effort to retain our examiners. It takes a number of
years to effectively train and guide our examiners to full
signature authority.
We don't want to lose them to our competitors when they
have developed marketable expertise. We want them to come to
the USPTO and want to stay there. And I will go in much more
detail about the specific statistics and what we are doing.
But I can tell you, the Bureau of Labor Statistics does
numbers. Attrition rate throughout the Federal Government is
11.2 percent. The attrition rate across the board at the USPTO
is 8.5 percent, 32 percent lower than throughout the rest of
Federal Government.
Our average attrition rate for patent examiners with 0 to 3
years of experience is quite high, and that is where we really
need to focus. But our examiners with experience beyond 3
years, between 3 to 30 years, that drops to below 40 percent.
Our focus on examiner retention and recruitment in those first
few years has borne fruit in the first years that we have done
that.
So BLS, Bureau of Labor Statistics, reports up to 45
percent attrition for engineers and computer scientists
throughout the private sector. Over the last 10 years, first-
year attrition at the USPTO has been about 20 percent. With
targeted retention and recruitment efforts with the new
training academy and other things we have put in place, we have
lowered that 25 percent to 15 percent for first years, and in
targeted areas we have lowered it to 10 percent.
So by targeting retention efforts, we think we have really
found something. We don't have enough numbers yet to give years
and years of data, but we have had much success on that.
So I look forward to talking about all the issues that you
have raised. I believe we have come a long way and enjoyed many
successes since our last oversight hearing. There is lots of
room for improvement. There are challenges that lie ahead, and
we fully intend to do all we can, with your continued support,
to build on these successes.
Thank you.
[The prepared statement of Mr. Dudas follows:]
Prepared Statement of the Honorable Jon W. Dudas
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
ATTACHMENT
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Berman. Thank you.
And Ms. Nazzaro?
TESTIMONY OF ROBIN M. NAZZARO, DIRECTOR OF NATURAL RESOURCES
AND ENVIRONMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE,
WASHINGTON, DC
Ms. Nazzaro. Thank you, Mr. Chairman and Members of the
Committee. I am pleased to be here today to discuss the U.S.
Patent & Trademark Office.
As the Chairman noted, my current portfolio does not
include USPTO, but I have had over 10 years experience where I
did have responsibility for Federal research and development
programs, including intellectual property and the oversight of
USPTO. I am here today pitch-hitting for one of my colleagues
who is undergoing cancer treatment.
My testimony today will be based on a report that we issued
last September entitled, ``U.S. Patent & Trademark Office:
Hiring Efforts Are Not Sufficient To Reduce The Patent
Application Backlog.''
Specifically, I will discuss (1) USPTO's process for making
its annual hiring estimates and the relationship of these
estimates to the patent application backlog; (2) the extent to
which patent examiner hiring has been offset by attrition; and
(3) the factors that may contribute to this attrition, and the
extent to which USPTO's retention efforts align with examiners'
reasons for staying with the agency.
First, as a result of its increased workload relative to
its existing workforce, USPTO determined that it would need to
hire additional patent examiners each year. However, the agency
identified its projected annual hiring estimates primarily on
the basis of available funding levels and its institutional
capacity to train and supervise examiners and not on existing
backlog or the expected patent application workload. Although
this process is generally consistent with the Office of
Personnel Management's workforce planning strategies, the
process does not consider how many examiners are needed to
reduce the existing patent application backlog or address the
inflow of new applications. Consequently, the patent
application backlog has continued to increase, and it is
unlikely that the agency will be able to reduce the backlog
simply to its hiring efforts.
Second, in addition to the patent examiner attrition, which
has continued to significantly offset PTO's hiring process from
2002 through 2006, one patent examiner left the agency for
every two patent examiners hired. Of those who left, 70 percent
had been at the agency for less than 5 years. This represents a
significant loss to the agency, because these new examiners are
primarily responsible for the actions to remove applications
from the backlog. According to USPTO management, patent
examiners leave the agency primarily for personal reasons, such
as the job not being a good fit or the need to relocate in the
event of a spouse's job. We also surveyed a random sample,
though, of over 1,400 patent examiners, in which we received an
80 percent response rate. In contrast, 67 percent of the patent
examiners we surveyed identified the agency's production goals
as one of the primary reasons examiners may choose to leave
USPTO. These goals are based on the number of applications
patent examiners must complete during a 2-week period. However,
the assumptions underlying these goals were established over 30
years ago and have not been adjusted to reflect changes in the
complexity of patent applications. Moreover, 70 percent
reported working unpaid overtime during the past year in order
to meet these production goals.
On the other hand, a number of different retention
incentives offered from 2002 through 2006, such as a special
pay rate, performance bonuses and a flexible workplace were the
primary reasons patent examiners identified for staying with
the agency. According to USPTO management, their most effective
retention efforts were those related to compensation and an
enhanced work environment. GAO's survey of patent examiners
indicates that most patent examiners generally approve of the
retention efforts and ranked the agency's salary, which can be
more than 25 percent above Federal salaries for comparable
positions, and the flexible work schedule among the primary
reasons for staying with the agency.
In conclusion, despite its efforts to hire more patent
examiners and implement retention incentives, USPTO has had
limited success in retaining new patent examiners. Because
production goals appear to be undermining its efforts to hire
and retain a highly qualified workforce, we believe the agency
will continue to be limited in its ability to meet the
increasing demand for U.S. patents and reduce the growth of the
patent application backlog, and ultimately may be unable to
fulfill its mission of ensuring U.S. competitiveness. Thus, we
recommended that USPTO undertake a comprehensive evaluation of
how it establishes these goals and revise its goals as
appropriate. USPTO agreed to implement this recommendation once
it determines the effect of recent initiatives designed to
increase the productivity of the agency through a more
efficient and focused patent examination process. We are
interested in timeframes and strategies that the agency has in
place to try to implement this recommendation.
Mr. Chairman, this concludes my prepared statement. I would
be happy to respond to any questions that you or Members of the
Subcommittee may have at this time.
[The prepared statement of Ms. Nazzaro follows:]
Prepared Statement of Robin M. Nazzaro
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Berman. Thank you very much.
Mr. Budens?
TESTIMONY OF ROBERT D. BUDENS, PRESIDENT, PATENT OFFICE
PROFESSIONAL ASSOCIATION (POPA), ARLINGTON, VA
Mr. Budens. Mr. Chairman, Ranking Member Coble, Members of
the Subcommittee, POPA represents more than 5,800 patent
professionals at the USPTO, including more than 5,500 patent
examiners.
Mr. Berman. Is your mic on?
Mr. Budens. Oh, sorry. You want me to start over?
Mr. Berman. Fifty eight hundred.
Mr. Budens. Fifty eight hundred patent professionals at the
USPTO, including more than 5,500 patent examiners. POPA's
members take great pride in the work they do, and are committed
to maintaining the quality and integrity of America's patent
system.
The USPTO has received much criticism in recent years for
failing to allow high quality patents in a timely manner. Many
proposed solutions represent radical changes that go far beyond
what is necessary to fix the patent system.
As with any product, it is better to build quality in right
up front than to try and repair problems after the product has
left the factory. Patent examiners need the time and the tools
to do their job right the first time. Years of inadequate
funding and restrictions on hiring left the USPTO severely
understaffed.
Fortunately, since 2005, the agency has been permitted to
keep its fees, and appropriators have lifted restrictions on
hiring, actually requiring more hiring, not less. The agency
now brings on 1,200 new examiners each year. It is doing a good
job hiring people. It is just not keeping them.
Statistics we have seen show that about 30 to 44 percent of
each year's new examiners leave the agency within 3 years. To
compensate for overall annual examiner attrition, the agency
must hire almost two examiners for each one it retains.
Frankly, we don't recognize the attrition statistics cited
in the agency response to the GAO report. The one thing
management could do to increase retention it has consistently
refused to do for more than 30 years--provide examiners with
the time to do the job right. More than any other factor, the
reason examiners leave the USPTO is the unrelenting stress
caused by the agency's outdated production system.
Patent examination is a labor-intensive job, mentally and
physically. Automation can accelerate processes, such as
searching large databases, but it cannot make the examiner read
and understand the results of those searches any faster.
After years of trying to do the job faster and cheaper, the
USPTO now finds itself facing the same criticism that any
manufacturer faces when it cuts corners--perception by end
users that the product lacks the quality it needs to do the job
it was supposed to do.
The USPTO's production goals have remained essentially
unchanged since they were put in place in 1976. Since then, the
patent applications have more technologically complex, have
larger specifications, and higher numbers of claims.
Studies by Professor Dennis Crouch show that the size of
issued patent specifications increased by 85 percent since
1987. The data also shows significant increases in the number
of independent claims and total claims. Trying to do a high
quality job in 2008 in the amount of time examiners were given
in 1976 has left examiners angry, stressed out and demoralized.
A POPA survey revealed that one-third of examiners worked
unpaid overtime just to keep their jobs. Another third of
examiners work unpaid overtime to earn performance awards. The
GAO found similar results in its September 2007 report. This
excessive use of unpaid overtime establishes a need for the
USPTO to provide more time.
What employees need--we need fee retention. POPA encourages
this Subcommittee to continue working with the Appropriations
Committee and the Administration to ensure that the USPTO has
access to all its fees. But POPA believes that this access,
however, must not be obtained at the expense of the oversight
responsibilities of the Judiciary and Appropriations
Committees.
We need to put an end to outsourcing searches. The USPTO
has wasted considerable resources in prior attempts to
outsource patent searches, and now with the applicant quality
submission.
Outsourcing searches will not result in better quality
patents, and will likely create conflicts of interest for
applicants. The Subcommittee should put an end to this waste by
passing legislation that clearly establishes patent searching
and examination as inherently governmental functions.
We need more time. POPA asks that the Subcommittee provide
more time for examiners by putting a fence around the patent
filing fees and directly allocating these fees to providing
time for examiners to examine patent applications.
Finally, we need tools. The USPTO needs to reverse its
policy of neglecting the U.S. classification system and
restoring its funding. We need automated tools that allow
examiners to classify and add foreign and non-patent references
to USPTO databases. There are very few former classifiers left
in the agency. Before their institutional memory is lost
forever, they need to be put back to work training new
classifiers and examiners.
Thank you very much for this opportunity to present our
views.
[The prepared statement of Mr. Budens follows:]
Prepared Statement of Robert D. Budens
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Berman. Well, thank you very much, Mr. Budens.
And Mr. Kasper, why don't you conclude for us, and then we
will have questions?
TESTIMONY OF ALAN J. KASPER, FIRST VICE PRESIDENT, AMERICAN
INTELLECTUAL PROPERTY LAW ASSOCIATION, SUGHRUE, MION, PLLC,
WASHINGTON, DC
Mr. Kasper. Thank you very much, Mr. Chairman and Members
of the Subcommittee. I am pleased to have the opportunity to
present the views of AIPLA at this oversight hearing on the
U.S. Patent & Trademark Office, an entity vital to maintaining
American innovation.
Since my time is limited, I will highlight only a few of
the points made in my written statement. I will focus on
current procedures, practices and administration of the patent
examination process that I and other practitioners find are
resulting in delays and added costs to applicants, and we
believe to the office, as well.
First, I would like to express my appreciation to the
thousands of dedicated patent examiners in the USPTO without
whom the system simply could not function. We believe, however,
that their jobs and their efficient processing of applications
could be facilitated if steps are taken to change the
adversarial culture that appears to exist in the USPTO.
For example, if examiners, following their detailed review
of a claimed invention and a prior ART that their search has
identified, were encouraged to make suggestions to applicants
for amendments to the claims. We believe that more applications
could be examined better and more efficiently.
While such suggestions may not be accepted in every case,
they would surely lead to a rapid narrowing of issues and a
meeting of the minds as to what language best defines the
patentable subject matter. Extended prosecution through RCEs or
continuations could be avoided in many cases.
Second, overly formalistic rules that are strictly applied
and result in frequent notices of noncompliant responses
requiring written replies within specified periods should be
relaxed. Often, the ensuing delays and costs to correct these
deficiencies could be avoided with an informal communication to
the applicant, permitting the examiner to amend or annotate the
application, showing a correction of the error. This too would
speed processing.
While formal errors in papers filed by applicants should
not occur, the rigidity with which the office approaches them
is in dramatic contrast to the manner in which it treats
deficiencies in communications from the office. For example,
the failure to list relevant prior ART in certain forms, or a
failure to fully complete other forms, requires applicants to
make unnecessary requests for correction so that a complete and
accurate record in the file history is obtained.
A greater stress on thorough and competent supervision of
the entire work product before it is mailed from the USPTO
would enhance the overall quality of the examination process
and save both applicants and the office time and money. The
greater emphasis on avoiding formal errors and resolving them
more expeditiously at all levels should be coupled with
appropriate metrics for the examiner, support staff and
supervisor performance, and matched with better training of and
incentives for all PTO employees.
My final comments on USPTO procedures concerns the pre-
appeal submission process outlined in Director Dudas's
testimony. This procedure was intended to avoid unnecessary
appeals and save costs. It was universally welcomed by
applicants when announced. However, its full potential has not
been realized in practice.
In reality, the reviewing panel of preferably three persons
typically includes the examiner and his supervisor, thereby
skewing the process against applicants. At least two senior
examiners not involved with the application should be part of
any reviewing panel.
Lastly, in my experience as an examiner, in-house attorney
and outside counsel, I found the European practice of placing
reference characters from the description into the claims to be
immensely helpful as a roadmap to efficiently understanding the
invention as claimed. We have recommended that this practice be
adopted by all three trilateral patent offices.
Unfortunately, current U.S. law as interpreted by the
courts effectively precludes such practice by allowing courts
to reach restrictive claim interpretations or impose an
estoppel. A legislative fix to this problem is needed so that
reference characters can be placed in the claims of U.S. patent
applications and issued patents.
Such a legislative fix, together with an amendment
relieving applicants from a statutory obligation to include
certain legends in applications rather than accompanying
documents would facilitate adoption of an international common
application format with attendant cost savings.
I wish to thank the Subcommittee for the opportunity to
present these views, and I would be pleased to answer any
questions you may have.
[The prepared statement of Mr. Kasper follows:]
Prepared Statement of Alan J. Kasper
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Berman. Well, thank you very much. A number of issues
raised.
I will recognize myself for 5 minutes.
There is a tension here between pendency and all of the
negatives caused by that, and quality. And in a way, all of you
have spoken to this issue.
At this point, I would like to just engage, maybe even in a
bit of a dialogue back and forth, Mr. Dudas, Ms. Nazzaro and
Mr. Budens on how we can accommodate this tension, deal with
the terrible pendency problem and deal with some of the quality
issues that you address in the context of goals and working
conditions and requirements. So let me just ask a few
questions.
First, to Ms. Nazzaro, I want to clarify one point in your
report. Your report found that, within a 1-year period, 70
percent of patent examiners worked unpaid overtime to meet
their production goals.
Did these examiners occasionally or consistently work
unpaid overtime to meet their goals? Was this a--sort of a once
in a while kind of situation, or was this a regular? And to
what extent, if you know, did examiners work unpaid overtime to
make production bonuses?
Ms. Nazzaro. The second part I can answer quicker. We don't
know whether the intent of working the overtime was to meet the
production goals. We didn't ask that question. But of the 70
percent that said that they worked overtime, five said they
worked less than 1 hour, 62 percent said they had worked 1 to
10 hours, 23 percent said----
Mr. Berman. Over what period of time?
Ms. Nazzaro. It is over the past 12-month period how much
overtime worked per biweek.
Mr. Berman. Okay.
Ms. Nazzaro. Twenty-three percent said they had worked
between 11 to 20 hours, 5 percent said they worked 21 to 30
hours, and 5 percent said they had worked more than 30 hours.
So that is worked per biweek in the 12-month period.
Mr. Berman. Okay.
Mr. Dudas, after the GAO report came out, the USPTO issued
a press release in October stating that it will review
assumptions the agency uses to establish production goals for
patent examiners. What steps thus far has the agency taken to
study these assumptions? When do you think we will have the
results of your study? And will these results be made publicly
available?
Mr. Dudas. Since that time, we have begun to look
particularly at breaking down attrition and retention numbers
not just across the board but specifically based on year. And
we found that, as things are more focused, when you get more
focus on things, you see patterns that begin to develop.
I will ask that we put up a chart that shows that attrition
throughout the USPTO is high in the first 3 years. As it gets
past the first 3 years, it drops to about eight, six, four,
three, two, one, and drops down dramatically. So we recognize--
that is not the right one, the one--the chart that has got
the--shows retention over 30 years, our attrition over 30
years.
The bottom line on that front is is that we have high
attrition in the first 3 years. That attrition lowers down
dramatically after 3 years, and then again lowers down--one of
the things we are focusing on is specifically why are people
leaving in the first year, the second year, the third year?
We do actual exit interviews. I think it is important what
GAO did, where they asked the question, ``If you were to leave,
why would you leave?'' Best practice--yes?
Mr. Berman. But is that responsive, though, to the issue of
reviewing the assumptions and establishing the production
goals?
Mr. Dudas. Oh, yes. On that front, well, we are certainly--
everything we are doing is looking at the assumption under the
production goals. Patent is doing that review across the board.
And again, even on that basis, you have to understand that
the production goals, that process has begun. That process is
looking at examiner's production--some examiners do roughly
2\1/2\ times more production than other examiners. It is based
on the level of experience the examiner has. It is also based
on the number of hours that are given per complexity for the
technology.
So yes, that study has begun. Patents is looking at that.
They want to look at that over time, and they want to look at
that. So yes, we are happy to make those results public as we
go through that process.
But what I am trying to focus on particularly is we have to
make--go beyond what the study did in the GAO report, and we
have gone beyond that for the last several years, to focus on
specifically where do we have attrition issues. We know that we
have attrition issues certainly in the first 3 years. We are
also putting things in place to try to address those attrition
issues.
We have actually lowered the attrition for first-years,
where we have our highest, by far. We have lowered that by 25
percent. We targeted that area with retention and recruitment
bonus and actually cut it in half.
But for the last 10 years, the PTO has lost about 20
percent of their first year examiners. We have lowered that to
10 percent where we have targeted retention and recruitment
bonuses, and to 15 percent across the board.
Mr. Berman. All right. I am going to give myself, and then
give other people, an additional minute to just finish my three
questions. And then, when--if there is a second round, although
I do--I should mention that we have to be out of here at 3.
Mr. Budens, the USPTO study--let us assume, when that study
is completed, and I am not quite sure when that is supposed to
be, but when it is completed, it finds an increase in
examination time is warranted, and the increase is implemented.
How do you believe this will impact patent pendency? Is there
any way to accurately calculate how incremental increases to
examination time would address examiner attention?
Mr. Budens. Well, first of all, I think that increasing--
giving examiners more time will directly impact retention. I go
down--I get talked to by examiners every day and get stopped in
the hallways, go--thank you for getting us some more money, but
what we really need now is more time. We have got to have more
time to do the work.
I believe the results of the study from the GAO because it
correlates with everything I hear and I see in the hallways. We
did a very similar study----
Mr. Berman. I also believe in the studies that correlate
with what I already believe, too.
Mr. Budens. We--interestingly enough, before the GAO study
came out, we had actually done a survey of our own--of
examiners ourselves, which ended up having results essentially
analogous to what they found.
And one of the questions you asked of Ms. Nazzaro, what we
found--because we actually asked the question, what we found
was roughly a third of examiners--and we asked a similar size
cohort, about 1,200, 1,300 examiners--about a third of them
were working unpaid overtime, significant amounts, just to keep
their jobs.
Another third were working significant amounts of unpaid
overtime in order to make outstanding ratings and get bonus
awards. So hopefully that--and that is a statistic I think
would--correlates perfectly with what the GAO found.
Dealing with how increasing those times is going to hit
pendency, obviously the short answer would be it has got to hit
pendency early on. But there are a number of factors that I
think are coming together at this point in time that may change
that.
The recent court case in KSR that may change where
obviousness goes, the fact that, if we can increase quality, if
we can start keeping the examiners and getting these people
experienced and examining and making the best rejections they
can, applicants are going to start seeing that it is not just
kind of a turkey shoot to go into the Patent office, and they
are going to stop filing and wasting their time and money. It
is not cheap to get a patent. They are going to stop filing
that.
I think those combination of things actually could lower
pendency in time. But pendency has been a problem that took us
20 years to get here. I don't think it is--I can't--I don't
know of any solution that is going to make it go away in a
year, or overnight.
Mr. Berman. My time has more than expired.
I recognize the Ranking Member, Mr. Coble.
Mr. Coble. Thank you, Mr. Chairman.
Good to have you all with us.
Attrition is a bad word. None of us embraces attrition. But
I am pleased to learn, Mr. Dudas, that your attrition rate is
more favorable than the Federal Government at large. I did not
know that. So that is the good news about attrition.
Now, you indicate, Mr. Dudas, that we cannot hire our way
out of the pendency and backlog problems. Are these problems
manageable?
Mr. Dudas. I think these problems are manageable, but there
are changes that are going be--need to be made, and I want to
support something that Robert Budens said.
If we could put up a chart that shows the allowance rate at
the Patent & Trademark Office, this is the number of patent
applications that ultimately lead to a patent issue. As you can
see, in year 2000, 70 percent of all applications led to a
patent. First quarter last year, it was 44 percent.
There is a dramatic drop in the number of applications that
have come in the door. Some of that is quality initiatives.
Some of those are things outside. But it is one of the things
we think--and I think Robert hit it on the head--KSR makes a
difference, that--what applications that come in the door are
sometimes quite problematic. And we have gone from having 70
percent approvals to 44 percent approvals.
That has also led to a behavior that is basically do-overs.
I will try again and again. I will ask for my continuation if I
don't like your answer. I will ask again. I will ask again. I
will ask again.
Unlimited do-overs we have right now. If there were no do-
overs, no continuing applications--and there are legitimate
reasons for them--that is 30 percent of our applications right
now, and that is growing.
Mr. Coble. Thank you, sir.
Mr. Dudas. So yes, we need better applications, as well.
Mr. Coble. Thank you.
Mr. Kasper, in your statement you say that the industry are
Trilateral, in which AIPLA participates, recommended a common
application format to the Trilateral patent offices. You
furthermore estimate that adoption of this format would yield a
savings of $300 million annually to patent applicants, but that
certain substantive issues prevent most of these savings from
being realized.
Expand on that, if you will.
Mr. Kasper. Yes. The common application format would assume
that there is a single format acceptable by all three
Trilateral offices. There are a number of components to that,
some very formal, such as common titles, common organizations.
Others are substantive, such as the content of the claims.
Now, in the study by the Industry Trilateral, in
preparation for discussions with the Trilateral offices, we
identified five different areas that were significant. One I
mentioned earlier in my testimony, it deals with adding numbers
to claims, where it is popular in Europe but not popular in the
United States.
Another is legends that are required under U.S. law. In
Europe there is a requirement that, once an application is
filed, there must be a description of the then-most pertinent
prior ART in the specification. Similarly, the claims must be
changed to comport with the specification. And finally, in
Japan, you have a requirement that the prior ART be listed in
the specifications.
Those are the major areas where costs would be saved if
they could be unified. So $300 million based upon each of those
requirements and those different jurisdictions would be saved
in the event that they could be eliminated or made uniform.
Mr. Coble. Thank you, sir.
Ms. Nazzaro or Mr. Budens, either one, what compensation-
related incentives are the most cost-efficient and attractive
to step the tide of attrition? Either of you? Either or both.
Ms. Nazzaro. I was going to say, we have not done any
analysis as to which ones are most cost effective.
Mr. Coble. Mr. Budens?
Mr. Budens. I think that, right now from my point of view,
our most cost effective use of money has been in higher
salaries for examiners, which has kept them in the
neighborhood. Washington is not a cheap place to live.
And the use of recruitment bonuses. One area I would
challenge Mr. Dudas on is that he keeps referring to
recruitment and retention bonuses. We are using recruitment
bonuses to get people in the door. I am not aware that we are
using--that any senior examiners have received retention
bonuses at all, and I think that is some place where we could
expand usage.
The recruitment bonuses, it is a little early yet, from my
view, to say that they are going to work, because they are
spread out over 4 years. But they are certainly an incentive to
get people in the door. But it is the higher salaries that we
have gotten with the special pay rates and that we need to
maintain in time that I think keep people in the door.
Mr. Coble. I want to try to beat that red light
illumination with this question, Mr. Budens. How does
outsourcing searches waste time and resources at the PTO, and
how do you feel it diminishes patent quality?
Mr. Budens. The first problem I have, the resources that
have been wasted is the fights that we have had ongoing on this
issue for years. We fought this battle in 2005, and then we are
fighting it again now with applicant quality submissions.
My belief is that those things are not going to put better
ART in front of examiners because an applicant themselves is
probably going to most likely be searching the same databases
that the examiner searches. They are going to be finding
roughly the same ART in a narrow area of their invention.
The problem with that is that examiners don't look at just
their invention. We give claims that have broader, reasonable
interpretation, and we may go out and find ART that reads on
the claims that their reading that the applicant doesn't think
about. Their view is more focused.
And I just don't believe in any way that it is going to put
more ART in. We already have the rules in place that, if
applicant knows about a Norwegian telecommunications ART or
something, they are supposed to be giving it to us. we need to
enforce that so BlackBerry cases don't come up again.
Mr. Coble. And I thank the Chairman for not penalizing me
for not beating the red light. I yield back.
Mr. Berman. The gentleman from Michigan, Mr. Conyers.
Mr. Conyers. Thank you, Chairman Berman .
You are a union man, Mr. Budens, Patent Office Professional
Association. What is the problem here? We have got tremendously
talented people here.
Mr. Undersecretary, you have been through this and helped
prepare us for many years. And I sense, quite frankly, that
this isn't complex. I mean, there is something more simple than
is coming forward.
Can you give me an idea about this, Mr. Budens? What is
going on underneath the radar for people that really want to
understand why we can't resolve the problem?
Now, I know that, for years, there was no replacement
money, and there were backlogs generated. Here we have a part
of our Government winning all kind of awards, and yet there is
a lot of severe criticism.
How do we sort these disparate facts out here and get to
the bottom of this? Start me off, please.
Mr. Budens. Well, first of all, I think that we have a--
somewhat of an atmosphere of conflict in the office. There is
certainly the normal kinds of conflicts that you always have
between management and labor.
But I think one of the biggest problems that we have that I
see plaguing us is that we don't have enough interaction
between each other on where the agency is going, how it wants
to solve problems.
When you really need to find out how to get the job done,
you go to the trenches. You go get the people who are actually
making the widgets involved in the process, in developing
better ways to do things and developing--and deciding the paths
you can go. This is something we haven't done.
Mr. Dudas says that they have started undertaking a goal
study of examiner goals. My viewpoint is POPA should be
involved in that study from day one, and I am just finding out
about it, that it is going on right now today at this table.
When the GAO report first came out, I met with the
commissioner of patents and the deputy commissioner for
operations, and I asked them, ``Okay, we have got this study
out. It clearly shows what the problem is. When are we going to
sit down, and let us start talking about what we can do with
goals.''
Their response to me is, ``Well, we can't really do that
right now because we need to see what efficiency gains we can
get from the rules change packages and the applicant quality
submission and other things--initiatives that we have got going
on, and we really won't know how to do the goals.
Well, the rules change packages is tied up in court. AQS is
tied up here in the Congress. In the meantime, examiners just
keep working, but we are not--we are not being involved in the
processes early on. We get things basically shoved at us at the
last minute and are told, ``Have a nice day.''
Mr. Conyers. Ms. Nazzaro, what do you see underneath the
radar screen that can help us out here? We want to help the
Patent and Trademark Office. Everybody is conscious of the
importance of what they do.
Ms. Nazzaro. I think my comment would be very similar to
Mr. Budens'. I mean, we have gotten an agreement from PTO that
they are going to look at the production goals, but we don't
have any time frame.
We don't know really what they are doing. This is the first
I have heard as well, and I did ask my staff before coming in
here, you know, what reaction have we gotten from the agency,
what response have we got, because we do track all of our
recommendations. And we had no idea that they were doing
something, as well.
We are not against production-based goals. Setting goals is
a good thing. You can't measure performance if you don't have
goals, so we are not against production goals. We just think
they have to be reasonable.
The agency has not met its goals for the 5-year period that
we looked at USPTO 2002 to 2006. So if they are not even
meeting these goals, they are unrealistic goals.
And yet, the number of staff who are very concerned with
these goals to me seems to be really off the radar screen. They
are very appreciative of all the initiatives that the agency
has taken, and we applaud them because they are in the
forefront of making a family-friendly workplace.
Being a woman myself, I know having an on-site daycare and
all of these things are commendable, being able to tele-work in
the Washington, D.C. area, all commendable. But they are
missing the point. When 67 percent of the agency says they have
a problem with production goals, it seems like they should at
least study it.
Mr. Conyers. Mr. Chairman, could I get enough time to ask
the undersecretary to respond after Mr. Kasper?
Mr. Berman. I think it makes sense.
Mr. Conyers. All right.
Mr. Kasper, please, do you have anything to add to this?
Mr. Kasper. Thank you.
From my perspective, as I said, as an ex-examiner and
certainly now outside, one of the things that is most important
is to have enough funding for the examiners, enough training
for the examiners, and to provide them with proper supervision
so that they can do their jobs in a consistent way so that, to
the outside world, they appear to be uniform and provide a high
quality output.
Thank you.
Mr. Conyers. Mr. Undersecretary?
Mr. Dudas. Thanks very much.
I do think that much of the issue at hand is what Chairman
Berman raised earlier, which is there is an inherent tension
between quality and production. We could certainly get rid of
the backlog overnight by cutting time in half. It would be
ridiculous. Quality would be terrible.
We had a 2004 study done by the inspector general who
concluded the opposite of what the GAO study was, which is that
we are giving too much time, because so many of our examiners,
more than 60 percent of our examiners actually achieved
productions standards of 10 percent higher than what is
required of them. It is beyond the goal.
We didn't instantly run in and say, well, let us, you know,
raise the goal for examiners, because we recognized there are a
lot of challenges, and there are many, many challenges.
Balancing that is critically important.
But I think, again, we believe very strongly in studying
all the assumptions under the production goals. They are 25
years old. I do listen to examiners.
We talk a great deal, everything from official functions
and brown-bag lunches. So quite honestly, I learn a whole lot
at the gym, talking to examiners about what kinds of issues
there are.
The claims package that is now being held up in court were
ideas that came from examiners because they look at too many
claims, and they said, ``This is a quality problem. It is a
production problem.''
I think where I see attention is I think the conclusion
that has come from the GAO study for many people is that what
we need to do is lower standards across the board. And I would
have to tell you, the USPTO disagrees that we need to lower
standards for examiners. We are a performance-based
organization with high achievers.
And let me tell you what this means. It means that 60
percent of all of our folks work beyond the level they need,
beyond 10 percent and beyond, to get higher bonuses. What we
need to do is not lower standards. We need to increase
opportunity.
We need to increase flexibility. We need to let examiners
have the opportunity to do what they do best from wherever they
want, whenever they want, and however they want.
And let me tell you about just three programs where this
has been put in place in the last 2 years. Tele-working, which
we didn't have in patents but had in trademarks, 1,000 patent
examiners are now working from home.
Eighty-three percent increased in morale. Eight-seven
percent say they would be more likely to work more years--
retention. And 10 percent increase on average in production
because they have the opportunity to work from home. When they
had more time, they chose to do more work and have more
flexibility.
A flat goal program, where we say, ``Listen, you get paid
per patent beyond a certain amount.'' Less people apply. It is
a voluntary program. Over 150 people. Eighty-three percent of
examiners reported higher job satisfaction. Over three-
quarters, which is not enough to conclude there is a 5 percent
increase in production across the board. Again, something
voluntarily chosen.
And laptop programs. This should have made sense a long
time ago. We said to patent examiners, ``Have a laptop. Take it
home.''
Mr. Conyers. Well, this impresses me, but does it pass the
test with Budens? That is the question.
Mr. Dudas. He is a tough, tough grader. I haven't passed--
--
Mr. Conyers. What do you say?
Mr. Budens. I appreciate Mr. Dudas's comments, and we do
agree that some of the things they have done have been very
good. Laptop program was very well received. It was a little of
a concern to us because we knew that examiners would be using
it to work more unpaid overtime, but examiners wanted it
because they are a dedicated bunch.
We are not necessarily opposed to production goals, by the
way, like the GAO is, either. We understand their needs. But
there are a lot of things that just aren't meshing.
You mentioned the flat goal program. The flat goal program,
almost all examiners just find that program reprehensible and
are scared to death that the agency is going to implement it
and pretty much run most of us out the door because it is not
unrealistic. We believe it is illegal. We are fighting it.
He made a--my brain went dead.
Mr. Conyers. Well, would going to the gym more with Dudas
help you or hurt you?
Mr. Budens. Well, one look at me says it may help me in
some ways. I am not sure that it would necessarily improve our
relationship all that much.
Actually, Mr. Dudas and I get along very well, I think,
one-on-one. We have had a lot of good conversation. Where the
real problems are is in the real development of where--and
direction of where the agency is going.
The employees need to be empowered. We need to be involved
in that process.
We are a very dedicated bunch. We believe in this system.
We want it to be successful, and we want to do a good job for
the American people. We need--we have one of the smartest,
highly educated workforces in the country. Put us--let us help
design where the agency is going and design the right tools
that we need and the right direction that we need to go to be
able to do the job that the American people deserve.
Mr. Berman. Very good.
The gentleman from Ohio. Again, 3 is our flat production
goal.
Mr. Chabot. Thank you, Mr. Chairman. I had another meeting
that conflicted with this. That is why I am a little bit late.
If I am repeating my questions, anything that you already
covered or anything my colleagues already covered, I apologize
in advance for that.
Mr. Undersecretary, I will begin with you. And if any of
the other witnesses want to either supplement or disagree with
or add to my questions to the undersecretary, that is fine. But
I will direct the questions to him.
Why did the USPTO wait until the 2007 GAO report to
initiate a study on patent examiner production goals when a
2005 GAO report identified unrealistic production goals as a
problem?
Mr. Dudas. Again--and you are not asking a--it is a new
question.
Essentially, we are--we have not agreed with the conclusion
that has come from GAO that it was intimated in 2005, and I
think more directly said in 2007, the conclusion that what we
need to do is adjust production goals and that that will
somehow really increase production.
And the reason being--and so, in 2004, I mentioned earlier,
the inspector general did a report that said the opposite,
essentially. It said we need to raise our production goals, not
lower them.
So I think what we are constantly looking at what should
production goals be and how do they work. We are also looking
in terms of what does it really mean in terms of attrition.
What the GAO study did was gave a lot of good, raw data,
but we have spent a lot of time doing--digging deeper under
that data since earlier than 2005, really trying to find out
what really is--what matters most for attrition and retention
by year.
So I had mentioned earlier that what we found is that we do
exit interviews. Everyone who leaves, we ask them why did you
leave, and they will come in and--not everyone chooses to do
them, but of those that do, we have a higher response rate than
generally in industry.
And what we have found is that the primary reason why
people are leaving in their first couple years, 41 percent said
the primary reason is the nature of the work. That agrees with
what the GAO says, what Robert Budens has said there.
We found in years 3 to 10, though, that no one said that it
was the nature of the work. They said that they think it was
supervisor issues or management issues, along those lines.
So what we have started to do, we have had 2 years in a row
where we have had a management competence, working with our
managers to work, ``How can we address that problem?'' We have
looked at----
Mr. Chabot. I tell you what. I have only got 5 minutes.
Mr. Dudas. I am sorry.
Mr. Chabot. That is all right. Let me cut you off there and
ask if any of the other witnesses want to supplement that
answer, or----
Ms. Nazzaro. Well, maybe there is a misunderstanding of why
GAO believes the way it does. I mean, what the testimony we
have heard today is that the more senior employees are the more
productive employees. Over 70 percent of the workload is done
by the more senior employees.
If you consistently have turnover, particularly among those
junior staff, you are never going to be developing that senior
cadre. What we see is the problem with the attrition among the
people who have less than 3 years, it takes 4 to 6 years for
someone to really become a journeyman or become proficient in
that profession. It is also taking the senior people more time
to provide that on-the-job training then, too.
So I mean, we really see a problem with this whole
attrition. And until they can effectively reduce that
attrition, I don't think we are going to work out of the
problem. And so, that is where we are saying that, if they are
continuing to say production goals are driving us out because
the nature of the work is too competitive, too production-
oriented, we need to figure out a way to have a happy medium.
Mr. Chabot. Okay, thank you.
Let me ask my second question, Mr. Dudas. Was there any
discussion within the USPTO management team over whether
Congress should have been notified of the re-organization of
the Office of External Affairs?
Mr. Dudas. Absolutely. In fact, we look at--there are three
different types of changes that might trigger different
requirements, a re-organization, a re-alignment and a
reprogramming. So we certainly have that discussion every time
we make a change.
A realignment is, if you will, changing people within a
box. A re-organization is changing boxes on the org chart,
getting rid of a different type of a thing. And a reprogramming
is a significant change in funding.
So there is no question. We had our chief financial officer
in every one of these cases. We have done five realignments in
the last year. On each one of those cases, our chief financial
officer gets together with our office of general counsel as
needed, our office of government affairs, to determine is this
the kind of thing that triggers that appropriations requirement
to notify the Appropriations Committee that this is a re-
organization.
So we definitely have that conversation every time. There
have been a number of times where re-organizations in the last
few years. I have got examples of when wee determine that they
are re-organizations. We have come up and notified Congress
officially, and in each case it is a re-organization.
I have examples of when it has been a reprogramming, and we
have come up and notified the Appropriations Committee and
others of what change is going to be made. But a realignment,
we don't do that, but we certainly have discussions n that in a
very formal way with a lot of----
Mr. Chabot. Let me squeeze my last question in quickly
here. What has been the effect of the re-organization of the
Office of External Affairs on USPTO, Intellectual Property
Enforcement efforts?
And my time has expired, so, if you would keep your answer
relatively brief, and I would like to go to the others quickly
if they have some response to that.
Mr. Dudas. Higher efficiency, essentially. We had an
organization that had Government Affairs, International Affairs
and Enforcement all in one. Five years ago we change that and
split them out among three.
And what we found is our people were bumping up against
each other. Enforcement people and International Affairs people
often do very much the same thing. We have stationed people in
the embassy in Thailand. We had people that were working in
that. That was from International Affairs.
We had people that were working from Enforcement bumping
into each other. What we have now is a team of more lawyer. No
on transferred out of the office or into the office. More
lawyers who can work on our global intellectual property
academy and gear themselves toward enforcement or gear
themselves toward the international relations or policy.
So it is a more efficient operation. We made a mistake 5
years ago when we split them into three. We should have split
them into two. Government Affairs should be separate--
International Relations.
Mr. Chabot. Thank you. Any of the other witnesses need to
comment on anything? Okay. Thank you. I yield back the balance
of my time, Mr. Chairman. Thank you.
Mr. Berman. I recognize the gentleman from Florida, Mr.
Wexler.
Mr. Wexler. Thank you, Mr. Chairman.
Mr. Dudas, if I could go back to the list that I had read
at the beginning in terms of, if my understanding is correct,
at least a dozen senior people in your office have left
involuntarily, not voluntarily. These involuntary dismissals
represent an extraordinary degree of talent, expertise,
technical knowledge developed over decades.
And it raises the question why so many career
professionals, if my understanding is correct, have
involuntarily been dismissed. So could you please tell us what
the numbers are in terms of this level? We are talking about
commissioners, deputy commissioners, administrators, chiefs of
staff, financial officers, deputy financial officers
information officers, chief information officers, deputy
information officers. What is going on?
Mr. Dudas. Yes. And you are talking about at the senior
elective service. This is the highest level within leadership
in our organization.
There haven't been a lot of involuntary dismissals. A lot
of people have chosen to leave. There have been some folks that
I have said, ``I don't think performance is where it should
be.''
I am really glad you asked this question because I worked
on this Committee in 1999 when the USPTO was made a
performance-based organization. We were about performance. And
our examiners had been under performance standards for a long
time. Our management wasn't always under performance standards.
When I came into the office, the Appropriations Committee
report came through, and Congress said, ``PTO management has
not been sufficiently innovative. Finally, we lack full
confidence in the information provided by PTO management
regarding its needs and performance.''
So the first thing we did was look at what is happening
within this office. Why aren't we achieving our goals? And we
looked at Government, performance and results----
If I can show you here, this is the history of the office.
The blue line going up, we met on average 25 percent of our
goals at the Patent & Trademark Office before 2004. We are now
up to 90 percent.
I am embarrassed to say that last line doesn't go up to 100
percent. All of our major goals that we report to the
Administration and the Congress, we have moved up from an
average of 25 percent to over 100 percent.
I will also show you the line that moves more downward.
That is the ratings outstanding for senior elective service
people in our organization. In 1999 we met 18 percent of our
goals, and 82 percent of the senior executives were ranked
outstanding. We don't even--we don't have about half of our
patent examiners ranked outstanding, and they have tight
production standards.
So the bottom line is it became a little harder to work
there. We said--and if you see, as our goals met went up, our
ratings of SESrs went down. A number of people left, quite
honestly just said, ``It is too hard. You have strategic plans.
I don't want to do this. I have other places I can work.''
There were others. I waited 3 years to have full
discussions where I said, ``I would like to reassign you
because I don't think we are meeting our goal. I want people in
place who will meet their goal.''
So I am happy to go over any individual, but I will say
there is little question that I came in with a sense of what
this Committee wanted and what that law said, is to become a
performance-based organization, and that is what we have done.
I am proud to say we brought down the ratings to a point
that I think is more reasonable. And in the last year, last 2
years where we have broken records, literally 12 records,
historical records at the Patent & Trademark Office, that yes,
we started to see some of those outstanding ratings go up.
Mr. Wexler. So if I just sum up your testimony then, in
regard to these senior managers, it is your testimony some have
left voluntarily, for whatever their reasons, and those that
have left involuntary--on an involuntary fashion have been
dismissed because they failed to meet your guidelines, they
failed to meet the levels of required expertise?
Mr. Dudas. Yes. I would say--I can't think of the people
that I actually--that I went through a process of actually
dismissing, going through the process of firing, et cetera. I
had hard conversations with a lot of our managers, where we sat
down and discussed whether or not we were meeting our goals and
what kind of support that I had given.
In the patents organization, at one point I sat down with
some leaders of the organization and said I would plan to
reassign you, and did make reassignments, which is--so that is
not a dismissal, but that is me saying that I think that the
fact that we have missed these goals, I would like to get
people in place who are--and quite honestly, I felt that I had
been asking for, wanting information for some time that would
help us meet our goals, and that we weren't doing that.
Mr. Wexler. Just to follow up and be done, is this
quantifiable in terms of individuals? If they--is there
something in writing that says they haven't met their goals?
Mr. Dudas. Well, we certainly do performance appraisal
plans and the like. And like I said, in many cases, it is not,
``You have not met your goals, and you are not doing the
findings.'' In many cases it is a sit-down conversation of,
``Why aren't we being sufficiently innovative? Why aren't we
doing the things that Congress has been asking us to do?''
I mean, again, I will tell you, I hold senior executives to
a very high standard because we certainly hold our examiners to
a very high standard.
Mr. Wexler. Thank you very much.
Mr. Berman. Thank the gentleman.
From what I heard from the Chairman and from what I see in
the audience, we are going to have a gig that implicates the
performance right soon, so we are going to have to start
wrapping up.
But Mr. Watt is recognized.
Mr. Watt. I will be very quick because I am going to ask
Mr. Dudas to provide some information in writing, if I can. You
said you anticipated what the oversight hearing would be about,
but I doubt you have a chart with you that will reflect what I
am getting ready to ask you.
As a new Member of this Subcommittee, I have noticed the
same thing that I have noticed as a Member of the Financial
Services Committee, on which I also sit, that there doesn't
seem to be a lot of diversity in what is going on.
So if you could just send us the information about the
diversity of your workforce at the Patent office----
Mr. Dudas. Congressman, I am happy to, but I can answer you
if you want me to. I am happy----
Mr. Watt. Well, in the interest of time, I would rather see
it in writing anyway. If it is not going to take you any longer
than it would take you to answer it, then I am going to be
disappointed anyway. I would rather be disappointed in private
than in public. And you would probably rather for me to be
disappointed in private.
Mr. Dudas. Right. I don't think you will be disappointed.
Let me just--54 percent diversity.
Mr. Watt. Four percent?
Mr. Dudas. Fifty-four.
Mr. Watt. Fifty-four. Well, I want to see the numbers up
and down the line.
Mr. Dudas. That is fine. We will give it to you broken
down, and we will give it to you whatever way you want.
Mr. Watt. Yes.
Mr. Dudas. And if you want more information, we are happy
to give you more information.
Mr. Watt. I appreciate it.
Mr. Dudas. Thank you.
Mr. Watt. That is the only question I have. I appreciate
it. I yield back, because I want to hear the whinings [sp]
also.
Mr. Berman. The gentleman from Georgia, Mr. Johnson.
Mr. Johnson. Thank you, Mr. Chairman.
Mr. Dudas, as a follow up to Mr. Watts' questions, in your
testimony you state that the various recruitment efforts, you
state the various recruitment efforts made to attract science
and engineering students to create a pool of potential
examiners for the agency. Could you please tell us your efforts
in ensuring the diversity in this pool of potential candidates?
And I will rest with that.
Mr. Dudas. Like many large organizations, we recognize that
diversity is something that is of great benefit to our agency.
So I can go into specific programs. The U.S. government is
about 32 percent diverse. The USPTO is 54 percent diverse. Our
examiners are 51 percent diverse. And in the last 2 years, our
recruiting classes have been 52 percent diverse.
That is broken down by a number of different categories. We
have been improving in a number of categories, seeking that
type of diversity. We have partnered with the Minority Business
Development Administration to help us with outreach because we
are hiring 1,200 examiners a year. We want to work with them to
do that.
We have now gone to--much more to historically Black
colleges and had I think 145 people hired at historically black
colleges in the last few years. We have partnerships with
minority student engineering societies at some of the major
schools we go to, MIT, some of the big universities where we
traditionally--not just said let us go in through the
recruiting, but let us work with the minority student
engineering societies that they have there as well.
We have a Community Day every year where we basically
celebrate the variety of cultures and the variety of
ethnicities we have, and celebrate that we are all at the
USPTO. We held 26 events specifically focused on minority
recruitment last year. And as I mentioned--in the last 2 years,
I am sorry--it is 145 people that we have recruited from
historically Black colleges.
We are challenged in recruitment on gender in the same way
that the industry for engineers are challenged. We need to
improve in terms of how many women that we are recruiting. We
are trying to expand that as well. That is something that you
see in the engineering professions throughout, but we are
trying to increase that number--that level of diversity as
well.
And I will throw just one more thing that wasn't intended,
necessarily, to be a diversity effort. But Chairman Conyers
came down and spoke to a recruitment class that we had, and he
came down right around Martin Luther King Day and shared with--
his efforts, what he managed to do to make Martin Luther King
Day a holiday.
That was something that we had about 200 people in that
academy that were graduating that day. They were inspired. But
the word spread throughout, just about how we are bringing
people in from outside traditionally USPTO environment, and
that was something that was inspirational to many of our folks.
So there is a lot that we are trying to do not only to
recruit, but also to make sure that it is an environment where
people want to stay.
Mr. Johnson. Thank you.
Mr. Dudas. Thank you.
Mr. Berman. The gentlelady from Texas, Ms. Sheila Jackson
Lee.
Ms. Jackson Lee. Thank you very much, Mr. Chairman. I know
the pending issue of importance that is about to come upon us,
so let me rush through and welcome the witnesses, thank them
for their presentation, and basically focus on the good friend
and assistant secretary of the office.
First of all, the President has put forward his budget for
forthcoming. And are you here applauding the budget, or are you
prepared to see it tweaked because there is a greater need,
particularly in the inspectors--examiners, rather?
Mr. Dudas. We are actually quite pleased with the budget
because it is the fifth year in a row that the President's
budget has said that all of the fees that come into the agency
should stay with the agency. And Congress has followed that
lead 4 years in a row.
And so to us, we are a fee-funded agency. Our goal is
really to see that those fees stay within for the inventors,
and so we have been pleased.
Ms. Jackson Lee. So that framework, it gives you the
sufficient amount of money?
Mr. Dudas. Yes. Well, it gets us all of our fees. It gets
us all our fees.
Ms. Jackson Lee. All right. I know I can probe that in a
further letter.
Let me just quickly--if I could follow up on Mr. Watt's
question and ask you, in the breakdown of his request regarding
diversity. If you can also categorize it by GS level, how many
are 13s, how many are coming at that level, because I would
imagine that you are taking some laterals, and it is very
important to see the ability of people moving up. Can you
provide it in that manner?
Mr. Dudas. I think we can. I am almost certain we can.
Ms. Jackson Lee. Management is important.
Let me also suggest that you--actually you talk about
minority engineering societies, very important. But I would
encourage you to formulate a direct program with Hispanics
serving in historically Black colleges, which the President has
a framework, the college--the Congress has a framework. We have
worked--and so those frameworks are already in place.
One, the knowledge of them, the organizations are there,
and we would like you to have a report back if you utilize
those resources of students. And I might, just for the record,
throw out Purview A&M in Texas.
My other question is--quickly is what efforts are being
undertaken by the USPTO in the area of enforcement,
particularly with respect to China? And what has been your
challenges? What have been your success rates, because I can
tell you that many of our businesses and constituents, and they
fall on different sides of the lot on this.
Certainly there are some successful, but others are
complaining that the trade imbalance, the infringement, rather,
which Mr. Conyers has worked on extensively, the Judiciary
Committee has worked on extensively. I don't know what progress
we have been able to make.
Mr. Dudas. The challenge, as I think you are implying, is
very clearly that, with all the efforts that are underway,
including a World Trade Organization action against China, the
metrics still show that China is responsible for 80 percent of
all of the counterfeit goods that are attempting to come in the
United States, and we see similar numbers in Japan and in
Europe.
And so there is no question. The challenge is that the
results are that counterfeiting is happening in China, that
their laws need to change, and that more needs to be done.
How are we involved? We are involved very directly.
Sometimes--we actually have a very unique position in the U.S.
government. Sometimes we are shaking our finger or telling
China, ``Listen, there is more that needs to be done.'' This
needs to be done, and we support the WTO case and work with the
U.S. trade representative.
But we also come in and work very carefully with all of the
agencies in China. We work with the customs people. we work
with the police. We talk to the Supreme Court justices. We have
a number of programs where we bring in hundreds of Chinese
officials to help train them and teach them and work with them
about how intellectual property is an important point.
We have had very successful relationships, particularly
with the head of office in the Chinese intellectual property
office. So what we do is we partner very closely with the
people who are pro-intellectual property in China, and we
develop and we help strengthen those ties. That is where we
have been very successful, particularly.
Ms. Jackson Lee [continuing]. I don't want to leave you out
of my last question. Can you give me an assessment of the
professional workers and the issues or--of your association, or
treatment of your association, or comfort level that you have
with the office at this point?
Mr. Budens. As I said before, the examiners are very highly
educated and highly skilled force, and they are highly
dedicated to the patent system. We want to do the job right. We
really understand the importance of patents in driving
innovation in this country and throughout the world.
I think there is a sense of frustration that we are not
more involved in developing the kinds of things and tools and
policies and stuff that we need to be able to do the job right.
In I think several areas of the office, I think we are very
pleased with this Administration, some of the initiatives they
have put forward. The Hotelling program has been well received.
The laptop program has been well received.
On the flip side of that, we are in the middle of a
contract negotiation right now for our term contract in where
the positions of the agency on many very important things like
grievance rights and performance appraisal stuff, the agency
has taken very decidedly anti-employee positions on those
areas. And we are scared to death of what is coming out of that
negotiation.
We are starting mediation on that next Tuesday, I believe,
and expect the agency to have us at the impasses panel very
quickly. And I don't think--I don't see right now anything good
coming out of those mediation. I hope I am wrong, because I
think it is going to be a decidedly negative impact on
examiners if nothing happens, if the positions of the parties
don't change right now.
Ms. Jackson Lee. Mr. Chairman, let me thank you very much
for your indulgence, and just conclude by saying Mr. Budens'
comments disturb me. And I believe if we are to have an
efficient, effective and professional office and staff, if we
are to build on our recruitment, obviously the Federal
Government needs to be a leader in respecting worker's rights
or opportunities to have--express a grievance.
So I don't know what statement that Congress can make at
this point, but I hope that we can make a statement that
indicates that we are watching, and we are concerned. And I
hope that we can get a report back that our parties have come
together, and they have done the right thing. Otherwise, I hope
maybe we will have a hearing on the issue.
Mr. Berman. We will take a closer look at the current round
of bargaining on this issue.
I will now thank the gentlelady, and I will recognize
myself. I am told we have a little bit more time, so, Mr.
Kasper, I would like to go to your testimony to examine one
particular statement. Page five where, in the middle paragraph,
where you start out, ``In the vast majority of cases,
inventions relate to actual products or processes that have
been developed by the inventor or his employer.''
And you talk about two major goals for such applicants, and
you have one, and then you have the second one, and that is the
one I want you to focus on, ``To secure claims directed to the
particular features of the commercial embodiment of a product
that contains the invention to protect against the copying of
that product.'' You see where I am talking?
Is what you are saying here, the phrase, ``The particular
features,'' is the particular features is the invention, but
the claims may be defined broader to cover and include the
commercial embodiment that contains that inventive feature. Is
that basically what you are intending?
Mr. Kasper. Chairman Berman, the intention was to show
that, in some cases, you can have a claim that is broad enough
to cover both the commercial embodiment as well as competitors'
embodiments. So in other words, the scope of protection is
broad, and stops many competitors from entering the field.
Mr. Berman. Can the scope of the claim be written to cover
sort of the commercial embodiment, and therefore is broader
than the description of the inventive feature?
Mr. Kasper. Yes, it can be broader. You may--and typically,
it is broader than the description of the invention. However,
sometimes the applicant will take a much narrower scope of
protection that covers only what he has in the marketplace. He
doesn't care about a competitor's product or getting the
broadest possible protection, as long as his widget, as it is
sold, is actually covered. So he is prepared to compromise and
to truncate the prosecute----
Mr. Berman. And in that case, the claim would only cover
the inventive feature.
Mr. Kasper. Correct.
Mr. Berman. All right. And then, one last--I have a lot of
questions, but I am not going to do that. But I just--in your
testimony, you speak about many applications your firm files
every year. We hear--I hear that part of the patent pendency
problem stems from overly aggressive lawyering on behalf of
applicants, where the lawyers exploit the system in ways that
create many burdens on the examiner despite the current rules.
What additional duties, if any, would you impose on
applicants to improve the patent examination process?
Mr. Kasper. Well, certainly the additional duties could
involve more full description of the features of the invention
during the application prosecution process. In some cases, for
example, the applicant may simply say there is a difference
between the invention and the prior ART, and then leave it to
the appeal process to have that worked out by the Board of
Appeals.
What I believe is that, in a dialogue between the examiner
and the applicant, if that dialogue could be open and free,
without concern for inequitable conduct, you would have an
opportunity to have the important inventive features
identified, recited in a claim, and eventually have the claim
and the application issued as a patent in a much more
expeditious manner.
Mr. Berman. All right. Unless there is some reason to the
contrary, we are--votes have been called. I appreciate very
much--they are not all the--there are a lot of issues out
there. In fact, I just will make an observation for Mr. Dudas
on one very specific point that was raised by you and commented
by one of the Members.
When you split the Office of External Affairs into three
offices 5 years ago, that was--this was Mr. Chabot, I think was
pursuing this line of questioning--that you considered an
executive reorganization. So wouldn't it follow that the
collapse of those three offices into two would be considered an
executive reorganization?
Mr. Dudas. It is not, and I will tell you why. The
difference between it is it is a--when the split came in
first--I am not certain if it was a reorganization, but I will
tell you the difference between that split and the flip back
was.
There was a specific position that was Administrator for
External Affairs. When we decided to put it into three, we said
that position should rest in the deputy undersecretary. And the
deputy undersecretary--at that level, this is policy for the
entire Patent & Trademark Office, lead advisor to the President
and others.
That statement--that right there stayed the same in this
realignment. It is still the deputy undersecretary that leads
that organization. So that would have been a change from
someone who reports to deputy undersecretary to someone who is
within.
I can tell you, I am happy to go into----
Mr. Berman. I will think about your statement on the
matter.
Mr. Dudas [continuing]. Sure, that is----
Mr. Berman. Okay.
The Committee hearing is adjourned. I thank you all for
coming, and there are things to follow up both on your part and
on our part, which we will do. Appreciate it.
[Whereupon, at 3:07 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record
Prepared Statement of the Honorable Sheila Jackson Lee, a
Representative in Congress from the State of Texas, and Member,
Subcommittee on Courts, the Internet, and Intellectual Property
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Prepared Statement of the Honorable Betty Sutton, a Representative in
Congress from the State of Ohio, and Member, Subcommittee on Courts,
the Internet, and Intellectual Property
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Prepared Statement of the Honorable Darrell Issa, a Representative in
Congress from the State of California, and Member, Subcommittee on
Courts, the Internet, and Intellectual Property
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]