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1996 Annual Review - Additional Information

 Organizational Chart

U.S. Department of Commerce Patent and Trademark Office
1996 Fee Collection by Category


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Patent Fee Collections              571,656,495        85.9%
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Trademark Fee Collections            68,175,445        10.3%
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Other Fee Collections                25,341,816         3.8%
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PTO Total Fee Collections

	    665,173,756       100.0%
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Fee collection by catagory

 Statement of Operations and Changes in Net Position by Program
Program/Operating Expenses by Program

Litigation


During FY 1996, the number of ex parte appeals taken from decisions of the Board of Patent Appeals and Interferences, the Trademark Trial and Appeal Board, and the number of civil actions filed against the Commissioner of Patents and Trademarks, totaled 71. There were 33 inter partes cases taken to the Federal Circuit in FY 1996. Although there were several significant court decisions, most of the opinions entered by the Court of Appeals for the Federal Circuit and the district courts were not precedential. This section highlights some of the significant rulings of FY 1996.

Re-examination

In In re Recreative Technologies Corp., 83 F.3d 1394, 38 USPQ2d 1776 (Fed. Cir. 1996), the examiner rejected the claims under § 103 for obviousness, based on a single reference to Ota. The Board of Patent Appeals and Interferences (Board) reversed the § 103 rejection but entered a § 102 rejection for lack of novelty based on Ota. During the original examination of the patent, a rejection under § 103 based on Ota had been overcome by the applicant. Recreative argued that the PTO had no authority to reject the claims, on reexamination, on the same ground on which the application was examined and the claims allowed during the original prosecution. Id. at 1396, 38 USPQ2d at 1777.

The Federal Circuit agreed with Recreative and reversed the Board, holding that [r]eexamination is barred for questions of patentability that were decided in the original examination. Id. at 1398, 38 USPQ2d at 1779. According to the court, once the examiner determined that no new grounds of rejection had been raised, the re-examination should have been dismissed. Id. The court did not reach the question of whether the Boards § 102 rejection based on the same reference was a new ground of rejection. Id. at 1399, 38 USPQ2d at 1779.

Chemistry/Biotechnology

In two companion cases that had been pending at the Federal Circuit for more than four years, the court addressed the patentability of known chemical processes for making and/or using unobvious chemical compounds.

In the first to be decided, In re Ochiai, 71 F.3d 1565, 37 USPQ2d 1127 (Fed. Cir. 1995), the claimed invention was a chemical process for making a patentable compound using a patentable compound. The PTO rejected the claims under 35 U.S.C. § 103 in view of the combined teachings of six references. The PTOs position was based on several earlier cases, In re Larsen, 292 F.2d 531, 130 USPQ 909 (CCPA 1961); In re Albertson, 332 F.2d 379, 141 USPQ 730 (CCPA 1964), and In re Durden, 763 F.2d 1406, 226 USPQ 359 (Fed. Cir. 1985). The suggestion in these cases was that an otherwise unpatentable process could not be made patentable merely by claiming the making of a patentable compound in the process. The PTO distinguished In re Pleuddemann, 910 F.2d 823, 15 USPQ2d 1738 (Fed. Cir. 1990) and other cases, based on its position that these cases were method of using rather than method of making cases. Ochiai, 71 F.3d at 1569, 37 USPQ2d at 1130.

The Federal Circuit reversed. The court found that Ochiais claimed process is not prima facie obvious because the particular acid required was unknown but for Ochiais disclosure, citing In re Mancy, 499 F.2d 1289, 1293, 182 USPQ 303, 306 (CCPA 1974), a case involving highly analogous facts, which observed that one cannot choose from the unknown. According to the court, the mere citation of Durden or any other case as a basis for rejecting process claims that differ from the previous art by their use of different starting materials is improper, as it sidesteps the fact-intensive inquiry mandated by § 103.

With reference to the alleged conflict in case law between inter alia, Durden and Pleuddemann, the court acknowledged that some generalized commentary found in these cases ... may, if viewed in isolation, have inadvertently provided encouragement to those who desire per se rules in this area. Id. at 1572, 37 USPQ2d at 1133. Nevertheless, the court continued, the use of per se rules ... flouts section 103 and the fundamental case law applying it. Id. at 1572, 37 USPQ2d at 1133.

In the second of the two companion cases, In re Brouwer, 77 F.3d 422, 37 USPQ2d 1663 (Fed. Cir. 1995), the claimed invention was a chemical process for making an unobvious compound. The relevant facts in Brouwer were substantially the same as those in Ochiai, except the case involved only a method of making an unobvious compound and not a method of using such a compound. The Federal Circuit again reversed, based on substantially the same reasoning as in Ochiai.

Note: 35 U.S.C. § 103(b) (effective November 1, 1995, shortly before these two cases were decided) precludes rejection of process claims that involve the making or using of certain biotechnological compositions.

Hatch-Waxman Act

In Merck & Co. v. Kessler, Civil Action No. 95-1005-A (E.D. Va. Oct. 16, 1995), affirmed in part, reversed in part, 80 F.3d 1543, 38 USPQ2d 1347 (Fed. Cir. 1996), the U.S. District Court for the Eastern District of Virginia rejected the PTOs interpretation of the relationship between the Uruguay Round Agreements Act (URAA) (35 U.S.C. § 154) and the Hatch-Waxman Act (35 U.S.C. § 156). The URAA requires that patents in force on June 8, 1995, receive the longer term of 20 years from filing or 17 years from the date of grant. Hatch-Waxman patent term extensions are required by law to be added to the original expiration date. 35 U.S.C. § 156(a). The PTO had determined that the patent term extensions should be added to the expiration date that was originally determined at issue, not to the new expiration date resulting from the enactment of the URAA. The district court disagreed.

The Department of Justice appealed the decision to the Federal Circuit on behalf of the PTO. The Federal Circuit affirmed in part and reversed in part, holding patents that were in force on June 8, 1995, only because of a Hatch-Waxman extension are not entitled to reapply a restoration extension to a 20-year from filing term. Except for those patents, a patent in force on June 8, 1995, is entitled to have a restoration extension, whenever granted, added to the longer term of either 17 years from issuance or 20 years from filing. Id. at 1553, 38 USPQ2d at 1354. The Federal Circuit also determined that the PTO was not entitled to deference with respect to its interpretation of 35 U.S.C. § 156. Justice, on behalf of PTO, requested an in banc rehearing of the case. That request was denied.

The PTO did not seek certiorari of the case; however, two parties have requested certiorari. Their basis is that even patents that were in force on June 8, 1995, solely due to an extension granted under the Hatch-Waxman Act should receive an original expiration date that is the longer of 17 years from patent issue or 20 years from filing.

FY 1996 Government Performance and Results Act (GPRA) Pilot Project Final Report


In FY 1994, the PTO elected to seek to participate in the first round of pilot projects for the newly enacted Government Performance and Results Act of 1993. PTOs decision to participate in the GPRA pilot test program stemmed from its historical experience in monitoring major program performance through performance measurements, and its many customer outreach efforts to gather feedback and comments on the PTOs performance. Customer satisfaction undertakings at the PTO included Total Quality Management efforts that won the Public Services and Administration division of the PTO the Department of Commerce Quality Award in 1991, and the Federal Quality Improvement Prototype Award (Federal equivalent of the Baldrige award for private industry) in 1992. In 1995, the entire PTO won the Department of Commerce Customer Service Excellence Award. The PTOs continuous commitment to improve customer satisfaction and delivery of its products and services, coupled with performance monitoring experience, enabled it to take full advantage of additional performance management tools (performance planning and performance reporting) available under the auspices of the GPRA pilot project.

As a participant in the GPRA project, the PTO has test-piloted three of the five components of GPRA: annual performance plans, annual performance reports, and managerial flexibility and accountability waivers. Since FY 1995, the PTO has submitted three performance plans and two performance reports to the Office of Management and Budget. In FY 1996, the PTO sought and was granted managerial flexibility and accountability waivers. However, simultaneous revisions of Federal administrative and procedural regulations such as the OMB Circular A-76 (Performance of Commercial Activities) and Federal Acquisition Reform Act of 1995 negated any benefits PTO may have derived from testing this phase of the pilot project.

As one of the early participants in the GPRA pilot project, the PTO has had the opportunity to re-examine, explore, and create performance measurements that are more aligned with agency mission and strategic goals and that provide a more balanced assessment of program performance. Assessing major program performance in areas other than input and output allowed the PTO to look at the result or outcome of its efforts and to monitor performance from all perspectives (e.g., customer and employee satisfaction, effectiveness, efficiency, innovation and quality). The Office has also evaluated private and public leaders in performance measurement data collecting, monitoring, and evaluating systems to use in improving the overall performance management system at the PTO.

Final FY 96 GPRA Performance Report


PTO Major Program Performance Goals:

  • Decrease patent pendency and maintain financial self-sufficiency.
  • Decrease trademark pendency and maintain financial self-sufficiency.
  • Engage in business-like partnerships with Patent and Trademark Depository Libraries tailored to the industry base of regional industrial areas, and increase the number of PTDLs throughout the nation.
  • Conduct customer focus group sessions and surveys of individual users, internal customers, law and intellectual property associations, and other stakeholders.

Patent Business Area Program Performance Goal: Decrease patent pendency and maintain financial self-sufficiency.


The Patent business area maintained 100 percent financial self-sufficiency in FY 1996; however, operational issues such as a steady increase in the average number of patent applications received, a reduction in overtime, and insufficient funds to hire as many new examiners as planned, continue to impede the business areas ability to achieve targeted pendency goals. The most needed resource for the Patent business area to achieve its business goals are FTEs. The lack of sufficient patent examiners to examine applications is a major impediment for the Patent business area to achieve its pendency goals. During FY 1996, the Patent business area applied several corporate foundation strategies to enhance its patent process and to move the business toward improved performance. These strategies include, but were not limited to Enhancing Human Resources, Leveraging Information Technologies, and Employing Better Processes. Despite deploying innovative approaches such as business process re-engineering to current processes, the performance targets for the Patent business area were not met in FY 1996. External impediments to achieving FY 1996 goals included the implementation of legislation for GATT, which changed the term of patents from 17 years from the date of grant to 20 years from the date of filing. This change resulted in the filing, before the legislations effective date, of approximately 29,000 additional applications over plan in FY 1995. The Patent business area projects that new and innovative approaches to current processes will realize significant improvement in the overall performance within the Patent business area.

Processes:

1. Enhance human resources.

2. Leverage information technologies.

3. Employ better processes.

Verification and Validation:

  • Patent program managers will use automated systems for tracking and monitoring all patent applications.
  • PTO managers will monitor performance through the use of monthly Executive Information System (EIS) reports and analysis.

Performance Indicators:

Performance indicators

Impediments:

  • Applications (or inputs) are subject to economic and political changes in the United States and abroad.
  • Application examination times are subject to technical complexity of applications, examiner experience, response time of applicants to office actions, and number of patent examiners available for examining.

Trademark Business Area Program Performance Goal: Decrease trademark pendency and maintain financial self-sufficiency.


The Trademark business area continued to maintain 100 percent financial self-sufficiency in FY 1996; however, a steady increase in the receipt of trademark applications and insufficient staff to process incoming workload continued to impede the business areas ability to achieve targeted pendency goals. The Trademark business area predicted two factors would impede its ability to achieve targeted performance goals: 1) applications are subject to economic and political changes in the United States and abroad, and 2) application examination times are subject to technical complexity of applications, examiner experience, response time of applicants to office actions, and the number of trademark examiners available for examining. Since the implementation of the Trademark Law Revision Act (TLRA) in 1990, which established intent to use (ITU) as a basis for filing, annual increases in filings have averaged eight percent, and have averaged over 12 percent since FY 1992. Applications filed under TLRA have increased as a proportion of total filings to nearly 60 percent of all applications; unfortunately, human resource levels have been insufficient to keep pace with customer demand, causing pendency to rise continually above plan. While the Trademark business area is applying several corporate foundation strategies, Enhancing Human Resources, Leveraging Information Technologies, and Employing Better Processes, to enhance its process and to move the business toward improved performance, the greatest potential for performance improvement will come from reducing or eliminating the number of processing activities in the current production process.

Processes:

1. Enhance human resources.

2. Leverage information technologies.

3. Employ better processes.

Verification and Validation:

  • Trademark program managers will use automated systems for tracking and monitoring all trademark applications.
  • PTO managers will monitor performance through the use of monthly Executive Information System (EIS) reports and analysis.

Performance Indicators:

Performance indicators

Impediments:

  • Applications (or inputs) are subject to economic and political changes in the United States and abroad.
  • Application examination times are subject to technical complexity of applications, examiner experience, response time of applicants to office actions, and the number of trademark examiners available for examining.

Information Dissemination Business Area Program Performance Goal: Engage in business-like partnerships with Patent and Trademark Depository Libraries tailored to the industry base of regional industrial areas and increase the number of PTDLs throughout the nation.


The Information Dissemination (IDO) business area continues to investigate ways to provide increased access to patent and trademark information, including the expansion of the PTDL library network. While the total number of libraries participating in the PTDL program has remained constant at 80, two libraries have dropped out and two libraries joined the program. While we continue to explore PTDL designation with various libraries throughout the United States, the decision to participate ultimately rests with the library administration.

The PTO has entered into business partnerships with two libraries to provide enhanced services tailored to meet the needs of local citizens and businesses in these regions. It has been our intent to evaluate the effectiveness of the current pilot business partnerships in FY 1996 before expanding further.

A formal program evaluation of the first partnership in Sunnyvale, California, was held in January 1996, and a marketing plan was formulated to address underused services. The Great Lakes Patent and Trademark Center of the Detroit Public Library in Detroit, Michigan, became operational in November 1995. A formal program evaluation will occur in the first quarter of FY 1997.

Processes:

1. Internal PTO approval of partnership agreements;

2. External acceptance of two partnership proposals;

3. Partnership agreement with the cities of Sunnyvale, CA, and Detroit, MI; and

4. Development of partnership performance measurements.

Verification and Validation:

  • PTO Business Council will review periodically.
  • Review partnership agreement for compliance.

Performance Indicators:

Performance indicators


Customer Service Program Performance Goal: To conduct customer focus group sessions and surveys of individual users, internal customers, law and intellectual property associations, and other stakeholders.


Processes:

1. Identify customers.

2. Take random sampling.

3. Conduct customer focus sessions (CFS).

4. Develop customer service standards based on CFS.

5. Disseminate standards to process owners, Partnership Auxiliary Committees (PACs), and Joint Partnership Council (JPC).

6. Publish customer service standards for customers.

7. Develop and conduct surveys to validate standards.

Conduct More CFS:

  • Disseminate data from surveys/CFS to process owners, PACs, and JPC for review and development.
  • Make budget decisions to meet customer needs.
  • Incorporate in budget request (PTO Corporate Plan).

Verification and Validation:

  • Analysis of customer service survey and focus group results by the PTO Business Council, PTO Union Partnership Council, and program managers.
  • Center for Quality Services will continually assess customer satisfaction levels.

Performance Indicators:

Performance indicators



Glossaries


Glossary of Office-Specific Terms

Allowance: examiners determine whether a patent can be allowed by searching previous art, which includes previously issued U.S. and foreign patents and nonpatent literature to help determine whether the claimed invention complies with the patent statutes and court decisions.

Patent Application: a request from a user for a patent to be granted by the United States Patent and Trademark Office.

Patent Application, Disposed (Disposal): patent examiner completes action on the application.

Patent Application, Examined: to determine the qualifications of patent applications requesting the granting of patents. To determine whether the invention is new, useful, and nonobvious to someone knowledgeable in the subject matter.

Patent Application, Issued (Issuance): patent application issued or granted as a patent.

Patent Application, Withdrawal (Abandoned): to surrender ones claim or right to a request for a patent to be granted.

Patent Pendency: average time in months from filing to either issuance or abandonment.

Trademark: a word, phrase, symbol, design, or combination thereof that identifies and distinguishes the source of goods or services of one party from that of another.

Trademark Application: application for Federal registration of a mark filed at the United States Patent and Trademark Office.

Trademark Application, Abandoned: termination of examination for failure to respond to an examination letter, because of a judicial decision, or by request of applicant.

Trademark Application, Disposed: an application that is registered or abandoned.

Trademark Application, Examined: review of application for compliance with the Trademark Act.

Glossary of Budget and Accounting Terms and Definitions

Account: something for which appropriations are made in an appropriations act. For spending that is not provided in an appropriations act, an account is an item for which there is a designated budget account identification number in the Presidents budget.

Accounts Payable: amounts owed to an account other than your own for goods and services purchases. Such amounts include disbursements owed to others.

Accounts Receivable: amounts owed to an account for goods furnished and services rendered. Such amounts include reimbursements earned and refunds receivable.

Appropriation: an act of Congress that allows Federal agencies to incur obligations and make payments from the Treasury for specified purposes. An appropriation is the most common means of providing budget authority and usually follows the passage of an authorization bill.

Authorization (Authorizing Legislation): an act of Congress that establishes or continues a Federal program or agency either for a specified period of time or indefinitely, specifies its general goals and conduct, and usually sets a ceiling on the amount of budget authority that can be provided in an annual appropriation. An authorization for an agency or program usually is required before an appropriation for that same agency or program can be passed.

Budget Authority: the authority granted to a Federal agency in an appropriations bill to enter into commitments that result in immediate or future spending. Budget authority is not necessarily the amount of money an agency or department actually will spend during a fiscal year, but merely the upper limit on the amount of new spending commitments it can make.

The three basic types of budget authority are appropriations, borrowing authority, and contract authority.

Budget Receipts: amounts received by the Federal Government from the public that arise from:

  • the exercise of governmental or sovereign power (consisting primarily of tax revenues, but also including receipts from premiums of compulsory social insurance programs, court fines, certain license fees, and the like);
  • premiums from voluntary participants in Federal and social insurance programs (such as deposits by States for unemployment insurance and for Social Security for their employees) that are closely related to compulsory social insurance programs; and
  • gifts and contributions.

Excluded from budget receipts are offsetting receipts, which are counted as deductions from budget authority and outlays rather than as budget receipts.

Carryover: the unobligated amounts at the end of a fiscal year for unexpired accounts.

Cash Basis of Accounting: a method of accounting in which revenue is recognized at the time the payment is received and costs are considered incurred at the time the payment is made.

Collections: any monies received by the government. Depending upon the nature of the transaction, collections may be treated as budget receipts, offsetting receipts, refunds, or credits to a deposit fund.

Deobligation: a downward adjustment of previously recorded obligations. This may be attributed to cancellation of a project or contract, price revision, or corrections of amounts previously recorded as obligations.

Deposit Funds: accounts established to facilitate the accounting for collections that are either (a) held in suspense temporarily and later refunded or paid into some other fund of the government upon administrative or legal determination as to the proper disposition thereof or (b) held by the government as banker or agent for others and paid out at the discretion of the depositor.

Expended Appropriation: the amount of expenditures (outlays) during the current fiscal year net of refunds to the appropriation made from general funds, special funds, and trust funds.

Expenditure: actual spending, generally interchangeable with outlays.

Fiscal Year (FY): any yearly accounting period. The fiscal year for the Federal Government begins October 1 and ends on September 30.

Intragovernmental Revolving Fund Account: funds authorized by law to carry out a cycle of intragovernmental business-type operations. These funds are credited with offsetting collections from other agencies and accounts.

Liability: accounts owed for items received, services rendered, expenses incurred, assets acquired, construction performed, and amounts received but not as yet earned.

Obligated Balance: the amount of obligations already incurred for which payment has not yet been made. This balance can be carried forward indefinitely until the obligations are paid.

Obligations: spending commitments by the Federal Government that will require outlays either immediately or in the future.

Offsetting Collections: money received by the government as a result of business-type transactions with the public (sale of goods and services) or as a result of a payment from one government account to another. If credited to an agencys expenditure account, the offsetting collection is usually available for spending by the agency.

Offsetting Receipts: an offsetting collection that is deducted from budget authority and outlays when calculating total budget authority and outlays for the Federal Government. Offsetting receipts are generally not available for spending by an agency without further Congressional action.

Receipt Accounts: accounts established for recording collections deposited into the Treasury for appropriation by the Congress. These accounts may be classified by the Congress.

Reimbursements: sums received by the government for commodities sold or services furnished either to the public or to other government accounts that are authorized by law to be credited directly to specific appropriation and fund accounts. These amounts are deducted from the total obligations incurred (and outlays) in determining net obligations (and outlays) for such accounts.

Unexpended Balance: the amount of budget authority unspent and still available for conversion into outlays in the future; the sum of the obligated and unobligated balances.

Unobligated Balance: the portion of budget authority that has not yet been obligated. In one-year accounts the unobligated balance expires (ceases to be available for obligation) at the end of the fiscal year. In multiple-year accounts, the unobligated balance may be carried forward and remain available for obligation for the period specified. In no-year accounts, the unobligated balance is carried forward indefinitely until specifically rescinded by law or until the purposes for which it was provided have been accomplished.

Tables


 Summary of Patent Examining Activities

 Patent Applications Filed, and Summary of Pending Patent Applications

 Patents Pending Prior to Allowance, and Patents Issued

 Statutory Invention Registrations Published, and Reexamination

 Summary of Contested Patent Cases

 U.S. Government Agency Patents, and Patent Applications Filed by Residents of the United States

 US Patent Applications Filed by Residents of Foreign Countries
cont.

 Patents Issued to Residents of the United States

 Patents Issued by the US to Residents of Foreign Countries
cont.

 Patent Classification Activity, and Scientific and Technical Information Center Activity

 Summary of Trademark Examining Activities

 Trademark Applications Filed for Registration and Renewal and Trademark Affidavits Filed, and Summary of Pending Trademark Applications

 Summary of Contested Trademark Cases, and Trademarks Registered, Renewed, and Published Under Section 12(c)

 Trademark Applications Filed by Residents of the US

 Trademark Applications Filed by Residents of Foreign Countries
cont.

 Trademarks Registered to Residents of the US

 Trademarks Registered to Residents of Foreign Countries

 Patent Services Workload, and Trademark Services Workload

 Actions on Petitions to the Commissioner of Patents and Trademarks

 Cases in Litigation, Cases in Litigation in U.S. Courts of Appeals, and Cases in Litigation by Month



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