 Under Secretary of Commerce for Intellectual Property Jon Dudas testifies on USPTO's FY 2008 Budget
Excerpt of Transcript for Hearing of the Senate Appropriations Committee - Commerce, Justice and Science Subcommittee held Thursday, March 1, 2007
SEN. MIKULSKI: ... Mr. Dudas, we welcome you, and we look forward to hear from you and your protecting intellectual property.
JON DUDAS: Thank you, Madam Chairwoman. Thank you, Ranking Member Shelby, and Senator Alexander. I appreciate this opportunity to share with you the things we are doing at the USPTO. And I also recognize I have a responsibility, and it’s even clearer now, a responsibility of the employees of the USPTO to do a better job not only talking about the challenges we face, but communicating the successes that our employees have had at the USPTO. So I really do welcome this as an opportunity.
And with that, I think I’ll just cut to the chase and say, on behalf of the 8,500 of my colleagues at the USPTO, I am truly proud to report that the women and the men of the USPTO delivered results in 2006 in literally record proportions. Last year, the USPTO set 11 all-time agency-wide records, including the highest quality in the history and trademarks, the second-highest quality in history and patents, the highest production in history in both patents and trademarks, the highest hiring of examiners in history in both patents and trademarks, the highest electronic processing and electronic filing in history in both patents and trademarks, and allowing more examiners than ever before to work from home – 85 percent of trademark examiners and 500 new patent examiners working from home last year.
In 2006, we were also chosen by Business Week Magazine as one of the best places in America to launch a career, and we were featured in Business Week Magazine as a premier place to round out one’s careers. One of our examiners who is 66 years old was featured in Business Week as, again, a place to round out your career.
And USPTO examiners not only succeeded on behalf of the United States on protecting innovation, they succeeded personally and professionally. Sixty percent of all patent examiners and 70 percent of all trademark examiners exceeded their goals in production and quality, or production or quality, and received an additional bonus for exceeding those goals.
Thanks is owed first and foremost to these loyal and determined employees of the USPTO, and in our office hangs a banner seven-stories high that says, celebrating 2006, our record-breaking year. We held an 8,500-person-all-hands celebration where senior executives served the rest of our colleagues a thank you lunch, a well-deserved thank you lunch for breaking those records.
Simply put, these results would not have been possible without this subcommittee allowing all innovator’s fees to be used to fund determination of their innovations. The years 2005 and 2006 were the first two years in 15 – more than 15 years where the USPTO operated under full funding, and the difference has been dramatic.
Since Congress passed the government performance and results act to hold government agencies accountable, and report their metrics and hold them accountable, the USPTO on average had only met about 25 percent of their key goals under Government Performance and Results Act.
Just last year, after having full funding and appropriate strategic plan, new methods in place, responding to some of the reports you have mentioned, we met to 90 percent of our goals met. There is one we missed. We should meet it. We should be at 100 percent of our key goals, and our overall goals, we have met 94 percent of.
In 2007, you again provided full funding, and we look forward to working with this subcommittee to make this a permanent policy. This subcommittee has helped the USPTO come a long way, but as you point out, there are real challenges that lie ahead. Continuing to attract and retain the finest public servant is a growing challenge. Our employees are at the heart and soul of our intellectual property system, and need to do everything we can possibly do to ensure they have an environment respect and an environment of opportunity.
The Business Week magazine article I talked to before reported that the most favored employees in the United States – not the average, but the most favored employees in America are losing about one-third of their new hires within the first three years of employment. The USPTO is experiencing similar attrition in the first years. And with the record hiring we have done, that pushes our overall attrition to slightly above what he average it has been. That is something we need to, again, focus more on, and I can share with you some of the things we are doing.
Pendency of application also continues to be a challenge. Despite record-level hiring, and record-level production increases in both patents and trademarks last year, 19-percent increase in trademarks, and a 17-percent increase patents in terms of production, and an already demanding environment for examiners, we continue to receive applications at a record that exceeds our capacity to examine. We have simply broken records in a number of applications we have received for over 20 years now.
The answers there lie in large part – and I think this is some of what we’ll talk to you about in the plan – in asking for more and better information, not just from our examiners. We recognize that the USPTO owes a whole lot and that our examiners are the finest in the world, but we need to get more and better information from applicants themselves and from the public at large, and those are some of the strategies that can increase productivity and increase production.
To that end, I would like to share with you that we introduced a system of accelerated examination last year. Under this program, for those applicants, any applicant, any technology from anywhere who want quick turnaround, the USPTO now offers a complete examination within 12 months. An applicant can literally reduce their time to 12 months as of August 26th, 2006.
In exchange for this quick turnaround, we don’t ask for a whole lot more money, but what we ask is that applicants file a complete application, that they give us meaningful and quick turnaround, that they file electronic so things can be more efficient, and that importantly, they give us search reports and information that will help our examiners become more efficient and more proficient. The first application to be completed under this program will issue this month and it will issue in less than six months.
Thank you again for this opportunity to discuss the progress the USPTO has made, and importantly, the challenges that we still face. I look forward to working with this subcommittee to make the best intellectual property system in the world even better. Please accept my invitation, if you have an opportunity, to come down and visit the USPTO, an open invitation to any of all of you to meet with the examiners, to share in this success. I can just tell you anecdotally the very best ideas we have had have come from opening communication more with employees, the people who are on the ground doing the work, who have the very best ideas. And I think that is where you will find the solutions that you are looking for. Thank you.
SEN. MIKULSKI: Thank you much, Mr. Dudas, and also Dr. Jeffrey. I have visited NIST and have been inspired. I have seen the hydrocarbon car and rode around in it, and looked at how you have examined building properties after what happened at the World Trade Center. So not only do we prevent an attack on us again, but that our buildings will be safer and more secure.
Let me, though, go to patents, and then I’ll come back to you, Dr. Jeffrey. The protection of our intellectual property is an obsession with me because if we invent it, and all that goes into it, that is how we are going to compete in the world. My question to you, Mr. Dudas – and thank you for your energetic testimony – how many patents do you receive a year, and what is the nature of the backlog? I understand it’s called pendency.
MR. DUDAS: Pendency is the amount of time it takes for an application, from the time it’s filed, until the time it’s completed. And the backlog is literally the number of applications that are waiting in line.
SEN. MIKULSKI: Okay, well, tell me, how many do you get.
MR. DUDAS: Yes, we are now receiving –
SEN. MIKULSKI: What is the backlog, and what is pending with pendency.
MR. DUDAS: Yes, the number of applications we receive is growing every year. This year, we anticipate 440,000 new patent applications – largest in the world, which is good news in terms of innovation. But 440,000 applications, and we are experiencing growth right now of about 8 percent. Many countries are wanting to file more, and certainly Americans are filing more.
SEN. MIKULSKI: So we have to be clear that it is not only inventors and entrepreneurs in the United States of America that file with you, but they file with you from around the world. And I understand one of the largest countries is South Korea.
MR. DUDAS: That is one – South Korea is one of the fastest-growing countries. It is not right now one of the largest, but it is the fastest growing.
SEN. MIKULSKI: Right, but you had 400,000 applicants a year – pretty techno stuff.
MR. DUDAS: Absolutely.
SEN. MIKULSKI: Okay, and what is the backlog?
MR. DUDAS: And the backlog is 700,000 patent applications waiting in line.
SEN. MIKULSKI: And how long – like, if they say – I mean, given – putting your expedited process here, what is the timeframe? Could you then get into pendency?
MR. DUDAS: The average across the board is 31 months, and it is growing because the backlog is – you know, I call it deficit examining – more applications coming in, even with record hiring. So 700,000 applications – it is 31.1 months right now on average. But that is a little misleading, let me tell you, to say on average, because we have some areas in the mechanical arts for instance, maybe relatively simple inventions that are only taking, maybe 14 months. That is wonderful, but on the other hand, we have some areas, like the electrical arts, where you see a lot of the high technology, fortunately where you see the short life cycle, it could take five or six years. And this is exactly why we are introducing concepts like accelerated examinations.
SEN. MIKULSKI: Well, then, let me go to these questions. You have read the GAO report. You’re obviously there. And we’re glad – the recognition in Business Week. But my – you know the three issues of the GAO report – ongoing communication and the issues related to improving their technical education. You are hiring people that are hot-tickets in the market price. These are lawyers, paralegals, support staff. They are hot.
MR. DUDAS: Right. Very hot.
SEN. MIKULSKI: And in some instances, they also have to have security clearance.
MR. DUDAS: Right, absolutely.
SEN. MIKULSKI: And we understand the dynamic in that.
MR. DUDAS: Right, they all have to be American citizens as well.
SEN. MIKULSKI: So could you – one of the things I noted in your prepared remarks that you submitted, that you don’t want to – you want to retain; you don’t want to keep training the new.
MR. DUDAS: Right.
SEN. MIKULSKI: And we support that. Could you tell us what you’re doing in the area of both retention, and providing and cracking this whole issue of ongoing technical – techno stuff. There are people – when I talk to, like, Nobel Prize winners that have worked – who were civil servants both at NASA and NIST, they said they liked working for the federal government because of its mission. It wasn’t money; it was purpose. And they also worked with the best colleagues in the world, and they had the opportunity for their own intellectual expansion. For us – for them to stay fresh – both technically and fresh in terms of enthusiasm for the job and a desire to stay. Could you talk then about your retention techniques and the opportunity for them to get ongoing education, and do you need something from us?
MR. DUDAS: I think we all – report what you have – and quite honestly, we are looking for guidance from anywhere and everywhere we can get it, but I will tell you that I think we have done a number of things. First and foremost, what you talked about – what do people want today – they are called the millennials. I’m not a millennial – the millennial generation, but many of the people you hire today, they care about government service; they want to be valued. Money matters, but that is not the number-one thing that attracts them, and we try to address that as well. And you talk about training and making sure you show value.
Of course we have a challenge because we are a performance-based organization. People do have to work hard in our office, but there is a number of things that we have done. First and foremost, we have changed the way we train. Instead of having examiners come in and train for two to three weeks, and then have a mentor approach, we have actually started a patent examiner training academy, where they come in for eight months and get extended-term training so we can get a greater level of consistency. It allows for more teamwork; it allows for people to get to know the office better; and more consistency.
That is something that we needed to do both because we thought it was a best practice and because of the amount we were hiring. It has turned out it has been a best practice.
SEN. MIKULSKI: That is when they come. How do you – what about training for them while they are there? In other words, say they work three years.
MR. DUDAS: Yes.
SEN. MIKULSKI: And they want to get refreshed and renewed.
MR. DUDAS: Absolutely.
SEN. MIKULSKI: Both intellectually and –
MR. DUDAS: Absolutely.
SEN. MIKULSKI: Getting to know the new stuff and the new buzz.
MR. DUDAS: Absolutely. One of the things we have done, we have beefed up what we do on allowing examiners to take time and use money to get external training, and we’re doing more on what we’re doing on internal training as well. So for instance, an examiner has the opportunity to have their legal degree paid for. If they want to get education outside, they can get a legal degree outside the office. The office will pay for it. But in addition to that, any training they want to get that is related to their field outside the office will pay up to $10,000 that is related. So Master’s degrees, courses, different things like that.
We are also working on – last year, we had the first-ever managers’ training conference where we worked with managers – we got all of the managers out two days away from the office to talk to them about how they can train better, how they can resolve conflicts better, how they can listen and communicate better with examiners. And so now we are developing what kinds of training programs can we have offer. We already offer several through the office and through the federal government but how do we tailor it specifically for those examiners who have been there for a long time.
Another program that we think is very important for retention is this teleworking that we have been doing. Five-hundred examiners were given the opportunity to work from home last year, and 500 more patent examiners this year – really giving examiners the opportunity to have the flexibility where they determine what they think is the best work environment. They can work from home, they can work with laptops at home, back and forth. And so we have found that that has been an incredible boost for morale, and also gives people more time with their families, but also more time to increase their production if they want to do that.
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