House Oversight Hearing
DAVID J. KAPPOS
UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY
DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE
COMMITTEE ON THE JUDICIARY
U.S. House of Representatives
MAY 5, 2010
Chairman Conyers, Ranking Member Smith, and Members of the Subcommittee:
Thank you for this opportunity to appear before you to discuss the United States Patent and
Trademark Office's (USPTO) operations, programs and initiatives.
As we move into the second decade of the 21st Century, it has become increasingly clear that
innovation is a principal driver of our economy. Promoting innovation, stimulating economic
growth and creating high-paying jobs are key priorities of the Obama Administration. Because
intellectual property (IP) delivers innovation to the marketplace, a well-run and appropriately
funded USPTO is critical to supporting those priorities.
We at the USPTO are proud of the role we play in serving America’s innovators and providing
the IP protection they need to secure investment capital and bring their products and services to
the marketplace. And, to support the changes taking place at the USPTO, the Administration has
strongly supported the work of the House and Senate to reform U.S. patent laws as reflected in
currently pending legislation.
Mr. Chairman, before I discuss the array of our programs, initiatives and other efforts to serve
America's innovators, I want to provide an overview of our funding situation and our strategic
Our FY 2011 Budget
I am pleased that the President's FY 2011 budget request provides the USPTO with the resources
and flexibility needed to aggressively reduce the patent application backlog, shorten patent
pendency, improve patent quality, enhance patent appeal and post-grant processes and invest in
rethinking our information technology (IT) infrastructure. These investments will support actions
we have already taken and have underway at the USPTO to create a more efficient and effective
Office -- an office that fuels economic growth, strengthens the competitiveness of U.S. companies
that bring new products to market, and hires employees to support those new products and
services. The proposed budget also represents the first step toward establishing a sustainable
funding model to finance the USPTO's patent and trademark operations in support of the
USPTO’s strategic priorities and the Administration’s goals.
We are working closely with the Department of Commerce in planning and preparing our
strategic priorities and budget requirements to ensure our goals and initiatives are aligned with
and support the goals of the Department and those of the Administration.
The President’s budget requests $2.322 billion for the USPTO, and it projects that fee collections
of $2.098 billion will be yielded by the current fee schedule. The estimated additional $224
million would be generated by an interim patent fee increase. To help put the USPTO on a path
towards a sustainable funding model, the budget proposes legislation for fee setting authority to
permit the USPTO to work with its external partners to better align fees with the actual cost to the
USPTO of its services. It also emphasizes business tools, such as creating an operating reserve to
ensure that the Agency can execute multi-year plans and can continue to serve the public without
disruption during periods of economic downturn.
Specifically, the President's Budget supports a five-year plan designed to:
• Reduce the average time to first Office action on the merits for patent applications to 10
months by 2014;
• Reduce total average pendency for patent applications to 20 months by 2015;
• Invest in IT infrastructure and tools to achieve a 21st Century system that permits end-to end
electronic processing in patent and trademark IT systems.
In addition, we are developing an option to provide end- to-end processing within 12 months for those patent applicants who desire it. To achieve these performance commitments, the USPTO
• Conduct targeted hiring to recruit and hire 1,000 patent examiners (projected to be a net
increase of 400 to 500) annually during FY 2011 and FY 2012. This temporary hiring
increase will begin with bringing on experienced former examiners and IP professionals,
which will allow Patent Operations to reduce the time necessary for training, and realize
benefits that will reduce the patent backlog and reach a targeted inventory level; and
• Achieve efficiency improvements as a result of reengineering many USPTO management
and operational processes. Our current efforts to optimize examination capacity, pursue
compact prosecution, revise the patent examiner production system (“count system”),
prioritize incoming work, and increase international work sharing will contribute to yield
efficiency gains to help achieve these goals.
The USPTO’s aggressive pendency reduction goals of 10-month first Office action and 20-month
total pendency set forth in its FY 2011 budget are based on our analysis of factors related to
international filings, patent term adjustment considerations, publication of patent applications,
patent application docket management and international best practices, with an overall objective
of providing optimal service for our innovators.
Hiring and Promoting a Nationwide Workforce
An additional component of the USPTO’s hiring strategy is to promote a nationwide workforce.
While the Office’s current array of telework programs serve as a model for the Federal
government, we continue to review possible improvements and geographical expansion of
telework opportunities for our employees to attract and retain a highly skilled workforce.
The USPTO has demonstrated its strong commitment to teleworking by expanding its telework
programs Office-wide. At this time, telework programs are available for almost all USPTO staff
who have served at the Office for at least two years. The USPTO now has 5,518 employees
teleworking at least one day a week. In a very competitive job market, the USPTO’s decision to
incorporate telework as a corporate business strategy, where appropriate, will enable the USPTO
to hire and retain quality employees.
Update on User Fee Collections and Current Fiscal Situation
Mr. Chairman, as the Committee is aware, the USPTO's revenues from user fee collections
declined substantially during FY 2009 and the Office was forced to cut spending sharply in many
important operational areas -- cuts that cannot be sustained over the long-term. Notably, without
swift and decisive action from Congress in late FY 2009, the USPTO may have been forced to
take even more drastic measures.
Our financial constraints carried over into FY 2010, forcing us to continue operating on a barebones
budget. Because we are funded entirely from fee revenues, the reduction in user fee
collections below our appropriations level that occurred in FY 2009 forced us to continue making
hard choices including hiring less than the planned number of examiners, limiting overtime, and
postponing critical upgrades to our information technology systems. So far during FY 2010, we
have lost 127 patent examiners and have only replaced nine.
In total for FY 2010, we project that nearly 300 examiners will leave the USPTO and that we will
be able to hire 250 examiners. After a complete halt in hiring for many months, the USPTO
recently began to implement a limited and targeted hiring initiative designed to attract
experienced former patent examiners and other experienced IP professionals. These
professionals, who will require less training and therefore be productive earlier, will help us turn
the tide on the mounting backlog of unprocessed applications.
With respect to our fee collections, I am pleased to report that, based on the first seven months of
FY 2010, we are seeing a rebound in user fee collections at the USPTO attributable to an
improving economy and increased production that also may be attributable to managerial
initiatives. Our most recent estimate is that the USPTO will collect between $146 and $232
million more than its appropriated amount in FY 2010. While the rebound in user fee collections
is very positive, it does not, however, lessen the need for an interim fee adjustment.
Finally, Mr. Chairman, we are studying ways to strengthen our organizational structure to support
our strategic initiatives and operational programs and look forward to working with you as we
move forward with this process.
III. Patent Initiatives
We are in the midst of fine-tuning our strategic plan to address the patent application backlog and
focus on high-quality, efficient examination. As we do so, we have sought to create a stronger
partnership with our external stakeholders, advisory committees, unions and our employees. We
look forward to even more collaboration with these important groups to address a great number of
issues facing the Office.
Our new leadership team at the USPTO has undertaken a broad array of efficiency initiatives to
improve the speed and quality of patent processing. These initiatives include a “first in a
generation” reform of the patent examiner count system. We expect this new system to create an
environment where examiners efficiently review applications and work with practitioners to come
to correct decisions more quickly. Our first action interview pilot has led to an increased percent
of first action allowances. Also, we are pleased to see a sustained decrease in actions per disposal
which is an indication that issues are being resolved more efficiently. While the average number
has ranged from 2.8 to more than 2.9 in the past few years, we are now seeing a sustained level of
approximately 2.3 in FY 2010. Importantly, these accomplishments have been made without any
sacrifice in quality. In fact, our non-final in-process compliance rate and our allowance/final
compliance rate are at their highest levels in several years. As indicated below, we are working
to reengineer our quality programs and measurements.
At the end of last year, the USPTO announced a new program to provide accelerated examination
for green technology innovations. We also launched a program specifically designed for small
and independent entities to allow for accelerated examination of one patent application in
exchange for abandoning a second unexamined application. If successful, we will consider
whether to expand this pilot to other applicants as well. With this program, while the applicant
benefits from faster service, the USPTO benefits from a smaller backlog.
We are actively engaging overseas patent offices and our user community to obtain substantial
benefit from work done by other patent offices on applications filed both overseas and in the
USPTO, an effort that can significantly improve the USPTO’s efficiency.
Our patent related initiatives are critical elements an important component in the road map for the
USPTO to achieve 10-months First Action patent pendency and reduce the application backlog.
These initiatives are described in more detail below:
In FY 2010, the USPTO initiated a new hiring model, supported by strong publicity and
expanded “nationwide” recruitment, to encourage individuals with previous IP experience to
apply for a position as a patent examiner. This new model places more emphasis on recruiting
candidates with significant IP experience while previous hiring focused on scientific background
and experience. Individuals with significant IP experience will require reduced training time so
that they can examine applications sooner than a new hire with little or no IP experience. The
new model concentrates on: (1) hiring experienced professionals such as registered patent
attorneys and patent agents, as well as skilled technologists having experience with the USPTO as
inventors, and (2) developing a nationwide workforce using telework which will allow us to hire
experienced IP professionals interested in joining the USPTO, but who do not want to relocate to
the Washington Capital region. It is expected that this different hiring demographic will provide
a more productive and balanced workforce, lower attrition, and faster transition to productivity
for new hires.
The USPTO's mission requires the recruitment and retention of highly skilled individuals in a
highly competitive employment market. As a result, the USPTO must continually improve and
enhance its recruitment and retention strategies to make the Office an employer of choice.
The USPTO analyzes patent examiner hiring and attrition, down to the smallest business unit. As
part of this analysis, Deputy Under Secretary Barner has instituted bi-weekly meetings with
Technology Center (TC) Directors. These meetings are focused on developing better methods to
manage and stem attrition and ways to retain our highly skilled examiner workforce. Utilizing
employee exit data and employee satisfaction surveys, the USPTO is addressing examiner specific
areas of job satisfaction concerns. For example, based on this information, the Office has
developed and enhanced "best practices" for retaining examiners and Supervisory Patent
Examiners (SPE) which includes front-line, active management, mentoring, detail appointments,
an improved wage structure and other proactive management efforts to enhance employment.
Patent examiner attrition is tracked on a monthly basis to allow Technology Center Directors to
address retention and set measurable retention targets. The Deputy Director will continually
monitor the effectiveness of retention initiatives and seek to uncover developing trends from exit
The USPTO's retention initiatives, in combination with current economic conditions, have helped
reduce the Patent examiner attrition rate to 5.5% in FY 2009 from levels as high as 8.8% in FYs
2005 and 2006. Current projections are approximately 5%.
Revision to Patent Examiner Production System (Count System)
In February 2010, in collaboration with the Patent Office Professional Association (POPA), the
USPTO established a new examination count system that was reengineered to recognize patent
examiner effort at various stages of the examination process. The changes increase the overall
time examiners have for examination to improve their ability to do quality work. The new system
provides incentives and modified work-credits which provide more time up-front for the First
Office Action to allow any issues to be addressed early in the examination process. These
changes provide real time compensation based on the effort involved in preparing the Office
action and which will reduce examiner frustration by curtailing rework. Implementation of the
new count system is a primary reason our patent application backlog was reduced by
approximately 10,000 cases in March 2010. While we only have one month worth of data, and it
is too early to tell, we believe that the revision will serve the Office well. We are carefully
monitoring the performance indicators, and will work with POPA to fine tune the system so that
it serves to achieve the USPTO’s goals and objectives.
Improving Patent Quality and Identifying New Ways to Measure It
The USPTO is reengineering its quality management program from top to bottom to focus on
improving the process for obtaining the best prior art, as well as improving the quality of the
initial application and the entire examination and prosecution process. We have sought
comments from IP professionals on methods to enhance the quality of issued patents (for both
applicants and the USPTO), to identify appropriate indicia of quality, and to establish metrics for
the measurement of the indicia. We have engaged our external partners in a very public
discussion through comment, with our Patent Public Advisory Committee and upcoming
roundtable discussions on the best way to address patent process inefficiencies, while also
improving patent quality and reducing overall application pendency.
We are committed to being fully transparent with respect to pendency. To that end, we have
developed and are fine-tuning an online "dashboard" that will show pendency from many
perspectives (including pendency from the first filing dates and Requests for Continuing
Examination (RCEs)) and other key metrics of patent pendency and quality. We intend to publish
and update the dashboard monthly so that the public can have access to this important
information about how the USPTO is doing its job.
Reformulating Performance Appraisal Plans (PAPs)
The USPTO established a task force with representation from all TCs to craft new performance
appraisal plans (PAPs) for supervisory patent examiners (SPEs) to focus on enhanced
examination quality, reduced application pendency, and improved stakeholder responsiveness.
The new SPE PAP, finalized and rolled out in early April 2010 for these critical managers,
provides increased recognition of key SPE activities in coaching and mentoring examiners while
also recognizing the importance of contributions to agency-wide initiatives. The task force also
created an SPE award program to provide additional incentives to the achievement of these new
In addition, a new joint labor and management task force is completing its work to update the
patent examiner performance appraisal plan (PAP) and to evaluate the existing processes for
addressing performance and conduct issues at the USPTO. The focus of this effort is to align the
patent examiner PAP to organizational goals, and ensure strategic alignment at all levels. A
strong emphasis will be placed on clearly defining objective measures that will be universally
applied during the performance appraisal process, as well as developing a framework that focuses
on coaching, mentoring, and training. The task force will be looking to modify the PAP to ensure
transparency, educate employees on their responsibilities, and enable managers to set clear
expectations and objectives for the achievement of organizational goals.
Training of Examiners
The USPTO is giving all of its patent examiners detailed training in efficient interview
techniques, compact prosecution, and negotiations -- all targeted to streamline the examination
process by working with applicants to identify and correctly resolve issues early in the process,
thereby reducing patent application backlog and pendency.
Training of Supervisors
In addition to the required supervisor training certificate program, patent managers and
supervisors are participating in a newly developed, state-of-the-art leadership development
program. This program is designed to help managers and supervisors hone their skills so they can
enable all employees to reach their full potential.
First Action Interview Pilot Program
This recently expanded program has effectively served to improve prosecution by enabling
applicants and examiners to identify issues and come to agreement more quickly. The success of
the program is reflected in an increased percent of first action allowances and at least some initial
reduction in RCE filings. The total number of hours of interview time for patent examiners in FY
2010 is projected to exceed the FY 2009 level by more than 60%.
In January 2010, the USPTO expanded its survey methodology to better measure the quality of
services provided by the patent examining staff. This survey will give applicants an opportunity
to provide feedback on the patent process on a semi-annual basis. The survey design ensures
each data-collection period covers a representative sample of patent filers, and that survey
findings can be extrapolated to the applicant population as a whole. The survey provides a
valuable complement to other initiatives, such as enhancing interview practice. The survey
results, along with customer outreach efforts and other initiatives, will enable the USPTO to
improve service quality based on the input collected through the survey process.
Re-engineering the Classification System
To improve quality, reduce pendency, and reduce costs, the USPTO is reviewing its patent
classification system. An improved system will allow effective assignment of applications for
examination and is critical to enable examiners to effectively locate prior art relevant to
determining patentability. The USPTO is also learning from and building upon best practices of
our partners in foreign IP offices to provide our examiners with the best prior art available. This
initiative will improve pendency and patent quality and reduce cost by putting the best prior art in
the hands of examiners efficiently, and by partnering with our international counterparts to
The USPTO recently established a new “Ombudsman" Pilot Program designed to provide patent
applicants with more assistance in handling application-processing problems if the normal
channels have not been successful. This one-year pilot program is intended to provide applicants
with additional resources to ensure application-processing problems are handled in a more
efficient way, thereby saving applicants and the Agency both time and resources and improving
Under this new program, applicants, attorneys or agents who have application-processing
concerns, and haven’t been able to get the assistance they need through normal channels in the
Technology Center (TC), can contact the ombudsman representative for the TC through the
USPTO Web site. The applicant will receive a phone call within one business day for a
discussion of the specifics of the issue. From there, the ombudsman representative will work
with TC staff to address the concerns expressed by the applicant and try to get the application
back on track. Each TC will have one ombudsman representative and a back-up, both of whom
are selected based on their experience. The program is supported by senior supervisors and TC
staff, including supervisory patent examiners, training quality assurance specialists, and subject
The program is a direct response to feedback received from members of the patent community
who have suggested the need for a dedicated resource they can turn to when they have concerns
about the prosecution of their application.
Increased International Work Sharing
A large percentage of applications received in the major global patent offices are filed in more
than one national or regional jurisdiction. To the extent that each national or regional jurisdiction
conducts its search and examination entirely independently of the search and examination done in
other jurisdictions, there is significant potential for redundancy and duplication. Accordingly,
the USPTO has, for several years, been proactively pursuing work sharing as a means for
avoiding duplication of work among offices and for reducing its own pendency and backlog.
The Patent Prosecution Highway (PPH), which was jointly developed by the USPTO and the
Japan Patent Office (JPO), is the first concrete implementation of a work sharing framework
among patent offices. The objective of the PPH is to promote work sharing while at the same
time allowing applicants to obtain patentability determinations faster in multiple jurisdictions.
The concept is fairly straightforward -- when an office determines that one or more claims are
patentable in one application, the applicant may request fast-track examination of the same or
similar claims in the second, related application filed with the second office. To have the request
for fast-tracking accepted, the applicant must make available to the second office the relevant
work of the first office as well as any necessary translations. By restricting the scope of claims
presented to the second office, and by requiring the applicant to make the relevant work from the
first office available to the second office, the PPH promotes a high degree of reutilization of first
office work. The PPH also respects the principle of sovereignty noted above because each office
maintains responsibility for the final determination of patentability in accordance with applicable
The first PPH was launched between the USPTO and the JPO in 2006 as a pilot project. Since
then, the USPTO has established bilateral PPHs with nine other patent offices, including the
offices of major trading partners such as Korea, Canada, the United Kingdom, Australia, and
Germany, and those and other offices have established PPHs of their own.
The PPH has proven to be a useful work sharing vehicle, as shown by the following statistics (as
of the beginning of April 2010):
• 2,713 total PPH requests received by the USPTO since 2006
• First action allowance rate for PPH applications (i.e., the rate at which an application
is allowed the first time the examiner considers the merits of the claims) is
approximately 25% -- about double the first action allowance rate for all applications
• Overall allowance rate for PPH applications is about 93%, also about double the
allowance rate for all applications
• The number of actions per disposal (a critical productivity metric) for PPH
applications is about 1.7 vs. about 2.7 for non-PPH applications
• Observed reduction in the number of claims in PPH applications of 15-20%
compared to the number of claims that would have been examined in the same
While the PPH has been successful, it can be improved. The USPTO has taken a number of
steps, in concert with the JPO and other PPH partners, to enhance the PPH framework to make it
more user-friendly and encourage more participation. In January 2010, the USPTO, EPO and
JPO (Trilateral Offices) agreed to expand PPH on a pilot basis to include Patent Cooperation
Treaty (“PCT”) work products (search and examination results). This expansion has the potential
to dramatically increase the number of applications eligible for PPH processing. The efficiencies
realizable through work-sharing are likely to be maximized to the extent that the office of second
filing (OSF) does not begin its work until after the office of first filing (OFF) has provided initial
results. Although the PPH process can be used to mitigate such timing imbalances, the scale of a
voluntary process like PPH is likely to be smaller than that of an office-driven process.
Accordingly, at the November 2006 Trilateral Conference, the USPTO introduced a proposal for
office-driven work sharing known as “SHARE” -- Strategic Handling of Applications for Rapid
Examination. According to the SHARE proposal, when corresponding applications were filed in
multiple offices, the first-filed application would be given precedence in examination in the OFF.
Further, each office would await the search and examination results for which it was the OSF
until results were available in the corresponding application from the OFF.
The USPTO, in cooperation with its stakeholders and taking into consideration its rules and
regulations, is committed to mitigating these timing imbalances and implementing SHARE in an
effort to optimize work-sharing on a global scale.
Toward that end, the USPTO and the Korean Intellectual Property Office (KIPO) are currently
conducting a small-scale pilot to gather empirical data and test the feasibility of the SHARE
concept. During fiscal year 2010, approximately 360 commonly filed applications in the
semiconductor and fuel cell technologies have been identified for prioritized examination and
enhanced collaboration on search and examination results between the two offices.
Finally, on March 10, 2010, the USPTO and the United Kingdom Intellectual Property Office
(UKIPO) committed to develop within one year a plan that would optimize reutilization of work
in all patent applications jointly filed at the USPTO and the UKIPO. This plan will, to the
maximum extent possible, utilize elements of the SHARE concept.
Application Acceleration Pilot for Small Entities (Project Exchange)
Project Exchange, an application acceleration pilot program open to small entities, allows
qualifying applicants with more than one application pending at the Office to accelerate
examination of one application if they abandon a second unexamined application that may no
longer be of value to them. This initiative, which began last year, also helps the USPTO
prioritize its workload while reducing the backlog of unexamined patent applications.
Green Technology Pilot Program
The USPTO has implemented a pilot program in which a qualifying green technology application
may be accorded special status. Applications pertaining to green technologies, including
greenhouse gas reduction, environmental quality, energy conservation, development of renewable
energy resources or greenhouse gas emission reduction, qualify for accelerated consideration
under this pilot program.
Outside of this program, such an application could not be advanced for examination unless it
meets the additional requirements of the USPTO's accelerated examination program (e.g.,
submission of an examination support document). The USPTO will accept only the first 3,000
petitions to “make special” in previously filed new applications, provided that the petitions meet
the requirements set forth in the notice published on December 8, 2009, in the Federal Register.
More than 900 applications have been submitted to this program since it was announced and
approximately one-third have been found qualified for advanced status. We look forward to
working with interested parties to expand participation in the program.
Reengineering the MPEP
Stakeholder input also is being sought on reengineering of the USPTO's Manual of Patent
Examining Procedure (MPEP). In addition to expediting updates to the MPEP, we will establish
a more collaborative process involving contributions by our stakeholders; provide more examples
and greater integration of guidelines; and include links to related USPTO online examiner
education materials. The objective is to create a new MPEP that will enable practitioners and
examiners to find information quickly, get accurate and complete guidance, and ensure that the
examination and prosecution of all patent applications complies with the laws and regulations
governing the patent system.
Transparency of USPTO Materials
The USPTO is promoting transparency by increasing the availability of its public information and
by providing patent examiner training materials on the Internet for reference by the innovation
community. The USPTO has launched a public “Director's Forum” blog, especially designed to
improve the exchange of information between the USPTO and the public, and is establishing
dedicated “Feedback Channels” to solicit public input on important initiatives like the count
system changes, the application exchange pilot for small entities, and the Green Technology pilot.
The USPTO is working to release all patent and published patent application data to enable
applicants and the entire innovation community to better understand trends in USPTO application
handling. In particular, we will be publishing decisions on petitions and full-text, searchable
application file histories.
Finally, as mentioned above, the USPTO will be launching an on-line “dashboard” providing key
pendency metrics publicly available. Additionally, speeches by USPTO officials are being
published on the Internet, and USPTO officials have significantly increased their public speaking
Investing in IT Infrastructure
It is critical to innovators, job growth and the American people that high quality patents and
trademarks are issued in a timely manner. Intelligent investment in our IT infrastructure holds the
potential to dramatically accelerate the USPTO towards those goals.
In FY 2011, the USPTO will fund the continued operations and maintenance of its existing IT
systems. In parallel, we will begin the work of setting up new systems that will enable end-to-end
electronic processing of patent and trademark applications. By removing the constraint that
the new system must interface significantly with our outdated, current systems, we allow the
work to be driven by these guiding principles:
(1) stakeholders’ (internal and external) needs drive the process;
(2) build lean, build fast, and own the design.
We will be moving quickly to get an end-to-end system built that demonstrates basic functionality
and meets core needs of our stakeholders, while at the same time reengineering our business
processes to modernize and streamline them.
IV. Trademark Initiatives
Our Trademark Operation continues to meet or exceed its performance goals. The decade-old
telework program in our Trademark Operation has expanded over the years to include 87% of all
eligible trademark examining attorneys in its voluntary program, and has served as the model for
the successful hoteling program in our Patents Operation. Other Trademark initiatives include the
In FY 2011, the Trademark operation will continue to maintain first action pendency at optimal
levels, on average between 2.5 – 3.5 months with 13 months final pendency.
While current metrics show that the quality of decision making is at high levels, to further
enhance quality, the Trademark Operation is establishing a new measure that focuses on the
comprehensive excellence of the entire Office Action. They have sought input from stakeholders
in determining how to define excellence, and last month completed focused excellence training
for all trademark examining attorneys.
Public Roundtables on Trademark Issues
Consistent with our outreach efforts to stimulate public discussion on IP policy and
developments, in April, the USPTO co-hosted with George Washington University Law School, a
panel discussion titled “The Future of the Use-based Trademark Register.” The discussion
focused on the vitality of our use-based trademark register in the wake of the recent decision by
the Court of Appeals for the Federal Circuit in In re Bose Corporation. In Bose, the Court held
that cancelling a trademark registration on the ground of fraud on the USPTO requires proof of a
false, material representation made with the intent to deceive the USPTO.
The panel discussed whether, as a result of the Bose case, trademark applicants and registrants
will be more likely to claim use or intent to use on overly broad or inaccurate lists of goods and
services, leading to a significant erosion of the use-based registration system.
Panel members considered a number of ideas for ensuring accurate lists of goods and services,
including fee-based incentives, requirements for more comprehensive proof of use during the
application or registration maintenance processes, and a truncated non-use expungement
procedure. The Trademark Operation will continue discussions with user groups on whether to
implement these ideas.
Anti-Counterfeiting and Anti-Piracy
Trademark Operation officials continue to partner with appropriate entities to promote
educational efforts to develop public awareness of the adverse effects of trademark
counterfeiting. The USPTO and Customs and Border Patrol (CBP) are assessing the feasibility of
establishing electronic links between the Trademark Registration System and CBP's recordation
Investing in IT Infrastructure
The USPTO is upgrading its Trademark IT infrastructure to improve the stability, availability,
and performance of the systems that support trademark examination and the public. As part of
this effort, the USPTO will re-architect its Trademark systems to provide scalable, redundant, and
virtually hosted systems based on current technologies. This will make the trademark process
more efficient and more transparent, and reduce trademark portfolio costs for the innovation
community. The Trademark Operation has launched an organized outreach effort for internal
and public users to ensure that the new system design best meets the needs of its stakeholders.
V. IP Policy and Enforcement
The USPTO plays a significant leadership role in promoting effective domestic and international
protection and enforcement of IP rights and are endeavoring to formulate a data-driven U.S.
government IP policy, working to develop unified standards for international IP, and providing
policy guidance on domestic IP issues. The USPTO advises Executive Branch agencies on
national and international IP policy matters, advocates for the establishment of global IP norms,
and conducts technical assistance and capacity-building programs for foreign governments
seeking to develop or improve their IP regulatory and enforcement mechanisms. The Office is
working closely with the White House’s U.S. Intellectual Property Enforcement Coordinator to
help formulate a robust and effective Administration IP enforcement plan. Related efforts
Creation of Office of the Chief Economist
To assist the USPTO in generating economic analyses of the IP system, and to better grasp the
economic impact of proposed and actual changes to the system, the Office has designed and filled
the position of Chief Economist. The incumbent conducts studies for presentations to Congress,
the Administration, and at public stakeholder events hosted by the USPTO.
Collection of Data on Role of IP in Innovation and Creativity
In conjunction with the creation of an Office of the Chief Economist, the USPTO has launched an
initiative to collect and analyze data on the role IP plays in the promotion of innovation and
creativity. More empirical work on precisely how IP operates in different innovation contexts
needs to be done. The USPTO will sponsor various symposia and roundtable discussions, and
otherwise solicit input from stakeholders, to prepare relevant and informative studies and reports.
Several of these symposia will be conducted in conjunction with other agencies (e.g., the DOJ
and the FTC) as well as with leading academic institutions.
Recognizing the vital importance of the Internet to U.S. innovation, prosperity, education and
political and cultural life, the Department of Commerce has made it a top priority to ensure that
the Internet remains open for innovation. The Department has created an Internet Policy Task
Force whose mission is to identify leading public policy and operational challenges in the Internet
environment. As a component of the Task Force, the USPTO is co-leading an initiative with a
sister DOC agency, the National Telecommunications and Information Administration (NTIA), to
gather data that will help the DOC formulate positions on digital copyright policy for the 21st
century. Outputs may include a major policy symposium and whitepapers. The outputs on this
process may assist the Administration in formulating digital copyright policies as well as the
Administration’s overall IP enforcement plan. The Task Force is conducting similar reviews of
privacy, cybersecurity, and the global free flow of information goods and services, and may
explore additional areas in the future.
IP Attachés Program
The USPTO’s Attaché Program was formally instituted in 2006 to promote the value and
importance of strong IP protection and enforcement in selected, high-profile countries where U.S.
IP challenges are greatest. Since that time, IP attaches have played a critically important role in
sharing relevant information about international developments with various parts of the U.S.
Government and providing critical input to enable the U.S. to more effectively participate in
international discussions regarding the development of IP laws. In partnership with the
Commerce Department's Foreign Commercial Service (FCS) and the Department of State, the
current team of IP attachés is working to improve global IP protection and enforcement overseas.
These experts support U.S. embassies and consulates on IP issues, including devising strategies to
stop counterfeiting and piracy, and supporting U.S. Government efforts to improve the protection
and enforcement of IP. The attachés also advocate U.S. IP policies, coordinate training on IP
matters, and assist U.S. businesses that rely on IP protection abroad. They serve at posts in
Brazil, Russia, India, China, Thailand, and the U.S. Missions in Geneva. The Office is also
employing its expertise in the overseas deployment of IP enforcement personnel as part of a
White House task force headed by the White House’s U.S. Intellectual Property Enforcement
Coordinator which was established to improve the effectiveness of IP enforcement personnel in
countries where strong IP enforcement is needed.
IP Law Development
The USPTO continues to work with Congress and the courts to improve the state of U.S. IP law.
We are actively engaged with Congress to enact patent reform legislation that fairly balances the
interests of innovators across all industries and technologies. We are supporting legislative
changes that will simplify the patent process, reduce legal costs, improve quality and fairness, and
make significant progress towards a more harmonized international patent system, while
continuing to protect intellectual property.
As the Executive Branch's statutory adviser on IP policy, the USPTO has been actively involved
in developing the U.S. government’s legal position on important court cases. In Bilski v. Kappos,
which was argued in the Supreme Court last November, the U.S. argued that the USPTO
appropriately denied patent claims for a business method patent involving a method for hedging
risk. In the "Google Books" matter, we worked closely with the Department of Justice and other
government agencies to craft a court filing explaining the many benefits of a settlement that
would give consumers easy access to vast numbers of out-of-print works, while articulating a
series of concerns about details of the proposed settlement.
Global IP Academy
Since 2005, the USPTO Global Intellectual Property Academy (GIPA) has provided high-level
intellectual property rights training, capacity building programs and technical assistance training
to foreign judges, prosecutors, customs officials, IP enforcement personnel, as well as officials
from copyright, trademark and patent offices from around the world. Those individuals come to
the United States to learn, discuss and strategize about global IP protection and enforcement. The
program’s goals include fostering a better understanding of international intellectual property
obligations and norms, exposing participants to the U.S. model of protecting and enforcing
intellectual property rights, and promoting discussion of intellectual property issues in a friendly
and supportive environment.
The Academy provides both multilateral programs and country-specific programs as needed.
The USPTO further envisions programs dedicated to specific legal issues or technologies as the
Academy continues to develop. GIPA also delivers training to other stakeholders, including
small business owners, U.S. Government officials, and the general public.
The success of the initiatives described above and progress toward the USPTO's strategic goals of
improved quality and reduced pendency and backlog are dependent on a number of elements.
These include establishment of a sustainable funding model; authority to set fees in a manner to
better reflect the actual cost of operations; an interim fee adjustment on patent fees to provide
resources in the intermediate term; and an operating reserve to ensure adequate reserves to
address multi-year budget plans and fluctuations in revenues. Our FY 2011 budget provides the
framework for continuing the work we have started to make critical changes at the USPTO so that
the Office is supporting innovation, enabling investment and contributing to U.S. economic
Mr. Chairman, we appreciate your continued support of the USPTO and we look forward to
working closely with you, the members of the Committee and your staff in the weeks and months