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| Performance and Accountability Report Fiscal Year 2006 Message from the Director |
MESSAGE FROM THE UNDER SECRETARY OF COMMERCE
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This year, President George W. Bush wrote, “In today’s increasingly competitive world, improved enforcement of intellectual property rights is critical to establishing free and fair trade among nations and to protecting consumers and hardworking innovators.”
World leaders are talking about intellectual property (IP) because it’s becoming increasingly important to the world’s economy. That’s why it’s critical that the United States Patent and Trademark Office (USPTO) continually improve and evolve to foster the growth and protection of our nation’s valuable IP resources.
In 2006, the USPTO continued to improve the enforcement of IP rights in our nation and around the world. We led several initiatives to make our own country’s system of IP protection even better. And we educated thousands of individuals, businesses, and other governments on the importance of protecting IP.
I am proud to say that fiscal year 2006 was a record-breaking year for the USPTO, in terms of quality, production, electronic filing, teleworking, electronic processing, and hiring.
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These records reflect the hard work and sound decisions of more than 8,000 USPTO employees. Over the past four years, we have focused internally -- shining a bright light on our organization, raising the bar on our metrics and measures, and making system-wide improvements. We are now seeing the results of those efforts. While we’ll continue improving our Agency, we are now working on our next strategic plan, focusing on the bigger picture of how IP and innovation are primary drivers of economic growth for our nation.
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Our Patent organization broke virtually every record this year -- in terms of improving quality, efficiency, e-filing, hiring, training, and hoteling. I am particularly proud of the improvements in quality. We had a record of more than 440,000 patent applications filed, and the lowest error rate in 20 years of 3.5 percent. As we define our new strategic plan going forward, we will continue to work with all interested parties to look for new ways to improve and measure quality even more effectively.
However, one challenge that remains is that the volume of patent applications continues to outpace our capacity to examine them. We have a pending application backlog of historic proportions. Patent pendency -- the amount of time a patent application is waiting before a patent is issued or abandoned -- now averages more than 31 months. To turn that corner and reduce the backlog of patent applications and the amount of wait-time for a patent examination, the USPTO is continuing and enhancing several initiatives, and proposing other necessary changes to the patent system as well.
The USPTO hired a record 1,218 patent examiners in FY 2006, exceeding our hiring goal by more than 200 people. We also plan to hire 1,200 new examiners in FY 2007, representing another monumental increase.
To match this dramatic hiring, we tried a new way of training. We implemented a university approach to training new examiners, in which we teach them in classroom groups for eight months, rather than using our traditional one-on-one training model. This allowed us to deliver intensive training to the new examiners, while more experienced examiners and supervisors could focus on quality examination.
We implemented recruitment bonuses to hire and retain the talented engineers and scientists we need to examine our increasingly complex applications.
And we added the first 500 examiners to our hoteling program, providing them with the electronic access and equipment they need to do their jobs from remote locations. This gave the USPTO space to add examiners more quickly and cost-effectively. An added benefit for those hoteling has been the reduction of time spent commuting. We plan to add 500 more examiners to the hoteling program in the coming year, and we are piloting a work-at-home program for our technical support staff as well.
Patents implemented the Electronic Filing System-Web (or EFS-Web), a user-friendly, Internet-based patent application and document submission solution. This system has already dramatically increased the electronic filing of patent applications from 1.5 percent per month to 33 percent per month.
This year, we proposed rules changes regarding the examination of patent application claims, continuations, and information disclosure statements. Our executive team traveled the nation presenting the proposed rules to interested groups and asking for feedback and alternative solutions from our customers and stakeholders, including independent inventors.
Our goal in these proposed claims and continuations packages is to produce a more focused, higher-quality, and efficient examination. Our goal in the proposed changes to information disclosure statements is to provide the most relevant information to examiners as early as possible.
We also implemented a new accelerated patent examination procedure, which gives participating applicants a final decision on their application within 12 months from filing. This is in return for their providing an appropriate search of the prior art and an improved explanation of their claims and prior art found.
We will continue to work with all interested parties to ensure that we maintain and improve the world’s best patent processes and procedures.
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In FY 2006, the Trademark organization also broke records in quality while increasing production. With more than 354,000 application classes filed, we had a final action error rate of only 3.6 percent. In fact, the Trademark organization exceeded all of its Agency performance targets for the first time since the Government Performance and Results Act of 1993 mandated establishing Agency goals. Those goals include first and final action quality, production, application pendency, and efficiency.
We reduced first action pendency by 1.5 months. We increased by 25 percent our number of “disposals” (instances when trademarks are either registered, or the applicant abandons the application). We made significant progress on improving internal operations. We streamlined our process to further improve disposal pendency and quality. We documented workflows, adopted standardized practices, and retrained employees to enhance trademark consistency and quality.
Ninety-four percent of trademark applications were filed electronically this year, compared with 88 percent in FY 2005. We continued to enhance electronic filing by expanding the number and type of transactions offered on-line and by offering reduced fees to any applicant who files a complete application using our newer system, Trademark Electronic Application System-Plus.
The Trademark organization provided more options to enhance the quality of application data in trademark systems and search results. And we expanded the hours of the Trademark call center, and added call center positions to improve service for all our customers.
The Trademark organization’s work-at-home program for examining attorneys received the “Telework Program with Maximum Impact on Government Award” from the Telework Exchange. We expanded the work-at-home program to include 85 percent of all eligible employees. The Trademark work-at-home program is considered a “best practice” because of its success in addressing budgetary, space, retention, recruitment, and job satisfaction issues.
In FY 2006, the USPTO communicated the importance of protecting and respecting IP, both domestically and internationally.
As part of the Bush Administration’s Strategy Targeting Organized Piracy (STOP!) initiative, the USPTO worked with other U.S. Government agencies to fight piracy and counterfeiting around the world. We collaborated on IP training, norm-setting, and enforcement efforts with our colleagues in the Departments of Commerce, Justice, and State; the Department of Homeland Security’s Customs and Border Protection; the Copyright Office; and the Office of the United States Trade Representative (USTR). Together, we enhanced the domestic and international IP environment for American businesses.
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As part of STOP!, the USPTO continued a communications campaign to educate small businesses about protecting their IP in the United States and abroad. We offered small-business conferences in San Diego, Northern Virginia, Columbus, Nashville, Minneapolis, and Providence.
Other USPTO conferences focused exclusively on the IP challenges of doing business in China. All conferences had strong attendance, and more than 90 percent of attendees rated them “Excellent” or “Good.”
The USPTO continued to staff the STOP! hotline, 1-866-999-HALT, which lets callers receive information from our attorneys with regional expertise on IP rights and enforcement. This year, the hotline received 1,460 phone calls from people across America with a range of IP questions -- a 52 percent increase over FY 2005.
The STOP! gateway Web site, www.stopfakes.gov, was expanded to provide more specialized information, including USPTO-designed “IP toolkits” which help businesses protect their rights in other countries.
To strengthen global IP protection, the USPTO represented the United States in discussions and negotiations at the World Intellectual Property Organization (WIPO) throughout the year. Most notably, in March, the USPTO led a delegation to the WIPO Diplomatic Conference, which culminated in the adoption of the Singapore Treaty on the Law of Trademarks. The new treaty will help trademark applicants around the world receive better and faster responses.
The USPTO promoted IP protection in China. Through the Joint Commission on Commerce and Trade (JCCT) and its Intellectual Property Rights (IPR) Working Group, the USPTO and USTR negotiated another set of commitments from the Chinese Government to reduce counterfeiting and piracy. The USPTO signed a Work Plan for Strategic Cooperation with China’s patent office, the State Intellectual Property Office, and hosted a delegation from the China Trademark Office to discuss improving trademark protections.
The USPTO conducted 17 Global Intellectual Property Academies for foreign government officials, including judges; prosecutors; police officers; customs officers; patent, trademark, and copyright officials; and policy makers. The USPTO also conducted IPR programs for government officials and private sector representatives around the world, including in Southeast Asia, India, China, the Middle East, North Africa, Latin America, Russia, Turkey, and others.
We placed IP experts in Brazil, China, Egypt, India, and Thailand to advocate improved IP protection for American businesses and to coordinate training to help stop piracy and counterfeiting abroad.
We are confident that the USPTO’s financial and performance data is complete, reliable, accurate, and consistent, as we improve our ability to measure progress toward performance objectives.
For the 14th consecutive year, we received an unqualified audit opinion on our annual financial statements. For financial reporting, the independent auditors did not identify any material weaknesses, reportable conditions, or instances of noncompliance. However, we are reporting one non-financial material weakness in information technology security.
During FY 2006, the USPTO lived up to our duty to strengthen intellectual property protection in the United States and around the world. Our vision means continually improving our own operations and preparing to become even more innovative for the future. With the leadership of President George W. Bush and Secretary of Commerce Carlos Gutierrez, I am confident we will continue to meet the challenges of the 21st century.
Jon W. Dudas
Under Secretary of Commerce for Intellectual Property and
Director of the United States Patent and Trademark Office
November 6, 2006
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