Drew Hirshfeld, Performing the functions and duties of the Under Secretary of Commerce for Intellectual Property and Director of the USPTO
November 18, 2021
I’d like to first thank you [PPAC Chair] Julie [Mar-Spinola] for your seven years of service and your tireless leadership of PPAC. It has been an absolute pleasure working with you. And as you are in your last PPAC meeting Julie as the chair I, too, am likely in my last meeting in [my current] position—although not in my last meeting.
To Steve Caltrider, who has been serving as Vice Chair of PPAC, thank you for your leadership. And to all PPAC members, thank you for everything you have done and will continue to do for the USPTO.
There is a lot of work that goes into organizing this event and to sharing information, so thank you to the entire PTO team that puts this meeting together. A special thank you to Jennifer Lo who is always behind the scenes putting this event together year after year and quarter after quarter. You do an absolutely wonderful job.
I will also take the opportunity to recognize the [USPTO] Executive Committee—the Business Unit leaders of USPTO—for their excellent work. You will hear from many of them today, but they are the ones who keeping the agency moving forward as we await political leadership. They have made this time for me exciting, and enjoyable.
On that note, I have great news—and I think everybody knows this—but we have a nominee for the political leadership position: That is Kathi Vidal.
I am very excited to have her go through the Senate confirmation process and join USPTO. She has a wealth of experience coming from the Winston Strawn law firm. When nominating her, President Biden said she was “one of the leading IP lawyers in the country,” and is “nationally recognized for leading high-profile patent disputes.” She has a wonderful background and experience to be the leader of the PTO, and I’m looking forward to her confirmation hearing.
I also wanted to say that we are very fortunate that Commerce Secretary Gina Raimondo has announced her chairpersonship of our Council for Inclusive Innovation, our rebranded National Council for Expanding American Innovation. We are thrilled to have her leadership, and for her to be at the forefront of CI2. This is our public-private partnership working on a National Strategy for Expanding American Innovation, particularly to underrepresented groups. So we are very happy to have Secretary Raimondo’s leadership there.
Turning to highlights from fiscal year 2021, I’ll start with our status at the Office during the pandemic. We have spent the entire year in maximum telework capacity. For the Office, we are entirely functional. We had a wonderful telework program prior to the pandemic. About 60 percent of our employees were home full time, anyway. So, for us, we were used to remote working. We are watching transmission rates [of the virus], and anticipating when there is a return back to a new “normal.” We are not quite there yet. But, hopefully, we are beginning to move in the right direction.
On quality, it is always job-one, and is most important to USPTO. Our most recent customer-perception survey on patent quality was completed in the third quarter of 2021, and we had the highest satisfaction for overall quality since the start of the survey. I feel very good about that. If you were to view our chart plotting out the results over the years, you will see a continued increase of those users who are rating our quality as “good” or “excellent,” and a continued decrease of those who are rating it as “poor” or “very poor,” and that dates back to 2015 and earlier. We have made really excellent progress.
When we look at measures of patent quality that we do internally—when we have our Office of Patent Quality Assurance look at compliance for reviews of the four statutes—at a high level, we made some of our internal goals, and we didn’t make some of our other goals. That being said, each of the compliance measures in all four of the statutes improved. So we got better in fiscal year 2021 compared to 2020 across the board; but for some of our goals we fell a little short, though improvement is moving in the right direction.
As far as patent pendencies go, I have said many times that we are trying to shift our focus to patent-term adjustment [PTA] timeframes, and not have such a focus on first-action pendency and total pendency. PTA is a better measure—it is better for the big picture, and better for certainty.
We’ve made progress there. We ended the fiscal year with 83% of our total compliance for mailed actions; and 86% compliance for the remaining inventory. Our long-term goal is to get to 90% for both of those. We basically made our internal goal with regard to compliance for remaining inventory, and we are just short of our internal goal for mailed actions. But those numbers—like quality—are moving in the right direction.
As far as filings, it’s been a really interesting year given the uncertainty caused by the pandemic. When the pandemic was new, we started looking at other historical events to see how they impacted filings, because that is a driver of everything we do at USPTO, including for our current and future revenues.
We were forecasting about a 4% decline at the beginning of the year 2021, and where we ended up at the end of the fiscal year was just about flat. We saw a very slight decline in new utility filings of 0.1%.
It is only the second time in the last 20-plus years where there was a decline. Back in 2009 during the financial crisis, we saw a decline of almost 9%. So, today, it’s very positive news for the IP system that we ended up almost flat.
On the design front, we saw a significant 17.6% increase in design patent applications. Design patent applications usually follow trademarks more than utility applications.
And for those of you who are curious, on the Trademarks side of PTO, we saw a 30% increase in filings [in FY 2021]. So it’s not so surprising that we saw design filings go up by 17.6%. By the way, the Trademark increase was due to the increase in online sales, and the increase in registrations that go along with online sales.
At the high level for our revenues, even though this was one of the biggest stressors coming into the year with the pandemic, we did finish the fiscal year with the highest operating reserves we’ve had on record. So, financially the agency is in a very good position.
Also in fiscal year 2021, we implemented the post-Arthrex Director Review process. There have been just over 50 petitions that have been decided, with one grant to the petitions, and a second grant [forthcoming].
In addition, we still have the POP—Precedential Opinion Panel—cases moving forward. Interestingly enough, after the Arthrex case and the Director Review process was put into place, we got asked if POP was still viable, and if POP should move forward. They are great questions, but we will certainly continue to have POP. I will say that the number of POP requests increased after Arthrex. I thought it would be the opposite, but it increased. And there has been one recent grant to the POP review request.
So that is a whirlwind summary of 2021.
Now let me mention some topics looking forward over the short term.
With quality metrics, we have been talking internally about making more of our quality metrics accessible to the public, so that you can see and evaluate them. We are in the process of putting more of our quality metrics and some of the data behind them up on our website over the next couple of weeks.
I would love for the public to look at our Master Review Form, which is the form we have been using for years. We update it as needed, but it’s what we use to review office actions. It is very extensive. It has 20 sections with up to 330 questions. I say up to 330 questions, because you only answer the ones for the sections that apply to the office action you are looking at. However, you will see that this is a very extensive form. Because we would love to have a more robust public discussion about these reviews, we are posting that information so everyone can see it. That form is used for all of the 12,000 reviews that the Office of Patent Quality Assurance does annually.
I also wanted to mention our next steps regarding DOCX. Our initial plan was to move forward on January 1, 2022, with a non-DOCX filing fee of $400 if people did not submit their applications in DOCX. But, throughout the year, there has been an extensive back-and-forth public discussion, and we have decided to delay for one year the implementation of the non-DOCX filing fee. . . And we will take a second step to create a very robust plan for having testers and a continued ramp up of usage of DOCX.
The complaint I hear mostly is that while users overall like the new system, there is a level of stress about renderings in DOCX. The fear is that if there is an unknown problem of rendering into DOCX, it might potentially change an application item. I don’t think this is ever going to happen, but the fear is that since this is new we needed to put more safeguards into place for applicants. We will most likely accept a PDF filing as well.
The PDF filing is hopefully never going to be used, but it will be there to show what information was filed if we need to go back if there is a rendering issue. We also recognized that we need to give everyone the confidence in the system. We will take a year for this intense testing and, hopefully, it ramps up over time.
I have asked [Acting Patent Commissioner] Andy Faile to take the next steps with regard to the testing program. . . to highlight for us if there any concerns that we need to address. It will enable us to do much more extensive testing. We will make sure that anybody who enters this pilot program will be safeguarded. So, please, join the pilot program when we issue a Federal Register Notice because we need to move the system forward.
In both Patents and Trademarks, we are also making some IT advancements with regard to the issuance of registrations. In the coming weeks, you will see information about the electronic issuance of both patents and trademarks. It’s a wonderful step because applicants will get their patents earlier than in the past. And it will help our pendency numbers. . . By the way, anyone who wants the paper issuance of a patent or trademark can get one. We will have a small fee of $25 to get paper.
I also wanted to mention on the PTAB [Patent Trial and Appeal Board] front that we are moving forward working with stakeholders to establish a pro bono program, first for ex parte appeals and hopefully—in time—for AIA trial proceedings. This is a wonderful step. The PTAB Bar Association will serve as the national clearinghouse for the program matching those in need of counsel with volunteer attorneys. More information on that program is coming soon.
With regard to the Legal Experience and Advancement Program [LEAP] in coming weeks, we are in the process of removing the condition that attorneys have seven or fewer years of experience as a licensed attorney or agent to qualify for participation in the program. We are removing that restriction because there are instances where people have been licensed or registered for more than seven years, but they don’t have the oral argument experience. We think this would be a very valuable program for parents who have taken time away from practice, or members of the reserve or active duty, or other factors. But we would like to open LEAP to anyone who is thinking that oral argument practice would be good for them.
So, thank you to all of the PPAC members. And with that I look forward to a great discussion for the rest of the session.