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Collage showing images with one-word descriptors from the U S P T O Fiscal Year 2007 Performance and Accountability Report cover that reinforces the report's tagline of Transforming for the Future Today.
Performance and Accountability Report Fiscal Year 2007
Management's Discussion and Analysis

Table of Contents | Management | Financial | Auditor | IG | Other

Strategic Goal 3: Improve Intellectual Property Protection and Enforcement Domestically and Abroad

The USPTO is an integral component of President Bush’s strategy to encourage innovation and strengthen the nation’s ability to compete in the global economy. To this end, the USPTO advocates U.S. Government IP policy, works to develop unified standards for international IP, provides policy guidance on domestic IP issues, and fosters innovation.

Protecting IP and Curbing IP Theft

During FY 2007, the USPTO continued to improve the enforcement of IP rights in the United States and around the world. USPTO actions included taking the lead on several initiatives to strengthen IP protection and enforcement and to continue advocating improved IP protection and enforcement for American businesses.

As part of the Administration’s Strategy Targeting Organized Piracy! (STOP!) initiative, the USPTO advanced work with other U.S. Government agencies to fight piracy and counterfeiting. As part of STOP!, the USPTO continued managing a hotline that helps small and medium-sized businesses leverage U.S. Government resources to protect their IP. The USPTO received 1,730 STOP! hotline calls in FY 2007.

The USPTO actively worked with the Office of the United States Trade Representative (USTR) on the IP chapter for several free trade agreements (FTAs) during FY 2007, most notably the IP chapter of the U.S.-Korea Free Trade Agreement, which was completed in April 2007. This is the strongest IP chapter in any FTA to date and the most commercially significant FTA in more than 15 years. Additionally, the USPTO officials participated in negotiations with USTR on the IP chapters of the U.S.-Malaysia FTA negotiations and the implementation of the U.S.-Central American FTA with the Dominican Republic. The USPTO also continued posting IP experts at American embassies in key locations around the world.

Image of World map showing the seven foreign postings of intellectual property experts: Brazil, China, Egypt, Geneva, India, Russia, and Thailand.

Working to Unify International IP Practice

Multilateral Efforts

The heads of the five largest IP Offices — China, Europe, Japan, Korea, and the United States met to discuss ways the Offices can cooperate to improve efficiency and quality and keep pace with the rising volume of global patent filings. In May 2007, the USPTO met with leaders from the European Patent Office (EPO), the Japan Patent Office (JPO), the Korean IP Office (KIPO), and the State Intellectual Property Office (SIPO) of the People’s Republic of China to discuss common patent administration issues such as work sharing, quality management practices, e-filing, and examiner training. These offices are critical to the future of the global patent system and global economy. Enhancing cooperation among them will lead to higher quality, greater productivity, and less redundancy.

The USPTO also made significant progress within the Trademark Trilateral (the USPTO, the JPO, and Europe’s Office for Harmonization in the Internal Market) on the identification of classifications for goods and services. The partners have now agreed to invite additional countries to participate in the project, on a limited basis. This work should further reduce trademark pendency as applications, especially those filed from abroad, will be more focused for examination in the United States.

The USPTO, JPO, and EPO continued working together, within the Patent Trilateral (the cooperative effort that began in 1983 among the three offices), to find mechanisms to streamline processing and avoid redundancies among the offices and for applicants. In FY 2007, the Patent Trilateral implemented electronic priority document exchange, allowing for direct office-to-office transmission of priority documents.

USPTO officials led discussions with the International Union for the Protection of New Varieties of Plants (UPOV) convention, which sets minimum standards for a sui generis form of IP protection system for plant varieties. The convention promotes compliance for IP protection internationally with respect to the process of plant breeding and aims to encourage plant breeders to develop new varieties of plants. Five countries — the Dominican Republic, Morocco, Spain, the Ukraine, and Vietnam — joined the 1991 Act of the UPOV convention in FY 2007 bringing total membership to 64.

In the future, the USPTO will continue to seek enhanced cooperation and improved protection for intellectual property multilaterally. Working with Patent and Trademark Trilateral partners, as well as other IP offices such as Korea and China, the USPTO plans to intensify efforts to improve efficiency and quality in the examination process. The USPTO also will continue to promote improved IP protection internationally in several multilateral fora such as the UPOV and the World Intellectual Property Organization (WIPO).

Bilateral Efforts

The USPTO also made great strides in implementing the USPTO-SIPO work plan of strategic cooperation. Under the work plan, the USPTO implemented an examiner exchange program, initiated an automation experts’ group meeting, and provided extensive training to SIPO examiners and managers.

The USPTO established broad cooperative agreements with other countries for increased technical cooperation between the offices. Memoranda of understanding signed by USPTO in FY 2007.

  • India’s Department of Industrial Policy and Promotion, January 9, 2007, to cooperate in capacity building activities, human resource development, and public awareness programs.
  • IP Australia (IPAU), January 18, 2007, to establish a second phase of a pilot project to determine the feasibility of having IPAU perform search and examination functions under the PCT for the USPTO.
  • The IP office of the Republic of the Philippines, January 28, 2007, for increased technical cooperation between the two Offices.
  • The Ethiopian IP Office, March 23, 2007, emphasizing the importance of bilateral relationships, and wherein the USPTO agreed to provide technical assistance to improve the administration of IP systems and develop professional skills.

Photo showing USPTO IP attorney Tom Sydnor testifying before the U.S. House Oversight and Government Reform Committee about the effects of inadvertent filesharing.

Resident Expert — USPTO IP attorney Tom Sydnor testifies before the U.S. House Oversight and Government Reform Committee about the effects of inadvertent filesharing.

While the main thrust of the USPTO bilateral efforts is at the operational level, involving training and technical assistance, the USPTO believes that these efforts should produce results at the policy level in the form of improved IP protection in these countries by improving IP office administration, public awareness of IP, and enhanced cooperation at both the technical and policy levels.






Giving Domestic IP Policy Guidance

Patent modernization legislation has been the subject of several committee hearings and considerable debate and discussion in the U.S. Congress. The legislative proposals are intended to improve patent quality, reduce patent litigation costs, and further international harmonization of patent laws. The USPTO supports these goals and is working with the Congress to develop a bill that effectively addresses the goals in a fair and balanced manner for all stakeholders in the patent community. The USPTO will continue consultations as this important legislation moves ahead in the legislative process.

The USPTO also provided policy guidance on various other patent, trademark, and IP bills during the year. The Agency responded to and consulted with Congressional staff on various diverse IP issues related to the protection and enforcement of Intellectual Property Rights (IPR), geographical indications, IP assistance to small businesses, and telework policies and practices for Federal agencies.

In March, the USPTO released a report, “Filesharing Programs and Technological Features to Induce Users to Share.” This report found that five popular filesharing programs had features that could cause users to inadvertently share files and facilitate identity theft or breaches of security. After the report's release, the USPTO, as a co-author, testified before the Congress on the results and the impact of inadvertent file sharing.

On July 17, the Director of the Office of International Relations testified before the Senate Committee on Foreign Relations to discuss three important IP treaties. The Director urged support for ratification of the Hague Agreement, the Patent Law Treaty, and the Singapore Treaty, each of which would streamline and simplify procedures for American innovators and businesses seeking to protect their IP abroad.

As in past years, the USPTO was heavily involved in shaping IP law and policy through domestic litigation.

The Obviousness Test in Patent Law
KSR International Co. v. Teleflex, Inc.

Whether a claimed invention is obvious in view of the prior art is often the central question in deciding whether to grant a patent. The Office of General Counsel worked closely with the Solicitor General of the United States in formulating the Government’s amicus brief for the Supreme Court case KSR International. v. Teleflex, Inc., and the Supreme Court largely adopted. The unanimous KSR opinion gives patent examiners more flexibility when analyzing this fundamental issue, ensuring that allowed applications meet the statutory standard of nonobviousness. The Agency is leading the way to apply KSR, having prepared very detailed examination guidelines. Moreover, BPAI has issued several precedential opinions, outlining best practices for examining patent applications in light of KSR. Finally, implementation of KSR will positively affect the USPTO’s role in maintaining a strong system of granting high quality, valid patents.

In addition to KSR, the USPTO advised the Solicitor General of the United States on several other IP matters before the Supreme Court. For example, the USPTO assisted in preparing the Government’s amicus brief in Microsoft v. AT&T Corp., which involved the limits of extraterritorial infringement under 35 U.S.C. § 271(f)(1). The Supreme Court essentially adopted the Government’s position, finding that Microsoft was not liable for infringement under §271(f) for copies of software made overseas of a master copy that was supplied from the United States. Likewise, the Supreme Court’s decision in MedImmune, Inc. v Genentech, Inc., was consistent with the Government’s brief, holding that a patent licensee may be permitted, under certain circumstances, to challenge the patent’s validity in court without having to breach the license.

The USPTO continued to defend its decisions before the U.S. Court of Appeals for the Federal Circuit, resulting in a number of recent precedential decisions that provide further guidance to both our examiners and applicants in improving the application process.

In Hyatt v. Dudas, the Federal Circuit upheld the USPTO’s decision, in the case of an application with very large numbers of claims, to require the applicant to affirmatively specify the written description supporting those claims when the examiner is unable to locate such support on initial examination of the application.

In Bender v. Dudas, the Federal Circuit affirmed the USPTO’s decision to disbar a patent attorney for his activities with an invention promotion company, in which they collectively misled hundreds of individual inventors through the patent application process. Public confidence in not only the quality of patent grants, but also in the members of the patent bar will always be a critical issue for the USPTO.

The USPTO successfully defended the Trademark Trial and Appeal Board’s (TTAB) decision in In re Elsevier, denying registration of the mark “LAWYERS.COM” for an online legal information service. The Federal Circuit determined that the mark was generic for legal information services.

Furthering the Agency's leadership in IP law, both the BPAI and the TTAB increased their issuance of precedential decisions, with the TTAB issuing over 60 such decisions, and the BPAI issuing landmark decisions providing early guidance on applying KSR. In addition, this past year, both boards issued or proposed new rules designed to streamline case resolution and improve the efficiency of the decision-making process.

Delivering IP Education Worldwide

This year, the USPTO completed the Global Intellectual Property Academy (GIPA), a 20,000 square foot state-of-the-art facility equipped to efficiently deliver targeted programs and training for foreign IP and law enforcement officials. With the establishment of this academy, the USPTO implemented a Foreign Examiners-in-Residence training program — the first of its kind in international cooperation and training at the USPTO.

Photo showing the completed Global Intellectual Property Academy (or GIPA), a 20,000 square-foot training facility for foreign IP officials. This work strengthens IP rights around the world.

Thinking Globally — The USPTO completed the Global Intellectual Property Academy (or GIPA), a 20,000 square-foot training facility for foreign IP officials. This work strengthens IP rights around the world.

Selected examiners from the patent offices in Brazil, China, Egypt, India, Mexico, and the Philippines are now participating in this eight-month training program. Overall, the USPTO conducted 77 GIPA programs in FY 2007, a 63 percent increase over programs offered last year. Fifty-eight percent of the FY 2007 GIPA programs focused specifically on IPR enforcement-related topics, with a goal toward improving IPR enforcement regimes worldwide. For example, programs dealt with border enforcement, IP rights for judges and prosecutors, effective practices in the regulation of optical media production and the implementation of anti-piracy efforts, copyright infringement in the digital environment, geographical indications, trademark examination, traditional knowledge, and genetic resources.

Also, as part of the STOP! initiative, the USPTO continued its intensive national public awareness campaign. In FY 2007 the USPTO developed a critical partnership with the U.S. Chamber of Commerce enabling the USPTO to share duties of agenda-building, funding, and outreach.

The USPTO kicked off the year with a highly anticipated event for small and medium-sized businesses designed to aid them in protecting their IP in a global marketplace in Raleigh, North Carolina, and followed up with events in Detroit, Michigan; Burlington, Vermont; San Antonio, Texas; Portland, Oregon; Seattle, Washington; Denver, Colorado; and Los Angeles, California. The USPTO also organized two China specific events throughout FY 2007, which took place in Philadelphia, Pennsylvania and Kansas City, Missouri.

More than 1,300 small and medium-sized businesses attended our conferences. Large companies presented “Lessons Learned” and “Best Practices” to small business attendees and small businesses discussed the importance of IP protection. As a new outreach and educational tool, the USPTO also distributed more than 1,500 CD-ROM presentations on IP protection. Our commitment to reach out to small businesses will continue in FY 2008.

In FY 2007, USPTO began a partnership with the Ad Council to reach young people through a national ad campaign called “Inspiring Invention,” which seeks to make inventing and developing new ideas part of American children’s lives. Radio and TV commercials are now playing throughout the country with the message, “Anything’s possible. Keep thinking.”

Photo showing the USPTO display at the 2007 Summer NAMM (International Music Products Association) trade show, where USPTO attorneys gave lectures on protecting IP and preventing piracy and counterfeiting. The USPTO’s work was part of the Bush Administration’s “Strategy Targeting Organized Piracy!” initiative, (or STOP!), a joint effort of nine Federal agencies to crack down on IP theft.

Spreading the Word — The USPTO displays information at the 2007 Summer NAMM (International Music Products Association) trade show, where USPTO attorneys gave lectures on protecting IP and preventing piracy and counterfeiting. The USPTO’s work was part of the Bush Administration’s “Strategy Targeting Organized Piracy!” initiative, (or STOP!), a joint effort of nine Federal agencies to crack down on IP theft.

IP Protection — The measures of the USPTO’s progress in protecting and enforcing IP focus on FTA negotiations and implementation, World Trade Organization (WTO) accessions, 301 reviews, trade policy reviews, technical assistance, expansion of foreign postings, work details of USPTO employees to other U.S. Government agencies, as well as development of specific plans for strategic cooperation; for example, the work plans with China, Egypt, India, Brazil, and Association of South East Asian Nations (ASEAN).

The significant variance in actual numbers of instances in which USPTO experts reviewed IP policies/standards compared to the target was due to the exceptionally large number of requests from the USTR to assist with trade policy reviews, activities associated with FTAs, and requests for technical assistance stemming from the successful GIPA program and an increased focus on China.

Graph summarizing the number of instances in which USPTO experts review IP policies/standards for the last four fiscal years.D

Graph summarizing the plns of action, mechanisms, and support programs initiated or implemented in developing countries for the last four fiscal years.D

Graph summarizing improving worldwide IP expertise for U.S. government interests for the last four fiscal years.D

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