|Performance and Accountability Report Fiscal Year 2009
Management's Discussion and Analysis
Management Challenges and What’s Ahead
The USPTO will continue to lead the world in IP policy by optimizing patent and trademark quality and timeliness, and improving IP protection and enforcement domestically and abroad by addressing the following challenges:
MAKE EFFICIENCY GAINS FOR THE FUTURE, WHILE KEEPING QUALITY HIGH
The Patent and Trademark organizations will build on their accomplishments and work toward meeting the objectives of the 2007-2012 Strategic Plan while working with customers to ensure that the objectives remain aligned with their needs.
The Patent organization’s biggest challenge is to address the growth of pendency and the backlog of patent applications waiting to be examined while maintaining high patent quality. The Patent organization must address the dual challenges of heavy workloads and a shift of applications from traditional arts to more complex technologies. Consequently, the Patent organization will continue to hire, train, and retain additional examiners, and explore and implement process improvements. These actions will help to make the Agency even more responsive to the ever-increasing demand for patents.
The Trademark organization must strike a proper balance between forecasting levels of new filings, existing inventories, and managing an appropriately sized staff to ensure sufficient resources are available to maintain pendency goals on a consistent basis. The Trademark business’ biggest challenge is to maintain the gains it has made in quality and pendency given the uncertainty of trademark filings, future revenues, and controlling costs. Efficiency gains have been realized through process improvement and cost reduction along with greater use of information technology. First-action pendency has reached the long-term target range of 2.5 to 3.5 months. Maintaining first-action pendency on a consistent monthly basis, given monthly fluctuations in filings, the unpredictability of projecting new filings given the continued uncertainty of the economy and the need to secure congressional approval for funding to support a high quality operation presents any number of challenges that must be carefully managed.
The Trademark organization will continue to assess the efficiency of its operations going forward, and incorporate process improvement in the incremental redesign of the electronic workflow and file management system. Completing the electronic workflow and file management system throughout the entire process will provide better automated tools and consistency for managing workloads and yield better services to its customers. The USPTO will also continue to use e-government as the primary means of doing business with applicants and registrants, and as a means of processing work within the Trademark organization. Continued high quality actions and consistent low first-action pendency will ensure low disposal pendency which translates to certainty for business owners in making investments in new products and services.
ECONOMIC AND FINANCIAL UNCERTAINTY
The financial crisis that began last year in the U.S. has created challenges for the USPTO as the world economy has fallen into a recession. The USPTO derives its budgetary resources from user fees and the recent economic downturn impacted patent and trademark operations and revealed vulnerability in the method for financing the Agency. The downturn in patent allowance, maintenance, and application fees stems directly from the financial constraints that even the nation’s most innovative companies face.
Patent and Trademark application filings, which historically increase year after year, declined between FY 2008 and 2009. Filing forecasts were lowered in expectation that the downturn in the economy would impact filings and revenues – specifically as they relate to the gross domestic product (GDP) and financial indicators such as venture capital. Continued uncertainty exists for the next two to three years in planning and managing staffing and budget requests that are supported by fee revenues, especially if current fee rates remain unchanged.
The USPTO sought legislation to enable it to temporarily use Trademark unobligated balances through June 2010 to forestall the need for a furlough, if needed. The USPTO is also exploring the use of new financing tools, such as fee setting authority, borrowing authority, operating reserves, and investment authority that would permit adjustment for volatility in the economy and/or demand for products and services without putting the Office in an operational crisis. Such tools would also permit the USPTO to undertake long-term strategies for improvement in a financially reasonable way.
CONTINUE TO MOVE TO AN ELECTRONIC WORKPLACE
The Patent and Trademark organizations are moving rapidly to eliminate paper documents from their processes. Electronic communications are improving, thereby encouraging more applicants to do business electronically through the use of Web-based systems. Both Patent and Trademark organizations have made significant progress in support of the long-term goal to create an e-government operation. The Trademark organization relies exclusively on data submitted or captured electronically to support examination, publish documents, issue registrations, and to a large extent communicate with applicants. Because of the high degree of reliance on electronic operations, the Trademark organization is dependent on the management and support of internal information technology systems and services to manage its operations and provide services to the public.
The Trademark organization, along with the support of the OCIO, still has the challenge of completing an electronic docket and file management system for the pre-exam and petitions operations that support core examination and to link all operations and processing with one system. A fully electronic workflow will allow the Trademark organization to better manage the fluctuations in filings and be more efficient, as well as timely, in processing and responding.
This increased reliance on electronic systems presents other challenges to the USPTO in the event of an unplanned outage or disruption in processing. To address this need, the USPTO has embarked on an aggressive, phased business continuity/disaster recovery program. The current phase involves establishing a remote data bunker, which stores backups of mission critical data.
In addition, IT infrastructure and attendant hardware and software systems had been neglected for a number of years, both from a resource perspective and from the lack of a holistic strategy. In response, the USPTO initiated the OCIO IT Modernization Road Map plan in FY 2008 to address the IT infrastructure needs of the USPTO. The Road Map initiatives focused on both the “remediation” of existing issues, but also forward-looking strategies for taking the Office into the next decade.
The Road Map focuses on four goals in an effort to revitalize the USPTO’s technology environment:
In FY 2010, the OCIO will take a more holistic approach to out-year planning by integrating the Road Map into the Agency’s SITP. This plan will present the course of action the Agency intends to take over the next five years for IT. The primary purpose is to establish a strategic framework for guiding the course of IT initiatives through the Agency’s strategic planning and decision making process. While the Road Map was primarily infrastructure focused, the SITP will incorporate the business area strategies for taking advantage of IT.
STRENGTHEN GLOBAL INTELLECTUAL PROPERTY RIGHTS SYSTEMS
An effective IPR system is important to trade because it provides confidence to businesses that rights will be respected and that profits will be returned to IPR holders. The tremendous ingenuity of American inventors, coupled with a strong IP system, encourages and rewards innovation and helps propel the economic and technological growth of our nation.
The challenges to maintaining an effective IPR system include deepening the dialogue on global IP policy, facilitating technical cooperation with foreign countries, surveying and exchanging information on the current status of IPR protection and administrative systems, and arriving at agreement on standards of enhanced IP enforcement. These standards of enhanced IP enforcement include increased criminal and civil protection, as well as tighter controls on circumventing technological protection. Reaching bilateral and multilateral agreements will require all sides to openly communicate and strive toward a more global convergence of patent and trademark standards.
The USPTO will continue strong advocacy policies that ensure that IP rights, such as patents, trademarks, and copyrights, are recognized as essential tools for economic growth in both developed and developing economies. This is particularly important in light of the misperception that strong IP protection hinders development. The USPTO will continue to work with international partners to promote a strong and effective IP regime that provides adequate and effective incentives for innovation and creativity worldwide, including within organizations such as the WIPO, the WTO, and the United Nations Human Rights Commission.
The USPTO must continue to advocate pro-IP principles as endorsed by the “Group of Eight” (G8) countries — Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States — to assist all countries in adopting and effectively enforcing adequate levels of IP protection for the benefit of all citizens. This will be accomplished by advising other Federal agencies on domestic and international IP policy, and by continually expanding our IP training and technical assistance internationally.
The USPTO will continue to search for solutions to its workload, examination quality, and e-government challenges by taking the lead on cooperative initiatives with other IP offices throughout the world. This will result in progress in the areas of work-sharing, examination practice uniformity, and electronic access and compatibility. Finally, the Agency will continue to address policy and legal matters relating to all legislative proposals relating to IP and the USPTO, especially in the context of the continuing debate over proposed changes to the patent laws of the United States.
ENSURING PROPER FEE RATES
Under current authority, any change to statutory fees requires legislation.1 This limits the USPTO’s ability to adjust its fees in response to changes in market demand for patent and trademark services, in processing costs or in other factors. To assure adequate funding levels for the long term, the USPTO needs authority to set and adjust fees administratively, so that it can properly establish and align fees in a timely, fair and consistent manner to recover the actual costs of USPTO operations and without going through the inherently long delays in the legislative process.
Any fee adjustments could be subject to oversight, review and comment by the USPTO’s Public Advisory Committees, its stakeholders and Congress. This would provide assurances that the USPTO has all the necessary oversight, checks, and balances.
ATTRACT AND RETAIN THE RIGHT SKILLS AND TALENT
Work at the USPTO is highly technical in nature and requires a well-educated, well-credentialed, and diverse workforce. Consequently, the Agency is faced with employment, management, training, and leadership challenges. Customer demands continue to increase while recruiting challenges escalate in a highly competitive environment, particularly for patent examiners, IT specialists, human resource specialists, and acquisition professionals.
The USPTO is focusing on ways to manage the new generation of employees in an increasing virtual workplace. While the Agency has strong performance management processes in place, there are still management challenges. Patent funding shortfalls have adversely impacted hiring patent examiners and organizational support for the patent process, the ability to retain employees, provision of adequate resources and tools for employees to do their jobs, and succession planning.
1. The following patent fees are set by statute (“statutory patent fee”): the filing fee, the application size fee, the excess claims fee, the examination fee, the issue fee, the disclaimer fee, the appeal fees, the application revival fee, the extension of time fees, the maintenance fees, and the assignment recordation fee. The remaining patent fees are set by regulation (“regulatory patent fees”), and these fees include the request for continued examination fee, the eighteen-month publication fee, the reexamination filing fees, and many petition fees. Trademark application filing fees are set by legislation in the 2005 Appropriations Act. (back to text)
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