		      Trademark Public Advisory Committee

				 Annual Report
			       November 30, 2000

I.  INTRODUCTION

   The recently appointed Trademark Public Advisory Committee (T-PAC) 
members were sworn in by Under Secretary Q. Todd Dickinson and that 
Committee had its initial meeting in Arlington, Virginia on August 22nd and 
23rd for the purpose of receiving a comprehensive orientation briefing.  
Excellent and informative presentations were made by Anne H. Chasser, 
Commissioner for Trademarks, and Nicholas Godici, Commissioner for Patents, 
as well as by: Dennis Shaw, CIO, on information systems; Clarence 
Crawford, CFO/CAO, on budget process and fees; Robert Stoll, Administrator, 
External Affairs, on legislative matters; Mary Lee,  Administrator, Quality 
Management, on quality initiatives; Kimberly Walton, Deputy CAO, on 
workforce and  labor management issues; and Jo-Anne Barnard, Administrator 
for Space and Acquisition, on space and facilities.  

   These initial briefings provided a base of information for T-PAC that 
will prove to be valuable when the United States Patent and Trademark 
Office (USPTO) presents various proposals and studies to the Committee and 
seeks its advice on those materials.  The information will also be useful 
to evaluate and advise on the general steps that are being taken and those 
being proposed for consideration to improve the performance of trademark 
operations at the USPTO.  The presentations also placed the members of the 
Committee in a better position to consider the proposed 2002 budget that 
was prepared by the USPTO for submission to the Office of Management and 
Budget (OMB).  The 2002 budget was reviewed by the T-PAC during an 
executive session meeting on October 23, 2000. Obviously, because of the 
uncertainty regarding the availability of fees collected by the USPTO in 
payment for services, the budgeting process is infinitely more difficult 
than if the Agency knew in advance that all fee collections would be 
available for expenditure as needed.  The uncertainty regarding the 
availability of funding severely limits the USPTO's ability to address 
critical problems arising from the proliferation of work above levels 
experienced in the past. As noted below, the T-PAC believes planning and 
funding problems would be significantly ameliorated if the goal of having 
full access to user fees to fund the operations of the USPTO as a 
Performance-Based Organization (PBO) had been realized.

   It is our understanding that as a PBO, the USPTO is expected to conduct 
its business from a performance, financial and accountability standpoint in 
a manner comparable to a  private business.  As such, it must rely on 
customer demand  and payments, as well as customer satisfaction and product 
quality, rather than being viewed by its users and the public as having 
some of the inefficient attributes associated by many with a Government 
operation.  Thus, the T-PAC firmly believes that the USPTO must seek to 
parallel the best attributes of both a private and public enterprise. We 
believe that by designating the USPTO as a PBO, as indicated in the 
testimony introduced at the hearings and passage of the U.S. Patent and 
Trademark Office Efficiency Act (Pub. L. No. 106-113 (1999)), Congress 
intended the USPTO to be a self-funding organization accountable for its 
policies and performance.  Further, it is clear that the only source of 
revenue available to the USPTO is user fees. It is also manifestly apparent 
that any  policy which imposes responsibility for performance without 
having 	available the revenue generated from its operations, is a policy 
that, in the opinion of the T-PAC, is antithetical to the effective 
operation of the USPTO and the best interest of its customers, users and 
fee payers, as well as the general public and the U.S. economy which relies 
heavily  upon the protection of intellectual property rights.

   In this report, the T-PAC offers a preliminarily review of the USPTO 
Trademark Operation (Trademarks), notwithstanding the fact the appointment 
of members took place in the latter part of the fiscal year covered by this 
first report. We recognize that under the legislation establishing the 
T-PAC, we have been chosen "to represent the interests of diverse users of 
the USPTO" regarding Trademarks, and to this end our Committee includes 
"members who represent small and large entity applicants located in the 
United States."  We acknowledge and are committed to our duties, which 
include: (1) the review of "the policies, goals, performance, budget and 
user fees" of the USPTO "with respect to trademarks"; and (2) advising the 
Director on these matters.

   In addition, we are required and committed, within sixty days after the 
end of the fiscal year, to prepare an annual report on the matters 
referred to in Paragraph (1) and to "transmit the report to the President, 
the Secretary of Commerce and the Committees on the Judiciary of the 
Senate and House of Representatives" and to "publish the report in the 
Official Gazette" of the USPTO.
 
II.  MEMBERS OF T-PAC

   Since any report involves the subjective and objective views of the 
T-PAC, it may be helpful for the recipients of this report to have a list 
of the members of T-PAC and a brief statement regarding their background.

Chair: 

   Miles J. Alexander of Atlanta, GA, is Senior Partner in the Intellectual 
Property Group and Co-Chairman of Kilpatrick Stockton LLP, a law firm which 
has over 500 attorneys in Georgia, North Carolina, Washington, D.C., 
Virginia, Florida, London, Brussels and Stockholm.  He is former General 
Counsel to the International Trademark Association (INTA). 

Members: 

   Helen M. Korniewicz of Corte Madera, CA, manages the Trademark group at 
the Chevron Corporation Law Department. In addition to foreign and domestic 
trademark and copyright issues, she is responsible for legal services for 
the e-commerce and communications activities of several Chevron entities 
and has extensive experience in commercial and consumer credit services. 

   Susan C. Lee of Bethesda, MD, is of counsel to the firm of Pena & 
Associations, P.C. and specializes in trademarks, copyrights, trade 
secrets, unfair competition and Internet law. From 1988-1993, she served as
a trademark attorney with the United States Patent and Trademark Office, 
including representing the USPTO before the U.S. Trademark Trial and 
Appeal Board. 

   David M. Moyer of Terrence Park, OH, is the Associate General Counsel 
for Trademarks and Trade Relations at the Procter and Gamble Company, with 
global responsibility for its trademark portfolio.  He is also a past  
board member of the International Trademark Association, and has chaired 
INTA's Membership Committee.

   Joseph Nicholson of New York, NY, is a partner at Kenyon & Kenyon whose 
principal practice is trademark and unfair competition, including large 
international trademark portfolios.  In addition to trademark practice, 
licensing and litigation, he has significant background in Internet 
commerce and domain name issues, and has served and continues to serve on 
various committees of the INTA. 

   Louis T. Pirkey of Austin, TX, is a member of the firm of Fulbright and 
Jaworski in  Austin, TX. He served as the immediate past president of the 
American Intellectual Property Law Association (AIPLA) and is Adjunct 
Professor of Trademark Law at the University of Texas School of Law. 

   Griffith B. Price, Jr. of Bethesda, MD, is a partner at the firm of 
Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P. He specializes in 
trademark and unfair competition matters. He is the former chair of the 
USPTO Public Advisory Committee for Trademarks, and the founding chair of 
the American Intellectual Property Law Association Trademark Law Practice 
Group. 

   John T. Rose, II of White Plains, NY, is Vice President for Human 
Resources at ESPN. He previously served as Senior Vice President for 
Player Relations and Administration for the NBA, where he was responsible 
for brand protection and trademarks worldwide, and organized an industry-
wide task force on intellectual property protection. Prior to that, as 
Vice President for Law at NBC, he provided legal services on human 
resources, labor  relations, finance, operations and engineering matters. 

   David C. Stimson of Rochester, NY, is the Chief Trademark Counsel for 
the Eastman Kodak Company. He has worldwide responsibility for Kodak's 
trademarks, including clearance, registration, oppositions, litigation and 
licensing. He is a past president of the International Trademark 
Association and has chaired INTA's Legislation, Finance, and Planning 
Committees. 

In addition to the above voting members, the statute provides us with the 
benefit of the views of three non-voting members representing the USPTO 
unions. They are:
 
   Virginia Cade - Area Vice President for the Trademark Building and 
Treasurer and Steward of the National Treasury Employees Union (NTEU), 
Chapter 243, representing Support Staff.  Ms. Cade is currently an 
Applications Classifier and has been with the USPTO for twenty-eight years.

   Howard Friedman - President of National Treasury Employees Union (NTEU),
Chapter 245, representing trademark attorneys in the Trademark Office, 
as well as attorneys at the Trademark Trial and Appeal Board.  Joined the 
USPTO in 1993.

   Lawrence Oresky - Vice President of the Patent Office Professional 
Association (Union) for the past eighteen years.  Mr. Oresky is a Patent 
Examiner and joined the USPTO thirty years ago after obtaining a Masters 
Degree in Aeronautical Engineering from the University of Illinois.  


III.  INITIAL IDENTIFICATION OF PROGRAMS TO BE REVIEWED

   The T-PAC, in considering the policies, goals, programs, budget and fees 
of the USPTO, will be reviewing and addressing, where appropriate, a wide 
range of issues that have been specifically identified to, or raised by, us 
following the comprehensive briefing we received at the end of August of 
this year. The leadership of the USPTO is constructively addressing 
important challenges it faces.  They include, inter alia: 

	Electronic filing
	   Providing incentives for and mandating of electronic filings

	Trademark Office Budget
	   Current and future general budgetary issues
	   Under-funding resulting from diversion of user fees
	   Analysis of fees

	Trademark registration rules and practice
	   Legislation
	   Rules changes
	   Creative means of addressing substantive legal issues and needs 
           for legislation
	   Madrid Protocol, TRIPS, and other treaty compliance issues
	   The international role of the USPTO
	   Ethical considerations

	Office administration and management
	   Current and long-time space needs
	   Automation
	   Expanded use of technology
	   Consolidation of operations
	   Examination overload
	   Likely trend for applications filed and increasing demands on 
           the USPTO
	   Impact of e-commerce and Internet on trademark operations
	   Quality control and accountability

	Trademark Examining Corps and other Trademark Office personnel 
        issues
	   Home, flex-time, and part-time employment; standards and 
           guidelines
	   Incentive programs and compensation issues
	   General productivity concerns
	   Employee relations, satisfaction, recruitment and retention
	   Impact of private sector compensation levels on recruitment and 
           retention
	   Staff training and educational programs

	User needs and resources
	   Measurers of customer satisfaction
	   Large user needs
	   Small user needs
	   Facilitating input from the trademark community (and T-PAC's 
           role in doing so)
	   Maintenance of the existing trademark search library
	   User educational programs

	Trademark Trial and Appeal Board
	   Fulfilling TTAB mission

IV.	ANNUAL REPORT
 
   Although it is premature to fully report on our Committee's views of the 
policies, goals, performance, budget, user fees and the topics listed 
above, many of which will be addressed by the T-PAC during the coming year, 
we have been able to reach conclusions with respect to three matters of 
great importance.  Thus, we make the following observations in this report, 
which is submitted to the President, the Secretary of Commerce and the 
Committees on the Judiciary of the Senate and the House of Representatives, 
as required by the legislation creating the United States Patent and 
Trademark Office Public Advisory Committees.  In accordance with the 
provisions of the law, we have advised the Director of our views.
 
Funding:  The unprecedented increase in trademark applications filed since 
1992, and in particular in the past two years when they increased at rates 
of 27% each year, and the growing complexity of fulfilling the mission of 
the USPTO in the e-commerce world, make it clear that the failure to 
provide all user fees on a current basis to the USPTO does a tremendous 
disservice to the agency, its users and the American public.  The annual 
diversion of USPTO user fees during the budget process through "scoring," 
"carryovers," or other measures, which 	take customer user fees and 
withhold them temporarily or permanently for purposes other than trademark 
operations creates a barrier, in the opinion of the T-PAC, to the ability 
of the USPTO to fulfill its mission.  The fact that the USPTO is self-
funded by the users and that those funds are being diverted to other 
purposes appears to the T-PAC to have no reasonable justification and to 
work serious and consistent hardship on the USPTO operations.  Finally, we 
would like to note that although Trademark customers paid almost $166 
million in fees in FY 2000, Trademarks only had access to approximately 
$130 million to fund activities associated with the registration of 
increasing numbers of trademarks.

Electronic Filing: A second conclusion reached by the T-PAC is that the 
USPTO should take immediate steps to expedite the use of technology in 
fulfilling its mission by mandating electronic filing, to the extent 
allowed by law, and by replacing paper based processes and information 
with processes designed to best leverage technology to conduct its 
business. Most importantly, it needs to move on an expedited basis to 
mandatory electronic filing of new applications and other papers, to the 
extent allowed by law. This is necessary for the USPTO to be able to meet 
the exponentially increasing demands placed upon its workforce and 
facilities.  
 
Madrid Convention: The T-PAC believes that if the U.S. adopts the Madrid 
Protocol, the benefits to trademark owners and the public who are served by 
the USPTO would outweigh the costs of implementation to the USPTO.

   Although the T-PAC will continue its study of funding, electronic filing 
and the Madrid Protocol, we believe it would be a disservice to the 
recipients of this Report to fail to provide our unequivocal conclusions in 
these areas, even as we undertake to address a wide range of other issues 
during our first full year of service. 

FY 2000 Performance:  Considering the limitations on the availability of 
user fees and the effect this has on resources, T-PAC has been briefed by 
the USPTO on, a	nd  would like to highlight, a number of its reported 
successes this past year.  
 
   Pendency and Production: Pendency to mailing first actions increased 
   from 4.6 months to 5.7 months during FY 2000.  However, it is of note 
   that applications increased at an unanticipated rate above the prior 
   year (i.e., 27.2% over 295,165 received in FY 1999) to a total of 
   375,428 new applications.  This was substantially above the initial 
   budget planning level for FY 2000 of 282,000 applications that 
   established funding and staffing levels for FY 2000.  Although the 
   staffing level planned for FY 2000 with 282,000 new applications would 
   have been sufficient to reduce pendency to the long standing goal of 
   three months, the higher than planned filings clearly had a negative 
   impact on pendency. To note, pendency rose by only one month when the 
   excess filings (i.e., 375,428 minus 282,000) represent approximately 
   four months of potential additional pendency.  This reflects very 
   favorably on Trademark's focus on achieving a high level of customer 
   service and the dedication of its employees.  It should also be noted 
   that this is the second year in a row that applications increased by 27% 
   which has had a substantial impact on workload distribution and 
   inventories of pending applications in Trademarks.  The inability of 
   Trademarks to have full access to funds received to process these 
   applications has a substantial and continuing detrimental impact on the 
   organization's ability to improve, or even maintain, services.  

   Despite its limited resources, Trademark operations had an impressive 
   production year. The Trademark Operation completed 352,400 first 
   actions, a new record and an increase of 4% from the prior year, 
   275,440 disposals, again a new record and an increase of 21% from the 
   prior year, and 106,383 trademark registrations including 127,794 
   classes, an increase of more than 29% over the number of registrations 
   issued in 1999.  However, Trademarks ended the fiscal year with more 
   than 677,000 classes under examination, an increase of 37% over the 
   prior year.  The T-PAC anticipates this examination backlog will 
   continue to rise and service will deteriorate so long as user fees are 
   diverted.
 
   Electronic Filing and E-Commerce Examination Offices: In its ongoing 
   efforts to incorporate reengineered, electronic processes into Trademark 
   operations, Trademarks has continued to champion the Trademark 
   Electronic Application System (TEAS) as the best alternative to paper 
   filing for Trademark customers.  Electronic filing and payment have now 
   increased to over 15% of the total applications filed, and in the first 
   two years of TEAS operations, Trademarks received more than 64,800 
   electronic applications (including 74,900 classes) for registration of 
   trademarks. Further, Trademark customers now have the option of filing 
   seven other trademark forms electronically.  To take better advantage of 
   electronic filing, Trademarks established two e-Commerce law offices 
   in late July.  These offices are unique in that they handle all 
   electronically filed applications - processing the applications directly 
   into the law office - and they have incorporated all other examination 
   and process activities into the offices creating one-stop electronic 
   examination for customers who file electronically.  The T-PAC strongly 
   supports this initiative as a step in the right direction and believes 
   that the e-Commerce law office activity should serve as the foundation 
   for new trademark processes as the office moves from paper to 
   electronic processing.
 
   The T-PAC also notes that in the past year, TEAS has been recognized 
   for excellence in two national competitions.  TEAS was recognized as a 
   semi-finalist in the 2000 Innovations in American Government Awards 
   Program, sponsored by the Ford Foundation and the Kennedy School of 
   Government at Harvard University, and has been declared a winner of the 
   2000 Government Technology Leadership Award sponsored by the Government 
   Technology Leadership Institute and the Government Executive Magazine.  
   Recognition in both competitions is clear evidence of the success of 
   this innovative electronic application, and a significant accomplishment 
   for Trademarks considering the level of competition and publicity these 
   programs provide.  We would like to add our congratulations for TEAS and 
   strongly encourage Trademarks to continue with innovations of this 
   nature. We commit to work with the USPTO to develop further ways to 
   encourage use of these systems.
 
   Trademarks on the Internet:  The T-PAC would also like to recognize the 
   successful efforts of Trademarks for setting up the Trademark Electronic 
   Business Center on the USPTO web-site. It provides a convenient single 
   source for locating a multitude of trademark related information and by 
   accessing the Trademark Electronic Business Center over the Internet, 
   customers have access to general information and the same data that is 
   used internally by the Office to process and examine applications.  Now 
   the citizens of this country may search the text and images for over 
   2.7 million active, pending and retired marks, and also locate status 
   information for pending and registered marks over the Internet. No 
   longer is access to this information confined to those who travel to 
   Arlington, Virginia to search in paper files. From anywhere in the 
   world, a potential applicant may conduct a search of U.S. registered 
   trademarks through the Trademark Electronic Search System (TESS), 
   complete and file and pay for a trademark application electronically 
   using TEAS, and check the status of pending applications through TARR, 
   the Trademark Application and Registration Retrieval system. 
 
   Trademark Work-at-Home (TW@H): Because of the extensive use of automated 
   processes andinformation to support Trademark operations, Trademarks 
   has established an innovative work-at-home program.  The T-PAC endorses 
   considering the expansion of this program as evidence of a focus on 
   intelligent use of resources focused on dealing with the issues related 
   to scarcity of financial resources.  Specifically, TW@H allows 
   Trademarks to add employees without adding office space.  By the end of 
   calendar year 2000, Trademarks will have the equivalent of approximately 
   three law offices of examining attorneys working at home three-four days 
   each week.  The organization is preparing to move to a "hotel" concept 
   to house TW@H examining attorneys when they are in the office, which 
   will allow for the expansion of the examining corps if compensation 
   funds are available without a commensurate need for additional office 
   space. Further, given that the Agency will begin moving to new space in 
   2004, TW@H allows Trademarks to expand operations without incurring 
   additional lease costs or long-term commitments to space that could 
   result in increased expenses as the Agency leaves Crystal City. Without 
   the extensive reengineering of processes and moves to electronic 
   processing that have already taken place, programs such as electronic 
   filing and TW@H would not be possible.

   We compliment the leadership in the Trademark Office for  their focus on 
the future and willingness to consider forward looking concepts of 
operation that are of great value to both the customers of the Agency who 
provide the funds for operations and to its employees who derive on-the-job 
satisfaction from these programs.  We commend these programs to the rest of 
the Government as an example for alternative ways of conducting business.  
Finally, the T-PAC believes that if Trademarks had the assurance of access 
to all of the fees paid by its customers for services, it would greatly 
facilitate progress toward reengineering its operations because the annual 
clash between funding production versus change would be alleviated.  

V.  CONCLUSION

   The T-PAC looks forward to working with the USPTO in addressing the 
challenges that have been presented to it.  

   We hope to contribute to the success of the governmental organization 
that is so critical to our country meeting the needs of the intellectual 
property community and the public during the 21st Century.
