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OVERSIGHT OF THE U.S. PATENT AND 

TRADEMARK OFFICE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COURTS, INTELLECTUAL PROPERTY, 

AND THE INTERNET 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 13, 2016 

Serial No. 114–90 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET

DARRELL E. ISSA, California, Chairman 

DOUG COLLINS, Georgia, Vice-Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

J. RANDY FORBES, Virginia 

TRENT FRANKS, Arizona 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

BLAKE FARENTHOLD, Texas 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

JERROLD NADLER, New York 

JUDY CHU, California 

TED DEUTCH, Florida 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

ZOE LOFGREN, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

JOE KEELEY, Chief Counsel 

HEATHER SAWYER, Minority Counsel 
(III) 

C O N T E N T S 

SEPTEMBER 13, 2016 

Page 

OPENING STATEMENTS 

The Honorable Darrell E. Issa, a Representative in Congress from the State 

of California, and Chairman, Subcommittee on Courts, Intellectual Property, and the Internet .......................................................................................... 1 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 3 

WITNESS 

The Honorable Michelle K. Lee, Under Secretary of Commerce for Intellectual 

Property, Director of the U.S. Patent and Trademark Office 

Oral Testimony ..................................................................................................... 5 

Prepared Statement ............................................................................................. 7 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable Darrell E. Issa, a Representative in 

Congress from the State of California, and Chairman, Subcommittee on 

Courts, Intellectual Property, and the Internet ................................................ 29 

Prepared Statement of the Honorable Jerrold Nadler, a Representative in 

Congress from the State of New York, and Ranking Member, Subcommittee 

on Courts, Intellectual Property, and the Internet ........................................... 42 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Response to Questions for the Record from the Honorable Michelle K. Lee, 

Under Secretary of Commerce for Intellectual Property, Director of the 

U.S. Patent and Trademark Office ..................................................................... 64 

Prepared Statement of the Computer & Communications Industry Association 

(CCIA) ................................................................................................................... 70 

OFFICIAL HEARING RECORD 

MATERIAL SUBMITTED FOR THE HEARING RECORD BUT NOT REPRINTED

GAO Report (GAO-16-883T), Statement for the Record by John Neumann, Director, 

Natural Resources and Environment. This report is available at the Subcommittee 

and can also be accessed at: 

http://www.gao.gov/assets/680/679830.pdf 

(1) 

OVERSIGHT OF THE U.S. PATENT AND 

TRADEMARK OFFICE 

TUESDAY, SEPTEMBER 13, 2016 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Subcommittee met, pursuant to call, at 1:05 p.m., in room 

2237, Rayburn House Office Building, the Honorable Darrell E. 

Issa (Chairman of the Subcommittee) presiding. 

Present: Representatives Issa, Goodlatte, Smith, Chabot, Jordan, 

Chaffetz, Walters, Nadler, Chu, DelBene, and Johnson. 

Staff Present: (Majority) Vishal Amin, Counsel; Zack Walz, 

Clerk; and (Minority) Jason Everett, Minority Counsel. 

Mr. ISSA. The Subcommittee on Courts, Intellectual Property, 

and the Internet will come to order. Without objection, the Chair 

is authorized to declare a recess of the Committee at any time. 

We welcome everyone here today for this hearing on the subject 

of oversight of the United States Patent and Trademark Office, and 

I would now recognize myself for a short opening statement. 

In 2011, the America Invents Act, the AIA, became the most substantial reform of the United States patent law since 1836. The 

AIA reestablished the U.S. patent system as a global standard, and 

I am proud that each of us on the dais here today was part of making that a law. 

As we continue to work to uphold the integrity and competitiveness of the American patent system, we have a constant challenge 

to realize that there are many who would like to undermine it with 

weak or, in fact, improperly granted patents. This is a constant 

challenge for the PTO. 

Today, we have the administrator here, who every day has to 

find ways to improve patent quality while working with an expanding workforce that covers not just the historic patent office here or 

the new one in San Jose, but, in fact, a massive amount of examiners who are in virtually every State remotely working on the 

work in both patent and trademark. 

It is important that we, in concert with the PTO, continue to look 

at whether these programs are working. That means a review of 

many areas, including the challenges faced by the covered methods 

patents program, which we certainly want to have remain in effect. 
2 

Reforming our patent system includes costly patent litigation and 

an economic issue, not a partisan issue, one with billions of dollars 

at stake and the very essence of American competitiveness at 

stake. 

But, along with ensuring the patent litigation system is properly 

balanced, we must also examine the internal processes of the PTO. 

On July 20, 2016, the General Accountability Office issued two significant reports. The first report detailed a dramatic rise in patent 

litigation from 2007 to 2015 and noted, by 2015, nearly 50 percent 

of all defendants named in patent infringement suits were sued in 

none other than the Eastern District of Texas. 

Therefore, one of the questions undoubtedly in today’s hearing, 

perhaps many times, will be the venue reform question, one that 

is both before this Committee on a regular basis, but also one 

which is before the courts now in the Kraft case. 

That first report made seven recommendations to the PTO concerning improving patent quality and patent clarity. The second 

GAO report identified ways to improve patent quality through 

stronger search capabilities to find all the relevant prior art and 

improve the PTO’s monitor of examiners at work. And just a couple 

of weeks ago, the Commerce Inspector General issued a strong report detailing serious abuses when it comes to logging of time and 

attendance of patent examiners. Again, these are the examiners 

very often spread throughout all 50 States in remote locations 

where they telecommute. 

The report raises serious questions about the integrity of the patent system. For innovation to flourish, Americans need to ensure 

that our Patent and Trademark Office is implementing procedures 

to guarantee high quality work from patent examiners, whether 

they are in the offices in Virginia or in fact spread throughout the 

country. If the PTO cannot guarantee sufficient oversight of its employees’ timecards, how can we ensure that patent examiners aren’t 

just rubber-stamping ideas without oversight as well? 

The type of fraud and abuse detailed in the IG’s report is simply 

unacceptable. But, when coupled with the problems that we are 

seeing with a continued patent backlog and with patent quality, it 

becomes even more pressing for these problems to resolve swiftly 

and effectively. 

Today, I hope to hear from the Director both on the steps her 

agency is taking to adopt these recommendations made by the GAO 

and on whether any disciplinary action is being taken as a result 

of the fraud against the PTO and the American inventor. I look forward to getting answers to these important questions and seeing 

what changes the agency will implement to squash this abuse and 

ensure our patent examiners are doing the thoughtful work and 

are being reviewed positively. 

Before recognizing the Chairman of the full Committee, I want 

to make an individual statement, and that is, we all know that a 

great many examiners, both here and remotely, work diligently to 

do their job, and today, we are talking about the exceptions and the 

outliers, and not a system that very often has dedicated people 

working extra hard to try to improve patent quality. And I want 

to make it clear that the GAO was not saying this was everyone, 

but in fact was concerned about some. 
3 

And with that, I would recognize the Chairman of the full Committee for his opening statement. 

Mr. GOODLATTE. Thank you, Mr. Chairman. I appreciate your 

holding this hearing. 

When we look at the array of agencies and departments within 

the Federal Government, only a certain number carry out a mission that is explicitly called for in the Constitution. The U.S. Patent and Trademark Office at the Department of Commerce is one 

such agency. As the PTO carries out its constitutional mission, we 

need to conduct appropriate oversight to ensure that our IP laws 

are being implemented fairly and in line with congressional intent. 

Over the past several years, the PTO has been tasked with implementing the America Invents Act, which was signed into law 

nearly 5 years ago, on September 16, 2011. I believe that it continues to be imperative for this Committee to examine the rules 

and procedures that the PTO has adopted to implement this important law, in particular, the various post-grant proceedings called 

for in the AIA. 

The AIA post-grant proceedings were designed to create a costeffective alternative legal forum at the PTO to provide a simpler 

way to review questions of patentability, thus reducing the costs of 

frivolous litigation on job creators. These past 5 years have demonstrated how important the PTO post-grant proceedings are, particularly the inter partes review process. It is important for all patents to be subject to IPR, and maintaining a strong IPR process is 

paramount to ensuring strong patent quality going forward. 

As the PTO continues to operate these proceedings, it is important for them to work fairly for both the patent owner and those 

accused of infringement. Additionally, based upon the statistics and 

cases being reviewed through the business method transitional program, it continues to be a success and is operating quite well. It 

will be important for this program to remain strong in the future. 

And when it comes to the courts, we are seeing the Supreme 

Court hearing a significant number of patent cases. I think that is 

important, that the PTO has the ability to file amicus briefs in 

cases that could help improve the patent litigation landscape. And 

if there are roadblocks that prevent the PTO from filing amicus 

briefs in important Federal circuit cases, then that is something we 

should also look into. 

In addition, the PTO is taking steps to improve patent quality internally with improved prior art searches and clearer guidelines. 

While I applaud these efforts, I also hope to hear from the Director 

on the additional steps that the PTO is taking to implement the 

recommendations made by GAO in the two reports which I requested, that were issued publicly in July. 

The GAO indicates that the increase in the number of patent infringement lawsuits being filed can be directly attributed to concerns over patent quality. While the Patent and Trademark Office 

has taken steps to improve patent quality, the GAO found that 

more work is needed in this area. And when it comes to patent 

search technology, I would hope that the PTO is modernizing their 

systems to at the very least, make use of the types of search engine 

technologies widely available today. 
4 

I am also concerned about patent examiners who refuse patent 

applications multiple times, requiring the applicant to make 

changes to fix the application, only to then refuse the application 

based on entirely new reasons or prior art. Patent quality is important, but we also need to make sure that for a patent applicant, 

their application is reviewed consistently and that examiners are 

up front with applicants. It shouldn’t simply be the luck of the 

draw when it comes to an examiner efficiently reviewing your patent application or dragging it out for years. 

On the patent quality front, I strongly believe that the PTO 

should not simply be in the business of granting patents and leaving the mess created for the courts and Congress to fix, but rather 

focus on tightening the requirements for patent eligibility to reduce 

the overall number of weak or overly broad patents from entering 

the system. This includes patents on so-called incremental innovations that may unnaturally extend monopolies beyond a single patent term and hinder price competition. 

There are also some patent applications that have been pending 

for a very long time. These pre-GATT or submarine patent applications have, in some cases, been pending for 30 or 40 years. This 

long pendency is not the fault of the PTO, and I appreciate that 

the PTO previously provided Congress with a report detailing these 

several hundred pending submarine patent applications. 

Apart from being a drain on PTO resources, if such applications 

were to issue as patents today, they would be entitled to a 17-year 

term and would not expire until the year 2033. Moreover, because 

these applications have not been published, the public has no notice that the patents may issue and no opportunity to provide the 

PTO with prior art that could directly apply to the overly broad 

claims in many of these applications. And so I call on you to provide Congress with these submarine patent applications immediately. 

Patent and trademark quality are key components of the PTO’s 

overall mission, but I also want to ensure that the PTO is properly 

spending the fees that it collects and that its employees are acting 

appropriately when it comes to hiring appropriately qualified individuals. I am deeply troubled by the recent Commerce Department 

Inspector General report on time and attendance abuse within the 

PTO. The amount of wasted man-hours that could have been spent 

reducing the patent backlog is astounding, not to mention the millions of taxpayer dollars that were wasted paying USPTO employees for work they were not doing. 

I hope to hear more from the Director on the steps being taken 

to ensure that patents are examined properly, consistently, and efficiently. 

Intellectual property powers the engine of American innovation 

and creativity. It creates new jobs and helps grow our economy. 

And I look forward to hearing from Director Lee on these important issues. Thank you. 

Mr. ISSA. I thank the Chairman. 

Without objection, other Members’ opening statements will be 

made part of the record. 

And with that, we welcome our panel of one. And, Madam Director, I would ask that you please rise to take the oath. 
5 

Do you solemnly swear the testimony you are about to give will 

be the truth, the whole truth, and nothing but the truth? 

Ms. LEE. I do. 

Mr. ISSA. Please be seated. 

Let the record indicate the witness has answered in the affirmative. 

Secretary Lee, I will not give you the usual lecture on the red 

and the yellow and the green. We will take your opening statement 

as long as it runs. But, I would say that it also will be placed in 

the record in its entirety. You are the reason for this hearing. Welcome. You are recognized. 

TESTIMONY OF THE HONORABLE MICHELLE K. LEE, UNDER 

SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY, 

DIRECTOR OF THE U.S. PATENT AND TRADEMARK OFFICE 

Ms. LEE. Thank you. Chairman Issa, Chairman Goodlatte, and 

Members of the Subcommittee, thank you for this opportunity to 

discuss the operations, programs, and initiatives of the United 

States Patent and Trademark Office. 

I am very proud of the work that we do to serve American 

innovators by helping to provide the intellectual property rights 

they use to raise investment capital, to build their businesses, and 

to bring their products and services to the marketplace 

Our mission is to deliver high quality and timely examination of 

patent and trademark applications and rulings from the Patent 

Trial and Appeal Board, to promote effective domestic and international intellectual property policy, and to provide IP information 

and education worldwide. 

Our work is more important than ever before because of the 

growing importance of IP to our economy. And we have worked 

hard to offer an array of programs and initiatives that serve America’s innovators, carried out by one of the most highly educated and 

talented workforces anywhere in the Federal Government. 

Mr. Chairman, I am pleased to report that our business is thriving, and I believe that is a good sign for our economy. This fiscal 

year, we expect to receive more than 600,000 patent applications 

and more than 300,000 trademark applications. 

On the patent side, we have reduced the patent application backlog by 28 percent since its all-time high in January of 2009, despite 

a 4 percent year-over-year average increase in filings, and we continue to make further progress in reducing the backlog and the 

pendency of applications. 

Our customers and stakeholders expect us to issue quality patents. Patent quality is a top priority of mine as I lead this agency. 

It is why I launched the Enhanced Patent Quality Initiative. We 

want to ensure that we are issuing the highest quality patents possible now and well into the future. High quality patents give greater certainty to patent owners of their rights and reduce the potential for abusive litigation, permitting our companies to focus on innovation 

Based on extensive feedback we received from internal and external stakeholders, the agency is focusing its efforts on 11 specific 

programs designed to meaningfully strengthen the quality of our 
6 

work product, our processes, our services, and the measurement of 

patent quality. 

In providing a quality check on issued patents, our Patent Trial 

and Appeal Board has done an admirable job in developing, implementing, and administering the post-grant review proceedings established pursuant to the AIA. The proceedings are functioning as 

intended by Congress to serve as a faster, lower-cost alternative to 

district court litigation in testing the validity of a patent. More 

than 5,300 post-grant petitions have been filed to date. That is 

more than three times the number we expected. 

And even with that level of filings, I am pleased to say that the 

PTAB has a perfect track record in meeting its very strict statutory 

deadlines and a respectable affirmance rate at the United States 

Court of Appeals for the Federal Circuit. 

Turning to our trademark operations, I am proud of the trademark team and their ability to maintain optimal backlog and pendency levels. Even with applications topping 300,000 a year, it takes 

an average of just 10.1 months to receive a final decision on a 

trademark application. 

On the international front, the USPTO continues to play an important role in promoting high quality IP systems around the globe 

to the benefit of our innovators and our creators. Our 13 IP 

attache ́s on the ground are in important trade centers around the 

globe where they advocate for U.S. IP policy positions and help 

Americans navigate foreign IP regimes. 

On the domestic front, I am pleased to report that all four of our 

regional offices are up and running in Detroit, Denver, Dallas, and 

San Jose, and are very much appreciated by the regional innovation communities. As envisioned by the AIA, these offices not only 

help us recruit and retain a highly qualified workforce of patent examiners and PTAB judges, but importantly, they provide inventors 

and entrepreneurs easier access to USPTO personnel and the wide 

range of resources we offer in support of innovation. 

Finally, with respect to the DOC OIG’s recent report on patent 

examiners’ time and attendance, I want to be clear that the 

USPTO takes any allegation of wrongdoing in our workplace very 

seriously. Any hour claimed by any of our employees as worked 

that is not is unacceptable. 

In recent years, we have invested significant time and effort on 

improving the overall workforce management of our operations. We 

have taken numerous concrete steps, including requiring new 

training for our employees and supervisors, updating policies, adding controls, and building tools for our supervisors. 

The recommendations made by the National Academy of Public 

Administration and the OIG’s work will help us continue to 

strengthen our oversight while leading the way in a telework program that is a crucial piece of our organizational and our workforce 

strategy. 

Mr. Chairman, my written statement has more detailed information on our operations, programs, and work. Thank you. 

[The prepared statement of Ms. Lee follows:] 
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Mr. ISSA. Thank you. 

I would note that there is a delay on many of the Ranking Members from being here, and it is unavoidable, and they will join us 

as soon as possible. 

I would like to now go out of order and recognize the Chairman 

of the full Committee for his questions. The gentleman from Virginia is recognized 

Mr. GOODLATTE. Well, thank you, Mr. Chairman. 

And, Secretary Lee, thank you again for joining us today. 

My first question relates to the GAO and Commerce Inspector 

General reports that provide avenues for ways to improve the patent application review process. I am very concerned with what is 

being done to ensure that patent applicants are having their applications reviewed fairly and consistently. 

What happens if an applicant, through the luck of the draw, got 

the short straw and had one of those poor-performing or derelict 

patent examiners reviewing their application? 

Ms. LEE. Well, thank you very much, Chairman Goodlatte, for 

the opportunity to answer that question. 

Let me just say that our examiners come in and they are trained 

from the day they walk in on all the patent eligibility requirements. They are trained for 4 months, they come with their technical degrees, oftentimes advanced, and their job is to understand 

the statutory requirements for patentability. So we work very hard 

to make sure that they are applying that consistently and accurately across the examination corps. 

We have reviewed processes, we have a quality tracker, we have 

annual reviews, and, in fact, quality constitutes an equal portion 

of their performance review as production. It is 35 percent for quality and 35 percent for production, so for a total of 70 percent. 

In short, we expect a quality product and a quality examination 

from our examiners, and we work hard to train them. And with our 

master review form that we are soon to roll out, it is going to measure every one of the statutory requirements in detail, including 

clarity, and we are going to be gathering three to five times more 

data points, which then we can fold back and more precisely train 

and improve for consistency across the corps. 

Mr. GOODLATTE. I completely agree that most patent examiners 

are well trained, well educated, and dedicated to their work. But, 

we do find there are some who engage in a shell game of refusing 

the application, requiring multiple changes to fix the application, 

only to refuse the application again on entirely arbitrary reasons, 

which has the effect of dragging out the process for years on end. 

And that is just not what I think you intend or what the law intends in terms of how long it might take somebody to get patent 

protection. 

Ms. LEE. That is right. And pursuant to our compact prosecution 

practices and procedures, we require our examiners to identify 

every statutory basis for rejection for each and every claim that 

they are examining up front and early, because that is the only fair 

way. We then provide that to the applicant, the applicant has the 

ability to respond, and the prosecution proceeds accordingly. 

But, it is not fair to withhold rejections. For every one of the 

claims that is before the examiner, every one of the statutory rejec-
22 

tions, they are instructed to identify all the bases for rejection so 

that the applicant can respond. It is not meant to be hiding the ball 

or delaying the provision of those sorts of references that we find. 

Mr. GOODLATTE. Thank you. 

On the issue of patent quality, I want to ask you about the 

EpiPen patents. I understand that Epinephrine is not under patent 

protection but the delivery vehicle is and has been under some sort 

of patent protection going back to the 1960’s and 1970’s. Apart 

from a lot of marketing, I believe the current EpiPen only enjoys 

a patent on the safety cap on the needle. 

I am curious as to whether such an incremental innovation, 

clearly based on previously issued patents and prior art going back 

nearly half a century, truly meets the standards for patentability, 

including obviousness. When prior patents have expired and you 

have a modest addition like the EpiPen safety cap, then we are not 

talking about the light bulb here. 

Has the PTO looked into this patent or has an IPR challenge 

been filed? Is there anything that can be done to promote competition in this marketplace when we have seen the dramatic increases 

in the cost of this important safety device? 

Ms. LEE. Yes. Well, thank you very much for that question. And 

let me just start by saying that patents are a key driver of investment and innovation. And any number of factors, I know this from 

the private sector and my experience in the private sector, they are 

any number of reasons that go into affecting the price of a piece 

of patented technology or a product or service. 

And what I would say is, in this case I am not aware of any challenge that has been brought against the feature that you describe. 

However, our Patent Trial and Appeal Board proceedings are available to all, and if there are folks who think that the patent should 

not have issued, it would be considered before our Patent Trial and 

Appeal Board, and we would look at the facts of the case, the arguments presented, and the prior art cited to determine whether or 

not that patent should remain. 

Mr. GOODLATTE. Because I think that case shows just how important the PTO post-grant proceedings are, particularly the inter 

partes review process. It is important for all patents to be subject 

to IPR, and maintaining this program is paramount to ensuring 

strong patent quality going forward. 

Mr. Chairman, thank you. 

Mr. ISSA. I thank the Chairman. 

I will now go through my round of questioning. 

Director, the case in the Federal circuit, TC Heartland v. Kraft, 

that is a big thing, isn’t it? 

Ms. LEE. It pertains to a very important issue, which is the issue 

of venue. 

Mr. ISSA. And with 50 percent of all patents going through the 

Eastern District of Texas, although this case, oddly enough, is an 

Indiana versus Delaware case, this could decide very much the reallocation of suits to be more broadly throughout the country, 

couldn’t it? 

Ms. LEE. It has implications on venue, yes. 

Mr. ISSA. And in your past work in the private sector, venue 

means a great deal, doesn’t it, especially as to cost to somebody 
23 

brought to a court well outside of where their engineers and their 

corporate headquarters are. Is that correct? 

Ms. LEE. That is right. 

Mr. ISSA. And this was decided initially by a three-judge panel. 

Are you prepared to ask for a full en banc in that case or to weigh 

in with an amicus? 

Ms. LEE. So we are considering all of those issues, and of course 

we work together with our colleagues in the Department of Justice 

and the solicitor’s office and so forth before we take any kind of 

amicus positions on behalf of the U.S. Government. But, for any 

key critical intellectual property issue, and this is certainly one of 

them, we would certainly be taking it into consideration. 

Mr. ISSA. Okay. We have already established, this is a big deal. 

It really is affecting it. When will we know whether or not the Justice Department is giving you a green light to make those filings? 

Ms. LEE. I would have to check where we are in the process, but 

we have had conversations on this topic. 

Mr. ISSA. Okay. Would you agree to keep the Chair informed of 

that? I obviously have a very strong personal interest because if 

this case cannot be resolved fully—or even if it is—it could affect 

whether or not legislation goes forward here. And from my understanding, the Fed circuit pretty much said in the three-judge panel: 

We will let Congress handle it. 

Now, I have no problem with them saying that, but we do need 

finality before we would take a three-judge panel. 

So for us it is a big deal, and if you would just keep us informed. 

And is it possible for you to share any of the draft thoughts you 

have on this case with us? I would appreciate it if you could do that 

also. 

Ms. LEE. We would be glad to follow up and share with you as 

much as we can. 

Mr. ISSA. I appreciate that. 

At previous hearings going back a long way, there was a challenge to looking at telecommuting or telework workers. Many of 

those included observations that some were not actually working 

during the time they said they were working, and efforts were 

made to try to verify whether somebody was giving you sort of 

their 8 hours for 8 hours. 

Can you briefly tell us what you believe you have been able to 

accomplish in ensuring that people that are at work are at work? 

Ms. LEE. Yes. Well, thank you very much for the opportunity to 

address that very important issue. And let me just start by saying 

that my team and I do not tolerate any time and attendance abuse. 

Any hour that is claimed as work that is not worked is unacceptable. It is not fair to the American public, and it is not fair to the 

vast majority of our hard-working employees. 

So what I will say is, since the time we last spoke, my team and 

I have undertaken a number of initiatives to enhance our workforce management, processes, and procedures, including during 

that 15-month period during which the OIG conducted its study. 

We retained the National Academy of Public Administration, a respected third-party independent auditor to come into our operations in 2014. They were at the USPTO for months looking at our 

teleworking program and our workforce management procedures. 
24 

They issued a report in July of 2015 largely affirming that the 

USPTO has controls in place to manage its workforce and concluded that it is unlikely that time and attendance abuse is widespread and that it is not unique to teleworkers. 

That said, they made 23 recommendations for improvement. The 

USPTO has implemented or taken actions to respond to all 23 of 

the recommendations. 

Our supervisors also have tools to manage their employees, and 

I would like to share with you a very specific example to give you 

an idea of the tools they have. They have got this online dashboard, 

and every supervisory patent examiner has the ability to see for 

every one of his or her employees every piece of work product that 

lands on his or her desk, when she picks it up, how long it is taking to resolve the matter, whether it is ahead of schedule, green; 

whether it is approaching the deadline, yellow; or whether it is 

past its due date or expected time, red. 

So it is in a heat map-like format for every one of their employees for every piece of work product at a glance, and that is whether 

the employee is working in our Alexandria campus or teleworking 

full or part time or working in one of our regional offices, including 

in some of your home districts. So we have very accurate and very 

helpful tools for them to manage and get a sense of what their 

workforce is doing. 

Keep in mind that our examiners also have measurable and 

quantifiable job requirements on production, quality, and timeliness. Also, in February of 2015, the USPTO implemented a policy 

requiring all supervisors and full-time teleworkers to remain logged 

into the USPTO during work hours; also to use collaboration tools 

such as instant messaging or the chat function and presence indicator, which indicates green or red as to whether or not you are 

available; also to provide work schedules to their supervisors in advance. 

We have provided guidance to supervisors on how to monitor indicators of time and attendance abuse, including responsiveness to 

supervisory communications, inconsistent workload activity—if 

they are submitting work inconsistently, that could oftentimes be 

an early sign of time and attendance abuse—and customer complaints. 

Recently, we have retrained all our supervisors and all our employees on time and attendance policies and gotten 99 percent of 

our teleworkers to take a refresher course on their teleworking obligations and to recertify their teleworking obligations. And as to 

that 0.01 percent, we are going to get them when they return from 

leave. 

Furthermore, we have made trainings annual, not just a oneand-done, and they are on topics such as how to effectively manage 

a workforce, including time and attendance oversight guidance, including a publication of an agency-wide telework management 

handbook on how to manage in a telework environment, including 

expectations and how to record time. 

And also, and importantly, I have made clear to every one of the 

employees at the USPTO that time and attendance abuse is not 

tolerated and that we will take any and all actions when we find 

violations. 
25 

So the combination of all those efforts, Mr. Chairman, I think 

provides for us the controls and oversight we need to ensure that 

our employees are meeting their performance obligations and their 

telework obligations and are really giving you all the confidence 

that you deserve and the American public deserves on our operations. 

Mr. ISSA. And with the 19 seconds remaining in my time, I am 

going to ask you what could be a simple question and a difficult 

answer. Would you welcome legislation that would put an absolute 

time limit on pending patents that in the opening statement were 

called submarine? In other words, Congress mandating that we 

bring to a conclusion patents which were applied for before I entered Congress. 

Ms. LEE. Yes. Thank you very much for that question. It is a 

good question. 

With regard to those pre-GATT applications, I can’t speak too 

much about them because a number of them are subject to litigation, but what I will say is many of them have numerous claims. 

And they are complicated issues, and the applicant involved has 

been—we have been involved in resolving them. 

So I think it would be hard to—well, it would be hard to have 

an absolute time limit, but I want to let you know that we are 

working on it. We have got a dedicated team of 14 full-time patent 

examiners focused on those issues. With regard to a certain category of the pre-GATT applications that are not the subject—not 

belonging to one particular applicant, we have reduced the number 

of pre-GATT applications by 80 percent, from 100 to 20. 

So what I would say is, if you would, please allow the agency to 

do its work. We know it is a priority. It is a concern I share with 

you. We need to move those patent applications along, and we are 

taking all the steps we need to move those along. 

Mr. ISSA. Thank you. 

The gentlelady from Washington. 

Ms. DELBENE. Thank you, Mr. Chair. 

And thank you, Secretary Lee, for being with us today and for 

all of your time. 

While the Innovation Act, H.R. 9, has stalled right now, patent 

reform remains as important as ever, and I hope it is something 

that we are able to resume very soon. 

I am particularly interested in seeing venue reform, and I wondered if you would agree that forum shopping has distorted the 

landscape of patent litigation in many ways, and do you think 

there needs to be reform to prevent patent trolls from abusive 

forum shopping? 

Ms. LEE. Thank you very much, Congressman, for that question. 

And as I testified before the House, I think it is probably a little 

over a year ago, what I said in that testimony still holds true now, 

which is I think that any opportunity to reduce the opportunities 

and advantages of forum shopping would be advantageous and we 

should consider. 

So I know there are various pieces of legislation that are pending 

that have been introduced. The Administration has not yet taken 

a position on any specific piece of legislation. 
26 

But, really having litigants adjudicate their patent disputes in 

courts where they have meaningful ties makes a lot of sense, and 

this should be one of a number of proposals that we consider as we 

look to strengthen our already very strong patent system. 

Ms. DELBENE. What type of impact do you think reform would 

have on the broader landscape, and particularly on market forces 

that drive patent legislation today? 

Ms. LEE. Are you talking about venue reform or are you talking 

about broader reform? 

Ms. DELBENE. Venue reform, in particular. 

Ms. LEE. Well, I think as to venue reform, if you eliminate the 

opportunity for gamesmanship, that has advantages at every stage 

of litigation. So I know a number of the proposals in the previous 

pieces of legislation that were introduced dealt with discovery and 

dealt with summary judgments and attorney’s fees. 

But, if there are no opportunities for gamesmanship, basically 

you end up in a court and you have a court that is equitably deciding all of these issues, that influences the management of the case 

throughout the entire case, from the summary judgment stage to 

the discovery stage to the damages award fee stage, and is again, 

I think, one of the things amongst others that we should consider 

in terms of avenues to potentially strengthen our already strong intellectual property system. 

Ms. DELBENE. Thank you. I also would like to urge your continued work on the inter parte, the IPR review process. Clearly, the 

process has not been without some controversies and difficulties. I 

wonder if you could talk to us a little bit about what you have been 

doing to ensure patent quality through the IPR process while also 

ensuring that the process isn’t abused. 

Ms. LEE. Yes. Thank you very much for that question. 

The Patent Trial and Appeal Board proceedings are a critical 

piece for ensuring that we have quality patents in our system. I 

have launched an Enhanced Patent Quality Initiative, which is 

meant to focus on making sure that the USPTO issues top quality 

patents before it leaves our office. 

But, as to the patents that are already in the system, the Patent 

Trial and Appeal Board, as Congress intended, as you all intended, 

was meant to be a quality check. Are there patents in the system 

which under today’s law should not be? And if so, the public has 

the opportunity to bring that back to the agency with a panel of 

three technically trained judges who are steeped in patent law to 

consider whether or not certain claims should remain or whether 

or not they should be invalidated in light of the arguments presented, the prior art references cited, and so forth. 

So it is serving, as Congress intended, as a means to providing 

a faster, lower-cost alternative to district court litigation in terms 

of testing the validity of the patent. We have about 269 judges on 

board, many of them come from our regional offices, a super talented team. And we are making sure that these proceedings are as 

effective and fair as possible by continuing to revise the procedures 

as we get input from our stakeholders and from the people who use 

the proceedings. 

We have issued new rules, fine-tuning the rules governing the 

Patent Trial and Appeal Board, and I continue to say that I remain 
27 

open to any and all additional changes that the public, in a consensus-like manner, tells us we need to make, provided it is within 

the statutory mandates of Congress. 

Ms. DELBENE. You mentioned the Enhanced Patent Quality Initiative, and I want to applaud you and the PTO for launching that. 

And the GAO’s findings indicate there is more work needed to be 

done to ensure the quality of patent applications that are approved. 

Can you give us an idea of how you measure quality and how you 

look at that? Because those metrics are going to be important to 

understanding whether the program is successful or not. 

Ms. LEE. Yeah, of course. 

So let me just step back a moment and address the GAO quality 

report. I want to thank the GAO for their work on this issue that 

I care very deeply about, which is patent quality. 

The GAO made seven recommendations on enhancing patent 

quality, and we agreed with all seven of them. In fact, even before 

the GAO report published, the PTO already began working on 

issues addressed in all seven of the recommendations. In some 

cases, we have been working on these initiatives for a year or more. 

And we appreciate the GAO’s acknowledgment of our good work in 

this area. 

Now, we recognize we have more work to do, and the USPTO is 

fully committed to continued leadership and enhancement in this 

critical area. 

On your question about measuring patent quality, one of the key 

prongs in our Enhanced Patent Quality Initiative is to improve the 

way in which we are measuring patent quality. And we held a patent symposium and we got input, and one of the key issues we discussed is, look, there were 2,200 attendees, how can we improve 

the way in which we are measuring patent quality? 

And we got a lot of feedback. They made some suggestions about 

how they wanted the way that we used to measure patent quality 

modified. And that is what we have done. We have taken that 

input to heart. We are modifying the ways in which we measure 

the patent quality. For the most part, they like the seven subcomponents that fed up to our quality composite. We are going to 

keep those, and we are going to look for any additional factors that 

are good measures of patent quality. 

Also, we are working on a master review form which measures 

for every statutory requirement for patentability how did the examiner do on each of those, including on clarity of the record. And 

that will be a very powerful tool, and we have gotten extensive 

stakeholder public input on that, and it will generate three to five 

times more data when we are electronically recording all those 

data points so that we can then go back and precisely train certain 

art units, certain technology centers, because we will have statistically significant data, to be much more precise on our trainings 

and areas for improvement. 

Ms. DELBENE. Thank you. 

I yield back, Mr. Chair. 

Mr. ISSA. Thank you. 

I now ask unanimous consent that letters addressed on the subject of this Committee from the Consumer Technology Association 

be placed in the record. Without objection, so ordered. 
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And another one from the Internet Association be placed in the 

record. And again, without objection, so ordered. 

[The information referred to follows:] 
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Mr. ISSA. We now go to Chairman of the full Committee, Mr. 

Goodlatte, for his questioning. Oh, I am sorry, you are right, I did 

go to you. 

Mr. Smith. 

Mr. SMITH. Thank you, Mr. Chairman. 

Director Lee, thank you for your testimony today, and I appreciated your response to the earlier question about how your postgrant rules are working, and I know you are still sort of waiting 

for that to shake out. 

I wanted to ask you more broadly, and you spoke broadly, and 

I would like to ask you to be more specific as to what other improvements you feel are needed for the America Invents Act. And 

by the way, I won’t take any suggestions personally. 

Ms. LEE. Well, let me see. I mean, a lot of good was achieved out 

of the AIA, thanks to your leadership and the leadership of many 

in this room, including the establishment of the regional offices. I 

can’t tell you what a success that has been for our agency and our 

innovation community. 

The change from the ‘‘first to invent’’ for the ‘‘first to file’’ was 

a necessary step for the harmonization, and of course the AIA Patent Trial and Appeal Board proceedings are providing the faster, 

lower-cost alternative to district court litigation. 

Mr. SMITH. What improvements or changes would you like to 

see? Within reason. 

Ms. LEE. On the Patent Trial and Appeal Board proceedings 

front, those are complicated proceedings, and the USPTO did a 

very good job of taking a first crack at implementing those proceedings, all sorts of procedural determinations, fleshing out and 

filling in some of the details that we needed to do when we implemented them that were not included in the statute. 

And over time we got experience with these proceedings, we got 

a lot of input from our stakeholders. And one of the first things 

that I did in my job as head of the agency, even before I was sworn 

in as Director of the USPTO, was to engage in a multiple-city listening tour to find out how we could improve those proceedings, to 

make sure that they were as effective and fair as possible. And we 

got a lot of input. 

Mr. SMITH. So an ongoing process. 

Ms. LEE. It is an ongoing process. And with our rulemaking and 

with our taking into account the input that we get from the users 

of our system, I think we can continue to strengthen them. 

Mr. SMITH. You mentioned a couple of areas, and that is good to 

hear. 

Let me jump to an entirely different subject, and that is the ability of our innovators, the ability of our inventors to protect their 

patents in foreign courts. I think they oftentimes have problems. If 

so, what can we do about it? 

Ms. LEE. Yes. So we spend a good part of our time and resources 

making sure that American innovators encounter a level playing 

field when they want to ship and sell their products overseas. It 

is in America’s interest that we ship as many products and services 

overseas as possible. 

And so what we have is we now have, I mentioned our IP attache ́

program in my opening statement, we have 13 IP attache ́s across 
36 

the globe. And these IP attache ́s are associated with the U.S. embassies oftentimes, and they help American innovators navigate 

the intellectual property regime in various foreign countries. 

These IP attache ́s also work with policymakers to help craft legislation containing values and IP values that we share to make 

sure that there are appropriate protections, remedies, and consequences for violation infringement. 

All to make sure that American innovators again are confident 

that when they ship or sell their products overseas, they encounter 

a level playing field. 

Mr. SMITH. Okay. I have one more question, and then I would 

like to yield the balance of my time to the Chairman of the full 

Committee, Mr. Goodlatte. 

My last question is this. You face this delicate balance between 

trying to process patent applications both quickly and thoroughly. 

You had the GAO report where 70 percent of the patent examiners 

said they wished they had more time. 

What reforms do you envision in the near future being made to 

enable you to reduce the backlog, which you have done so well, I 

think you said 78 percent, but to continue to reduce the backlog 

and process patent applications, but doing so in a very thorough 

way? What reforms that have not yet been implemented do you anticipate? Very briefly. 

Ms. LEE. Thank you very much. We are already looking at—and 

this is before the GAO report came out and before the IG report 

came out—across our examination corps, are we allocating the correct amount of time, the proper amount of time for our examiners 

to do this very challenging job? 

Mr. SMITH. So you are thinking about increasing the time allotted? 

Ms. LEE. I think we need to remain open. In some instances, 

more time; in some instances, less. What we need to do is make 

sure that we are giving the appropriate amount of time to accomplish this very challenging task. 

Mr. SMITH. Thank you, Director Lee. 

I yield the rest of my time to Mr. Goodlatte. 

Mr. GOODLATTE. I thank the gentleman for yielding. 

I just want to follow up on that general area. The IG has apparently found that some of your employees have quite a bit of extra 

time, because they are simply collecting a paycheck without actually working. The last time you were here, I believe you told us 

that you have zero tolerance for this type of behavior, which I very 

much appreciate. 

In the aggregate, accounting for employee privacy, how many examiners at the PTO have you or your staff identified as delinquent 

either in the Patent Division or Trademarks, and have you taken 

any disciplinary action as of this date with any such employees? 

Ms. LEE. Yes. So we have taken action for time and attendance 

abuse, and that ranges anything from counseling, to a letter of reprimand in the employee’s file, to suspension, to termination, and 

repayment of moneys paid for hours worked that were not worked. 

I know during the period during which the OIG conducted his investigation, from August of 2014 to November of 2015, we have al-
37 

ready taken action against a number of the employees identified in 

that group. 

So we can and we will continue to take all appropriate actions 

anytime we find time and attendance abuse. 

Mr. GOODLATTE. Thank you very much. 

Mr. ISSA. Thank you, Mr. Chairman. 

We now go to the gentleman from Georgia, Mr. Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman and Ranking Member, 

for holding this important hearing. 

And I thank the witness today for her testimony, which is quite 

valuable. 

Today’s hearing is a testament to your leadership and focuses 

upon issues that are protected by our Constitution and fundamental to the ability of American companies and inventors to remain competitive in the global marketplace. Under you, Secretary 

Lee, I want to commend you for the improvements that you and 

your team have made to the Patent and Trademark Office. The 

PTO was ranked as the best place to work in the Federal Government in 2013, and you have diligently worked to not only cut costs 

in this post-sequestration environment, but also to improve internal processes so that the patent backlog can be addressed. 

Despite these improvements, however, there are still some concerns overshadowing the Patent Office’s success that deal with patent quality and diversity. The PTO was once criticized and faced 

litigation for alleged discriminatory practices in its hiring and promotion of patent examiners, especially against African American 

women. How has the telework program increased the USPTO’s 

ability to recruit and retain high-skilled examiners from diverse 

backgrounds? 

Ms. LEE. Thank you very much, Congressman, for that question. 

And I have the privilege of serving as the first woman head of the 

United States Patent and Trademark Office in our country’s history, and it is a tremendous honor and privilege. And one of my 

very big initiatives is to make sure that we are recruiting and retaining the top technical talent that we can get, the top talent 

across the board, technical and nontechnical, across all demographics. 

And we have mentoring programs. I have the Office of Equal 

Employment Opportunity director reporting directly to me, providing me with information on our programs to retain our very critical talent and to recruit very diverse talent. 

It is an issue that I care very deeply about not only within the 

PTO. And I might add that within the PTO, we have more women 

executives than, dare I say, the average in the private sector, and 

we are looking to recruit and retain more candidates of diverse 

backgrounds into every level of the Patent and Trademark Office. 

And externally, outside the Patent and Trademark Office, one of 

the issues that I found when I asked the question is that about 15 

percent of the U.S.-based inventors that were listed on patents 

were women, and we would like to see more. And we would like 

to see individuals from diverse backgrounds taking advantage of 

programs that we create, like Camp Invention, where we bring elementary school-age kids to the camp. 
38 

It is a 1-week summer enrichment program. They learn a little 

bit about making, designing, building, prototyping, a little bit about 

intellectual property. And we give special scholarships, working 

with Invent Now as our partner in this, to kids from underprivileged backgrounds. Why? Because we can’t afford to leave behind 

any inventor or any potential future entrepreneur. It is that important to our country’s future success. 

Mr. JOHNSON. What is the name of that program? 

Ms. LEE. It is Camp Invention. And actually that is just one of 

the many initiatives we have to encourage all of our citizens to be 

excited about invention. I would like nothing more than for all of 

our children across all demographics, across all geographic regions 

of this great country of ours, to want to grow up to be inventors 

and to want to be entrepreneurs. 

So I can get you a whole long list of issues that we are very 

proud of, but there is a lot more work to be done in terms of expanding the diversity both in terms of our inventor and applicant 

base, but also within the agency itself. 

Mr. JOHNSON. All right. That will be great. I look forward to my 

fellow Members of the Congressional Black Caucus being able to 

know about Camp Invention and participate in it. 

As mentioned in the 2016 GAO report on patent examiners, has 

the USPTO conducted an overall analysis of its examiners, of their 

skill, of their technical competency, to identify potential gaps in 

technical skills? And if so, what steps have you taken to address 

these gaps? 

Ms. LEE. So we have taken steps to identify gaps in the skill sets 

of our examiners. What we do is when we make new hiring decisions, we tend to try to fill the gaps that we have. And also, with 

our existing employee base, we have worked very hard to continue 

to provide them technical and legal training, as the case law develops and changes, which it inevitably does, and importantly, as 

technology changes. 

We have a program where we pay for our examiners to go back 

to get technical education in new areas of the technology so that 

they are examining and they know how to examine at the stateof-the-art level in these whole range of new technology areas that 

we are all hearing so much about. 

Also, we have a patent examiner training program where we 

work with the private sector and academics where they volunteer 

to provide time, and they come to the Patent and Trademark Office 

or they come to our regional offices and they give a lecture on their 

area of expertise. And we can then televise that across all of our 

examination corps so that everybody who is examining in that area 

has the benefit of that educational training. It is provided for free 

and makes perfect sense. These people are in the industry. They 

have the state-of-the-art knowledge and expertise. The technology 

changes quickly. 

So we train and keep our examiners at the top level of technical 

expertise through any number of these initiatives, and we are always looking to do more, and the public has helped us keep them 

up to date on the technologies, and we are very appreciative of 

that. 

Mr. JOHNSON. Thank you. 
39 

And, Mr. Chairman, I yield back 

Mr. ISSA. Thank you, Mr. Johnson. 

We now go to the gentleman from Ohio for his round of questioning 

Mr. CHABOT. Thank you, Mr. Chairman. 

Madam Director, this past June, the GAO found that primary examiners have the least amount of time to examine patent applications, and therefore these applications often undergo the least 

amount of supervisory review. 

What oversight measures has your office taken to ensure that 

each application undergoes a thorough examination, regardless of 

whether the examiner is a primary or a junior examiner? 

Ms. LEE. Thank you very much for that question, Congressman. 

It is interesting, I have got the GAO report that tells me that 

some 70 percent of our examiners volunteer and have uncompensated overtime in order to meet their minimum production requirements. And I have the IG report which is telling me that due to 

technological efficiencies, that the examination job has been so easy 

that we should consider reducing the time. 

Clearly, the issue of the adequate amount of time for our examiners is an important issue, and I had mentioned that even before 

the publication of the GAO report and the OIG report, at the PTO 

we are undergoing a comprehensive study about the amount of 

time that each of our examiners has for tasks that they need to 

perform. And it is not fair to our examiners if they are volunteering 

time. On the other hand, it is not fair to the public if the tasks are 

too easy and we are giving too much time. 

So it is my job and my team’s job to find the appropriate amount 

of time for each of the tasks, and that is what we are committed 

to do. 

Mr. CHABOT. Thank you. 

It is my understanding that examiners have minimum production goals based on time allotted for the number of office actions 

that they have to complete, and examiners may earn bonus for exceeding the minimum production goals. What are the minimum 

production goals, and what criteria do you use to determine the 

time allotment? 

Ms. LEE. Yeah. Thank you very much, Congressman. 

The production goals vary, depending upon the seniority of the 

examiner. Clearly, the more junior examiners who are getting up 

to speed on the state of the art and are not as experienced are 

going to have lower production requirements. 

I would be glad to have my office follow up with you at each of 

the various levels what their production requirements are. But remember, it is not just production, it is also the quality. And we expect all of our examiners, and all of our examiners are trained to 

produce a quality product. So quality is a prerequisite for all of our 

activities. 

Mr. CHABOT. Thank you. 

Approximately, you have, what, over 8,000 examiners? Is that 

what you said? 

Ms. LEE. I think we are up to 8,500, but I can get you the precise 

number. 

Mr. CHABOT. Okay. 
40 

Ms. LEE. It is a substantial body of examiners. 

Mr. CHABOT. I know at one point a fair number, the number I 

had, was about half worked out of their homes. Is that still the 

case? 

Ms. LEE. That may be true full-time or part-time, some combination. But I can, again, get you those numbers. 

Mr. CHABOT. Obviously, if they are in their homes, there can be 

an issue of supervisory concerns that one might have. Are there 

any extra measures that you take if they are working out of their 

home, for example? 

Ms. LEE. Yeah. So let me just point back to the National Academy of Public Administration report. They did an extensive study 

of our telework program, and they found that time and attendance 

abuse was not widespread and that it was not unique to teleworkers and that we had substantially the controls in place necessary to manage our workforce. 

I would be glad to share with you the programs that we have and 

the tools that we have. I mentioned the online dashboard. I think 

you were here when I explained the online dashboard. That is a 

very powerful tool to know exactly what your employees are doing, 

the work product they deliver, and when they deliver it. 

Mr. CHABOT. I know at one point that there were some significant problems with the folks at home. I am wondering, have you 

seen improvement in that area? 

Ms. LEE. So the National Academy of Public Administration 

looked at this issue and found that there was no real difference between those working at home, in terms of misconduct and productivity, versus those in the office. 

That said, we do have controls in place. We train our supervisors 

to monitor for varying levels of submission of work product. We require a number of our employees to—well, all our full-time teleworkers and all of our supervisors to log into the USPTO network 

during working hours, to participate and use collaboration tools, 

such as the instant messaging and the chat functions. And we train 

our supervisors on teleworking workforce management, how to approve hours, how to spot abuses or potential abuses as they may 

arise. 

Mr. CHABOT. What is the current pay range that your patent examiners have? 

Ms. LEE. Pay range? 

Mr. CHABOT. Yeah. From what to what? 

Ms. LEE. I would be guessing. So my guess is—— 

Mr. CHABOT. You don’t have to guess. 

Ms. LEE. Okay. Thank you. 

Mr. CHABOT. If you can get that to us, I would appreciate it. 

Ms. LEE. Okay. I would be glad to follow up with you. 

Mr. CHABOT. And then finally, are you familiar with the terms 

‘‘end loading’’ and ‘‘mortgaging’’? 

Ms. LEE. Yes, I am. 

Mr. CHABOT. Would you explain what those—and I have only got 

a half a minute here—but could you explain briefly what those are 

and the problems that those can potentially cause? 

Ms. LEE. Sure. Absolutely. 
41 

So end loading is where an examiner submits a large chunk of 

work near the deadline, not evenly but right near the deadline. 

That is not misconduct. That has implications on quality because 

the supervisor then has a whole bunch of work and a short amount 

of time to review it. 

And to address the end-loading issue, the agency has implemented the Consistent Credit Initiative, which incentivizes our employees to submit the work product over a smoother period of time, 

and it allows us to identify bunching up of delivery of work product. 

And mortgaging is where you are submitting work that is incomplete for credit, and that constitutes misconduct. And we take action when we find mortgaging activities occurring. 

Mr. CHABOT. Thank you. My time has expired. 

Mr. ISSA. I thank the gentleman. 

I would announce for everyone that we are going to take the 

Ranking Member of the Subcommittee and then we are going to 

break for two votes and return immediately. 

Is it four? 

I apologize, four votes, and then return immediately following 

the last vote. 

With that, the gentleman from New York is recognized. 

Mr. NADLER. Thank you, Mr. Chairman. 

First of all, let me ask unanimous consent to submit my earlier 

statement for the record. 

Mr. ISSA. Without objection, so ordered. 

[The prepared statement of Mr. Nadler follows:] 
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Mr. NADLER. Thank you. 

Ms. Lee, with reference to the IG report alleging time and attendance abuse, which I think has been referenced before, critics 

of the report have questioned its methodology, which allegedly is 

unlikely to have identified all the hours that patent examiners 

worked. 

The IG constructed a digital footprint for each examiner, including ID badge swipes into the building, in-office workstation records, 

records for when teleworkers logged into the system remotely, and 

the USPTO’s internal system for tracking patent applications. 

These records were then matched with the hours that examiners 

claimed to have worked. 

Relying purely on this digital footprint, however, I would think 

cannot account for hours that an examiner may have worked offline. The agency also does not track when employees leave the 

building, only when they enter, since ID badge data is used for security purposes, not time and attendance. 

Given these problems with the methodology, do you think that 

the IG report may have underreported the amount of time that 

they were spending the time working? 

Ms. LEE. Thank you very much, Congressman, for the question. 

And let me just say that any hour claimed as work that is not 

worked is unacceptable. And we do thank the OIG for their report, 

and that report will play an important resource and will be an important tool for the USPTO in our ongoing commitment to further 

strengthen our workforce management practices. 

Mr. NADLER. Let me just ask, do you think that given what I just 

said, the IG report may, in fact, have understated—may have overstated the problem, the amount of time not really worked? 

Ms. LEE. It is possible. 

Mr. NADLER. Thank you. 

My second question is, assuming that they didn’t overstate it, in 

the IG report, what percentage of all the hours the IG reviewed 

were unsupported? 

Ms. LEE. Two percent of all the claimed hours by an examiner 

that lacked a digital footprint were unsupported. 

Mr. NADLER. So the total number of unsupported hours was 2 

percent in violation of the USPTO’s time and attendance policies, 

assuming that they didn’t underreport? 

Ms. LEE. So let me just be clear. The IG looked at all the—some 

14.7 million hours. They found some 289,000 hours that lacked a 

digital footprint, and that constitutes 2 percent of the total hours 

claimed. 

However, in the period, the last 9 months of the study, that 2 

percent number dropped down to 1.6 percent, and that was after 

the USPTO launched some new policies and controls in February 

of 2015. That number dropped down to 1.6 percent. 

Mr. NADLER. I would think that most employers would think 1.6 

percent is not too bad. 

Let me just say that I hope that the report does not lose sight 

of the bigger picture. Over the last 5 years, the backlog of 

unexamined applications has shrunk significantly, whether only 98 

or 98.5 percent of the time was spent properly. In that time, the 

backlog of unexamined applications has shrunk significantly and 
49 

patent quality has been steadily increasing, although we can improve both. But, the fact is those two things are true, and I congratulate you and the office for those. 

And I thank you. And I yield back the balance of my time. 

Mr. ISSA. The gentleman yields back. 

And as promised, we will take a recess until as quick as we can 

come back after the last vote, probably be about 30 minutes. We 

stand in recess. 

[Recess.] 

Mr. ISSA. As promised, the Committee will come back to order. 

Director, as you know, it is good to be Chairman, because any 

extra time flows to the Chair. 

I have a line of questioning I would like to beg your indulgence 

on, and this goes to the core of patentability. 

We deal every day with patents disproportionately. We are almost always talking about utility patents, 20-year term, subject to 

how long they take to get processed. But, there are other patents, 

including design patents. And over the years, there have been proposals for other patents of shorter duration, including one related 

to auto body parts, dress design, and so on. 

Let me ask you a series of questions in hopes that your expertise, 

in combination with future work, could give us some insight. I just 

want to have these questions on the record. 

In the biological and pharmaceutical industries, and even medical devices, when there are serious questions which we do not 

know the answer to, by definition, aren’t we in a discovery process 

of the unknown? 

Ms. LEE. Yes. 

Mr. ISSA. And if the discovery of the unknown is by definition an 

invention, then any time there is a creation of a product that is a 

useful advance in the sciences, it enjoys the possibility of patent 

protection, wouldn’t it? 

Ms. LEE. That is right. New, useful, and nonobvious. Those are 

the requirements. 

Mr. ISSA. So let me run you through a hypothetical question. 

Let’s just say that this is a medical device. It has never been 

around before—or it is been around before. So we have this device. 

What we don’t know is, is it safe and is it effective. 

If those are unknowns and the very act of discovering whether 

something, which is not known to be safe and effective, becomes 

known to be safe and effective, isn’t that potentially, subject to the 

definition of Congress, a patentable discovery? 

Ms. LEE. So something that has existed in the past, not known 

to be safe or useful, but then discovered to be safe and useful. 

Mr. ISSA. Right. Let’s just take, for example, a hypothetical: Aspirin. We know a chemical compound. Do we know that it is safe and 

effective for reducing heart disease if taken in a certain way? 

Ms. LEE. So your question is? 

Mr. ISSA. My question is—and this is a hypothetical question, 

but it leads to a whole question of inherent patentability if defined 

by Congress—if, in fact, Congress were to choose to view the question of the unknown is something safe and effective, and that safe 

and effectiveness requires clinical trials and statistical analysis and 

ultimately proof that something has a level of effectiveness, is that 
50 

a useful advance in science? The answer, of course, is yes. And 

then the hypothetical is, why wouldn’t that potentially be the subject of a new or innovative type of patent? 

Ms. LEE. So if it exists in nature and there is no additional work 

necessary to create it or to achieve it, then under the current law 

it is not eligible for patent protection. 

Mr. ISSA. Let’s go through patentability for a moment. If somebody has a product, let’s say opium, and they go through the process of preparing and using it in a different way, have they not 

many, many times received patents on various combinations of opiates? 

Ms. LEE. They may have. 

Mr. ISSA. So it is not a question of is a substance or anything 

known, it is a question of is there a new advancement in the 

science. And I am taking you through—and I am happy to yield 

when somebody else comes in—I am taking you through this because we have a challenge that you are very familiar with. 

In the world of IPR, we have a vast industry who, although objections to patent after the fact in non-inter parte but ex parte, 

have been around a long time, and patents have been reduced or 

eliminated countless times by ex parte motions taken up by the 

PTO and ultimately found, because of some 102, 103, some prior 

art, usually not to be patentable. 

The industry has come to us time and time again and said: We 

have this odd situation. We have the invention, which we rely on 

in order to make the investment, and the investment is not an investment in just development, it is an investment in a massive 

search of clinical science to determine two fundamental things, 

safety and efficacy. And efficacy is an unknown. 

So I ask you, again, in this long-term exchange, if efficacy is an 

unknown for any substance, and efficacy for a dosage in combination with something is discovered, separate from the other many 

things that are in patentability, don’t we have a fundamental of an 

advancement in science that we are inducing that, in fact, Congress, in concert with the President, could choose to write patent 

law that would allow that to be patentable without being inconsistent with our Founders’ instructions to us? 

Ms. LEE. You can choose to write laws on whatever you would 

like and with input from stakeholders, of course, I imagine, influencing that development, but it is not inconsistent with that which 

exists currently. 

Mr. ISSA. I ask this because it is going to be, if you and I do our 

jobs well, it is going to be over a period of time harder and harder 

for people to know whether or not they have an investable new 

technology. Well, you can’t wait until your patent is granted to 

begin the process of developing useful medicines and medical devices. And so we have a challenge, you and I, which is our mandate 

is not to give people exclusivity for a period of time. Our mandate 

is to promote these advancements in science. 

So I leave you with that. I will go to the gentlelady from California. I started with it and I leave you with it, because I believe 

that as we end this Congress, this is the kind of thinking that we 

need to look at if we want to take that next step in the promotion 

of useful sciences. 
51 

Yes, ma’am. 

Ms. LEE. So if you would, Mr. Chairman, if you would allow us, 

let me think about that further and the issues that you raised, and 

let us get back to you and myself get back to you on that very interesting topic. It is an interesting issue. 

Mr. ISSA. I look forward to it. Thank you. 

The gentlelady from California, Mrs. Walters. 

Mrs. WALTERS. Thank you, Mr. Chairman. 

Director Lee, the correlation between strong intellectual property 

systems and innovative economies cannot be denied. Moreover, less 

developed economies benefit greatly from those innovations over 

time. 

Unfortunately, maintaining strong intellectual property rights 

continues to be a contentious issue at the United Nations. And recent efforts at the U.N., particularly the U.N. High-Level Panel on 

Access to Medicines, seem to be dedicated to preventing the adoption of stronger global laws needed to protect creators and 

innovators overseas. 

That panel also seems resolved to circumvent the minimum 

standards that have already been agreed to at the WTO, which 

could undermine the United States IP system that is responsible 

for our own innovative success. 

Can you please tell me how the Administration has responded to 

the U.N. High-Level Panel on Access to Medicines and what the 

plan is to ensure the U.N. serves to reinforce rather than challenge 

sound IP policies? 

Ms. LEE. Thank you very much, Congresswoman, for that question. 

And let me just start by saying that the USPTO supports expanding access to medicines, but it is important to consider really 

all aspects of this complex issue. And the U.N. High-Level Panel 

on Access to Medicines raised some serious concerns for us, particularly because of the process followed in appointing the panel 

and also because of the narrow focus and the biased mandate of the 

panel. 

Let me give you an example. There is an unjustified assumption 

of IP policy incoherence between the rights of inventors, trade 

rules, human rights laws, and public health. 

The Administration responded to the establishment of this panel 

and expressed concerns. We worked with an interagency group to 

formulate our response. And they have not yet come out with a report, but when they do, we will review it carefully and, of course, 

take appropriate steps. 

So to answer your questions about what are we doing generally 

in the U.N. to make sure that we are promoting intellectual property rights and the importance of them, we routinely work with our 

peers in the United States Government to ensure that the U.N. 

serves to reinforce sound IP policies that promote the interest of 

innovators as well as consumers. 

And I know, myself, I oftentimes engage on a bilateral basis with 

other countries who share our IP values precisely to achieve some 

of these goals. 

Mrs. WALTERS. Thank you. 

Mr. ISSA. I thank the gentlelady. 
52 

I do believe we have Members coming back, so I inquire what 

your schedule is like. How much longer do you have to be with us? 

Ms. LEE. As long as you need me. 

Mr. ISSA. I love that kind of talk. 

Let’s go back. You asked for more time on the submarine patents. The question, I guess, I have is, how much more time do you 

think we really need? When do you think, in your crystal ball, we 

would get past these legacy applications that now go back pre1997? 

Ms. LEE. So thank you very much for that question. And let me 

get back to you on the precise amount of time. I would have to 

check. There are a whole bunch of cases pending. They are all in 

various stages. 

But, as to what Congress can help us do with regard to these 

pre-GATT applications, I know Congress has asked us repeatedly 

for information to publish the applications and so forth. And one 

can publish these applications only under one of two ways. One is 

by act of Congress, and secondly is by a showing of special circumstances. 

And the Committee had requested that we publish these applications. I will say that a pre-GATT applicant sued the USPTO challenging our determination of special circumstances. And although 

the Federal circuit found that the PTO did not abuse its discretion 

in finding special circumstances in that case, based upon the prior 

lawsuit and in light of the Federal circuit guidance, we decided we 

would best spend our energy and resources, and, quite frankly, the 

resources of the Department of Justice and the court system, by 

pushing forward those applications. 

But, there is something that Congress can do. I know you considered legislation in the past. 

Mr. ISSA. We have a perfect draft of it, I believe. 

Ms. LEE. So we would be delighted to work with you to support 

any legislation you might propose on that front. 

Mr. ISSA. Well, I will take you up on that offer because I do think 

that if we put that place marker going into the next Congress, it 

might cause everyone to realize it is now time. 

Let’s talk about your search tools. There was quite a bit of discussion earlier about the various individuals who may have or may 

not have given you their full due. 

I told you we would be having people coming back. 

Do you believe that we need to continue to make a substantial 

investment—you need to make a substantial investment—in better 

tools to search more broadly and effectively for existing art? And 

if so, is that a unique requirement that you don’t share with Commerce? It is kind of a two-part question there, is that requirement 

significant, do you think you have it? And does anyone else in Commerce share it to where it really is a joint project? 

Ms. LEE. Thank you very much for that question. 

One of the key prongs of our Enhanced Patent Quality Initiative 

is to get the most relevant prior art before our examiners as early 

as possible. And the key to getting relevant prior art can be improving our search tools. So the agency is absolutely focused on 

this. 
53 

And one of the initiatives in the Enhanced Patent Quality Initiative is—I mean, I come from the world of artificial intelligence, I 

know that technology has evolved significantly in the past 10 years. 

And should not the agency be looking at these technological developments to see if the computer can automatically generate some 

relevant search results to identify relevant prior art so that by the 

time it comes to the examiner, they have a place to start? 

Now, we are just exploring this. It is pretty early on. It is something that we have discussed in our conversations with the stakeholders. Any and all tools that we have to get the best prior art 

before our examiners as early as possible will lead to a high-quality 

patent. 

And one other initiative that we have—I mean, we have many 

initiatives, but we have this initiative called the Global Dossier 

program. And I am very proud about this because it makes a lot 

of sense. It has a fancy name, but it is a fancy name for a very 

simple concept. 

And basically what we have done is we have worked with the 

five top patent offices across the globe—the United States Patent 

Office, the European Patent Office, Japanese, Korea, and China— 

and the file histories of their applications are now available online 

in a single portal that the entire public and our patent examiners 

can access. 

So if I am a patent examiner examining a patent in the United 

States, one of the first things I might choose to do is go online to 

this portal and see what my peer examiners found in a related application. Doesn’t mean I am not going to do my own search. Of 

course, I will. But, having the benefit of that so that when I pick 

up the application and when I do a search, I have got some pretty 

good references. 

And keep in mind that a patent’s validity depends upon all the 

prior art on this globe regardless of the language. So most of our 

examiners are primarily English language, English is their main 

language of proficiency, but the prior art references, if you are litigating a patent, they are going to comb the corners of the Earth. 

They are going to look for that Japanese reference. They are going 

to look for the German patent reference. And those could be invalidating references. 

So for us to issue the very best quality patent possible, it helps 

that we take advantage of the native language expertise of examiners across the globe, have access to that, and take that into consideration before we issue a patent. 

So that is not a search tool, so to speak, but it is taking advantage of search work that has been done by other patent offices 

across the globe and taking advantage of it. So that is another example of how we are getting prior art before our examiners as 

early as possible. 

Mr. ISSA. And I might characterize that then as an active search 

rather than a passive search when you have other entities that 

may be able to illuminate you beyond that which you would find 

in a static search. 

Ms. LEE. And also, I mean, I can go on, through our Patent Trial 

Appeal Board proceedings. The stakes are high in those cases. It 

is a litigation. A lot of money is spent by counsel to identify the 
54 

prior art. And you know what, if there is a pending related application that is still in our examination corps, why shouldn’t that examiner have the benefit of all the hard work and effort that outside 

counsel has spent in terms of looking for those invalidating prior 

art references on a related application? 

And through our Enhanced Patent Quality Initiative and consistent with the GAO report on patent quality, we have launched 

a pilot program to do exactly that. We should be taking advantage 

of those references that we find in PTAB litigation and in a related 

application and fold that back so we issue better quality patents. 

Mr. ISSA. I look forward to seeing that part. 

The gentlelady from California, Ms. Chu. 

Ms. CHU. Well, first, thank you, Chairman Issa, for keeping this 

hearing open. I truly appreciate it. 

Well, Director Lee, did OIG investigators conduct interviews with 

staff about reporting hours and timekeeping practices? Do you 

think that a more extensive investigation, including employee 

interviews and observations of employee behavior, would have resulted in different conclusions? 

Ms. LEE. I don’t believe they conducted interviews. What they 

did was they looked at hours claimed by the examiners and identified those hours that were claimed that lacked a digital footprint 

through computer network log-in, log-out data, through badge-in 

security data. It did not take into account, for example, the fact 

that some of our examiners just may work offline. They may print 

out a prior art reference and choose to read it. 

Also, there may have been simple misrecordings of hours. If an 

examiner works very hard Monday through Thursday, more than 

the 8-hour day, and doesn’t work Friday, but yet records 8 hours 

Monday through Friday, that could be a misrecording of hours. And 

I am not saying that misrecording is not problematic. It is certainly 

a problem and that is something that we are going to fix. But, is 

that fraud? Was that service denied to the United States Patent 

and Trademark Office? No, it is not. 

Let me just say that if we find any time and attendance abuse, 

any hour claimed as work that has not been worked, we will take 

all appropriate action. 

Ms. CHU. And we want to ensure that examiners are working at 

optimum levels to avoid increasing the backlog of unexamined patent applications. During this period in which OIG conducted its investigation of patent examiner time and attendance, did the backlog for pending patent applications increase or decrease? 

Ms. LEE. Thank you very much for that question, Congresswoman. In fact, I looked up the answer to that question myself as 

I was reviewing the report, and I actually have for you the precise 

statistics. 

During that 15-month period from August of 2014 to November 

of 2015, that was the period of the OIG investigation, the USPTO 

was delivering results. The backlog of unexamined patent applications was reduced from 616,000 to 557,000, a decrease of almost 10 

percent, the first-action pendencies were reduced from 18.9 months 

to 16.8 months, and the total pendency was reduced from 27.5 

months to 26.4 months, all while our filings were increasing on an 

average rate of about 4.5 percent. 
55 

So we were delivering results to our stakeholders. Now, the question is, might we have delivered 2 percent or 1.6 percent more? 

And my job is to find out if we could have, and if we could have, 

to do so. 

Ms. CHU. Well, that is certainly good news. 

And with regard to the telework program, are there any cost savings associated with it? 

Ms. LEE. There are a lot of cost savings. As an executive and as 

a leader of the organization, I can’t tell you how valuable the 

telework program has been for us and the success of the agency. 

I come from the tech sector. I know how scarce really talented technical talent is to get. It helps us recruit and retain top national talent across the country. 

It also helps us maintain productivity. We all in Washington had 

to deal with the Metro slowdown or shutdown. Guess what? During 

that period of time, because of our telework program, our employees continued to remain productive. 

Also, if you will remember, during the winter of 2015, we had a 

rather rough winter. There were a number of government closings. 

And I looked up the statistics, and on average during the winter 

snow days of 2015 December, the average patent examiner maintained close to 92 percent production rate. The average trademark 

examiner was more productive when they were teleworking than 

when they were in office, 106 percent production rate. And the Patent Trial and Appeal Board judges met every one of their strict 

statutory deadlines. 

So on average, the PTO issued 4,000 more patents per year, decreasing our backlog, because we worked during government shutdowns. Those are our conclusions, our facts, but the NAPA report 

too found that the telework program saves the USPTO $7 million 

per year by working during the shutdowns, and that doesn’t count 

the savings in real estate on average. In 2015, we saved $38.3 million per year. 

All of that said, it is very valuable for our stakeholders, very valuable for the agency. It is my job to make sure that you all and 

the American public have the confidence that you deserve in our 

operations, in the accountability of all that we do, and we are committed to doing so. 

Ms. CHU. Well, that is a very good point about the cost savings. 

And I appreciate that you do have this telework program. I am assuming that there are some improvements in terms of the reporting that you would make? 

Ms. LEE. In terms of the—I am sorry? 

Ms. CHU. Are there any improvements that you would make with 

the telework program? 

Ms. LEE. Yes. We have made a lot, and we will continue to make 

any additional improvements as is necessary after we review the 

data very carefully. I am glad to go through those. We went 

through them earlier in the hearing, but I am glad to run through 

them. 

We have implemented or taken action that responds to all 23 of 

the recommendations from the National Academy of Public Administration. They came in in 2014, they looked at our entire telework 

program, they looked at our workforce management procedures. 
56 

They concluded that it was unlikely that time and attendance 

abuse is widespread and that it is not unique to teleworkers. They 

also concluded or affirmed that the USPTO has controls in place 

to manage its workforce. 

Also, I described an online dashboard, and I would like to share 

that with you because we think it is a very powerful tool to managing our employees. And basically what it is, for every one of our 

patent supervisors, for every one of the employees he or she supervises, in real time continuously he or she can see all the pieces of 

work product that are on that examiner’s plate—when that examiner picks it up, are they ahead of schedule in addressing it, are 

they on time, are they late. 

And it is in a heat map-like format, in green if you are ahead 

of schedule, yellow if you are kind of approaching the deadline, and 

red if you are running late. 

So it is continuously updated for all of your employees that you 

are supervising. Whether they are located in Alexandria, whether 

they are located or teleworking part time or full time, or whether 

they are located in one of the regional offices, that is an at-a-glance 

view of what your workforce is doing. 

So we think that is a very powerful and a very effective management tool, not to mention the fact that our examiners have clearly 

very quantifiable and measurable production requirements, timeliness requirements, and quality requirements. 

And in February of 2015, we implemented new policies for all supervisors and all full-time teleworkers requiring them to log into 

the PTO network during working hours; requiring them to use collaboration tools, like the instant messaging chat function; requiring 

them to use presence indicator to indicate whether they are available or they are in a meeting or on the phone or even there; providing schedules to supervisors in advance; and providing a lot of 

guidance to our supervisors on how to manage or monitor indicators of potential time and attendance abuse, such as responsiveness 

to supervisory communications, such as inconsistent workload. 

If an examiner is submitting work inconsistently, that can oftentimes be an early sign of time and attendance abuse. And we have 

a Consistent Credit Initiative which is meant to identify early on 

and to help kind of smooth out the submission of work product. 

And of course if there are customer complaints, that will also be 

assigned. 

So we have a whole bunch of tools, a lot of training that we were 

doing. And if we need to do more as a result of the very helpful 

work from the Office of Inspector General, we are committed to 

doing more. 

Ms. CHU. Thank you. 

I yield back. 

Mr. ISSA. Thank you. 

I want to go through a couple of questions. We had sent you a 

letter, had a letter exchange on the shared services proposal. 

Would you agree that under the current law in which we do not 

allow a diversion of any of your funds anywhere else in government, that that is equally true, that there can be no allowance of 

a diversion of funds even within Commerce? 
57 

Ms. LEE. That is right. Let me just step back for a moment on 

the issue of shared services. The goal is to consolidate common mission support functions like HR, IT, procurement, and financial 

services. And I applaud Secretary Pritzker for her focus on wanting 

to make the Department of Commerce even more efficient. I share 

that goal with respect to the operations of the USPTO. 

I am always looking for better quality service at a lower price, 

whether that comes through a shared services initiative, whether 

that comes through another government service provider, or whether I procure it myself. I am open to all options. 

And so far the USPTO has not received any new services under 

the shared services initiative. And we are keenly aware. We are always looking out for the interest of—we are not taxpayer funded. 

We are fee funded. And we are very cognizant of the money that 

we spend. We recognize that you oversee our actions, our stakeholders oversee our actions, and we are very prudent in the way 

we spend those dollars. 

Mr. ISSA. And there is a gentleman in the room who specifically 

oversees those actions for efficiency and effectiveness, and that is 

the Chairman of the Oversight Committee, Mr. Chaffetz, who I 

now recognize. 

Mr. CHAFFETZ. I thank the Chairman. Appreciate it. 

Director, thanks so much for being here and the work that you 

are doing. 

You oversee some, what, 8,000-plus employees? What is the total 

universe of employees? 

Ms. LEE. The number is actually 13,000. 

Mr. CHAFFETZ. Thirteen thousand. 

Ms. LEE. So trademarks, Patent Trial Appeal Board, patents, and 

a whole talented team of administrative support. 

Mr. CHAFFETZ. So tell me about the software and hardware that 

you are doing. What is the worst—I mean, I worry about the Federal employees who are using system software and hardware that 

is really quite outdated. How good or bad is it? What is the worst 

situation that you are aware of in the Patent and Trademark Office? 

Ms. LEE. So I can’t speak to other bureaus and departments? 

Mr. CHAFFETZ. No, just yours. 

Ms. LEE. At the USPTO, my sense is that we do have very stateof-the-art technology. If you think about it, in order for us to support a telework environment, your networks, your computer systems have to be pretty modern. 

Mr. CHAFFETZ. So what software, what operating systems are 

you using? 

Ms. LEE. I believe we are using Microsoft Office. 

Mr. CHAFFETZ. Do you know what version? 

Ms. LEE. I would have to get back to you on that. 

Mr. CHAFFETZ. What do you have at your desk? 

Ms. LEE. I don’t know what version of operating system I have. 

I know it works. 

Mr. CHAFFETZ. You know it works. 

Do you have DOS operating systems still at the Patent Office? 

Ms. LEE. I would have to look into that. I don’t know the answer 

to that question. I do know that we have some legacy systems that 
58 

we are in the process of transitioning to, newer systems, and that 

is a priority of ours. And thanks to the more stable fees that we 

have got, the ability—— 

Mr. CHAFFETZ. Well, so this transition is a curious one. That is 

why I ask pretty much every agency I run across as to how dilapidated, outdated their systems are, because I do think the transition 

in dealing—right now we spend some $80 billion a year as the Federal Government on IT and it doesn’t work. Across the board, we 

spend about 75 percent of that on these legacy systems that cost 

both dollars and people and investment to try to keep something 

above board. 

And I guess what I would ask, if you are not able to do it off the 

top of your head, is to just provide to us a sense of who is using 

what software systems, maybe from worst to best, because last 

time I looked, there was some new stuff, but there was really a real 

problem with the software and hardware that you are using in the 

Patent Office. 

Ms. LEE. So my wonderful staff here has just informed me that 

we use the state of the art. We have Windows 7. 

And as to the legacy system, that is a priority of mine. 

Mr. CHAFFETZ. You really think that Windows 7 is the state of 

the art? 

Ms. LEE. That is what my staff tells me. 

Mr. CHAFFETZ. Yeah, well, your staff needs to—— 

Mr. ISSA. Don’t push your luck, though. I think the House would 

be lucky to be all on Windows 7. 

Mr. CHAFFETZ. I am not suggesting that the House is on the top 

of it either. Don’t be following us. 

Ms. LEE. But, to answer your question, Congressman, moving off 

of our legacy systems, my sense is that it is a very small part of 

our operations. I mean, we have had the ability now over the most 

recent several years to set our own fees working with Congress. We 

have been able to get access to all fees. I can’t tell you what a difference that has made in terms of being able to update our IT systems. And a focus, a key priority is moving off of the legacy systems. 

Mr. CHAFFETZ. Since you have been there, any data breaches 

that you are aware of? 

Ms. LEE. Well, I know the entire U.S. Government suffered the 

personnel data breach. 

Mr. CHAFFETZ. I am asking about yours. 

Ms. LEE. None that I am aware of. 

Mr. CHAFFETZ. All right. Well, again, I have got like 1 minute 

left. I really would appreciate sort of an analysis for the 13,000 

people and the array of software. You may have some people using 

Windows 7. You may have 10. You may have some people on an 

Apple system. I don’t know. 

And I would like, I am not looking for mounds of data, just a 

summary of how many people are using which operating systems 

and an analysis of the range of hardware, if you will. 

Ms. LEE. So my team would be—we will follow up with your 

staff, and we would be glad to get to you the information you have 

requested. 
59 

Mr. CHAFFETZ. Fair enough. I thank you. And I know that Chairman Issa is very keenly aware of this as well. So please, if we could 

work together on this, I would appreciate it. 

Thank you. Yield back. 

Mr. ISSA. I thank the gentleman. Before he leaves, I am going 

to ask one question that is pertinent to his Committee. 

In the last Congress we dealt with the District of Columbia, 

which had its own funds and yet was forced to shut down. And 

with great fanfare, that was corrected to where the use of its own 

funds would allow the District of Columbia to continue on during 

a government shutdown. 

Now, you mentioned government shutdowns, but you were talking about bad weather shutdowns. You were not talking about a 

lapse in the funding of the government. 

Ms. LEE. Yeah, that is right. When the rest of the United States 

Government shut down due to snow or what have you, we continued to remain operational. I will say that because we have an operating reserve, we were able to continue operating during sequestration. 

And, again, the combination of being able to set our own fees and 

working with Congress to get access to all of our fees has made a 

tremendous difference in the operations. We have a reserve, right, 

so that we have some funds to keep the lights on. 

Mr. ISSA. The question though for you, Director, was if the government does an actual shutdown and only essential personnel are 

allowed to remain at work, you do have to send your examiners 

home under current law. Is that correct? I am getting a head shake 

of no. I want to make sure—— 

Ms. LEE. I am sorry, one more time. If the—one more time. 

Mr. ISSA. If there is a lapse in the funding of the government, 

and it happened last Congress, did you send your people home or 

were you able to continue working? 

Ms. LEE. We were able to continue working because we have an 

operating reserve, and we can pay the salaries for a period of time. 

Mr. ISSA. So how long before the Antideficiency Act would have 

kicked in on you, if you know? 

Ms. LEE. What is the Antideficiency Act? 

Mr. ISSA. That is the act that forces the government to shut 

down. 

Ms. LEE. Okay. 

Mr. ISSA. Without appropriations, you are not allowed to spend 

money that hasn’t—— 

Ms. LEE. I see. I would have to get back to you on that, to answer that question. 

Mr. ISSA. Okay. I would appreciate it. I just want to make sure 

that to the extent that we exceed any possible anticipated date 

sometime in the future—we have done it for the District of Columbia where they could go on for months, if necessary. And I certainly 

do not want to see examiners stop, because you can never catch up. 

And as you know and I know, we always pay the Federal workforce, so they always get paid for that which they did not do. And 

in this case, it really is a challenge because you can’t catch that 

back up. 
60 

Ms. LEE. Well, and keep in mind too, we are a fee-funded agency. 

So if they are not working, we are not also getting revenue. So it 

is a double whammy for us. 

Mr. ISSA. Very good. Very true. Although those renewals would 

still tick over. 

One more area that I am particularly concerned about is—and I 

will just ask it the way the question is and then I will do a followup—our country is utilizing compulsory license to sidestep patents 

and trademark secrets in key areas of science and technology. And 

we are talking hypothetically about maybe Brazil and India, for example. 

Ms. LEE. So on the issue of compulsory licensing, we appreciate 

a country’s desire to protect public health and to make medicines 

available to folks who need it. But, that has got to be balanced 

against the desire to incentivize innovation. And you will get no incentive to innovate if you are not giving for a limited period of time 

some period of exclusivity so that the inventor or the creator of a 

patented product or technology can recoup the benefits of those efforts. 

So on the area of compulsory licensing, we continue to monitor 

the country’s application of the compulsory licensing laws. We monitor it closely. And we would just say that voluntary licensing is always preferable in the first instance. 

Mr. ISSA. One more follow-up, one more question. At a previous 

hearing we talked about China not—if you will, dealing in, if you 

will, bad faith trademark registration. Has there been progress 

made in negotiating that? 

Ms. LEE. It is an issue, in terms of trademark misappropriation 

or trademark squatting in China, it is an issue that we are very 

aware of, we hear a lot from, from American companies. I raised 

it in my bilateral discussions with my counterparts in China. And 

we have conducted workshops in China precisely to discuss this 

issue. So we look to make improvements. 

And I will say that China is undergoing some pretty massive 

changes in their entire intellectual property system, including patents, trademarks, trade secrets, and copyrights. And the USPTO is 

providing input on their legislative proposals. 

So we are working together very closely. We want them to get 

the right laws on the books. And we continue to provide a lot of 

educational sessions so that we hope that they share our IP values. 

Mr. ISSA. Well, we have certainly seen Taiwan go from a country 

that did not share our values to a country that has made substantial progress. So let’s hope that it does occur. 

In the area of tying patents—well, let me say it another way. In 

the United States, we tie the continued ownership of a trademark 

to its continued use. However, some countries are trying to tie the 

make, use, and sell of patents to the actual patent. We don’t, the 

United States. What can we do to harmonize that standard so that 

you don’t have countries essentially forcing the production in order 

to maintain a patent right? 

Ms. LEE. That is an interesting question. We work with a lot 

of—— 

Mr. ISSA. Same two countries again, by the way, we are dealing 

with. 
61 

Ms. LEE. Yes. So we work a lot with our major trading partners. 

We work with their intellectual property offices overseas. And we 

are actually engaged now in an effort on substantive law harmonization. So that could very well be an issue that we raise. 

I don’t recall—I don’t think it has been raised, but given—I 

think, if developments proceed further and more concretely in some 

of those countries, that is an issue that I think we would want to 

look very carefully at and elevate in terms of our discussions with 

them in our harmonization efforts. 

Mr. ISSA. I have asked you a lot of questions. You have been very 

patient. I think I have given enough time for other Members to get 

back from the vote. So I want to close by thanking you very much. 

We do have follow-up questions and some additional questions 

we would ask to be taken for the record, if that is okay. 

Ms. LEE. Of course. 

Mr. ISSA. Then we will hold the record open awaiting those answers. 

In closing, Director, do you have other things you want to leave 

us with in the way of wants, needs, and so on? This could be—it 

certainly will be the last hearing before an intervening election. 

Ms. LEE. Yes, thank you very much for that question, Mr. Chairman, and there is one matter for your consideration. Our fee-setting authority expires in 2018. And I cannot tell you, as head of 

this agency, how helpful it has been to be able to set the price of 

the services that we provide. 

So if Congress in its wisdom could consider a renewal of that provision, I know that my successors and anybody running this agency 

and our stakeholders would all benefit from that. 

Mr. ISSA. We will take that as one of those deadlines that we 

should not push to the limit but rather work on early in the next 

Congress. 

Ms. LEE. Thank you. 

Mr. ISSA. So again, we will leave the record open for questions 

from individuals who were not able to ask them here today and the 

questions the Committee will be delivering. 

And with that, we stand adjourned. 

[Whereupon, at 3:25 p.m., the Subcommittee was adjourned.] 

(63) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD
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Response to Questions for the Record from the Honorable Michelle K. Lee, 

Under Secretary of Commerce for Intellectual Property, Director of the 

U.S. Patent and Trademark Office 
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f 
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Prepared Statement of the Computer & 

Communications Industry Association (CCIA) 
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Æ