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40–926 PDF 2008

U.S. PATENT AND TRADEMARK OFFICE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COURTS, THE INTERNET, 

AND INTELLECTUAL PROPERTY 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

FEBRUARY 27, 2008 

Serial No. 110–115 

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 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

PERRY APELBAUM, Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

HOWARD L. BERMAN, California, Chairman 

JOHN CONYERS, JR., Michigan 

RICK BOUCHER, Virginia 

MARTIN T. MEEHAN, Massachusetts 

ROBERT WEXLER, Florida 

MELVIN L. WATT, North Carolina 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BRAD SHERMAN, California 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ZOE LOFGREN, California 

BETTY SUTTON, Ohio 

HOWARD COBLE, North Carolina 

TOM FEENEY, Florida 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

SHANNA WINTERS, Chief Counsel 

BLAINE MERRITT, Minority Counsel 

(III) 

C O N T E N T S 

FEBRUARY 27, 2008 

Page 

OPENING STATEMENTS 

The Honorable Howard L. Berman, a Representative in Congress from the 

State of California, and Chairman, Subcommittee on Courts, the Internet, 

and Intellectual Property .................................................................................... 1 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Courts, the 

Internet, and Intellectual Property .................................................................... 3 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Chairman, Committee on the Judiciary, and Member, 

Subcommittee on Courts, the Internet, and Intellectual Property .................. 4 

The Honorable Robert Wexler, a Representative in Congress from the State 

of Florida, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 5 

WITNESSES 

The Honorable Jon Dudas, Undersecretary of Commerce for Intellectual Property, and Director of the U.S. Patent and Trademark Office, U.S. Department of Commerce, Washington, DC 

Oral Testimony ..................................................................................................... 7 

Prepared Statement ............................................................................................. 10 

Ms. Robin M. Nazzaro, Director of Natural Resources and Environment, 

U.S. Government Accountability Office, Washington, DC 

Oral Testimony ..................................................................................................... 31 

Prepared Statement ............................................................................................. 33 

Mr. Robert D. Budens, President, Patent Office Professional Association 

(POPA), Arlington, VA 

Oral Testimony ..................................................................................................... 53 

Prepared Statement ............................................................................................. 55 

Mr. Alan J. Kasper, First Vice President, American Intellectual Property 

Law Association, Sughrue, Mion, PLLC, Washington, DC 

Oral Testimony ..................................................................................................... 100 

Prepared Statement ............................................................................................. 102 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, Chairman, Committee on the 

Judiciary, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 4 

APPENDIX 

Material Submitted for the Hearing Record .......................................................... 141 

(1) 

U.S. PATENT AND TRADEMARK OFFICE 

WEDNESDAY, FEBRUARY 27, 2008 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COURTS, THE INTERNET, 

AND INTELLECTUAL PROPERTY, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 1:34 p.m., in Room 

2141, Rayburn House Office Building, the Honorable Howard Berman (Chairman of the Subcommittee) presiding. 

Present: Representatives Conyers, Berman, Wexler, Watt, Jackson Lee, Johnson, Coble, Sensenbrenner, Goodlatte, Chabot, and 

Issa. 

Staff present: Shanna Winters, Majority Chief Counsel; Eric 

Garduno, Majority Counsel; Christal Sheppard, Majority Counsel; 

Rosalind Jackson, Majority Professional Staff Member; Blaine Merritt, Minority Counsel. 

Mr. BERMAN. This hearing of the Subcommittee on Courts, the 

Internet, and Intellectual Property will come to order. I would like 

to begin by welcoming everyone to this hearing. 

I have to remember now which hearing is it that I am chairing. 

Right, Oversight Hearing on the U.S. Patent and Trademark Office. 

I will recognize myself for an opening statement. 

For over 200 years, inventors have relied on U.S. patents to protect their inventions from unauthorized use and copy. Patents play 

a essential role in spurring innovation. With the exclusive rights 

granted by patents, investors are rewarded for the inventions they 

create and are encouraged to further innovate. While the degree of 

importance that intellectual property plays varies by industry, patents are crucial to many of the industries that the U.S. economy 

depends on. 

That is why I take seriously threats to the patent system. One 

threat, the issuance of poor quality patents, has been a problem I 

have tried to address since at least 2002. Poor quality patents undermine the value of patents generally. They lead to a waste of resources, hinder development of new products as companies are 

forced to either take out licenses on junk patents or spend millions 

fighting them in court. 

Addressing this problem is the primary impetus of the patent reform legislation passed by the House last year and currently under 

consideration in the Senate. But another problem is the patent application backlog and the resulting increase in patent pendency. 

2 

The number of patent applications awaiting initial review by an examiner has increased every year for the last 10 years and totaled 

over 760,000 applications by the end of 2007. 

Today, it takes on average over 25 months for a first office action 

to be issued, and almost 32 months for an application to complete 

its course through the USPTO. Average pendency in some of the 

more important technology areas like biotechnology, chemicals and 

computer architecture and software are well above 32 months. By 

the USPTO’s own account, if steps are not taken to address patent 

pendency, total average pendency could increase to roughly 52 

months by 2012. 

The implications of long patent pendency periods are sobering. 

The value in a patent is being able to use it to exclude others from 

making, using or selling an invention. 

While patent rights must be perfected through the application 

and examination process, the term of an issued patent begins the 

day the patent application is submitted. Thus, long pendency periods cut directly into the time an inventor has to make commercial 

use of his invention. 

If this period becomes too long, inventors may give up relying on 

the patent system altogether and use trade secrecy as a means to 

protect their inventions. This will reduce the technical information 

available to society, since some inventors will no longer provide 

public disclosure of their inventions through the patent system. 

Over the last few years, GAO has issued various reports analyzing practices of the USPTO. The most important recent report 

makes several points related to patent examiner hiring and retention, two of which I will highlight, and leave the rest to our GAO 

witness to discuss. 

Thanks in large part, the first part to pressure from this Subcommittee, there has been no diversion of USPTO fees since fiscal 

year 2005. And as a result, the USPTO has been able to plan and 

make examiner hiring decisions based on their projected fee collections. 

Secondly, the GAO report found there is little hope of diminishing the patent application backlog through hiring efforts. This 

may be due to a number of factors—examiner retention issues, 

flawed examiner production goals, the lack of capacity to train 

enough examiners, and because actions to address this problem are 

too late in coming. 

The Subcommittee is committed to make sure the USPTO has 

the resources it needs to address both patent quality and pendency. 

For instance, I introduced H.R. 2336 earlier this Congress, which 

would ensure that the USPTO permanently retains all fees it collects. I believe Mr. Caldwell is a co-sponsor of that legislation. 

Our support of the USPTO should not be misconstrued as giving 

the USPTO carte blanche to pursue any course it chooses and, conversely, to ignore warning signs that impact efforts to reduce the 

patent backlog. For instance, while I understand that the USPTO 

has agreed to study whether the current production goals are indeed unreasonable, I have to question why this was not done sooner, given that this very problem had already been identified by the 

GAO in 2005. 

3 

Additionally, I am troubled about the recently promulgated continuation and claims rules, and wonder why a compromise couldn’t 

be reached that patent users could live with and that would still 

address the pendency problem. I am very familiar with the difference between rhetoric and substance. 

I can’t count the ways the patent reform legislation that passed 

the House last year has been unfairly criticized and misconstrued. 

Nevertheless, there may be some truth to the public criticisms regarding the claims and continuation rules. As such, there would be 

some middle ground that the USPTO has not fully considered. 

And finally, as part of our oversight responsibilities, we must 

look into all assertions being made about the USPTO. I have recently been made aware that there may be problems with various 

management decisions made by the USPTO leadership. 

For instance, last year the USPTO eliminated an office dedicated 

solely to intellectual property enforcement. This seems counter-intuitive, given the Subcommittee’s actions to strengthen intellectual 

property enforcement efforts through the—Chairman Conyers’ Pro 

IP Act legislation. 

The USPTO has characterized this change as a realignment instead of a reprogram that would require prior congressional notification. Regardless of the semantics, it should be clear that the Subcommittee would like to understand the USPTO’s reasons behind 

any such decision prior to its implementations. 

I look forward to what promises to be a vigorous discussion with 

our witnesses on these and related issues, and I would now like to 

recognize our distinguished Ranking Member, Howard Coble, for 

his opening statement. 

Mr. COBLE. Thank you, Mr. Chairman, and thank you, as well, 

for having scheduled this hearing. A healthy U.S. Patent and 

Trademark Office is essential for our patent system to thrive. Unfortunately, there is no true measure or statistic to evaluate the office or the system as a whole. 

On the one hand, we have some report that there may be troubles over the horizon. The time for average patent pendency and 

the backlog of patent applications are steadily increasing. 

And while we are losing experienced examiners, it appears there 

may be no solution in sight. Also, fairly recent internal reorganizations and rule changes have led to some controversy, which may 

lead to some additional concern. 

On the other hand, the U.S. Patent & Trademark Office is showing successes in many other areas, including projections for more 

than $2 billion in fee revenue in 2009, record numbers of patents 

being processed, and other indications that examiners are improving their reviews of applications, including a substantially lower 

percentage of applications being approved. Some think that the 

U.S. Patent & Trademark Office are obviously going well. 

Address the increasing patent pendency and the growing backlog 

of applications is a perennial challenge for the office, but the length 

of time for pendency and the magnitude of the backlog have grown 

to what some have viewed as alarming proportions. 

Recent improvements in examiner performance are enormous accomplishments. They should be recognized, but they alone will not 

overcome these historic challenges. I am hopeful that today’s panel 

4 

will help everyone better understand how the pendency and backlog issues can be managed. 

Also, Mr. Chairman, I am interested to hear about changes within the patent office and how they have or have not improved efficiencies. If changes were made that triggered a notice to Congress, 

that notice should have been sent. I hope we can clarify today 

when notice to Congress is required, that what constitutes notice 

or what actions trigger a notice so there is no confusion in the future. 

In order to work together, we must be kept abreast of these important changes within the office, and we must furthermore maintain an open dialogue, it seems to me. 

Finally, I greatly appreciate the effort of Mr. Berman, of you, in 

having scheduled this hearing. We have spent considerable time 

and resources in the first session of the 110th Congress developing 

comprehensive patent reform. No reform, however, will be successful unless our patent system is strong and robust, which largely depends on the ability and the performance of the U.S. Patent & 

Trademark Office. 

Unfortunately, there are no predictions that demands our patent 

system are going to recede. As a result, the office, as users of the 

Congress, are going to have to continually and honestly assess the 

performance of the office to protect and ensure the future of our innovations. This honest assessment is essential for Members of this 

Subcommittee and for the future of the U.S. Patent & Trademark 

Office. 

I look forward, Mr. Chairman, as do you, to today’s panel and 

learning any new sights on how we may improve or assist the U.S. 

Patent & Trademark Office in meeting its growing challenges. 

And I yield back, Mr. Chairman. 

Mr. BERMAN. Well, thank you, Mr. Coble. 

And the Chairman of the Committee on Judiciary, Mr. Conyers, 

is recognized. 

Mr. CONYERS. Thank you, Chairman. I am happy to associate 

myself with the remarks of both you and Howard Coble, and I 

would ask unanimous consent to put my statement in the record. 

The only point that I would like to make is to Mr. Dudas, our 

distinguished Undersecretary. I was out at the Patent Office earlier 

this year and there is a question about hiring—as many people as 

we hire, we have got a lot of people going out the back door. 

I was impressed with the quality of the young men and women 

that are trained out there. They were energetic and committed. 

Now, these were people going into the system. The question is, 

what happened somewhere along the way, or what goes on to 

change that enthusiasm? And I am sure we will get into that. 

And so, I am happy to join the distinguished Chairman of the 

Committee, Mr. Berman, and I look forward to the testimony of the 

witnesses. 

The prepared statement of Mr. Conyers follows:] 

PREPARED STATEMENT OF THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF MICHIGAN, CHAIRMAN, COMMITTEE ON THE JUDICIARY, AND MEMBER, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLEC- TUAL PROPERTY

Thank you, Chairman Berman, for holding this oversight hearing on the USPTO. 

5 

The GAO report, and general commentary throughout the patenting community 

is essentially unanimous that the increasing length of patent pendency is a serious 

and growing problem that harms our nation’s competitive advantage both at home 

and abroad. 

However, there’s much less than unanimity when it comes to figuring out the root 

causes of the increase in the time it takes to obtain a patent and the mechanisms 

that are necessary to reverse that trend. 

Many place the blame squarely on the shoulders of either the USPTO administration or the USPTO employees represented before us today by Department of Commerce Undersecretary Jon Dudas and Robert Budens, President of the patent examiners union, POPA. 

However, it is clear to me that the patenting community and advances in the complexity of technology must also shoulder some of the blame/burden. 

The USPTO has directly taken, head-on, the issue of patent pendency, patent 

quality and employee retention through several bold initiatives that we will hear 

more about today. Some of these efforts have not been met with applause—but rather with lawsuits. Others have been instituted and carried out without much fanfare. 

I speak of the new continuation rules, aggressive new examiner hiring efforts and 

the USPTO examiner training academy. 

Whether or not these initiatives are the optimal way to achieve our collective 

goals will be examined today; however, we all agree that a patent system that does 

not take into account the realities of the world around us can not survive, thus 

sometimes minor or major tweaks are necessary—doing nothing is not an option. We 

may disagree with the changes but we all see the need for correction. 

In the case of this committee, we proposed and passed the Patent Reform Act of 

2007, which is essential to the continued vitality of American intellectual property 

in the increasingly competitive global marketplace. 

In the case of the USPTO, Undersecretary Dudas saw a problem with pendency 

and laid out a solution that the Administration felt would address the issues. 

I went to the USPTO this past January to not only to meet and speak with Undersecretary Dudas about his initiatives but also to meet and speak directly with 

a graduating class of new USPTO examiners. I saw, directly, the sincere and profound investment in training for the new hires. 

However, investment in increased training and additional hiring can not cure the 

problem of pendency and quality unless we also address the problem of attrition. 

The September 2007 GAO report stated that despite aggressive hiring efforts for 

new examiners by the USPTO that the new hires will not be sufficient to reduce 

the patent application backlog mainly due to the inability to retain those examiners. 

For nearly every two patent examiners that the USPTO hires and trains, at least 

one has left the agency. Between 2002 and 2006, the USPTO hired 3,672 examiners 

and 1,643 left the agency during that same time period. High attrition levels clearly 

offset the increased examiner hiring. 

POPA stated that the reason is the unrealistic production goal schedule—insufficient time to meet production goals—which results not only in examiner attrition 

but poor quality patents. 

The USPTO states that attrition is for reasons personal to the examiner, such as 

the job is not a good fit or having to move to a new city because of a spouse. 

As for the GAO results, they polled people who were still at the agency for reasons why they would consider leaving. Although 67% indicated that it was the production goal schedule as POPA also stated, GAO is polling the wrong people. They 

asked people who chose to stay. Not those who left. 

We have to ensure that the patent laws stay relevant with the changing times 

and that the USPTO has the resources and regulations in place that assist in that 

process. I look forward to hearing the panels commentary today on how to maintain 

the US as one of the, if not the, best Patent Office in the World. 

Mr. BERMAN. I thank the Chairman. 

Okay. Without objection, I recognize the gentleman from Florida, 

Mr. Wexler, for opening comments. 

Mr. WEXLER. Thank you, Mr. Chairman. 

I just want to read a list of senior title positions. Commissioner 

for Patents. Commissioner for Trademarks. Deputy Commissioner 

for Patents. Deputy Commissioner for Patent Operations. Administrator for External Affairs. Chief of Staff for the Undersecretary of 

Commerce. Chief Financial Officer. Deputy Financial Officer. DirecVerDate Aug 31 2005 13:59 Sep 18, 2008 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\022708\40926.000 HJUD1 PsN: 40926
6 

tor of Patent Quality. Chief Information Officer. Deputy Information Officer. Director of Enforcement. 

All of these positions were filled, as I understand it, by career 

professionals. Collectively, they represent literally hundreds of 

years of experience, Federal experience in scientific, legal and technical fields. And if I have the right information, they have all been 

removed by Mr. Dudas or his predecessor, most by the current occupant. 

The numbers are disturbing, and I hope that the hearing will tell 

us why this is happening. 

And thank you, Mr. Chairman, for holding the hearing. 

Mr. BERMAN. Thank the gentleman. 

And we will now go to the witnesses. 

John Dudas is Undersecretary of Commerce for Intellectual Property and Director of the United States Patent & Trademark Office, 

a post he has held since 2004. Prior to that, Mr. Dudas served as 

acting undersecretary and director and deputy undersecretary and 

deputy director. 

Before joining the Bush administration, Mr. Dudas served for 6 

years as counsel here to the U.S. House Judiciary Committee’s 

Subcommittee on Courts and Intellectual Property, and staff director and deputy general counsel to the House Judiciary Committee. 

Mr. Dudas holds a law degree from the University of Chicago. 

Robin Nazzaro is a director with the Natural Resources and Environment team of the United States Government Accountability 

Office. She is currently responsible for GAO’s work on Federal land 

management issues—so it is obvious why you are here. No. 

Recently, she oversaw GAO’s work on federally funded R&D, 

which includes responsibility for the USPTO and other Government 

programs. Ms. Nazzaro received a bachelor’s degree from the University of Wisconsin and a certificate in senior management and 

government from the John F. Kennedy School of Government at 

Harvard University. 

Robert Budens is president of the Patent Office Professional Association, and has served on this executive committee since 1998. 

He also currently serves on the Patent Public Advisory Committee. 

Mr. Budens has been with the USPTO since 1990 and has been 

a primary patent examiner since 1994. He holds advanced degrees 

in microbiology and immunology from Brigham Young University 

and the University of Texas Southwestern Medical Center, respectively. 

Alan Kasper is first vice president of the American Intellectual 

Property Law Association. He is also the director of Sughrue Mions 

International Department, and a member of the firm’s management committee. Mr. Kasper’s practice includes domestic and international patent law. 

Prior to joining Sughrue Mions, Mr. Kasper was an attorney for 

the Communications Satellite Corporation, and was a patent examiner in the U.S. Patent & Trademark Office. He received his law 

degree from the Georgetown University Law Center. 

Gentlemen and lady, your written statements will be made part 

of the record in their entirety. I would ask you to summarize your 

testimony in 5 minutes or less. To help you stay within that time, 

there is a timing light at your table. When 1 minute remains, the 

7 

light will switch from green to yellow, and then red when the 5 

minutes are up. 

Mr. Dudas, would you lead the panel with your testimony? 

TESTIMONY OF THE HONORABLE JON DUDAS, UNDERSECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY, AND 

DIRECTOR OF THE U.S. PATENT AND TRADEMARK OFFICE, 

U.S. DEPARTMENT OF COMMERCE, WASHINGTON, DC 

Mr. DUDAS. Thanks very much, Chairman Berman. Thank you, 

Ranking Member Coble, Congressman Wexler, and Congressman 

Issa. It has been over 2 years since I have had the opportunity to 

update this Subcommittee officially at an oversight hearing, and I 

appreciate this opportunity to do so today. 

Mr. Chairman, I am pleased to report that both fiscal year 2006 

and fiscal year 2007 were record-breaking years for the USPTO, 

due in part to the women and men at the United States Patent & 

Trademark Office. For 2 years in a row we have met or exceeded 

our highest production goals ever with a 21 percent increase in production in the last 2 years. 

We have the highest hiring in the history of the office, both in 

terms of percentage and in terms of raw numbers. Over 1,200 examiners hired in Patents each of the last 2 years. 

We have the highest number of examiners working from home. 

In the last 2 years, we went from zero working almost full-time 

from home to over 1,000, and we are adding 500 a year. 

We now have the highest usage of electronic filing. We used to 

measure in terms of 2 and 3 percent. We are up to 70 percent in 

electronic filing, and the highest percentage of electronic processing 

in the history of the office. 

For each of these accomplishments in 2006, we met or exceeded 

those records in 2007. And for those achievements, it is clear we 

must thank the 8,500 hard-working women and men of the United 

States Patent & Trademark Office. They are high achievers. We 

are a performance-based organization. They are performance-focused, and they are always up for the challenge. 

On behalf of our employees, I also want to thank this Subcommittee, and the Chairman and Ranking Member in particular, 

all of your colleagues. We are pleased especially that the Administration and Congress have worked together to ensure that the 

USPTO has had access on a yearly basis to all anticipated fee collections. The President’s budget request continues full funding for 

the fifth consecutive year this year. 

Full access to fees gives us the resources we need to continue to 

improve upon our record-breaking successes, but there certainly 

are challenges ahead. 

Mr. Chairman, my written statements describes the wide range 

of initiatives that we have underway and updates our activity since 

our last oversight hearing. Quality is the driving force in everything we do, from our daily activities to our long-term strategic 

planning. 

All of us in the room and all stakeholders want a quality examination process that results in quality patents and quality trademarks. That quality starts with the highest quality people, and I 

8 

am proud that our 8,500 employees do this on a daily basis with 

true dedication to their jobs. 

We recognize that, to recruit and retain the highest quality people, we must provide an employment package with benefits and a 

working environment that beats—not just meets, but beats what 

our competitors are offering, and we do have competitors within 

Government and the private sector who are constantly looking to 

hire the people with the same skill sets that we are looking for, 

and also hiring people that have the experience after having been 

a patent examiner. 

Quite frankly, I believe the offerings that we have are more than 

competitive, and we seek to improve them. Others find our environment to be good, as well. 

We have been honored for 2 years in a row, that Business Week 

Magazine chose the United States Patent & Trademark Office as 

one of the best places in the United States to launch a career. We 

have been chosen by Business Week magazine as one of the best 

places to round out your career, and one of the best places to have 

an internship. Washington Families magazine called the USPTO 

one of the best places to work in the Washington area if you have 

a family. 

Our flex time, our tele-work and Hotelling programs continue to 

be a model for Federal agencies. Eight-five percent of eligible trademark examining attorneys work from home. 

As I mentioned, we now have over 1,000 patent examiners working from home, and we are adding 500 per year. Our vision is to 

create a workplace where an examiner has every opportunity and 

every flexibility to succeed as they want to succeed, and they can 

do that, we hope, from anywhere in the country. They can choose 

where they go, is our vision. 

But we have some legislative hurdles. We want examiners to be 

able to work from home in Detroit, Austin, Florida, Los Angeles, 

Greensboro, Roanoke, for that matter, Mr. Goodlatte. Good to see 

you. 

Mr. Chairman, we recognize the importance of making every reasonable effort to retain our examiners. It takes a number of years 

to effectively train and guide our examiners to full signature authority. 

We don’t want to lose them to our competitors when they have 

developed marketable expertise. We want them to come to the 

USPTO and want to stay there. And I will go in much more detail 

about the specific statistics and what we are doing. 

But I can tell you, the Bureau of Labor Statistics does numbers. 

Attrition rate throughout the Federal Government is 11.2 percent. 

The attrition rate across the board at the USPTO is 8.5 percent, 

32 percent lower than throughout the rest of Federal Government. 

Our average attrition rate for patent examiners with 0 to 3 years 

of experience is quite high, and that is where we really need to 

focus. But our examiners with experience beyond 3 years, between 

3 to 30 years, that drops to below 40 percent. Our focus on examiner retention and recruitment in those first few years has borne 

fruit in the first years that we have done that. 

So BLS, Bureau of Labor Statistics, reports up to 45 percent attrition for engineers and computer scientists throughout the priVerDate Aug 31 2005 13:59 Sep 18, 2008 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\022708\40926.000 HJUD1 PsN: 40926
9 

vate sector. Over the last 10 years, first-year attrition at the 

USPTO has been about 20 percent. With targeted retention and recruitment efforts with the new training academy and other things 

we have put in place, we have lowered that 25 percent to 15 percent for first years, and in targeted areas we have lowered it to 10 

percent. 

So by targeting retention efforts, we think we have really found 

something. We don’t have enough numbers yet to give years and 

years of data, but we have had much success on that. 

So I look forward to talking about all the issues that you have 

raised. I believe we have come a long way and enjoyed many successes since our last oversight hearing. There is lots of room for improvement. There are challenges that lie ahead, and we fully intend to do all we can, with your continued support, to build on 

these successes. 

Thank you. 

[The prepared statement of Mr. Dudas follows:] 

10 

PREPARED STATEMENT OF THE HONORABLE JON W. DUDAS


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ATTACHMENT 


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Mr. BERMAN. Thank you. 

And Ms. Nazzaro? 

TESTIMONY OF ROBIN M. NAZZARO, DIRECTOR OF NATURAL 

RESOURCES AND ENVIRONMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, DC 

Ms. NAZZARO. Thank you, Mr. Chairman and Members of the 

Committee. I am pleased to be here today to discuss the U.S. Patent & Trademark Office. 

As the Chairman noted, my current portfolio does not include 

USPTO, but I have had over 10 years experience where I did have 

responsibility for Federal research and development programs, including intellectual property and the oversight of USPTO. I am 

here today pitch-hitting for one of my colleagues who is undergoing 

cancer treatment. 

My testimony today will be based on a report that we issued last 

September entitled, ‘‘U.S. Patent & Trademark Office: Hiring Efforts Are Not Sufficient To Reduce The Patent Application Backlog.’’ 

Specifically, I will discuss (1) USPTO’s process for making its annual hiring estimates and the relationship of these estimates to the 

patent application backlog; (2) the extent to which patent examiner 

hiring has been offset by attrition; and (3) the factors that may contribute to this attrition, and the extent to which USPTO’s retention 

efforts align with examiners’ reasons for staying with the agency. 

First, as a result of its increased workload relative to its existing 

workforce, USPTO determined that it would need to hire additional 

patent examiners each year. However, the agency identified its projected annual hiring estimates primarily on the basis of available 

funding levels and its institutional capacity to train and supervise 

examiners and not on existing backlog or the expected patent application workload. Although this process is generally consistent with 

the Office of Personnel Management’s workforce planning strategies, the process does not consider how many examiners are needed 

to reduce the existing patent application backlog or address the inflow of new applications. Consequently, the patent application 

backlog has continued to increase, and it is unlikely that the agency will be able to reduce the backlog simply to its hiring efforts. 

Second, in addition to the patent examiner attrition, which has 

continued to significantly offset PTO’s hiring process from 2002 

through 2006, one patent examiner left the agency for every two 

patent examiners hired. Of those who left, 70 percent had been at 

the agency for less than 5 years. This represents a significant loss 

to the agency, because these new examiners are primarily responsible for the actions to remove applications from the backlog. According to USPTO management, patent examiners leave the agency 

primarily for personal reasons, such as the job not being a good fit 

or the need to relocate in the event of a spouse’s job. We also surveyed a random sample, though, of over 1,400 patent examiners, in 

which we received an 80 percent response rate. In contrast, 67 percent of the patent examiners we surveyed identified the agency’s 

production goals as one of the primary reasons examiners may 

choose to leave USPTO. These goals are based on the number of 

applications patent examiners must complete during a 2-week peVerDate Aug 31 2005 13:59 Sep 18, 2008 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\022708\40926.000 HJUD1 PsN: 40926
32 

riod. However, the assumptions underlying these goals were established over 30 years ago and have not been adjusted to reflect 

changes in the complexity of patent applications. Moreover, 70 percent reported working unpaid overtime during the past year in 

order to meet these production goals. 

On the other hand, a number of different retention incentives offered from 2002 through 2006, such as a special pay rate, performance bonuses and a flexible workplace were the primary reasons 

patent examiners identified for staying with the agency. According 

to USPTO management, their most effective retention efforts were 

those related to compensation and an enhanced work environment. 

GAO’s survey of patent examiners indicates that most patent examiners generally approve of the retention efforts and ranked the 

agency’s salary, which can be more than 25 percent above Federal 

salaries for comparable positions, and the flexible work schedule 

among the primary reasons for staying with the agency. 

In conclusion, despite its efforts to hire more patent examiners 

and implement retention incentives, USPTO has had limited success in retaining new patent examiners. Because production goals 

appear to be undermining its efforts to hire and retain a highly 

qualified workforce, we believe the agency will continue to be limited in its ability to meet the increasing demand for U.S. patents 

and reduce the growth of the patent application backlog, and ultimately may be unable to fulfill its mission of ensuring U.S. competitiveness. Thus, we recommended that USPTO undertake a 

comprehensive evaluation of how it establishes these goals and revise its goals as appropriate. USPTO agreed to implement this recommendation once it determines the effect of recent initiatives designed to increase the productivity of the agency through a more 

efficient and focused patent examination process. We are interested 

in timeframes and strategies that the agency has in place to try to 

implement this recommendation. 

Mr. Chairman, this concludes my prepared statement. I would be 

happy to respond to any questions that you or Members of the Subcommittee may have at this time. 

[The prepared statement of Ms. Nazzaro follows:] 

33 

PREPARED STATEMENT OF ROBIN M. NAZZARO


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Mr. BERMAN. Thank you very much. 

Mr. Budens? 

TESTIMONY OF ROBERT D. BUDENS, PRESIDENT, PATENT 

OFFICE PROFESSIONAL ASSOCIATION (POPA), ARLINGTON, VA 

Mr. BUDENS. Mr. Chairman, Ranking Member Coble, Members of 

the Subcommittee, POPA represents more than 5,800 patent professionals at the USPTO, including more than 5,500 patent examiners. 

Mr. BERMAN. Is your mic on? 

Mr. BUDENS. Oh, sorry. You want me to start over? 

Mr. BERMAN. Fifty eight hundred. 

Mr. BUDENS. Fifty eight hundred patent professionals at the 

USPTO, including more than 5,500 patent examiners. POPA’s 

members take great pride in the work they do, and are committed 

to maintaining the quality and integrity of America’s patent system. 

The USPTO has received much criticism in recent years for failing to allow high quality patents in a timely manner. Many proposed solutions represent radical changes that go far beyond what 

is necessary to fix the patent system. 

As with any product, it is better to build quality in right up front 

than to try and repair problems after the product has left the factory. Patent examiners need the time and the tools to do their job 

right the first time. Years of inadequate funding and restrictions 

on hiring left the USPTO severely understaffed. 

Fortunately, since 2005, the agency has been permitted to keep 

its fees, and appropriators have lifted restrictions on hiring, actually requiring more hiring, not less. The agency now brings on 

1,200 new examiners each year. It is doing a good job hiring people. 

It is just not keeping them. 

Statistics we have seen show that about 30 to 44 percent of each 

year’s new examiners leave the agency within 3 years. To compensate for overall annual examiner attrition, the agency must hire 

almost two examiners for each one it retains. 

Frankly, we don’t recognize the attrition statistics cited in the 

agency response to the GAO report. The one thing management 

could do to increase retention it has consistently refused to do for 

more than 30 years—provide examiners with the time to do the job 

right. More than any other factor, the reason examiners leave the 

USPTO is the unrelenting stress caused by the agency’s outdated 

production system. 

Patent examination is a labor-intensive job, mentally and physically. Automation can accelerate processes, such as searching large 

databases, but it cannot make the examiner read and understand 

the results of those searches any faster. 

After years of trying to do the job faster and cheaper, the USPTO 

now finds itself facing the same criticism that any manufacturer 

faces when it cuts corners—perception by end users that the product lacks the quality it needs to do the job it was supposed to do. 

The USPTO’s production goals have remained essentially unchanged since they were put in place in 1976. Since then, the patent applications have more technologically complex, have larger 

specifications, and higher numbers of claims. 

54 

Studies by Professor Dennis Crouch show that the size of issued 

patent specifications increased by 85 percent since 1987. The data 

also shows significant increases in the number of independent 

claims and total claims. Trying to do a high quality job in 2008 in 

the amount of time examiners were given in 1976 has left examiners angry, stressed out and demoralized. 

A POPA survey revealed that one-third of examiners worked unpaid overtime just to keep their jobs. Another third of examiners 

work unpaid overtime to earn performance awards. The GAO found 

similar results in its September 2007 report. This excessive use of 

unpaid overtime establishes a need for the USPTO to provide more 

time. 

What employees need—we need fee retention. POPA encourages 

this Subcommittee to continue working with the Appropriations 

Committee and the Administration to ensure that the USPTO has 

access to all its fees. But POPA believes that this access, however, 

must not be obtained at the expense of the oversight responsibilities of the Judiciary and Appropriations Committees. 

We need to put an end to outsourcing searches. The USPTO has 

wasted considerable resources in prior attempts to outsource patent 

searches, and now with the applicant quality submission. 

Outsourcing searches will not result in better quality patents, 

and will likely create conflicts of interest for applicants. The Subcommittee should put an end to this waste by passing legislation 

that clearly establishes patent searching and examination as inherently governmental functions. 

We need more time. POPA asks that the Subcommittee provide 

more time for examiners by putting a fence around the patent filing fees and directly allocating these fees to providing time for examiners to examine patent applications. 

Finally, we need tools. The USPTO needs to reverse its policy of 

neglecting the U.S. classification system and restoring its funding. 

We need automated tools that allow examiners to classify and add 

foreign and non-patent references to USPTO databases. There are 

very few former classifiers left in the agency. Before their institutional memory is lost forever, they need to be put back to work 

training new classifiers and examiners. 

Thank you very much for this opportunity to present our views. 

[The prepared statement of Mr. Budens follows:] 

55 

PREPARED STATEMENT OF ROBERT D. BUDENS


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Mr. BERMAN. Well, thank you very much, Mr. Budens. 

And Mr. Kasper, why don’t you conclude for us, and then we will 

have questions? 

TESTIMONY OF ALAN J. KASPER, FIRST VICE PRESIDENT, 

AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION, 

SUGHRUE, MION, PLLC, WASHINGTON, DC 

Mr. KASPER. Thank you very much, Mr. Chairman and Members 

of the Subcommittee. I am pleased to have the opportunity to 

present the views of AIPLA at this oversight hearing on the U.S. 

Patent & Trademark Office, an entity vital to maintaining American innovation. 

Since my time is limited, I will highlight only a few of the points 

made in my written statement. I will focus on current procedures, 

practices and administration of the patent examination process 

that I and other practitioners find are resulting in delays and 

added costs to applicants, and we believe to the office, as well. 

First, I would like to express my appreciation to the thousands 

of dedicated patent examiners in the USPTO without whom the 

system simply could not function. We believe, however, that their 

jobs and their efficient processing of applications could be facilitated if steps are taken to change the adversarial culture that appears to exist in the USPTO. 

For example, if examiners, following their detailed review of a 

claimed invention and a prior ART that their search has identified, 

were encouraged to make suggestions to applicants for amendments to the claims. We believe that more applications could be examined better and more efficiently. 

While such suggestions may not be accepted in every case, they 

would surely lead to a rapid narrowing of issues and a meeting of 

the minds as to what language best defines the patentable subject 

matter. Extended prosecution through RCEs or continuations could 

be avoided in many cases. 

Second, overly formalistic rules that are strictly applied and result in frequent notices of noncompliant responses requiring written replies within specified periods should be relaxed. Often, the 

ensuing delays and costs to correct these deficiencies could be 

avoided with an informal communication to the applicant, permitting the examiner to amend or annotate the application, showing 

a correction of the error. This too would speed processing. 

While formal errors in papers filed by applicants should not 

occur, the rigidity with which the office approaches them is in dramatic contrast to the manner in which it treats deficiencies in communications from the office. For example, the failure to list relevant prior ART in certain forms, or a failure to fully complete 

other forms, requires applicants to make unnecessary requests for 

correction so that a complete and accurate record in the file history 

is obtained. 

A greater stress on thorough and competent supervision of the 

entire work product before it is mailed from the USPTO would enhance the overall quality of the examination process and save both 

applicants and the office time and money. The greater emphasis on 

avoiding formal errors and resolving them more expeditiously at all 

levels should be coupled with appropriate metrics for the examiner, 

101 

support staff and supervisor performance, and matched with better 

training of and incentives for all PTO employees. 

My final comments on USPTO procedures concerns the pre-appeal submission process outlined in Director Dudas’s testimony. 

This procedure was intended to avoid unnecessary appeals and 

save costs. It was universally welcomed by applicants when announced. However, its full potential has not been realized in practice. 

In reality, the reviewing panel of preferably three persons typically includes the examiner and his supervisor, thereby skewing 

the process against applicants. At least two senior examiners not 

involved with the application should be part of any reviewing 

panel. 

Lastly, in my experience as an examiner, in-house attorney and 

outside counsel, I found the European practice of placing reference 

characters from the description into the claims to be immensely 

helpful as a roadmap to efficiently understanding the invention as 

claimed. We have recommended that this practice be adopted by all 

three trilateral patent offices. 

Unfortunately, current U.S. law as interpreted by the courts effectively precludes such practice by allowing courts to reach restrictive claim interpretations or impose an estoppel. A legislative fix to 

this problem is needed so that reference characters can be placed 

in the claims of U.S. patent applications and issued patents. 

Such a legislative fix, together with an amendment relieving applicants from a statutory obligation to include certain legends in 

applications rather than accompanying documents would facilitate 

adoption of an international common application format with attendant cost savings. 

I wish to thank the Subcommittee for the opportunity to present 

these views, and I would be pleased to answer any questions you 

may have. 

[The prepared statement of Mr. Kasper follows:] 

102 

PREPARED STATEMENT OF ALAN J. KASPER


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Mr. BERMAN. Well, thank you very much. A number of issues 

raised. 

I will recognize myself for 5 minutes. 

There is a tension here between pendency and all of the negatives caused by that, and quality. And in a way, all of you have 

spoken to this issue. 

At this point, I would like to just engage, maybe even in a bit 

of a dialogue back and forth, Mr. Dudas, Ms. Nazzaro and Mr. 

Budens on how we can accommodate this tension, deal with the 

terrible pendency problem and deal with some of the quality issues 

that you address in the context of goals and working conditions and 

requirements. So let me just ask a few questions. 

First, to Ms. Nazzaro, I want to clarify one point in your report. 

Your report found that, within a 1-year period, 70 percent of patent 

examiners worked unpaid overtime to meet their production goals. 

Did these examiners occasionally or consistently work unpaid 

overtime to meet their goals? Was this a—sort of a once in a while 

kind of situation, or was this a regular? And to what extent, if you 

know, did examiners work unpaid overtime to make production bonuses? 

Ms. NAZZARO. The second part I can answer quicker. We don’t 

know whether the intent of working the overtime was to meet the 

production goals. We didn’t ask that question. But of the 70 percent 

that said that they worked overtime, five said they worked less 

than 1 hour, 62 percent said they had worked 1 to 10 hours, 23 

percent said—— 

Mr. BERMAN. Over what period of time? 

Ms. NAZZARO. It is over the past 12-month period how much 

overtime worked per biweek. 

Mr. BERMAN. Okay. 

Ms. NAZZARO. Twenty-three percent said they had worked between 11 to 20 hours, 5 percent said they worked 21 to 30 hours, 

and 5 percent said they had worked more than 30 hours. So that 

is worked per biweek in the 12-month period. 

Mr. BERMAN. Okay. 

Mr. Dudas, after the GAO report came out, the USPTO issued 

a press release in October stating that it will review assumptions 

the agency uses to establish production goals for patent examiners. 

What steps thus far has the agency taken to study these assumptions? When do you think we will have the results of your study? 

And will these results be made publicly available? 

Mr. DUDAS. Since that time, we have begun to look particularly 

at breaking down attrition and retention numbers not just across 

the board but specifically based on year. And we found that, as 

things are more focused, when you get more focus on things, you 

see patterns that begin to develop. 

I will ask that we put up a chart that shows that attrition 

throughout the USPTO is high in the first 3 years. As it gets past 

the first 3 years, it drops to about eight, six, four, three, two, one, 

and drops down dramatically. So we recognize—that is not the 

right one, the one—the chart that has got the—shows retention 

over 30 years, our attrition over 30 years. 

The bottom line on that front is is that we have high attrition 

in the first 3 years. That attrition lowers down dramatically after 

122 

3 years, and then again lowers down—one of the things we are focusing on is specifically why are people leaving in the first year, 

the second year, the third year? 

We do actual exit interviews. I think it is important what GAO 

did, where they asked the question, ‘‘If you were to leave, why 

would you leave?’’ Best practice—yes? 

Mr. BERMAN. But is that responsive, though, to the issue of reviewing the assumptions and establishing the production goals? 

Mr. DUDAS. Oh, yes. On that front, well, we are certainly—everything we are doing is looking at the assumption under the production goals. Patent is doing that review across the board. 

And again, even on that basis, you have to understand that the 

production goals, that process has begun. That process is looking 

at examiner’s production—some examiners do roughly 21⁄2 times 

more production than other examiners. It is based on the level of 

experience the examiner has. It is also based on the number of 

hours that are given per complexity for the technology. 

So yes, that study has begun. Patents is looking at that. They 

want to look at that over time, and they want to look at that. So 

yes, we are happy to make those results public as we go through 

that process. 

But what I am trying to focus on particularly is we have to 

make—go beyond what the study did in the GAO report, and we 

have gone beyond that for the last several years, to focus on specifically where do we have attrition issues. We know that we have attrition issues certainly in the first 3 years. We are also putting 

things in place to try to address those attrition issues. 

We have actually lowered the attrition for first-years, where we 

have our highest, by far. We have lowered that by 25 percent. We 

targeted that area with retention and recruitment bonus and actually cut it in half. 

But for the last 10 years, the PTO has lost about 20 percent of 

their first year examiners. We have lowered that to 10 percent 

where we have targeted retention and recruitment bonuses, and to 

15 percent across the board. 

Mr. BERMAN. All right. I am going to give myself, and then give 

other people, an additional minute to just finish my three questions. And then, when—if there is a second round, although I do— 

I should mention that we have to be out of here at 3. 

Mr. Budens, the USPTO study—let us assume, when that study 

is completed, and I am not quite sure when that is supposed to be, 

but when it is completed, it finds an increase in examination time 

is warranted, and the increase is implemented. How do you believe 

this will impact patent pendency? Is there any way to accurately 

calculate how incremental increases to examination time would address examiner attention? 

Mr. BUDENS. Well, first of all, I think that increasing—giving examiners more time will directly impact retention. I go down—I get 

talked to by examiners every day and get stopped in the hallways, 

go—thank you for getting us some more money, but what we really 

need now is more time. We have got to have more time to do the 

work. 

123 

I believe the results of the study from the GAO because it correlates with everything I hear and I see in the hallways. We did 

a very similar study—— 

Mr. BERMAN. I also believe in the studies that correlate with 

what I already believe, too. 

Mr. BUDENS. We—interestingly enough, before the GAO study 

came out, we had actually done a survey of our own—of examiners 

ourselves, which ended up having results essentially analogous to 

what they found. 

And one of the questions you asked of Ms. Nazzaro, what we 

found—because we actually asked the question, what we found was 

roughly a third of examiners—and we asked a similar size cohort, 

about 1,200, 1,300 examiners—about a third of them were working 

unpaid overtime, significant amounts, just to keep their jobs. 

Another third were working significant amounts of unpaid overtime in order to make outstanding ratings and get bonus awards. 

So hopefully that—and that is a statistic I think would—correlates 

perfectly with what the GAO found. 

Dealing with how increasing those times is going to hit pendency, obviously the short answer would be it has got to hit pendency early on. But there are a number of factors that I think are 

coming together at this point in time that may change that. 

The recent court case in KSR that may change where obviousness goes, the fact that, if we can increase quality, if we can start 

keeping the examiners and getting these people experienced and 

examining and making the best rejections they can, applicants are 

going to start seeing that it is not just kind of a turkey shoot to 

go into the Patent office, and they are going to stop filing and wasting their time and money. It is not cheap to get a patent. They are 

going to stop filing that. 

I think those combination of things actually could lower pendency in time. But pendency has been a problem that took us 20 

years to get here. I don’t think it is—I can’t—I don’t know of any 

solution that is going to make it go away in a year, or overnight. 

Mr. BERMAN. My time has more than expired. 

I recognize the Ranking Member, Mr. Coble. 

Mr. COBLE. Thank you, Mr. Chairman. 

Good to have you all with us. 

Attrition is a bad word. None of us embraces attrition. But I am 

pleased to learn, Mr. Dudas, that your attrition rate is more favorable than the Federal Government at large. I did not know that. 

So that is the good news about attrition. 

Now, you indicate, Mr. Dudas, that we cannot hire our way out 

of the pendency and backlog problems. Are these problems manageable? 

Mr. DUDAS. I think these problems are manageable, but there 

are changes that are going be—need to be made, and I want to support something that Robert Budens said. 

If we could put up a chart that shows the allowance rate at the 

Patent & Trademark Office, this is the number of patent applications that ultimately lead to a patent issue. As you can see, in year 

2000, 70 percent of all applications led to a patent. First quarter 

last year, it was 44 percent. 

124 

There is a dramatic drop in the number of applications that have 

come in the door. Some of that is quality initiatives. Some of those 

are things outside. But it is one of the things we think—and I 

think Robert hit it on the head—KSR makes a difference, that— 

what applications that come in the door are sometimes quite problematic. And we have gone from having 70 percent approvals to 44 

percent approvals. 

That has also led to a behavior that is basically do-overs. I will 

try again and again. I will ask for my continuation if I don’t like 

your answer. I will ask again. I will ask again. I will ask again. 

Unlimited do-overs we have right now. If there were no do-overs, 

no continuing applications—and there are legitimate reasons for 

them—that is 30 percent of our applications right now, and that is 

growing. 

Mr. COBLE. Thank you, sir. 

Mr. DUDAS. So yes, we need better applications, as well. 

Mr. COBLE. Thank you. 

Mr. Kasper, in your statement you say that the industry are Trilateral, in which AIPLA participates, recommended a common application format to the Trilateral patent offices. You furthermore 

estimate that adoption of this format would yield a savings of $300 

million annually to patent applicants, but that certain substantive 

issues prevent most of these savings from being realized. 

Expand on that, if you will. 

Mr. KASPER. Yes. The common application format would assume 

that there is a single format acceptable by all three Trilateral offices. There are a number of components to that, some very formal, 

such as common titles, common organizations. Others are substantive, such as the content of the claims. 

Now, in the study by the Industry Trilateral, in preparation for 

discussions with the Trilateral offices, we identified five different 

areas that were significant. One I mentioned earlier in my testimony, it deals with adding numbers to claims, where it is popular 

in Europe but not popular in the United States. 

Another is legends that are required under U.S. law. In Europe 

there is a requirement that, once an application is filed, there must 

be a description of the then-most pertinent prior ART in the specification. Similarly, the claims must be changed to comport with the 

specification. And finally, in Japan, you have a requirement that 

the prior ART be listed in the specifications. 

Those are the major areas where costs would be saved if they 

could be unified. So $300 million based upon each of those requirements and those different jurisdictions would be saved in the event 

that they could be eliminated or made uniform. 

Mr. COBLE. Thank you, sir. 

Ms. Nazzaro or Mr. Budens, either one, what compensation-related incentives are the most cost-efficient and attractive to step 

the tide of attrition? Either of you? Either or both. 

Ms. NAZZARO. I was going to say, we have not done any analysis 

as to which ones are most cost effective. 

Mr. COBLE. Mr. Budens? 

Mr. BUDENS. I think that, right now from my point of view, our 

most cost effective use of money has been in higher salaries for exVerDate Aug 31 2005 13:59 Sep 18, 2008 Jkt 000000 PO 00000 Frm 00128 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\022708\40926.000 HJUD1 PsN: 40926
125 

aminers, which has kept them in the neighborhood. Washington is 

not a cheap place to live. 

And the use of recruitment bonuses. One area I would challenge 

Mr. Dudas on is that he keeps referring to recruitment and retention bonuses. We are using recruitment bonuses to get people in 

the door. I am not aware that we are using—that any senior examiners have received retention bonuses at all, and I think that is 

some place where we could expand usage. 

The recruitment bonuses, it is a little early yet, from my view, 

to say that they are going to work, because they are spread out 

over 4 years. But they are certainly an incentive to get people in 

the door. But it is the higher salaries that we have gotten with the 

special pay rates and that we need to maintain in time that I think 

keep people in the door. 

Mr. COBLE. I want to try to beat that red light illumination with 

this question, Mr. Budens. How does outsourcing searches waste 

time and resources at the PTO, and how do you feel it diminishes 

patent quality? 

Mr. BUDENS. The first problem I have, the resources that have 

been wasted is the fights that we have had ongoing on this issue 

for years. We fought this battle in 2005, and then we are fighting 

it again now with applicant quality submissions. 

My belief is that those things are not going to put better ART 

in front of examiners because an applicant themselves is probably 

going to most likely be searching the same databases that the examiner searches. They are going to be finding roughly the same 

ART in a narrow area of their invention. 

The problem with that is that examiners don’t look at just their 

invention. We give claims that have broader, reasonable interpretation, and we may go out and find ART that reads on the claims 

that their reading that the applicant doesn’t think about. Their 

view is more focused. 

And I just don’t believe in any way that it is going to put more 

ART in. We already have the rules in place that, if applicant knows 

about a Norwegian telecommunications ART or something, they are 

supposed to be giving it to us. we need to enforce that so BlackBerry cases don’t come up again. 

Mr. COBLE. And I thank the Chairman for not penalizing me for 

not beating the red light. I yield back. 

Mr. BERMAN. The gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. Thank you, Chairman Berman . 

You are a union man, Mr. Budens, Patent Office Professional Association. What is the problem here? We have got tremendously talented people here. 

Mr. Undersecretary, you have been through this and helped prepare us for many years. And I sense, quite frankly, that this isn’t 

complex. I mean, there is something more simple than is coming 

forward. 

Can you give me an idea about this, Mr. Budens? What is going 

on underneath the radar for people that really want to understand 

why we can’t resolve the problem? 

Now, I know that, for years, there was no replacement money, 

and there were backlogs generated. Here we have a part of our 

126 

Government winning all kind of awards, and yet there is a lot of 

severe criticism. 

How do we sort these disparate facts out here and get to the bottom of this? Start me off, please. 

Mr. BUDENS. Well, first of all, I think that we have a—somewhat 

of an atmosphere of conflict in the office. There is certainly the normal kinds of conflicts that you always have between management 

and labor. 

But I think one of the biggest problems that we have that I see 

plaguing us is that we don’t have enough interaction between each 

other on where the agency is going, how it wants to solve problems. 

When you really need to find out how to get the job done, you 

go to the trenches. You go get the people who are actually making 

the widgets involved in the process, in developing better ways to 

do things and developing—and deciding the paths you can go. This 

is something we haven’t done. 

Mr. Dudas says that they have started undertaking a goal study 

of examiner goals. My viewpoint is POPA should be involved in 

that study from day one, and I am just finding out about it, that 

it is going on right now today at this table. 

When the GAO report first came out, I met with the commissioner of patents and the deputy commissioner for operations, and 

I asked them, ‘‘Okay, we have got this study out. It clearly shows 

what the problem is. When are we going to sit down, and let us 

start talking about what we can do with goals.’’ 

Their response to me is, ‘‘Well, we can’t really do that right now 

because we need to see what efficiency gains we can get from the 

rules change packages and the applicant quality submission and 

other things—initiatives that we have got going on, and we really 

won’t know how to do the goals. 

Well, the rules change packages is tied up in court. AQS is tied 

up here in the Congress. In the meantime, examiners just keep 

working, but we are not—we are not being involved in the processes early on. We get things basically shoved at us at the last 

minute and are told, ‘‘Have a nice day.’’ 

Mr. CONYERS. Ms. Nazzaro, what do you see underneath the 

radar screen that can help us out here? We want to help the Patent 

and Trademark Office. Everybody is conscious of the importance of 

what they do. 

Ms. NAZZARO. I think my comment would be very similar to Mr. 

Budens’. I mean, we have gotten an agreement from PTO that they 

are going to look at the production goals, but we don’t have any 

time frame. 

We don’t know really what they are doing. This is the first I have 

heard as well, and I did ask my staff before coming in here, you 

know, what reaction have we gotten from the agency, what response have we got, because we do track all of our recommendations. And we had no idea that they were doing something, as well. 

We are not against production-based goals. Setting goals is a 

good thing. You can’t measure performance if you don’t have goals, 

so we are not against production goals. We just think they have to 

be reasonable. 

127 

The agency has not met its goals for the 5-year period that we 

looked at USPTO 2002 to 2006. So if they are not even meeting 

these goals, they are unrealistic goals. 

And yet, the number of staff who are very concerned with these 

goals to me seems to be really off the radar screen. They are very 

appreciative of all the initiatives that the agency has taken, and we 

applaud them because they are in the forefront of making a familyfriendly workplace. 

Being a woman myself, I know having an on-site daycare and all 

of these things are commendable, being able to tele-work in the 

Washington, D.C. area, all commendable. But they are missing the 

point. When 67 percent of the agency says they have a problem 

with production goals, it seems like they should at least study it. 

Mr. CONYERS. Mr. Chairman, could I get enough time to ask the 

undersecretary to respond after Mr. Kasper? 

Mr. BERMAN. I think it makes sense. 

Mr. CONYERS. All right. 

Mr. Kasper, please, do you have anything to add to this? 

Mr. KASPER. Thank you. 

From my perspective, as I said, as an ex-examiner and certainly 

now outside, one of the things that is most important is to have 

enough funding for the examiners, enough training for the examiners, and to provide them with proper supervision so that they can 

do their jobs in a consistent way so that, to the outside world, they 

appear to be uniform and provide a high quality output. 

Thank you. 

Mr. CONYERS. Mr. Undersecretary? 

Mr. DUDAS. Thanks very much. 

I do think that much of the issue at hand is what Chairman Berman raised earlier, which is there is an inherent tension between 

quality and production. We could certainly get rid of the backlog 

overnight by cutting time in half. It would be ridiculous. Quality 

would be terrible. 

We had a 2004 study done by the inspector general who concluded the opposite of what the GAO study was, which is that we 

are giving too much time, because so many of our examiners, more 

than 60 percent of our examiners actually achieved productions 

standards of 10 percent higher than what is required of them. It 

is beyond the goal. 

We didn’t instantly run in and say, well, let us, you know, raise 

the goal for examiners, because we recognized there are a lot of 

challenges, and there are many, many challenges. Balancing that 

is critically important. 

But I think, again, we believe very strongly in studying all the 

assumptions under the production goals. They are 25 years old. I 

do listen to examiners. 

We talk a great deal, everything from official functions and 

brown-bag lunches. So quite honestly, I learn a whole lot at the 

gym, talking to examiners about what kinds of issues there are. 

The claims package that is now being held up in court were ideas 

that came from examiners because they look at too many claims, 

and they said, ‘‘This is a quality problem. It is a production problem.’’ 

128 

I think where I see attention is I think the conclusion that has 

come from the GAO study for many people is that what we need 

to do is lower standards across the board. And I would have to tell 

you, the USPTO disagrees that we need to lower standards for examiners. We are a performance-based organization with high 

achievers. 

And let me tell you what this means. It means that 60 percent 

of all of our folks work beyond the level they need, beyond 10 percent and beyond, to get higher bonuses. What we need to do is not 

lower standards. We need to increase opportunity. 

We need to increase flexibility. We need to let examiners have 

the opportunity to do what they do best from wherever they want, 

whenever they want, and however they want. 

And let me tell you about just three programs where this has 

been put in place in the last 2 years. Tele-working, which we didn’t 

have in patents but had in trademarks, 1,000 patent examiners are 

now working from home. 

Eighty-three percent increased in morale. Eight-seven percent 

say they would be more likely to work more years—retention. And 

10 percent increase on average in production because they have the 

opportunity to work from home. When they had more time, they 

chose to do more work and have more flexibility. 

A flat goal program, where we say, ‘‘Listen, you get paid per patent beyond a certain amount.’’ Less people apply. It is a voluntary 

program. Over 150 people. Eighty-three percent of examiners reported higher job satisfaction. Over three-quarters, which is not 

enough to conclude there is a 5 percent increase in production 

across the board. Again, something voluntarily chosen. 

And laptop programs. This should have made sense a long time 

ago. We said to patent examiners, ‘‘Have a laptop. Take it home.’’ 

Mr. CONYERS. Well, this impresses me, but does it pass the test 

with Budens? That is the question. 

Mr. DUDAS. He is a tough, tough grader. I haven’t passed—— 

Mr. CONYERS. What do you say? 

Mr. BUDENS. I appreciate Mr. Dudas’s comments, and we do 

agree that some of the things they have done have been very good. 

Laptop program was very well received. It was a little of a concern 

to us because we knew that examiners would be using it to work 

more unpaid overtime, but examiners wanted it because they are 

a dedicated bunch. 

We are not necessarily opposed to production goals, by the way, 

like the GAO is, either. We understand their needs. But there are 

a lot of things that just aren’t meshing. 

You mentioned the flat goal program. The flat goal program, almost all examiners just find that program reprehensible and are 

scared to death that the agency is going to implement it and pretty 

much run most of us out the door because it is not unrealistic. We 

believe it is illegal. We are fighting it. 

He made a—my brain went dead. 

Mr. CONYERS. Well, would going to the gym more with Dudas 

help you or hurt you? 

Mr. BUDENS. Well, one look at me says it may help me in some 

ways. I am not sure that it would necessarily improve our relationship all that much. 

129 

Actually, Mr. Dudas and I get along very well, I think, one-onone. We have had a lot of good conversation. Where the real problems are is in the real development of where—and direction of 

where the agency is going. 

The employees need to be empowered. We need to be involved in 

that process. 

We are a very dedicated bunch. We believe in this system. We 

want it to be successful, and we want to do a good job for the 

American people. We need—we have one of the smartest, highly 

educated workforces in the country. Put us—let us help design 

where the agency is going and design the right tools that we need 

and the right direction that we need to go to be able to do the job 

that the American people deserve. 

Mr. BERMAN. Very good. 

The gentleman from Ohio. Again, 3 is our flat production goal. 

Mr. CHABOT. Thank you, Mr. Chairman. I had another meeting 

that conflicted with this. That is why I am a little bit late. If I am 

repeating my questions, anything that you already covered or anything my colleagues already covered, I apologize in advance for 

that. 

Mr. Undersecretary, I will begin with you. And if any of the 

other witnesses want to either supplement or disagree with or add 

to my questions to the undersecretary, that is fine. But I will direct 

the questions to him. 

Why did the USPTO wait until the 2007 GAO report to initiate 

a study on patent examiner production goals when a 2005 GAO report identified unrealistic production goals as a problem? 

Mr. DUDAS. Again—and you are not asking a—it is a new question. 

Essentially, we are—we have not agreed with the conclusion that 

has come from GAO that it was intimated in 2005, and I think 

more directly said in 2007, the conclusion that what we need to do 

is adjust production goals and that that will somehow really increase production. 

And the reason being—and so, in 2004, I mentioned earlier, the 

inspector general did a report that said the opposite, essentially. It 

said we need to raise our production goals, not lower them. 

So I think what we are constantly looking at what should production goals be and how do they work. We are also looking in 

terms of what does it really mean in terms of attrition. 

What the GAO study did was gave a lot of good, raw data, but 

we have spent a lot of time doing—digging deeper under that data 

since earlier than 2005, really trying to find out what really is— 

what matters most for attrition and retention by year. 

So I had mentioned earlier that what we found is that we do exit 

interviews. Everyone who leaves, we ask them why did you leave, 

and they will come in and—not everyone chooses to do them, but 

of those that do, we have a higher response rate than generally in 

industry. 

And what we have found is that the primary reason why people 

are leaving in their first couple years, 41 percent said the primary 

reason is the nature of the work. That agrees with what the GAO 

says, what Robert Budens has said there. 

130 

We found in years 3 to 10, though, that no one said that it was 

the nature of the work. They said that they think it was supervisor 

issues or management issues, along those lines. 

So what we have started to do, we have had 2 years in a row 

where we have had a management competence, working with our 

managers to work, ‘‘How can we address that problem?’’ We have 

looked at—— 

Mr. CHABOT. I tell you what. I have only got 5 minutes. 

Mr. DUDAS. I am sorry. 

Mr. CHABOT. That is all right. Let me cut you off there and ask 

if any of the other witnesses want to supplement that answer, 

or—— 

Ms. NAZZARO. Well, maybe there is a misunderstanding of why 

GAO believes the way it does. I mean, what the testimony we have 

heard today is that the more senior employees are the more productive employees. Over 70 percent of the workload is done by the 

more senior employees. 

If you consistently have turnover, particularly among those junior staff, you are never going to be developing that senior cadre. 

What we see is the problem with the attrition among the people 

who have less than 3 years, it takes 4 to 6 years for someone to 

really become a journeyman or become proficient in that profession. 

It is also taking the senior people more time to provide that on-thejob training then, too. 

So I mean, we really see a problem with this whole attrition. And 

until they can effectively reduce that attrition, I don’t think we are 

going to work out of the problem. And so, that is where we are saying that, if they are continuing to say production goals are driving 

us out because the nature of the work is too competitive, too production-oriented, we need to figure out a way to have a happy medium. 

Mr. CHABOT. Okay, thank you. 

Let me ask my second question, Mr. Dudas. Was there any discussion within the USPTO management team over whether Congress should have been notified of the re-organization of the Office 

of External Affairs? 

Mr. DUDAS. Absolutely. In fact, we look at—there are three different types of changes that might trigger different requirements, 

a re-organization, a re-alignment and a reprogramming. So we certainly have that discussion every time we make a change. 

A realignment is, if you will, changing people within a box. A reorganization is changing boxes on the org chart, getting rid of a different type of a thing. And a reprogramming is a significant change 

in funding. 

So there is no question. We had our chief financial officer in 

every one of these cases. We have done five realignments in the 

last year. On each one of those cases, our chief financial officer gets 

together with our office of general counsel as needed, our office of 

government affairs, to determine is this the kind of thing that triggers that appropriations requirement to notify the Appropriations 

Committee that this is a re-organization. 

So we definitely have that conversation every time. There have 

been a number of times where re-organizations in the last few 

years. I have got examples of when wee determine that they are 

131 

re-organizations. We have come up and notified Congress officially, 

and in each case it is a re-organization. 

I have examples of when it has been a reprogramming, and we 

have come up and notified the Appropriations Committee and others of what change is going to be made. But a realignment, we 

don’t do that, but we certainly have discussions n that in a very 

formal way with a lot of—— 

Mr. CHABOT. Let me squeeze my last question in quickly here. 

What has been the effect of the re-organization of the Office of External Affairs on USPTO, Intellectual Property Enforcement efforts? 

And my time has expired, so, if you would keep your answer relatively brief, and I would like to go to the others quickly if they 

have some response to that. 

Mr. DUDAS. Higher efficiency, essentially. We had an organization that had Government Affairs, International Affairs and Enforcement all in one. Five years ago we change that and split them 

out among three. 

And what we found is our people were bumping up against each 

other. Enforcement people and International Affairs people often do 

very much the same thing. We have stationed people in the embassy in Thailand. We had people that were working in that. That 

was from International Affairs. 

We had people that were working from Enforcement bumping 

into each other. What we have now is a team of more lawyer. No 

on transferred out of the office or into the office. More lawyers who 

can work on our global intellectual property academy and gear 

themselves toward enforcement or gear themselves toward the 

international relations or policy. 

So it is a more efficient operation. We made a mistake 5 years 

ago when we split them into three. We should have split them into 

two. Government Affairs should be separate—International Relations. 

Mr. CHABOT. Thank you. Any of the other witnesses need to comment on anything? Okay. Thank you. I yield back the balance of 

my time, Mr. Chairman. Thank you. 

Mr. BERMAN. I recognize the gentleman from Florida, Mr. 

Wexler. 

Mr. WEXLER. Thank you, Mr. Chairman. 

Mr. Dudas, if I could go back to the list that I had read at the 

beginning in terms of, if my understanding is correct, at least a 

dozen senior people in your office have left involuntarily, not voluntarily. These involuntary dismissals represent an extraordinary degree of talent, expertise, technical knowledge developed over decades. 

And it raises the question why so many career professionals, if 

my understanding is correct, have involuntarily been dismissed. So 

could you please tell us what the numbers are in terms of this 

level? We are talking about commissioners, deputy commissioners, 

administrators, chiefs of staff, financial officers, deputy financial officers information officers, chief information officers, deputy information officers. What is going on? 

132 

Mr. DUDAS. Yes. And you are talking about at the senior elective 

service. This is the highest level within leadership in our organization. 

There haven’t been a lot of involuntary dismissals. A lot of people 

have chosen to leave. There have been some folks that I have said, 

‘‘I don’t think performance is where it should be.’’ 

I am really glad you asked this question because I worked on 

this Committee in 1999 when the USPTO was made a performance-based organization. We were about performance. And our examiners had been under performance standards for a long time. 

Our management wasn’t always under performance standards. 

When I came into the office, the Appropriations Committee report came through, and Congress said, ‘‘PTO management has not 

been sufficiently innovative. Finally, we lack full confidence in the 

information provided by PTO management regarding its needs and 

performance.’’ 

So the first thing we did was look at what is happening within 

this office. Why aren’t we achieving our goals? And we looked at 

Government, performance and results—— 

If I can show you here, this is the history of the office. The blue 

line going up, we met on average 25 percent of our goals at the 

Patent & Trademark Office before 2004. We are now up to 90 percent. 

I am embarrassed to say that last line doesn’t go up to 100 percent. All of our major goals that we report to the Administration 

and the Congress, we have moved up from an average of 25 percent 

to over 100 percent. 

I will also show you the line that moves more downward. That 

is the ratings outstanding for senior elective service people in our 

organization. In 1999 we met 18 percent of our goals, and 82 percent of the senior executives were ranked outstanding. We don’t 

even—we don’t have about half of our patent examiners ranked 

outstanding, and they have tight production standards. 

So the bottom line is it became a little harder to work there. We 

said—and if you see, as our goals met went up, our ratings of 

SESrs went down. A number of people left, quite honestly just said, 

‘‘It is too hard. You have strategic plans. I don’t want to do this. 

I have other places I can work.’’ 

There were others. I waited 3 years to have full discussions 

where I said, ‘‘I would like to reassign you because I don’t think 

we are meeting our goal. I want people in place who will meet their 

goal.’’ 

So I am happy to go over any individual, but I will say there is 

little question that I came in with a sense of what this Committee 

wanted and what that law said, is to become a performance-based 

organization, and that is what we have done. 

I am proud to say we brought down the ratings to a point that 

I think is more reasonable. And in the last year, last 2 years where 

we have broken records, literally 12 records, historical records at 

the Patent & Trademark Office, that yes, we started to see some 

of those outstanding ratings go up. 

Mr. WEXLER. So if I just sum up your testimony then, in regard 

to these senior managers, it is your testimony some have left voluntarily, for whatever their reasons, and those that have left involVerDate Aug 31 2005 13:59 Sep 18, 2008 Jkt 000000 PO 00000 Frm 00136 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\022708\40926.000 HJUD1 PsN: 40926
133 

untary—on an involuntary fashion have been dismissed because 

they failed to meet your guidelines, they failed to meet the levels 

of required expertise? 

Mr. DUDAS. Yes. I would say—I can’t think of the people that I 

actually—that I went through a process of actually dismissing, 

going through the process of firing, et cetera. I had hard conversations with a lot of our managers, where we sat down and discussed 

whether or not we were meeting our goals and what kind of support that I had given. 

In the patents organization, at one point I sat down with some 

leaders of the organization and said I would plan to reassign you, 

and did make reassignments, which is—so that is not a dismissal, 

but that is me saying that I think that the fact that we have 

missed these goals, I would like to get people in place who are— 

and quite honestly, I felt that I had been asking for, wanting information for some time that would help us meet our goals, and that 

we weren’t doing that. 

Mr. WEXLER. Just to follow up and be done, is this quantifiable 

in terms of individuals? If they—is there something in writing that 

says they haven’t met their goals? 

Mr. DUDAS. Well, we certainly do performance appraisal plans 

and the like. And like I said, in many cases, it is not, ‘‘You have 

not met your goals, and you are not doing the findings.’’ In many 

cases it is a sit-down conversation of, ‘‘Why aren’t we being sufficiently innovative? Why aren’t we doing the things that Congress 

has been asking us to do?’’ 

I mean, again, I will tell you, I hold senior executives to a very 

high standard because we certainly hold our examiners to a very 

high standard. 

Mr. WEXLER. Thank you very much. 

Mr. BERMAN. Thank the gentleman. 

From what I heard from the Chairman and from what I see in 

the audience, we are going to have a gig that implicates the performance right soon, so we are going to have to start wrapping up. 

But Mr. Watt is recognized. 

Mr. WATT. I will be very quick because I am going to ask Mr. 

Dudas to provide some information in writing, if I can. You said 

you anticipated what the oversight hearing would be about, but I 

doubt you have a chart with you that will reflect what I am getting 

ready to ask you. 

As a new Member of this Subcommittee, I have noticed the same 

thing that I have noticed as a Member of the Financial Services 

Committee, on which I also sit, that there doesn’t seem to be a lot 

of diversity in what is going on. 

So if you could just send us the information about the diversity 

of your workforce at the Patent office—— 

Mr. DUDAS. Congressman, I am happy to, but I can answer you 

if you want me to. I am happy—— 

Mr. WATT. Well, in the interest of time, I would rather see it in 

writing anyway. If it is not going to take you any longer than it 

would take you to answer it, then I am going to be disappointed 

anyway. I would rather be disappointed in private than in public. 

And you would probably rather for me to be disappointed in private. 

134 

Mr. DUDAS. Right. I don’t think you will be disappointed. Let me 

just—54 percent diversity. 

Mr. WATT. Four percent? 

Mr. DUDAS. Fifty-four. 

Mr. WATT. Fifty-four. Well, I want to see the numbers up and 

down the line. 

Mr. DUDAS. That is fine. We will give it to you broken down, and 

we will give it to you whatever way you want. 

Mr. WATT. Yes. 

Mr. DUDAS. And if you want more information, we are happy to 

give you more information. 

Mr. WATT. I appreciate it. 

Mr. DUDAS. Thank you. 

Mr. WATT. That is the only question I have. I appreciate it. I 

yield back, because I want to hear the whinings [sp] also. 

Mr. BERMAN. The gentleman from Georgia, Mr. Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Mr. Dudas, as a follow up to Mr. Watts’ questions, in your testimony you state that the various recruitment efforts, you state the 

various recruitment efforts made to attract science and engineering 

students to create a pool of potential examiners for the agency. 

Could you please tell us your efforts in ensuring the diversity in 

this pool of potential candidates? 

And I will rest with that. 

Mr. DUDAS. Like many large organizations, we recognize that diversity is something that is of great benefit to our agency. So I can 

go into specific programs. The U.S. government is about 32 percent 

diverse. The USPTO is 54 percent diverse. Our examiners are 51 

percent diverse. And in the last 2 years, our recruiting classes have 

been 52 percent diverse. 

That is broken down by a number of different categories. We 

have been improving in a number of categories, seeking that type 

of diversity. We have partnered with the Minority Business Development Administration to help us with outreach because we are 

hiring 1,200 examiners a year. We want to work with them to do 

that. 

We have now gone to—much more to historically Black colleges 

and had I think 145 people hired at historically black colleges in 

the last few years. We have partnerships with minority student engineering societies at some of the major schools we go to, MIT, 

some of the big universities where we traditionally—not just said 

let us go in through the recruiting, but let us work with the minority student engineering societies that they have there as well. 

We have a Community Day every year where we basically celebrate the variety of cultures and the variety of ethnicities we have, 

and celebrate that we are all at the USPTO. We held 26 events 

specifically focused on minority recruitment last year. And as I 

mentioned—in the last 2 years, I am sorry—it is 145 people that 

we have recruited from historically Black colleges. 

We are challenged in recruitment on gender in the same way 

that the industry for engineers are challenged. We need to improve 

in terms of how many women that we are recruiting. We are trying 

to expand that as well. That is something that you see in the engiVerDate Aug 31 2005 13:59 Sep 18, 2008 Jkt 000000 PO 00000 Frm 00138 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\022708\40926.000 HJUD1 PsN: 40926
135 

neering professions throughout, but we are trying to increase that 

number—that level of diversity as well. 

And I will throw just one more thing that wasn’t intended, necessarily, to be a diversity effort. But Chairman Conyers came down 

and spoke to a recruitment class that we had, and he came down 

right around Martin Luther King Day and shared with—his efforts, 

what he managed to do to make Martin Luther King Day a holiday. 

That was something that we had about 200 people in that academy that were graduating that day. They were inspired. But the 

word spread throughout, just about how we are bringing people in 

from outside traditionally USPTO environment, and that was 

something that was inspirational to many of our folks. 

So there is a lot that we are trying to do not only to recruit, but 

also to make sure that it is an environment where people want to 

stay. 

Mr. JOHNSON. Thank you. 

Mr. DUDAS. Thank you. 

Mr. BERMAN. The gentlelady from Texas, Ms. Sheila Jackson 

Lee. 

Ms. JACKSON LEE. Thank you very much, Mr. Chairman. I know 

the pending issue of importance that is about to come upon us, so 

let me rush through and welcome the witnesses, thank them for 

their presentation, and basically focus on the good friend and assistant secretary of the office. 

First of all, the President has put forward his budget for forthcoming. And are you here applauding the budget, or are you prepared to see it tweaked because there is a greater need, particularly in the inspectors—examiners, rather? 

Mr. DUDAS. We are actually quite pleased with the budget because it is the fifth year in a row that the President’s budget has 

said that all of the fees that come into the agency should stay with 

the agency. And Congress has followed that lead 4 years in a row. 

And so to us, we are a fee-funded agency. Our goal is really to 

see that those fees stay within for the inventors, and so we have 

been pleased. 

Ms. JACKSON LEE. So that framework, it gives you the sufficient 

amount of money? 

Mr. DUDAS. Yes. Well, it gets us all of our fees. It gets us all our 

fees. 

Ms. JACKSON LEE. All right. I know I can probe that in a further 

letter. 

Let me just quickly—if I could follow up on Mr. Watt’s question 

and ask you, in the breakdown of his request regarding diversity. 

If you can also categorize it by GS level, how many are 13s, how 

many are coming at that level, because I would imagine that you 

are taking some laterals, and it is very important to see the ability 

of people moving up. Can you provide it in that manner? 

Mr. DUDAS. I think we can. I am almost certain we can. 

Ms. JACKSON LEE. Management is important. 

Let me also suggest that you—actually you talk about minority 

engineering societies, very important. But I would encourage you 

to formulate a direct program with Hispanics serving in historically 

Black colleges, which the President has a framework, the college— 

136 

the Congress has a framework. We have worked—and so those 

frameworks are already in place. 

One, the knowledge of them, the organizations are there, and we 

would like you to have a report back if you utilize those resources 

of students. And I might, just for the record, throw out Purview 

A&M in Texas. 

My other question is—quickly is what efforts are being undertaken by the USPTO in the area of enforcement, particularly with 

respect to China? And what has been your challenges? What have 

been your success rates, because I can tell you that many of our 

businesses and constituents, and they fall on different sides of the 

lot on this. 

Certainly there are some successful, but others are complaining 

that the trade imbalance, the infringement, rather, which Mr. Conyers has worked on extensively, the Judiciary Committee has 

worked on extensively. I don’t know what progress we have been 

able to make. 

Mr. DUDAS. The challenge, as I think you are implying, is very 

clearly that, with all the efforts that are underway, including a 

World Trade Organization action against China, the metrics still 

show that China is responsible for 80 percent of all of the counterfeit goods that are attempting to come in the United States, and 

we see similar numbers in Japan and in Europe. 

And so there is no question. The challenge is that the results are 

that counterfeiting is happening in China, that their laws need to 

change, and that more needs to be done. 

How are we involved? We are involved very directly. Sometimes—we actually have a very unique position in the U.S. government. Sometimes we are shaking our finger or telling China, ‘‘Listen, there is more that needs to be done.’’ This needs to be done, 

and we support the WTO case and work with the U.S. trade representative. 

But we also come in and work very carefully with all of the agencies in China. We work with the customs people. we work with the 

police. We talk to the Supreme Court justices. We have a number 

of programs where we bring in hundreds of Chinese officials to help 

train them and teach them and work with them about how intellectual property is an important point. 

We have had very successful relationships, particularly with the 

head of office in the Chinese intellectual property office. So what 

we do is we partner very closely with the people who are pro-intellectual property in China, and we develop and we help strengthen 

those ties. That is where we have been very successful, particularly. 

Ms. JACKSON LEE [continuing]. I don’t want to leave you out of 

my last question. Can you give me an assessment of the professional workers and the issues or—of your association, or treatment 

of your association, or comfort level that you have with the office 

at this point? 

Mr. BUDENS. As I said before, the examiners are very highly educated and highly skilled force, and they are highly dedicated to the 

patent system. We want to do the job right. We really understand 

the importance of patents in driving innovation in this country and 

throughout the world. 

137 

I think there is a sense of frustration that we are not more involved in developing the kinds of things and tools and policies and 

stuff that we need to be able to do the job right. 

In I think several areas of the office, I think we are very pleased 

with this Administration, some of the initiatives they have put forward. The Hotelling program has been well received. The laptop 

program has been well received. 

On the flip side of that, we are in the middle of a contract negotiation right now for our term contract in where the positions of the 

agency on many very important things like grievance rights and 

performance appraisal stuff, the agency has taken very decidedly 

anti-employee positions on those areas. And we are scared to death 

of what is coming out of that negotiation. 

We are starting mediation on that next Tuesday, I believe, and 

expect the agency to have us at the impasses panel very quickly. 

And I don’t think—I don’t see right now anything good coming out 

of those mediation. I hope I am wrong, because I think it is going 

to be a decidedly negative impact on examiners if nothing happens, 

if the positions of the parties don’t change right now. 

Ms. JACKSON LEE. Mr. Chairman, let me thank you very much 

for your indulgence, and just conclude by saying Mr. Budens’ comments disturb me. And I believe if we are to have an efficient, effective and professional office and staff, if we are to build on our 

recruitment, obviously the Federal Government needs to be a leader in respecting worker’s rights or opportunities to have—express 

a grievance. 

So I don’t know what statement that Congress can make at this 

point, but I hope that we can make a statement that indicates that 

we are watching, and we are concerned. And I hope that we can 

get a report back that our parties have come together, and they 

have done the right thing. Otherwise, I hope maybe we will have 

a hearing on the issue. 

Mr. BERMAN. We will take a closer look at the current round of 

bargaining on this issue. 

I will now thank the gentlelady, and I will recognize myself. I am 

told we have a little bit more time, so, Mr. Kasper, I would like 

to go to your testimony to examine one particular statement. Page 

five where, in the middle paragraph, where you start out, ‘‘In the 

vast majority of cases, inventions relate to actual products or processes that have been developed by the inventor or his employer.’’ 

And you talk about two major goals for such applicants, and you 

have one, and then you have the second one, and that is the one 

I want you to focus on, ‘‘To secure claims directed to the particular 

features of the commercial embodiment of a product that contains 

the invention to protect against the copying of that product.’’ You 

see where I am talking? 

Is what you are saying here, the phrase, ‘‘The particular features,’’ is the particular features is the invention, but the claims 

may be defined broader to cover and include the commercial embodiment that contains that inventive feature. Is that basically 

what you are intending? 

Mr. KASPER. Chairman Berman, the intention was to show that, 

in some cases, you can have a claim that is broad enough to cover 

both the commercial embodiment as well as competitors’ embodiVerDate Aug 31 2005 13:59 Sep 18, 2008 Jkt 000000 PO 00000 Frm 00141 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\022708\40926.000 HJUD1 PsN: 40926
138 

ments. So in other words, the scope of protection is broad, and 

stops many competitors from entering the field. 

Mr. BERMAN. Can the scope of the claim be written to cover sort 

of the commercial embodiment, and therefore is broader than the 

description of the inventive feature? 

Mr. KASPER. Yes, it can be broader. You may—and typically, it 

is broader than the description of the invention. However, sometimes the applicant will take a much narrower scope of protection 

that covers only what he has in the marketplace. He doesn’t care 

about a competitor’s product or getting the broadest possible protection, as long as his widget, as it is sold, is actually covered. So 

he is prepared to compromise and to truncate the prosecute—— 

Mr. BERMAN. And in that case, the claim would only cover the 

inventive feature. 

Mr. KASPER. Correct. 

Mr. BERMAN. All right. And then, one last—I have a lot of questions, but I am not going to do that. But I just—in your testimony, 

you speak about many applications your firm files every year. We 

hear—I hear that part of the patent pendency problem stems from 

overly aggressive lawyering on behalf of applicants, where the lawyers exploit the system in ways that create many burdens on the 

examiner despite the current rules. 

What additional duties, if any, would you impose on applicants 

to improve the patent examination process? 

Mr. KASPER. Well, certainly the additional duties could involve 

more full description of the features of the invention during the application prosecution process. In some cases, for example, the applicant may simply say there is a difference between the invention 

and the prior ART, and then leave it to the appeal process to have 

that worked out by the Board of Appeals. 

What I believe is that, in a dialogue between the examiner and 

the applicant, if that dialogue could be open and free, without concern for inequitable conduct, you would have an opportunity to 

have the important inventive features identified, recited in a claim, 

and eventually have the claim and the application issued as a patent in a much more expeditious manner. 

Mr. BERMAN. All right. Unless there is some reason to the contrary, we are—votes have been called. I appreciate very much— 

they are not all the—there are a lot of issues out there. In fact, I 

just will make an observation for Mr. Dudas on one very specific 

point that was raised by you and commented by one of the Members. 

When you split the Office of External Affairs into three offices 5 

years ago, that was—this was Mr. Chabot, I think was pursuing 

this line of questioning—that you considered an executive reorganization. So wouldn’t it follow that the collapse of those three offices into two would be considered an executive reorganization? 

Mr. DUDAS. It is not, and I will tell you why. The difference between it is it is a—when the split came in first—I am not certain 

if it was a reorganization, but I will tell you the difference between 

that split and the flip back was. 

There was a specific position that was Administrator for External 

Affairs. When we decided to put it into three, we said that position 

should rest in the deputy undersecretary. And the deputy underVerDate Aug 31 2005 13:59 Sep 18, 2008 Jkt 000000 PO 00000 Frm 00142 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\022708\40926.000 HJUD1 PsN: 40926
139 

secretary—at that level, this is policy for the entire Patent & 

Trademark Office, lead advisor to the President and others. 

That statement—that right there stayed the same in this realignment. It is still the deputy undersecretary that leads that organization. So that would have been a change from someone who 

reports to deputy undersecretary to someone who is within. 

I can tell you, I am happy to go into—— 

Mr. BERMAN. I will think about your statement on the matter. 

Mr. DUDAS [continuing]. Sure, that is—— 

Mr. BERMAN. Okay. 

The Committee hearing is adjourned. I thank you all for coming, 

and there are things to follow up both on your part and on our 

part, which we will do. Appreciate it. 

[Whereupon, at 3:07 p.m., the Subcommittee was adjourned.] 

141 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE SHEILA JACKSON LEE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF TEXAS, AND MEMBER, SUBCOMMITTEE ON

COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY


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PREPARED STATEMENT OF THE HONORABLE BETTY SUTTON, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF OHIO, AND MEMBER, SUBCOMMITTEE ON COURTS, 

THE INTERNET, AND INTELLECTUAL PROPERTY


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PREPARED STATEMENT OF THE HONORABLE DARRELL ISSA, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF CALIFORNIA, AND MEMBER, SUBCOMMITTEE ON

COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY


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