Intellectual Property: USPTO Has Made Progress in Hiring Examiners, but Challenges to Retention Remain
Published: 2005-06-17T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The U.S. Patent and Trademark Office (USPTO) is responsible for issuing U.S. patents that protect new ideas and investments in innovation and creativity. Recent increases in both the complexity and volume of patent applications have increased the time it takes to process patents and have raised concerns about the validity of the patents USPTO issues. Adding to these challenges is the difficulty that USPTO has had attracting and retaining qualified staff. In this context, GAO was asked to obtain information about USPTO's patent organization. Specifically GAO reviewed (1) overall progress in implementing the initiatives in its strategic plan; (2) efforts to attract and retain a qualified patent workforce; and (3) remaining challenges, if any, in attracting and retaining a qualified patent workforce.
section_title: What GAO Found
paragraphs: USPTO has made more progress in implementing its strategic plan initiatives to increase the agency's capability than initiatives aimed at decreasing patent pendency. USPTO has fully or partially implemented all 23 capability initiatives that focus on improving the skills of employees, enhancing quality assurance, and altering the patent system through changes in existing laws or regulations. In contrast, the agency has partially or fully implemented only 8 of the 15 initiatives aimed at reducing pendency. Lack of funding was cited as the primary reason for not implementing these initiatives. With passage of legislation in December 2004 to increase fees available to USPTO for the next two years, the agency is re-evaluating the feasibility of implementing some of these initiatives. Since 2000, USPTO has taken steps intended to help attract and retain a qualified patent examination workforce, such as enhancing its recruiting efforts and using many of the human capital benefits available under federal personnel regulations. However, it is too soon to determine the long-term success of the agency's recruiting efforts because they have been in place only a short time and have not been consistently sustained due to budgetary constraints. Long-term uncertainty about USPTO's hiring and retention success is also due to the unknown impact of the economy. In the past, when the economy was doing well, the agency had more difficulty in recruiting and retaining the staff it needed. USPTO faces three long-standing challenges that could also undermine its efforts to retain a qualified workforce: the lack of an effective strategy to communicate and collaborate with examiners; outdated assumptions in the production quotas it uses to reward examiners; and the lack of required ongoing technical training for examiners. According to patent examiners, the lack of communication and a collaborative work environment has resulted in low morale and an atmosphere of distrust that is exacerbated by the contentious relationship between management and union officials. Also, managers and examiners have differing opinions on the need to update the monetary award system that is based on assumptions that were established in 1976. As a result, examiners told us they have to contend with a highly stressful work environment and work voluntary overtime to meet their assigned quotas. Similarly, managers and examiners disagree on the need for required ongoing technical training. Examiners said they need this training to keep current in their technical fields, while managers believe that reviewing patent applications is the best way for examiners to remain current.

section_title: Letter
paragraphs: The U.S. Patent and Trademark Office (USPTO) is responsible for issuing  U.S. patents that protect new ideas and investments in innovation and  creativity. However, recent increases in both the complexity and volume of  patent applications have lengthened the time it takes USPTO to process  patents (“pendency”) and have raised concerns among intellectual property  organizations, patent holders, and others about the quality of the patents  that are issued. Over the last 10 years, the number of patent applications  filed annually with USPTO has increased 91 percent from about 185,000 in  1994 to over 350,000 in 2004. USPTO’s resources have not kept pace with  the rising number and complexity of patent applications it must review.  Moreover, at times, USPTO officials acknowledge they have had difficulty  competing with the private sector to attract and retain staff with the high  degree of scientific, technical, and legal knowledge required to be patent  examiners. To help the agency address these challenges, Congress passed a  law requiring USPTO to improve patent quality, implement electronic  government, and reduce pendency.
In response to the law, USPTO in June 2002 embarked on an aggressive 5- year modernization plan outlined in its 21st Century Strategic Plan  (Strategic Plan), which was updated to include stakeholder input and  rereleased in February 2003. USPTO’s Strategic Plan includes 38 initiatives  related to the patent organization that focus on three crosscutting strategic  themes: capability, productivity, and agility. The capability theme includes  efforts to enhance patent quality through workforce and process  improvements; the productivity theme includes efforts to decrease  pendency of patent applications; and the agility theme includes initiatives  to electronically process patent applications. To fully fund the initiatives in  its Strategic Plan, the agency requested authority from Congress to  increase the user fees it collects from applicants and to spend all of these  fees on patent processing. Legislation to increase the fees was enacted in  December 2004; however, the changes will be effective only in fiscal years  2005 and 2006. Although USPTO’s Strategic Plan includes some initiatives  to improve the skills of its examination workforce, the agency’s more  detailed summary of its actions to attract and retain a qualified workforce  is contained in the Strategic Workforce Restructuring Plan (Workforce  Plan), which the agency developed in 2001.
In the context of the various efforts being undertaken by USPTO, you  requested that we obtain information about its (1) overall progress in  implementing the initiatives in the 21st Century Strategic Plan related to  the patent organization; (2) efforts to attract and retain a qualified patent  workforce; and (3) remaining challenges, if any, in attracting and retaining  a qualified patent workforce.
To determine USPTO’s progress toward implementing the Strategic Plan  initiatives for the patent organization, we reviewed the initiatives contained  in the plan, as well as agency documents regarding USPTO’s progress in  implementing each initiative. We also interviewed key USPTO officials and  union officials about the plan’s implementation. We focused our review on  tasks that were to have been completed by December 2004. To determine  what actions USPTO has taken to attract and retain a qualified patent  workforce and what challenges, if any, the agency faces in this area, we  reviewed USPTO’s Workforce Plan and other policies and practices related  to human capital. We interviewed USPTO management and union officials,  as well as officials from the Department of Commerce, its Office of  Inspector General (OIG), and the Office of Personnel Management (OPM)  about human capital initiatives undertaken by USPTO. We also reviewed  results from USPTO and OPM employee surveys and compared human  capital policies and practices with those recommended by GAO, OPM, and  others. In addition, we attended a USPTO career fair for patent examiners  to observe agency recruiting efforts and conducted focus groups with  patent examiners and supervisory patent examiners to obtain their views  on various issues related to USPTO’s ability to attract and retain a qualified  patent examination workforce. Our review focused exclusively on the  activities of the patent organization and not those of the trademark  organization. We are issuing a separate report addressing the agency’s  strategy for automating its patent process. Appendix I contains a detailed  discussion of the scope and methodology for our review. We conducted our  review from June 2004 through April 2005 in accordance with generally  accepted government auditing standards.
subsections: section_title: Background
paragraphs: USPTO administers U.S. patent and trademark law to encourage innovation  and advance science and technology in two ways. First, USPTO grants to  inventors exclusive rights to their inventions for a limited period of time,  usually 20 years. During this time, the inventor can exclude others from  making, using, selling or importing the invention. Second, the agency  preserves and disseminates patent information, for example on issued  patents and most patent applications. Such information allows other  inventors to improve upon the invention in the original application and  apply for their own patent.
To obtain a patent, inventors—or more usually their attorneys or agents— submit to USPTO an application that fully discloses and clearly describes  one or more distinct innovative features of the proposed invention (called  claims) and pays a filing fee to begin the examination process. USPTO  evaluates the application for completeness, classifies it by the type of  patent and the technology involved, and assigns it for review to one of its  operational units, called technology centers, that specialize in specific  areas of science and engineering. Supervisors in each technology center  then assign the application to a patent examiner for further review. For  each claim in the application, the examiner searches and analyzes relevant  United States and international patents, journals, and other literature to  determine whether the proposed invention merits a patent—that is,  whether the invention is a new and useful process, machine, manufacture,  or composition of matter, or any new and useful improvement to one that  already exists. The examiner may contact the applicant on one or more  occasions to resolve questions and obtain additional information to  determine the proposed invention’s potential patentability. If the examiner  determines that the proposed invention merits a patent, the applicant is  informed, and, upon payment of a fee, USPTO issues a patent. The  applicant may abandon the application at any time during the examination  process. If the application is denied a patent, the applicant may appeal the  decision within an established time. Each examiner typically reviews  applications in the order in which they are received by USPTO.
The time from the date an application is filed until a patent is granted,  denied, or the application is abandoned is called “overall pendency.” Over  the past decade, overall pendency has increased on average from 20 to  almost 28 months. However, pendency varies by technology center, ranging  from 24 months for applications in such fields as transportation,  agriculture, electronic commerce, mechanical engineering, and  manufacturing to 41 months for applications in the fields of computer  architecture, software and information security (see table 1). In addition to  overall pendency, USPTO monitors the time from when an application is  filed until the examiner makes an initial assessment of the proposed  invention’s patentability and informs the applicant, called first action  pendency. First action pendency also has generally increased in the past  decade from 8 to over 20 months. In 2004, first action pendency ranged  from an average of 14 months for applications in such fields as  semiconductors and optical systems to 33 months for computer  architecture and software applications. Such measures of pendency help  USPTO assess its effectiveness in reviewing patent applications.
section_title: USPTO Has Made Greater Progress on Strategic Plan Initiatives That Enhance the Agency’s Capability Rather Than Productivity and Agility
paragraphs: USPTO has made greater progress in implementing its Strategic Plan  initiatives to make the patent organization more capable than it has been in  implementing its productivity and agility initiatives. Specifically, of the  activities planned for completion by December 2004, the agency has fully  or partially implemented all 23 of the initiatives related to its capability  theme to improve the skills of employees, enhance quality assurance, and  alter the patent process through legislative and rule changes. In contrast,  USPTO has partially implemented only 1 of the 4 initiatives related to the  productivity theme to restructure fees and expand examination options for  patent applicants and has fully or partially implemented 7 of the 11  initiatives related to the agility theme to increase electronic processing of  patent applications and reduce examiners’ responsibilities for literature  searches. In explaining why some initiatives have not been implemented,  agency officials primarily cited the need for additional funding. With  passage of the legislation in December 2004 to restructure and increase the  fees available to USPTO, the agency is re-evaluating the feasibility of many  initiatives that it had deferred or suspended. For more details on USPTO’s  progress in implementing the 38 initiatives in the Strategic Plan, see  appendix III.
subsections: section_title: USPTO Has Made Substantial Progress on Its Capability Initiatives
paragraphs: To improve the quality of its reviews of patent applications through  workforce and process improvements, USPTO developed 23 capability  initiatives: 9 to improve the skills of its workforce, 5 to enhance its quality  assurance program, and 9 to improve processes through legislative and rule  changes.
subsections: section_title: Workforce Skills Improvements
paragraphs: As shown in table 2, USPTO has implemented 5 and partially implemented  4 of the 9 workforce skills initiatives.
Although the agency has not estimated how much funding would be needed  to implement the final 4 initiatives, their full implementation was hindered,  in part by funding constraints, agency officials said. The current status of  these partially completed initiatives is as follows:  To improve the selection and training of managers, USPTO has added  proficiency in supervisory skills to the requirements for a supervisory  examiner and in 2004 required applicants for such positions to pass an  examination, but the agency has not fully developed the supervisory  curriculum or trained supervisors.
To help ensure that new examiners have the requisite skills prior to  promotion, USPTO has identified the knowledge, skills, and abilities  needed for patent examiners and established training units in work  groups for new examiners, but has not developed a structured process  for subsequent promotions.
To implement a pre-employment test to assess English language  communication skills of new patent examiners, USPTO has, among  other things, revised its vacancy announcements to include English  language proficiency as a required skill but has not developed an  automated pre-employment test of such skills.
USPTO has developed an action plan to establish an Enterprise Training  Division, which was to have been in place in 2003, to consolidate  responsibility for conducting legally required and other agencywide  training, developing training policy, and monitoring funds spent on  training.
section_title: Quality Assurance Enhancements
paragraphs: As shown in table 3, USPTO has implemented 3 and partially implemented  2 of the 5 capability initiatives to enhance its quality assurance program.
The status of the initiatives USPTO has partially implemented is as follows:  The agency has begun to develop a plan and criteria to review the  quality of searches and anticipates incorporating such reviews in the  quality assurance program during fiscal year 2006.
To enhance the reviewable record for patent applications, USPTO has  developed guidance and amended forms to allow both examiners and  applicants to provide additional information on the content of  interviews and reason for decisions and strongly recommends, rather  than requires, applicants and examiners to do so.
section_title: Process Improvements Related to Legislative and Rule Changes
paragraphs: As shown in table 4, of the 9 capability initiatives to streamline patent  processing through legislative and rule changes, USPTO has implemented 1  and partially implemented 8.
Although full implementation of these initiatives is largely dependent on  actions by Congress, the status of the 8 partially implemented initiatives is  as follows:  To certify the legal knowledge of newly registering and practicing patent  attorneys and agents and to monitor their practice, the agency offers  registration examinations electronically year-round and issued  proposed rules to harmonize ethics and disciplinary actions with the  requirements in place in most states, but has not yet developed a formal  program of continuing legal education requirements to periodically  recertify the skills of practicing attorneys and agents.
To evaluate whether to adopt a unity standard to harmonize U.S.  examination practices with international standards and allow U.S.  applicants to obtain a single patent on related claims that must currently  be pursued in separate patent applications in the United States, USPTO  began a study of the changes needed to adopt a unity standard and  sought public comment but has not completed its analysis, reached a  decision, or drafted and introduced implementing legislation.
For the other 6 partially implemented initiatives, USPTO is drafting  proposed legislation or obtaining administrative clearance to introduce  it.
section_title: USPTO Has Made Less Progress Implementing Its Productivity and Agility Initiatives
paragraphs: As shown in table 5, USPTO has not implemented 3 of the 4 initiatives that  focus on accelerating the time to process patent applications and expand  public input and has partially implemented only 1 of the productivity  initiatives that allow the agency to increase fees and retain the funds.  Following passage of legislation in 2004, USPTO has issued rules to  increase fees generally and restructure fees to include separate  components for different stages of processing both domestic and  international patent applications, and for filing the application, searching  the literature, and examining the claims. The separate components could,  under certain circumstances, be refunded to the applicant. USPTO has not  issued rules governing the refund of domestic fees. The revised fees are  effective for 2005 and 2006.
Similarly, as shown in table 6, USPTO has not implemented 4 of the 11  initiatives related to agility, has only implemented 1 and partially  implemented 6. These 11 initiatives are designed to further the agency’s  goal to create a more flexible organization and include efforts to increase  electronic processing of patent applications, reduce examiners’  responsibilities for literature searches, and participate in worldwide efforts  to streamline processes and strengthen intellectual property protection.
The status of the 6 partially implemented agility initiatives to increase  electronic processing and harmonize U.S. and international practices is as  follows:   Although USPTO has largely accomplished the actions related to  implementing image-based electronic processing of patent applications,  it has not achieved the full extent of electronic sharing of patent  documents with the European Patent Office the initiative had  anticipated and the two offices continue to finalize security and  protocols between their servers.
USPTO has amended rules to generally allow electronic filing of  postgrant review documents and trained additional judges in  streamlined procedures, but it has not defined records management  schedules for electronic documents or implemented full electronic  processing capabilities to support these reviews, such as text searching  and the ability to receive, file, store, and view multimedia files.
To ensure the availability of critical data in the event of a catastrophic  failure, USPTO has certified and accredited its classified system and its  mission-critical and business-essential systems, uses scanning tools to  identify security weaknesses, and uses intrusion detection systems, but  has not acquired the hardware, software, staff, and facilities for a  backup data center.
To promote harmonization of patent processing among international  intellectual property offices and pursue goals to strengthen  international intellectual property rights of U.S. inventors, USPTO  participated in substantive patent treaty discussions that addressed  such topics as the first-to-file (European) versus the first-to-invent  (U.S.) standards, access to genetic resources, and definitions for such  terms as prior art and novelty.
To pursue multi- and bilateral agreements with other intellectual  property offices, USPTO completed pilot programs to compare search  results with the Japan and European Patent Offices and with patent  offices in Australia and the United Kingdom.
Regarding the acceleration of Patent Cooperation Treaty reforms,  USPTO indicated that many significant reform procedures have been  adopted in the last several years.
Although USPTO has not determined how much funding would be needed,  officials said that the lack of adequate funding largely limited its ability to  complete planned actions on productivity and agility initiatives that had not  been fully implemented. With passage of the fee-restructuring legislation in  December 2004, USPTO plans to commence work on these suspended  initiatives. For example, it has assigned new teams to evaluate the  feasibility of using contractors and international intellectual property  offices to conduct literature searches. For greater detail on USPTO’s  progress in implementing the 38 initiatives in the Strategic Plan, see  appendix III.
section_title: USPTO Has Taken Steps to Help Attract and Retain a Qualified Patent Examiner Workforce, but Long- Term Success Is Uncertain
paragraphs: Since 2000, USPTO has taken steps intended to help attract and retain a  qualified patent examination workforce. The agency has enhanced its  recruiting efforts and has used many human capital flexibilities to attract  and retain qualified patent examiners. However, during the past 5 years, the  agency’s recruiting efforts and use of benefits have not been consistently  sustained, and officials and examiners at all levels in the agency told us that  the economy has more of an impact on USPTO’s ability to attract and retain  examiners than any actions taken by the agency. Consequently, how the  agency’s actions will affect its long-term ability to maintain a highly  qualified workforce is unclear. While USPTO has been able to meet its  hiring goals, attrition has recently increased.
subsections: section_title: USPTO Has Enhanced Recruiting Efforts to Attract Qualified Examiners
paragraphs: USPTO’s recent recruiting efforts have incorporated several measures  identified by GAO and others as necessary to attract a qualified  workforce. First, in 2003, to help select qualified applicants, USPTO  identified the knowledge, skills, and abilities that examiners need to  effectively fulfill their responsibilities. As part of this study, USPTO  conducted focus group meetings with, and surveys of, experienced  examiners to identify and validate key skills. In doing so, the agency was  responding to a recommendation from the Department of Commerce’s OIG  to better target candidates likely to stay at USPTO.
Second, in 2004, the agency’s permanent recruiting team, composed of  senior and line managers, participated in various recruiting events,  including visits to the 10 schools that the agency targeted based on the  diversity of their student population and the strength of their engineering  and science programs. The team also visited 22 additional schools,  participated in two job fairs, and attended three conferences sponsored by  professional societies. To assist the recruiting team, USPTO hired a  consultant to develop a new brand image for the agency, shown in figure 1  below. As part of this effort, USPTO and the consultant surveyed USPTO  managers and supervisors and conducted focus groups with a range of  ethnically diverse audiences, from college seniors to experienced  professionals, to identify the characteristics of examiners and how the  target market perceives the agency, as well as to get a sense of their work  habits, values, and perceptions of work at USPTO. According to USPTO,  the agency’s new brand focuses on the vital role intellectual property plays  in the U.S. economy and the career momentum of patent examiners.  Agency officials said that USPTO uses its employment brand image at every  opportunity, from Internet banner ads to print advertisements. They believe  that this has enhanced public awareness of the agency and has helped  distinguish USPTO from other employers.
Finally, for 2005, USPTO developed a formal recruiting plan that, among  other things, identified hiring goals for each technology center and  described USPTO’s efforts to establish ongoing partnerships with the 10  target schools. In addition, USPTO trained its recruiters in effective  interviewing techniques to help them better describe the production  system and incorporated references to the production-oriented work  environment in its recruitment literature. During a USPTO career fair in  February 2005, we observed that potential candidates were provided with a  range of information about the work environment at the agency, received  handouts, and heard a formal presentation about the agency and the role  and responsibilities of a patent examiner. The presentation also included  overviews of the basics of intellectual property, the patent examination  process, USPTO’s production model, the skill set needed for a successful  patent examiner, and the benefits the agency offers.
section_title: USPTO Has Used Many Federal Human Capital Benefits to Attract and Retain Examiners
paragraphs: USPTO has used many of the human capital benefits available under  federal personnel regulations to attract and retain qualified patent  examiners. Among other benefits, USPTO has offered  recruitment bonuses ranging from $600 to over $10,000;  a special pay rate for patent examiners that is 10 percent above federal  salaries for comparable jobs;  noncompetitive promotion to the full performance level;  flexible spending accounts that allow examiners to set aside funds for  expenses related to health care and care for dependents;  reimbursement for law school tuition;  a transit subsidy program that was recognized in 2003 and 2004 as one of  the best in the greater Washington, D.C., area;  flexible working schedules, including the ability to schedule hours off   work at home opportunities for certain supervisory and senior   no-cost health screenings at an on-site health unit staffed with a  registered nurse and part-time physician;   casual dress policy; and   on-site child care and fitness centers at USPTO’s new facility.
According to many of the supervisors and examiners in our focus groups,  these benefits were a key reason they were attracted to USPTO and are a  reason they continue to stay. The benefits most frequently cited as  important by examiners were the flexible working schedules and  competitive salaries. Many supervisors and examiners said that the ability  to set their own hours allowed them to better coordinate their work  schedules with their personal commitments, such as a child’s school or day  care schedule. Concerning salaries, examiners also cited the special pay  rate offered by USPTO as increasing the agency’s competitiveness with the  private sector. Although entry-level pay for examiners may not be as high  as in the private sector, examiners who have been with the agency for  about 5 to 7 years can earn up to $100,000 annually, and new examiners  can increase their pay relatively rapidly, in part because of the  noncompetitive promotion potential available at the agency. However,  some examiners commented that the benefit of the special pay rate is  eroding over time because examiners do not receive annual locality pay  adjustments to compensate for the high cost of living in the Washington,  D.C., area. According to USPTO management, in 2002 the agency sought  such an adjustment, but OPM denied the request because of a lack of  justification. In addition to basic salary, examiners may also earn various  cash awards based on production or other types of meritorious  performance.
section_title: Lack of Consistent Recruiting Efforts and Benefits, along with Changes in the Economy, Could Affect USPTO’s Efforts
paragraphs: The long-term effect of USPTO’s recruiting efforts and use of benefits is  difficult to predict for a variety of reasons. First, many of USPTO’s efforts  have been in place for a relatively short duration and have not been  consistently maintained. For example, as shown in table 7, USPTO  suspended recruitment and hiring in fiscal year 2000, which agency  officials said resulted in its inability to meet its hiring goals for the year.  Except for 2002, in those years where USPTO used its recruiting strategy  consistently, such as 2001, 2003, and 2004, it not only met its hiring goals,  but exceeded them.
The second reason that creates uncertainty about USPTO’s success in  retaining examiners is that USPTO has occasionally suspended some  important employee benefits. For example, funding constraints led USPTO  to discontinue reimbursing examiners for their law school tuition in 2002  and 2003, although the agency resumed reimbursement in 2004, when  funding became available. Examiners who participated in our focus groups  expressed dissatisfaction with the inconsistent availability of the benefits.  Regarding law school tuition reimbursement, one examiner said, “I started  when they started the  and then they cut it off and I  had to pay  myself, which creates a large incentive to leave the  office now that I have . . . student loans to pay off.” Other examiners  expressed similar views. More recently in March 2005, USPTO proposed to  eliminate or modify other benefits such as examiners’ ability to earn credit  hours and alter examiners’ ability to set their own work schedules. For  example, unlike current practice, examiners would no longer be able to  schedule hours off during midday without a written request approved in  advance. These benefits were cited by examiners in our focus groups as  key reasons for working at USPTO, and eliminating such benefits may  impact future retention.
The third and possibly the most important factor that adds to the  uncertainty surrounding the success of USPTO’s recruitment efforts is the  unknown potential impact of the economy. According to USPTO officials  and examiners, because USPTO competes directly with the private sector  for qualified individuals, changes in the economy have a greater impact on  USPTO’s ability to attract and retain examiners than any actions taken by  the agency. They told us that when the economy picks up, more examiners  tend to leave USPTO and fewer qualified candidates accept employment  offers. Conversely, they said that when there is a downturn in the economy,  employment opportunities at USPTO become more attractive. When  discussing reasons for joining USPTO, many examiners in our focus groups  cited job security and lack of other employment opportunities, making  comments such as “I had been laid off from my prior job, and this was the  only job offer I got at the time”; “I looked towards the government because  I wanted job security”; and “. . . part of the reason I came to the office is  that when I first came out of college, the job market was not great.”
The relationship between the economy and USPTO’s ability to attract and  retain examiners is reflected in its attrition rates over time. As shown in  figure 3, attrition among patent examiners declined from a high of almost  14 percent in 2000 to just over 6 percent in 2003. This decline coincided  with a recession in 2001, a general slowdown of the economy, and  subsequent collapse of the “high tech bubble”—which caused many  Internet-based businesses to close, leaving computer scientists and  engineers out of work. The decline in attrition was preceded by a more  robust economy during a time when the high-tech industry was building up.  At that time, attrition at USPTO was steadily rising.
Since 2004, attrition has risen again to almost 9 percent, fueled in part by an  increase in the number of examiners who retired. By the end of fiscal year  2010, about 12 percent of examiners will be eligible to retire. Another  trend that could affect USPTO’s efforts to maintain a highly qualified patent  examination workforce is the high level of attrition among younger, less  experienced examiners. While attrition among examiners who have been at  USPTO for 3 or fewer years has declined each year since 2000, attrition  among these examiners continues to account for over half of all examiners  who leave the agency. Attrition of examiners with 3 or fewer years of  experience is a particularly significant loss for USPTO because the agency  invests considerable time and money helping new examiners become  proficient during the first few years. Managers and examiners told us that  examiners usually become fully proficient in conducting patent application  reviews in about 4 to 6 years. Managers we spoke with said the agency  needs continuous recruiting efforts to offset these trends and continue to  attract the best candidates. They said they hope to have constant  recruitment efforts and year-round hiring in the upcoming years.
section_title: USPTO Faces Long- standing Human Capital Challenges That Could Undermine Its Recruiting and Retention Efforts
paragraphs: Although USPTO has taken a number of steps to attract and retain a  qualified patent examiner workforce, the agency continues to face three  human capital challenges of a long-standing nature that could also  undermine its efforts in the future if not addressed. Current workforce  models developed by GAO and others to help federal agencies attract and  retain a qualified workforce suggest, among other things, that agencies  establish an agencywide communication strategy, including opportunities  for feedback from employees; involving management, employees, and  other stakeholders in making key decisions; have appropriately designed  compensation and awards systems; and develop strategies to address  current and future competencies and skills needed by staff. However,  USPTO lacks a collaborative culture, has an awards system that is based on  outdated information, and requires little ongoing technical training for  patent examiners. USPTO management and examiners do not agree on the  need to address these issues.
subsections: section_title: USPTO Has Not Established Effective Mechanisms for Managers to Communicate and Collaborate with Examiners
paragraphs: Organizations with effective human capital models have strategies to  communicate with employees at all levels of the organization, as well as  involve them in key decision-making processes. However, lack of good  communication and collaboration has been a long-standing problem at  USPTO. For example, focus groups with examiners conducted by USPTO  in 2000 identified a need for improved communication across all levels of  the agency to assist in its efforts to retain examiners. Accordingly, one of  the goals listed in the Commissioner of Patent’s 2003 performance  appraisal plan was to establish an effective communication strategy.  However, when we asked for the agency’s communication strategy, USPTO  management officials acknowledged the agency does not have a formal  strategy. Instead, USPTO officials provided us with a list of activities  undertaken by the agency to improve communication. However, most of  these activities focused on improving communication among managers but  not between managers and other levels of the organization, such as  between managers and patent examiners. The efforts to communicate with  examiners were largely confined to presenting information to examiners  and generally were not interactive, according to examiners.
Patent examiners and supervisory patent examiners that participated in  our focus groups frequently said that communication with USPTO  management was poor and that managers provided them with inadequate  or no information. They also said management is out of touch with  examiners and their concerns and that communication with managers  tends to be one way and hierarchical, with little opportunity for feedback.  Management officials told us that informal feedback can always be  provided by anyone in the organization—for example, through an e-mail to  anyone in management. However, some patent examiners believe they will  be penalized for offering any type of criticism of management actions or  decisions and therefore do not provide this kind of feedback.
The lack of communication between management and examiners is  exacerbated by the contentious working relationship between USPTO  management and union officials and the complexity of the rules about what  level of communication can occur between managers and examiners  without involving the union. Union officials stated that a more  collaborative spirit existed between USPTO and the examiners’ union from  the late 1990s to about 2001. During this period, both parties actively  worked to improve their relationship. For example, in 2001, USPTO  management and the union quickly reached an agreement that led to  increased pay for examiners and paved the way for electronic processing of  patent applications by having examiners rely more heavily on electronic  searches of relevant patent literature. According to union officials, this  agreement was negotiated in about 1-1/2 weeks, improved the morale of  patent examiners, and made them feel valued and appreciated. Since that  time however, both USPTO management and union officials agree that  their working relationship has not been as productive. Both say that  despite several attempts, neither USPTO managers nor union officials have  improved this relationship and that issues raised by either side are  routinely presented for arbitration before the Federal Labor Relations  Authority because the two sides cannot agree. USPTO and union officials  are currently disputing the validity of their 1986 collective bargaining  agreement, which USPTO deems defunct. In February 2004, this issue  was presented for arbitration to determine the validity of the agreement.  According to union officials, the arbitrator agreed with their position that  the agreement was still valid and ordered a 1-year hiatus on negotiations on  a new agreement. USPTO contends that the arbitrator said the two had  “tacit agreements” but did not define the term. In March 2005, without  continuing any debate regarding the validity of the 1986 agreement, USPTO  issued a proposed new collective bargaining agreement with the union. The  union denounced this proposal, reporting in its newsletter to examiners  that “USPTO declares war on employee professionalism and patent system  integrity.”
Some USPTO managers alluded to this contentious relationship as one of  the reasons why they have limited communication with patent examiners,  who are represented by the union even if they decide not to join.  Specifically, they believe they cannot solicit the input of employees directly  without engaging the union. Another official, however, told us that nothing  prevents the agency from having “town hall” type meetings to discuss  potential changes, as long as the agency does not promise examiners a  benefit that impacts their working conditions. Union officials agreed that  USPTO can invite comments from examiners on a plan or proposal;  however, if the proposal concerns a negotiating issue, the agency must  consult the examiners’ union, which is their exclusive representative with  regard to working conditions. For example, union officials said that agency  management can involve examiners on discussions of substantive issues  related to patent law and practice, such as how to implement electronic  filing, but must consult the union to obtain examiners’ views on issues such  as the development of the Strategic Plan which contains initiatives that  would entail, for example, additional reviews of examiners work and other  changes to working conditions.
Given the lack of effective communication mechanisms between  management and patent examiners and the poor relationship between  management and the union, patent examiners report little involvement in  providing input to key decision-making processes. For example, some of  the examiners in our focus groups stated that although they had heard of  the agency’s Strategic Plan, they were not involved in developing it and had  no idea what it entailed or how it was to be implemented. USPTO  management officials we spoke to acknowledged that employees had no  role in developing the Strategic Plan even though USPTO identifies its  employees as a key stakeholder in the plan. This lack of employee  involvement is not a new problem for the agency. For example, a study  about the agency’s performance measurement and rewards system  conducted in 1995 by a private consultant stated that the agency must  strive to include employees at all levels of the organization in the decision- making process to both introduce a variety of perspectives and experiences  and to generate the critical support of employees to any new system  developed. Additionally, responses to employee surveys conducted in  1998 and 2001 by USPTO and others indicate that employees believed that  they did not play a meaningful role in decision making. Specifically, a  quarter of the examiners surveyed in 1998 expressed satisfaction with their  level of involvement in decisions that affect their work. In 2001, less than  half of examiners who responded to the survey said they believe USPTO  management trusts and respects them or values their opinions. Agency- specific data from the 2004 federal human capital survey conducted by the  Office of Personnel Management have not been released.
Managers told us that examiners do not need to be involved in decision  making because all of the agency’s senior managers—from the  Commissioner down—“came up through the ranks.” Moreover, they said  the basic role of the agency has not changed in 200 years. As a result, senior  managers believe they bring the staff perspective to all planning and  decision-making activities. However, examiners in our focus groups believe  that senior managers are out of touch with the role of examiners, making  comments such as “I think it would help if upper management who haven’t  examined in decades could try to do some of it now—it’s so drastically  different than when they were doing it—and realize how difficult it is, and  then maybe they might get a clue. I really don’t think that they realize how  much work it takes to examine an application. It is so different than when  they were examining.” Examiners in our focus groups said that the lack of  communication and involvement has created an atmosphere of distrust in  management officials by examiners and has lowered examiners’ morale.
section_title: Examiners’ Monetary Awards Are Based on Outdated Assumptions about the Time It Takes to Process a Patent Application
paragraphs: According to human capital models, an agency’s compensation and  rewards system should help it attract, motivate, retain, and reward the  people it needs to achieve its goals. To ensure that their systems meet these  criteria, agencies should periodically assess how they compensate staff and  consider changes, as appropriate. Patent examiners’ monetary awards are  based largely on the number of patent applications they process, but the  assumptions underlying their annual application-processing quotas (called  production quotas) have not been updated since 1976. Depending on the  type of patent and the skill level of the examiner, each examiner is  expected to process an average of 87 applications per year at a rate of 19  hours per application. Examiners who consistently do not meet their  quotas may be dismissed. Patent examiners may earn cash awards based  on the extent to which they exceed their production quotas. Although  examiners in our focus groups generally support production quotas as a  way to guide their work and provide an objective basis for cash awards,  they said that the time estimates involved are no longer accurate.
Examiners in our focus groups told us that, in the last several decades, the  tasks for processing applications have greatly increased while the time  allowed has not. For example, examiners said the number of claims per  application have increased, which in turn increases the amount of relevant  literature they must review and analyze for each application. Also, while  the greater use of electronic search tools has improved their access to  relevant patent literature, the use of such tools has also increased the  amount of literature they must review. In addition, the complexity of  applications in some fields has increased significantly, requiring more time  for a quality review. Neither USPTO nor the examiners union has collected  information on the effects that such changes as improvements in electronic  search capabilities have had on the time required to review patent  applications.
Moreover, many examiners in our focus groups said that the time  limitations of the current production quotas are inconsistent with  producing high-quality work and do not adequately reflect the actual tasks  and time required to examine applications. For example, examiners have  responsibilities included in their job expectations, such as responding to  calls from applicants and the public and providing more documentation for  their decisions, which are not accounted for in the production model.  Examiners expressed concern that although the agency’s emphasis on  quality has increased under the Strategic Plan, examiners have not been  allowed more time to fulfill these increased responsibilities for quality, and  there are no negative consequences for examiners who produce low-quality  work. Examiners told us that voluntarily working overtime to meet quotas  is common at USPTO, and they find it demoralizing not to have enough  time to do a good quality job. In commenting on a draft of this report,  USPTO stated that quality is a critical element of an examiner’s  performance standards and if an examiner does not maintain quality, their  rating would reflect this deficiency. Consequences would depend on the  level of deficiency.
Employee surveys conducted since 1998 suggest that these concerns are  not new to the agency. Specifically, a quarter of the examiners who  responded to the agency’s employee surveys during the period 1998 to 2001  said that the amount of time available for their work was sufficient to  produce high-quality products and services. The 1995 study conducted by a  private consultant also noted that USPTO is production driven and that the  agency’s emphasis on production placed considerable stress on examiners.  Although less than 25 percent of patent examiners who left USPTO in 2002  and 2004 actually completed an exit survey, about half who did cited  dissatisfaction with the nature of the job, the production system, and the  workload as factors that had the most impact on their decision to leave the  agency.
In contrast, USPTO managers had a different perspective on the production  model and its impact on examiners. They stated that the time estimates  used in establishing production quotas do not need to be adjusted because  the efficiencies gained through actions such as the greater use of  technology have offset the demands resulting from changes such as greater  complexity of the applications and increases in the number of claims.  Moreover, they said that for an individual examiner, reviews of applications  that take more time than the estimated average are generally offset by  other reviews that take less time.
section_title: USPTO Does Not Require Ongoing Technical Education for Patent Examiners
paragraphs: Current workforce models suggest that professional organizations such as  USPTO make appropriate investments in education, training, and other  developmental opportunities to help build the competencies of its  employees. Reviewing patent applications involves knowledge and  understanding of highly technical subjects, but USPTO does not require  ongoing training on these subjects. Instead, USPTO only requires newly  hired examiners to take extensive training on how to be a patent examiner  during the first year, and all other required training is focused on legal  training. For example, newly hired examiners are required, within their  first 10 months at the agency, to take about 200 hours of training on such  topics as procedures for examining patent applications, electronic tools  used in the examination process, and patent law and evidence. In addition,  almost all patent examiners are required to take a range of ongoing training  on legal matters, including patent law. As a result of the implementation of  some Strategic Plan initiatives, additional mandatory training to help  examiners prepare for tests to certify their legal competency and ensure  their eligibility for promotion from a GS-12 level to a GS-13 is also required.  In addition, patent examiners who have the authority to issue patents  (generally GS-14s or above) must pass tests on the content of legal training  every 3 years. In contrast, patent examiners are not required to undertake  any ongoing training to maintain expertise in their area of technology, even  though the agency acknowledges that such training is important, especially  for electrical and electronic engineers. Specifically, in its 2001 justification  for examiners’ special pay rates, the agency stated, “Engineers who fail to  keep up with the rapid changes in technology, regardless of degree, risk  technological obsolescence.”
USPTO does offer some voluntary in-house training, such as technology  fairs and industry days at which scientists and others are invited to lecture  to help keep patent examiners current on the technical aspects of their  work. Because this training is not required by USPTO, patent examiners  told us they are reluctant to attend such training given the time demands  involved. USPTO also offers a voluntary external training program for  examiners to update their technical skills. Under this program, examiners  may take technical courses related to their area of expertise at an  accredited college or university. USPTO will pay up to $5,000 per fiscal year  for each participant and up to $150 per course for required materials, such  as books and lab fees. In addition, agency managers told us the agency will  pay registration fees for a small number of examiners to attend  conferences, although sometimes it will not pay travel expenses. While  USPTO officials told us they knew of examiners who had taken advantage  of these opportunities, the agency could provide no data on the extent to  which examiners had taken advantage of these voluntary training  opportunities. Some examiners in our focus groups said that they did  participate in these training opportunities, but others said they did not  because of the monetary costs or personal time involved.
USPTO believes that a requirement for ongoing technical training is not  necessary for patent examiners because the nature of the job keeps them  up-to-date with the latest technology. According to agency officials, the  primary method for examiners to keep current in their technical fields is by  processing patent applications. However, patent examiners and  supervisors in our focus groups said that often the literature cited in the  application they review for patents, particularly in rapidly developing  technologies, is outdated, can be too narrowly focused, and does not  provide them the big picture of the field. For example, in certain fields,  such as computer software and biotechnology, some examiners told us that  the information cited in the application may be several years old even  though it may have been current at the time the application was submitted.
section_title: Conclusions
paragraphs: To improve its ability to attract and retain the highly educated and qualified  patent examiners it needs, USPTO has taken a number of steps recognized  by experts as characteristic of highly effective organizations. However, the  lack of an effective communication strategy and a collaborative  environment that is inclusive of all layers within the organization could  undermine some of USPTO’s efforts. Specifically, the lack of  communication and collaborative culture has resulted in a general distrust  of management by examiners and has caused a significant divide between  management and examiners on important issues such as the  appropriateness of the current production model and the need for technical  training. We believe that unless USPTO begins the process of developing an  open, transparent, and collaborative work environment, its efforts to hire  and retain examiners may be negatively impacted in the long run.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of Commerce direct the Under Secretary  of Commerce for Intellectual Property and Director of the U.S. Patent and  Trademark Office to take the following two actions: develop formal  strategies to (1) improve communication between management and patent  examiners and between management and union officials, and (2) foster  greater collaboration among all levels of the organization to resolve key  issues discussed in this report, such as the assumptions underlying the  quota system and the need for required technical training.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of our report, the Under Secretary of  Commerce for Intellectual Property and Director of USPTO agreed with  our findings, conclusions, and recommendations. The agency’s comments  suggest that USPTO will develop a communication plan and labor  management strategy and educate and inform employees about progress  on initiatives, successes, and lessons learned. In addition, USPTO indicated  that it would develop a more formalized technical program for patent  examiners to ensure that their skills are fresh and ready to address state-of- the-art technology. USPTO also provided technical comments that we have  incorporated, as appropriate. USPTO’s comments are included in appendix  II.
We are sending copies of this report to interested congressional  committees; the Secretary of Commerce; the Under Secretary for  Intellectual Property and Commissioner of the U.S. Patent and Trademark  Office; and other interested parties. We will also make copies available to  others upon request. In addition, the report will be available at no charge  on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-3841 or mittala@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made contributions to this report are listed in  appendix IV.
section_title: Scope and Methodology
paragraphs: We were asked to report on various efforts being undertaken by the U.S.  Patent and Trademark Office (USPTO) about its (1) overall progress in  implementing the initiatives in the 21st Century Strategic Plan related to  the patent organization; (2) efforts to attract and retain a qualified patent  workforce; and (3) remaining challenges, if any, in attracting and retaining  a qualified patent workforce.
To determine USPTO’s progress toward implementing the Strategic Plan  initiatives for the patent organization, we reviewed the initiatives contained  in the plan, as well as agency documents regarding USPTO’s progress in  implementing each initiative. We also interviewed key USPTO officials and  union officials about the plan’s implementation.
To determine what actions USPTO has taken to attract and retain a  qualified patent workforce and what challenges, if any, the agency faces in  this area, we reviewed USPTO’s Workforce Plan and other policies and  practices related to human capital. We interviewed USPTO management,  union officials, and relevant interest groups, as well as officials from the  Department of Commerce, its Office of Inspector General (OIG), and the  Office of Personnel Management (OPM) about human capital initiatives  undertaken by USPTO. We reviewed evaluations of USPTO human capital  management efforts by OIG and by a private consultant. We reviewed  USPTO employee surveys, USPTO documents on hiring and retention, and  OPM reports on USPTO. We also reviewed results from USPTO and OPM  employee surveys and compared human capital policies and practices with  best practices recommended by GAO and OPM. In addition, we attended a  USPTO career fair for patent examiners.
To obtain the perspective of patent examiners and supervisory patent  examiners on issues related to USPTO’s ability to attract and retain a  qualified patent examination workforce, we conducted 11 focus groups.  Participants were randomly selected from all patent examiners and  supervisory patent examiners who had been at USPTO at least 9 months. A  total of 91 examiners and supervisory examiners attended the focus  groups. The number of participants in the groups ranged from 6 to 11;  participants in 8 of the groups were patent examiners while the other 3  groups encompassed supervisory patent examiners. Participants were  selected from both USPTO locations (Alexandria and Crystal City,  Virginia). We developed questions for the focus groups based on literature  reviews and by speaking with USPTO management, union officials, and  interest groups. In addition, we developed a short questionnaire that asked  for individual views of issues similar to those being discussed in the  groups. Following each discussion question, participants filled out the  corresponding questions in their questionnaires. Trained facilitators  conducted the focus groups and transcripts were professionally prepared.  Prior to using the transcripts, we checked each for accuracy and found that  they were sufficiently accurate for the purposes of this study.
We conducted a content analysis in order to produce a summary of the  respondents’ comments made during the focus groups. The classification  plan was developed by two GAO analysts who independently reviewed the  transcripts and proposed classification categories for each question. The  classification categories were finalized through discussion with a third  analyst. One analyst then coded all comments made during each discussion  question into the categories. The accuracy of the coding was checked by  another analyst, who independently coded a random sample of transcript  pages for each question. The accuracy of the content coding was  sufficiently high for the purposes of this report. Finally, the number of  comments in each category and subcategory was tallied, and the resulting  summary of the comments was verified by a second analyst. A quantitative  analysis was conducted on the data from the questionnaires.
Our review focused exclusively on the activities of the patent organization  and not those of the trademark organization. We conducted our review  from June 2004 through May 2005 in accordance with generally accepted  government auditing standards.
section_title: Comments from the U.S. Patent and Trademark Office
section_title: Progress on Strategic Plan Initiatives
paragraphs: USPTO issued its 21st Century Strategic Plan in June 2002, then updated  and rereleased it in February 2003. The Strategic Plan responds to the  Government Performance and Results Act and direction from Congress.  The plan is centered on three themes—capability, productivity, and agility.
subsections: section_title: Strategic Theme: Capability
paragraphs: To become a more capable organization that enhances quality through  workforce and process improvements, USPTO developed initiatives to  improve the skills of its workforce (transformation), enhance its quality  assurance program (quality), and improve processes through rule changes  or proposed legislative changes (legislative/rules changes).
section_title: Strategic Theme: Productivity
paragraphs: The agency’s productivity initiatives are designed to accelerate the time to  process patent applications by offering a range of examination options to  applicants, reducing the responsibilities examiners have for searches of  literature related to applications (pendency and accelerated examination),  and creating financial incentives for applicants as well as an improved  postgrant review process (shared responsibility).
section_title: Strategic Theme: Agility
paragraphs: To become an organization that responds quickly and efficiently to changes  in the economy, the marketplace, and the nature and size of workloads,  USPTO developed initiatives to implement electronic beginning-to-end  processing of patents (e-government), increase reliance on the private  sector or other intellectual property offices (flexibility), and streamline  international patent systems and strengthen protection of patent rights as  well as share search results with other international patent offices (global  development).
section_title: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Cheryl Williams, Vondalee R. Hunt,  Lynn Musser, Cynthia Norris, and Ilga Semeiks made significant  contributions to this report. Allen Chen, Amy Dingler, Omari Norman, Don  Pless, and Greg Wilmoth also contributed to this report.