Intellectual Property: Improvements Needed to Better Manage Patent Office Automation and Address Workforce Challenges
Published: 2005-09-08T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The United States Patent and Trademark Office (USPTO) is responsible for issuing patents that protect new ideas and investments in innovation and creativity. However, the volume and complexity of patent applications to the agency have increased significantly in recent years, lengthening the time needed to process patents and raising concerns about the validity of the patents that are issued. Annual applications have grown from about 185,000 to over 350,000 in the last 10 years and are projected to exceed 450,000 by 2009. Coupled with this growth is a backlog of about 750,000 applications. Further complicating matters, the agency has faced difficulty in attracting and retaining qualified staff to process patent applications. USPTO has long recognized the need to automate its patent processing and, over the past two decades, has been engaged in various automation projects. More recently, in its strategic plan, the agency articulated its approach for accelerating the use of automation and improving workforce quality. In two reports issued in June 2005, GAO discussed progress and problems that the agency faces as it develops its electronic patent process, its actions to attain a highly qualified patent examination workforce, and the progress of the agency's strategic plan initiatives. At Congress's request, this testimony summarizes the results of these GAO reports.
section_title: What GAO Found
paragraphs: As part of its strategy to achieve an electronic patent process, USPTO had planned to deliver an operational patent system by October 2004. It has delivered important capabilities, for example, allowing patent applicants to electronically file and view the status of their applications and the public to search published patents. Nonetheless, after spending over $1 billion on its efforts from 1983 through 2004, the agency has not yet developed the fully integrated, electronic patent process articulated in its automation plans, and when and how it will achieve this process is uncertain. Key systems that the agency is relying on to help reach this goal--an electronic application filing system and a document imaging system--have not provided capabilities that are essential to operating in a fully electronic environment. Contributing to this situation is the agency's ineffective planning for and management of its patent automation initiatives, due in large measure to enterprise-level, systemic weaknesses in its information technology investment management processes. Although the agency has begun instituting essential investment management mechanisms, such as its enterprise architecture framework, it has not yet finalized its capital planning and investment control process, or established necessary linkages between the process and its architecture to guide the development and implementation of its information technology. The Under Secretary of Commerce for Intellectual Property and the agency's chief information officer have acknowledged the need for improvement. USPTO has taken steps to attract and retain a highly qualified patent examination workforce by, for example, 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 efforts because they have been in place only a short time and have not been consistently sustained because of budgetary constraints. Long-term uncertainty about the agency's hiring and retention success is also due to the unknown impact of the economy. In the past, the agency had more difficulty recruiting and retaining staff when the economy was doing well. Further, USPTO faces three long-standing challenges that could undermine its efforts: the lack of an effective strategy to communicate and collaborate with examiners, outdated assumptions in production quotas that it uses to reward examiners, and the lack of required ongoing technical training for examiners. Patent examiners said the lack of a collaborative work environment has lowered morale and created an atmosphere of distrust between management and patent examiners. Overall, USPTO has made more progress in implementing its strategic plan initiatives aimed at increasing its patent processing capability through workforce and process improvements than in its initiatives to decrease patent pendency and improve electronic processing. It has fully or partially implemented all 23 capability initiatives, but only 8 of 15 initiatives to reduce patent pendency and improve electronic processing. The agency cited a lack of funding as the primary reason for not implementing all initiatives.

section_title: Letter
paragraphs: We are pleased to be here today to participate in your oversight hearing of  the United States Patent and Trademark Office’s (USPTO) efforts to  modernize its patent application processing capability. Our testimony  focuses on several critical aspects of the agency’s overall goal: (1) its  ongoing initiative to achieve a paperless, electronic patent process, (2) its  actions to attract and retain a highly qualified patent examiner workforce  and address human capital challenges, and (3) the implementation of  critical initiatives outlined in its 21st Century Strategic Plan—issued in  2002 in response to a congressional requirement that the agency improve  patent quality, implement electronic government, and reduce the number  of pending patent claims.
Rapid growth in both the volume and complexity of patent applications to  USPTO has lengthened the time needed to process patents and has 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 has increased 91  percent, from about 185,000 in 1994 to over 350,000 in 2004. Along with  this growing workload is a 28-month backlog of approximately 750,000  applications. Further complicating this picture, is that USPTO’s resources  have not kept pace with the increases in its patent workload. Agency  officials acknowledge that, at times, 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.
Recognizing the need to improve its patent processing capability, over the  past 2 decades, USPTO has undertaken various efforts to automate its  patent process. In addition, as part of an aggressive 5-year modernization  effort outlined in its strategic plan, the agency has articulated its approach  to creating a more productive and responsive patent organization through  accelerating its use of automation and enhancing the quality of its patent  examination workforce. At the request of the Committee, our testimony  today summarizes the work presented in two reports that we issued in  June 2005—one addressing the agency’s progress, and problems faced, in  developing and using electronic information and systems to achieve its  automated patent processing capability and the other addressing its steps  to attract and retain a workforce of qualified patent examiners, three long- standing human capital challenges that could undermine recent efforts,  and the overall status in implementing its strategic plan.
In summary, we found the following:  USPTO is pursuing a long-standing strategy to implement a paperless,  electronic patent process, with the goal of replacing the manual  processing of applications with an electronic process for researching  patent information and viewing and manipulating application text  throughout all processing phases. While the agency has achieved  important electronic capabilities through information systems that it has  implemented, such as electronic filing and patent application classification  and search, collectively these functions have not provided the fully  integrated electronic patent processing capability articulated in its  automation plans. Two of the primary systems that the agency is relying  on to enhance its capabilities—its electronic filing system and a document  imaging system that it acquired from the European Patent Office—have  not yielded processing improvements that the agency considers essential  to operate successfully in an electronic environment. Contributing to this  situation are ineffective planning and management of its patent  automation projects—due in large measure to enterprise-level, systemic  weaknesses in its information technology investment management  processes. Although the agency had begun instituting certain essential  investment management mechanisms, it had not yet finalized its capital  planning and investment control process and had not established the  necessary linkages between the process and its enterprise architecture to  ensure that projects will comply with the architecture. As a result, the  agency had not rigorously assessed its patent systems’ compliance with  the enterprise architecture and it lacked reliable experience-based data to  consistently demonstrate the costs and benefits of its systems.
In addition, to help attract and retain a qualified patent examination  workforce, USPTO has taken steps 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 because of  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 recruiting and retaining the staff it needed. Further, USPTO faces  three long-standing challenges that could undermine its efforts to retain a  qualified workforce: (1) the lack of an effective strategy to communicate  and collaborate with examiners, (2) outdated assumptions in the  application processing quotas it uses to reward examiners, and (3) 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.
Overall, USPTO has made more progress in implementing its strategic plan  initiatives to increase the agency’s capability than it has in implementing  the initiatives to decrease patent pendency and improve electronic  processing. The agency 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 patent  pendency and improving electronic processing. A lack of funding was  cited as the primary reason for not implementing these initiatives. With the  passage of legislation in December 2004 to increase fees available to  USPTO for the next 2 years, the agency is reevaluating the feasibility of  implementing some of these initiatives.
In our reports, we made recommendations aimed at improving the  agency’s management of its patent automation strategy and related  information technology investments and at enhancing communication and  collaboration between management and patent examiners, and between  management and union officials. USPTO generally agreed with the  findings, conclusions, and recommendations in both reports, although it  only partially agreed with several material aspects of our assessment of its  patent automation strategy, including our recommendation that it reassess  its approach to automating its patent process.
subsections: section_title: Background
paragraphs: USPTO helps promote industrial and technological progress in the United  States and strengthen the national economy by administering the laws  relating to patents and trademarks. A critical part of its mission is  examining patent applications and issuing patents. A patent is a property  right granted by the U.S. government to an inventor who secures, generally  for 20 years from the date of initial application in the United States, his or  her exclusive right to make, use, offer for sale, or sell the invention in  exchange for disclosing it. The number of patent filings to USPTO  continues to grow and, by 2009, the agency is projecting receipt of over  450,000 patent applications annually.
Patent processing essentially involves three phases: pre-examination,  examination, and post-examination. The process begins when an applicant  files a patent application and pays a filing fee. During the pre-examination  phase, patent office staff document receipt of the application and process  the application fee, scan and convert the paper documents to electronic  format, and conduct an initial review of the application and classify it by  subject matter. During the subsequent examination phase, the application  is assigned to a patent examiner with expertise in the subject area who  searches existing U.S. and foreign patents, journals, and other literature  and, as necessary, contacts the applicant to resolve questions and obtain  additional information to determine whether the proposed invention can  be patented. Examiners document their determinations on the  applications in formal correspondence, referred to as office actions.  Applicants may abandon their applications at any time during this process.  If the examiner determines that a patent is warranted, a supervisor  reviews and approves it and the applicant is informed of the outcome. The  application then enters the post-examination phase and, upon payment of  an “issue fee,” a patent is granted and published. Historically, the time  from the date that a patent application is filed to the date that the patent is  either granted or the application is abandoned has been called “patent  pendency.”
Because of long-standing concerns about the increasing volume and  complexity of patent applications, USPTO has been undertaking projects  to automate its patent process for about the past two decades. In 1983, the  agency began one of its most substantial projects—the Automated Patent  System (APS)—with the intent of automating all aspects of the patent  process. APS was to be deployed in 1990 and, when completed, consist of  five integrated subsystems that would (1) fully automate incoming patent  applications; (2) allow examiners to electronically search the text of  granted U.S. patents and access selected abstracts of foreign patents; (3)  scan and allow examiners to retrieve, display, and print images of U.S.  patents; (4) help examiners classify patents; and (5) support on-demand  printing of copies of patents.
In reporting on APS more than 10 years following its inception, we noted  that USPTO had deployed and was operating and maintaining certain parts  of the system, supporting text search, limited document imaging, order- entry and patent printing, and classification activities. However, our  report raised concerns about the agency’s ability to adequately plan and  manage this major project, pointing out that its processes for exercising  effective management control over APS were weak. Ultimately, USPTO  never fully developed and deployed APS to achieve the integrated, end-to- end patent processing system that it envisioned. The agency reported  spending approximately $1 billion on this initiative from 1983 through  2002.
In addition, in 1998, the agency implemented an Internet-based electronic  filing system at a reported cost of $10 million, enabling applicants to  submit their applications online. Further, through 2002, the agency  continued to enhance its capabilities that enabled examiners to search  patent images and text, and upgraded its patent application classification  and tracking systems.
To help the agency address the challenges of reviewing an increased  volume of more complex patent applications and of reducing the length of  time it takes to process them, Congress passed a law requiring USPTO to  improve patent quality, implement electronic government, and reduce  pendency. In response to the law, in June 2002, the agency embarked on  an aggressive 5-year modernization plan outlined in its 21st Century  Strategic Plan, which was updated to include stakeholder input and re- released in February 2003. The strategic plan outlines 38 initiatives related  to the patent organization that focus on three crosscutting strategic  themes: capability, productivity, and agility. The capability theme focuses  on efforts to enhance patent quality through workforce and process  improvements; the productivity theme focuses on efforts to decrease the  pendency of patent applications; and the agility theme focuses on  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 enacted in December  2004 increased the fees available to USPTO;  however, the increases are  only effective for fiscal years 2005 and 2006.
section_title: USPTO Continues to Pursue a Fully Automated Patent Process, but Has Not Effectively Managed its Strategy for Achieving This Capability
paragraphs: As was its intent with APS, USPTO has continued to pursue a paperless,  end-to-end, automated patent process. In 2001, the agency initiated its  Tools for Electronic Application Management (TEAM) automation project,  aiming to deliver an end-to-end capability to process patent applications  electronically by fiscal year 2006. Under the TEAM concept, the agency  had planned to integrate its existing electronic filing system and the  classification and search capabilities from the earlier APS project with  new document management and workflow capabilities, and with image-  and text-based processing of patent applications to achieve a  sophisticated means of handling documents and tracking patent  applications throughout the examination process. By implementing image-  and text-based capabilities, the agency had anticipated that patent  examiners would be able to view and process applications online, as well  as manipulate and annotate text within a patent application, thus  eliminating manual functions and improving processing accuracy,  reliability, and productivity, as well as the quality of the patents that are  granted.
With the issuance of its 21st Century Strategic Plan, however, USPTO  altered its approach to accomplishing patent automation. The strategic  plan, among other things, identified the agency’s high-level information  technology goals for fully automating the patent process as part of the 5- year modernization effort. It incorporated automation concepts from the  TEAM project, but announced an accelerated goal of delivering an  operational system to electronically process patent applications by  October 1, 2004, earlier than had been scheduled under TEAM.
In carrying out its patent automation plans, USPTO has delivered a  number of important processing capabilities through the various  information systems that it has implemented. For example, an automated  search capability, available since 1986, has eliminated the need for patent  examiners to manually search for prior art in paper files, and the  classification and fee accounting capabilities have facilitated assigning  applications to the correct subject areas and managing collections of  applicable fees. In addition, the electronic filing system that has existed  since 1998 has enabled applicants to file their applications with the agency  via the Internet. Using the Internet, patent applicants also can review the  status of their applications online and the public can electronically access  and search existing published patents. Further, an imaging system  implemented in August 2004, called the Image File Wrapper, has given  USPTO the capability to scan patent applications and related documents,  which can then be stored in a database and retrieved and reviewed online.  The agency’s progress in implementing its automated patent functions is  illustrated in figure 1.
Nonetheless, even with the progress that has been made, collectively,  these automated functions have not provided the fully integrated,  electronic patent processing capability articulated in the agency’s  automation plans. Two of the key systems that it is relying on to further  enhance its capabilities—the electronic filing system and the Image File  Wrapper—have not yielded the processing improvements that the agency  has deemed essential to successfully operate in a fully integrated,  electronic environment.
Specifically, in implementing its electronic filing system, USPTO had  projected significant increases in processing efficiencies and quality by  providing patent applicants the capability to file online, thus alleviating the  need for them to send paper applications to the agency or for patent office  staff to manually key application data into the various processing systems.  However, even after enhancements in 2002 and 2004, the system did not  produce the level of usage among patent filers that the agency had  anticipated. For example, although USPTO’s preliminary justification for  acquiring the electronic filing system had projected an estimated usage  rate of 30 percent in fiscal year 2004, patent officials reported that, as of  April 2005, fewer than 2 percent of all patent applications were being  submitted to the agency via this system. As a result, anticipated processing  efficiencies and quality improvements through eliminating the manual re- keying of application data have not been realized.
In September 2004, USPTO convened a forum of senior officials  representing the largest U.S. corporate and patent law firm filers to  identify causes of patent applicants’ dissatisfaction with the electronic  filing system and determine how to increase the number of patents being  filed electronically. According to the report resulting from this forum, the  majority of participants viewed the system as cumbersome, time- consuming, costly, inherently risky, and lacking a business case to justify  its usage. Among the barriers to system usage that the participants  specifically identified were (1) users’ lack of a perceived benefit from  filing applications electronically, (2) liability concerns associated with  filers’ unsuccessful use of the system or unsuccessful transmission of  patent applications to USPTO, and (3) significant disruptions to filers’  normal office/corporate processes and workflow caused by factors such  as difficulty in using the automated tools and the inability to download  necessary software through firewalls.
Several concerns raised during the forum mirrored those that USPTO had  earlier identified in a 1997 analysis of a prototype for electronic filing.  However, at the time of our review, the agency had not completed plans to  show how it would address the concerns regarding use of the electronic  filing system.
The agency’s Image File Wrapper also had not resulted in critical patent  processing improvements. The system includes image technology for  storage and maintenance of records associated with patent applications  and provides the capability to scan each page of a submitted paper  application and convert the pages into electronic images. Patent  examiners in a majority of the focus groups that we conducted  commented that the system had provided them with the ability to easily  access patent applications and related information. In addition, patent  officials stated that the system had enabled multiple users to  simultaneously access patent applications.
Nonetheless, patent officials acknowledged that the system had  experienced performance and usability problems. Specifically, in speaking  about the system’s performance, the officials and agency documentation  stated that, after its implementation, the Image File Wrapper had been  unavailable for extended periods of time or had experienced slow  response times, resulting in decreased productivity. To lessen the impact  of this problem, patent officials said they had developed a backup tool to  store images of an examiner’s most recent applications, which can be  accessed when the Image File Wrapper is not available. Further, in  commenting on this matter, the USPTO director stated that the system’s  performance had begun to show improvement.
Regarding the usability of the system, patent officials and focus group  results indicated that the Image File Wrapper did not fully meet processing  needs. For example, the officials stated that, as an image-based system,  the Image File Wrapper did not fully enable patent examiners to  electronically search, manipulate, or track and log changes to application  text, which were key processing features emphasized in the agency’s  automation plans. The examiners also commented that a limited capability  to convert images to text, which was intended to assist them in copying  and reusing information contained in patent files, was error-prone,  contributing to their need to download and print the applications for  review. Further, because the office’s legacy systems were not integrated  with the Image File Wrapper, examiners were required to manually print  correspondence from these systems, which then had to be scanned into  the Image File Wrapper in order to be included as part of an applicant’s  electronic file.
Patent and Office of Chief Information Officer (OCIO) officials largely  attributed the system’s performance and usability problems to the  agency’s use of software that it acquired from the European Patent Office.  The officials explained that, to meet the accelerated date for delivering an  operational system as outlined in its strategic plan, the agency had decided  in 2002 to acquire and use a document-imaging system owned by the  European Patent Office, called ePhoenix, rather than develop the  integrated patent processing system that had been described in its  automation plans. According to the officials, the director, at that time,  had considered ePhoenix to be the most appropriate solution for further  implementing USPTO’s electronic patent processing capabilities given (1)  pressures from Congress and from customers and stakeholders to  implement an electronic patent processing system more quickly than  originally planned and (2) the agency’s impending move to its new facility  in Alexandria, Virginia, which did not include provisions for transferring  and storing paper patent applications.
However, they indicated that the original design of the ePhoenix system  had not been compatible with USPTO’s technical platform for electronic  patent processing. Specifically, they stated that the European Patent  Office had designed the system to support only the printing of files for  subsequent manual reviews, rather than for electronic review and  processing. In addition, they stated that the system had not been designed  for integration with other legacy systems or to incorporate additional  capabilities, such as text processing, with the existing imaging capability.  Further, an official of the European Patent Office noted that ePhoenix had  supported their office’s much smaller volume of patent applications.  Thus, with USPTO’s patent application workload being approximately  twice as large as that of its European counterpart, the agency placed  greater stress on the system than it was originally designed to  accommodate. OCIO officials told us that, although they had tested certain  aspects of the system’s capability, many of the problems encountered in  using the system were not revealed until after the system was deployed  and operational.
Patent and OCIO officials acknowledged that the agency had purchased  ePhoenix although senior officials were aware that the original design of  the system had not been compatible with USPTO’s technological platform  for electronic patent processing. They stated that, despite knowing about  the problems and risks associated with using the software, the agency had  nonetheless proceeded with this initiative because senior officials,  including the former USPTO director, had stressed their preference for  using ePhoenix in order to expedite the implementation of a system.  Patent and OCIO officials acknowledged that management judgment,  rather than a rigorous analysis of costs, benefits, and alternatives, had  driven the agency’s decision to use this system.
To a significant extent, USPTO’s difficulty in realizing intended  improvements through its electronic filing system and Image File Wrapper  can be attributed to the fact that the agency took an ad hoc approach to  planning and managing its implementation of these systems, driven in part  by its accelerated schedule for implementing an automated patent  processing capability. The Clinger-Cohen Act of 1996, as well as  information technology best practices and our prior reviews, emphasize  the need for agencies to undertake information technology projects based  on well-established business cases that articulate agreed-upon business  and technical requirements; effectively analyze project alternatives, costs,  and benefits; include measures for tracking projects through their life  cycle against cost, schedule, benefit, and performance targets; and  ultimately, provide the basis for credible and informed decision making  and project management. Yet, patent officials did not rely on established  business cases to guide their implementation of these key automation  initiatives.
The absence of sound project planning and management for these  initiatives has left the agency without critical capabilities, such as text  processing, and consequently, has impeded its successful transition to an  integrated and paperless patent processing environment. The Under  Secretary of Commerce for Intellectual Property, who serves as the  director of USPTO, stated at the conclusion of our review that he  recognized and intended to implement measures to address the  weaknesses in the agency’s planning and management of its automated  patent systems.
subsections: section_title: USPTO Lacks Essential Information Technology Investment Management Processes to Support Its Patent Automation
paragraphs: USPTO’s ineffective planning for and management of its patent  automation projects, in large measure, can be attributed to enterprise- level, systemic weaknesses in the agency’s information technology  investment management processes. A key requirement of the Clinger- Cohen Act is that agencies have established processes, such as capital  planning and investment control, to help ensure that information  technology projects are implemented at acceptable costs and within  reasonable and expected time frames, and contribute to tangible,  observable improvements in mission performance. Such processes guide  the selection, management, and evaluation of information technology  investments by aiding management in considering whether to undertake a  particular investment in information systems and providing a means to  obtain necessary information regarding the progress of an investment in  terms of cost, capability of the system to meet specified requirements,  timeliness, and quality.
Further, our Enterprise Architecture Framework emphasizes that  information technology projects should show evidence of compliance with  the organization’s enterprise architecture, which serves as a blueprint for  systematically and completely defining an organization’s current  (baseline) operational and technology environment and as a roadmap  toward the desired (target) state. Effective implementation of an  enterprise architecture can facilitate an agency by informing, guiding, and  constraining the decisions being made for the agency, and subsequently  decrease the risk of buying and building systems that are duplicative,  incompatible, and unnecessarily costly to maintain and interface.
At the time of our study, USPTO had begun instituting certain essential  information technology investment management mechanisms, such as a  framework for its enterprise architecture and components of a capital  planning and investment control process. However, it had not yet  established the necessary linkages between its enterprise architecture and  its capital planning and investment control process to ensure that its  automation projects would comply with the architecture or fully instituted  enforcement mechanisms for investment management. For example,  USPTO drafted a capital planning and investment control guide in June  2004 and issued an agency administrative order on its integrated  investment decision practices in February 2005. However, according to  senior officials, many of the processes and procedures in the guide had not  been completed and fully implemented and it was unclear how the agency  administrative order was being applied to investments.
In addition, while the agency had completed the framework for its  enterprise architecture, it had not aligned its business processes and  information technology in accordance with the architecture. According to  OCIO officials, the architecture review board responsible for enforcing  compliance with the architecture was not yet in place; thus, current  architecture reviews were of an advisory nature and were not required for  system implementation. Our analysis of architecture review documents  that system officials provided for the electronic filing system and the  Image File Wrapper confirmed that the agency had not rigorously assessed  either of these systems’ compliance with the enterprise architecture.  Adding to these conditions, a study commissioned by the agency in 2004  found that its Office of Chief Information Officer was not organized to help  the agency accomplish the goals in its automation strategy and that its  investment management processes did not ensure appropriate reviews of  automation initiatives.
USPTO has an explicit responsibility to ensure that the automation  initiatives that it is counting on to enhance its overall patent process are  consistent with the agency’s priorities and needs and are supported by the  necessary planning and management to successfully accomplish this. At  the conclusion of our review, the agency’s director and its chief  information officer acknowledged the need to strengthen the agency’s  investment management processes and practices and to effectively apply  them to USPTO’s patent automation initiatives.
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 also 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, its  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 their ability to attract and retain  examiners than any actions taken by the agency. Consequently, how  USPTO’s actions will affect its long-term ability to maintain a highly  qualified workforce is unclear. While the agency has been able to meet its  hiring goals, attrition has recently increased.
USPTO’s recent recruiting efforts have incorporated several measures that  we and others identified as necessary to attract a qualified workforce.  First, in 2003, to help select qualified applicants, the agency identified the  knowledge, skills, and abilities that examiners need to effectively fulfill  their responsibilities. Second, in 2004, its permanent recruiting team,  composed of senior and line managers, participated in various recruiting  events, such as job fairs, conferences sponsored by professional societies,  and 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. Finally, for 2005, USPTO developed a formal recruiting  plan that, among other things, identified hiring goals for each technology  center and described the agency’s efforts to establish ongoing partnerships  with the 10 target schools. In addition, the agency 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.
USPTO has also used many of the human capital benefits available under  federal personnel regulations to attract and retain qualified patent  examiners. Among other benefits, it 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;   non-competitive promotion to the full performance level; and  flexible working schedules, including the ability to schedule hours off  during midday.
According to many of the supervisors and examiners who participated in  our focus groups, these benefits were a key reason they were attracted to  the agency and are a reason they continue to stay. The benefits that  examiners most frequently cited as important were the flexible working  schedules and competitive salaries.
However, it is too soon to determine the long-term effect of the agency’s  efforts, in part because neither its recruiting efforts nor the human capital  benefits have been consistently sustained due to budgetary constraints.  For example, in 2002 the agency suspended reimbursements to examiners  for law school tuition because of funding limitations, although it resumed  the reimbursements in 2004 when funding became available. Examiners in  our focus groups expressed dissatisfaction with the inconsistent  availability of these benefits, in some cases saying that the suspension of  benefits, such as law school tuition reimbursement, provided them an  incentive to leave the agency. More recently, in March 2005, USPTO  proposed to eliminate or modify other benefits, such as the ability of  examiners to earn credit hours and to set their own work schedules.
Another, and possibly the most important, factor adding to the uncertainty  of USPTO’s recruiting efforts is the unknown potential impact of the  economy, which, according to agency officials and examiners, has a  greater effect on recruitment and retention than any actions the agency  may take. Both agency officials and examiners told us that when the  economy picks up, more examiners tend to leave the agency and fewer  qualified candidates are attracted to it. On the other hand, when there is a  downturn in the economy, the agency’s ability to attract and retain  qualified examiners increases because of perceived job security and  competitive pay. When discussing their reasons for joining USPTO, many  examiners in our focus groups cited job security and the 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.” This  relationship between the economy and USPTO’s hiring and retention  success is part of the reason why the agency has met its hiring goals for  the last several years. However, the agency has recently experienced a rise  in attrition rates. In particular, a high level of attrition among younger, less  experienced examiners could affect its efforts to maintain a highly  qualified patent examination workforce. Attrition of examiners with 3  years or less experience is a significant loss for the agency because  considerable time and dollar resources are invested to help new  examiners become proficient during their first few years.
section_title: USPTO Faces Long- Standing Human Capital Challenges that Could Undermine Its Recruiting and Retention Efforts
paragraphs: While USPTO has undertaken a number of important and necessary  actions to attract and retain qualified patent examiners, it continues to  face three long-standing human capital challenges which, if not addressed,  could also undermine its recent efforts. First, although organizations with  effective human capital models have strategies to communicate with  employees and involve them in decision making, the lack of good  communication and collaboration has been a long-standing problem at  USPTO. We found that the agency does not have a formal communication  strategy and does not actively seek input from examiners on key  management decisions. Most of the emphasis is on enhanced  communication among managers but not between managers and other  levels of the organization, such as patent examiners. Patent examiners and  supervisory patent examiners in our focus groups frequently stated that  communication with agency management was poor and that managers  provided them with inadequate or no information, creating an atmosphere  of distrust of management. The examiners also said that management was  out of touch with them and their concerns and that communication with  the managers tended 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.
The lack of communication between management and examiners is  exacerbated by the contentious working relationship between  management and union officials and by the complexity of the rules about  what level of communication can occur between managers and examiners  without involving the union. Some managers alluded to this contentious  relationship as one of the reasons why they had limited communication  with patent examiners, who are represented by the union even if they  decide not to join it. Specifically, they believed they could not 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 in policies and procedures, 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.
Second, human capital models suggest that agencies should periodically  assess their monetary awards systems to ensure that they help attract and  retain qualified staff. However, patent examiners’ awards are based largely  on the number of applications they process, and the assumptions on which  application processing quotas are based have not been updated since 1976.  Patent examiners and management have differing opinions on whether  these assumptions need to be updated. Examiners in our focus groups told  us that, in the last several decades, the tasks associated with and the  complexity of processing applications have greatly increased while the  time allowed has not. As a result, many of the examiners and supervisory  patent examiners in our focus groups and respondents to previous agency  surveys reported that examiners do not have enough time to conduct high- quality reviews of patent applications. The examiners noted that these  inadequate time frames create a stressful work environment and are cited  in the agency’s exit surveys as a primary reason that examiners 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 time needed to address the  greater complexity of the applications and the increase 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.
Finally, counter to current workforce models, USPTO does not require  ongoing technical education for patent examiners, which could negatively  affect the quality of its patent examination workforce. Instead, the agency  requires newly hired examiners to take extensive training only during their  first year of employment; all subsequent required training is focused on  developing legal expertise. Almost all patent examiners are required to  take a range of ongoing training in legal matters, including patent law. 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. In 2001 the agency stated, “Engineers  who fail to keep up with the rapid changes in technology, regardless of  degree, risk technological obsolescence.” However, agency officials told  us that examiners automatically maintain currency with their technical  fields by just doing their job. Patent examiners and supervisory patent  examiners disagreed, stating that the literature they review in applications  is outdated, particularly in rapidly evolving technologies. The agency does  offer some voluntary in-house training, such as technology fairs and  industry days at which scientists and others are invited to present lectures  to patent examiners that will help keep them current on the technical  aspects of their work. In addition, the agency offers voluntary external  training and, for a small number of examiners, pays conference or  workshop registration fees. Agency officials could provide no data on the  extent to which examiners have taken advantage of such training  opportunities.
section_title: USPTO Has Made Greater Progress on Strategic Plan Initiatives that Enhance the Agency’s Capability Rather than Productivity and Agility
paragraphs: In carrying out its strategic plan to become a more productive and  responsive organization, our work found that USPTO has made greater  progress in implementing its initiatives to make the patent organization  more capable by improving the quality of examiners’ skills and work  processes than it has in implementing its productivity and agility initiatives  aimed at decreasing the length of time to process a patent application and  improving electronic processing. 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, it 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 to reduce examiners’ responsibilities for literature  searches. Table 1 provides our assessment of each of the strategic plan  initiatives.
Agency officials primarily cited the need for additional funding as the main  reason that some initiatives have not been implemented. With passage of  the legislation in December 2004 to restructure and increase the fees  available to USPTO, the agency is reevaluating the feasibility of many  initiatives that it had deferred or suspended.
In summary, through its attempts to implement an integrated, paperless  patent process over the past two decades, USPTO has delivered a number  of important automated capabilities. Nonetheless, after spending over a  billion dollars on its efforts, the agency is still not yet effectively  positioned to process patent applications in a fully automated  environment. Moreover, when and how it will actually achieve this  capability is uncertain. Largely as a result of ineffective planning and  management of its automated capabilities, system performance and  usability problems have limited the effectiveness of key systems that the  agency has implemented to support critical patent processes. Although  USPTO’s director and its chief information officer have recognized the  need to improve the agency’s planning and management of its automation  initiatives, weaknesses in key information technology management  processes needed to guide the agency’s investments in patent automation,  such as incomplete capital planning and investment controls, could  preclude their ability to successfully accomplish this. Thus, the agency  risks further implementing information technology that does not support  its needs and that threatens its overall goal of achieving a fully electronic  capability to process its growing patent application workload.
Further, to improve its ability to attract and retain the highly educated and  qualified patent examiners it needs, USPTO has taken steps recognized by  experts as characteristic of highly effective organizations. However,  without an effective communication strategy and a collaborative culture  that includes all layers of the organization, the agency’s efforts could be  undermined. The absence of effective communication and collaboration  has created distrust and a significant divide between management and  examiners on important issues such as the appropriateness of the  production model and the need for technical training. Unless the agency  begins to develop an open, transparent, and collaborative work  environment, its efforts to hire and retain examiners may be adversely  affected in the long run. Overall, while USPTO has progressed in  implementing strategic plan initiatives aimed at improving its  organizational capability, the agency attributes its limited implementation  of other initiatives intended to reduce pendency and improve electronic  patent application processing primarily to the need for additional funding.
Given the weaknesses in USPTO’s information technology investment  management processes, we recommended that the agency, before  proceeding with any new patent automation initiatives, (1) reassess and,  where necessary, revise its approach for implementing and achieving  effective use of information systems supporting a fully automated patent  process; (2) establish disciplined processes for planning and managing the  development of patent systems based on well-established business cases;  and (3) fully institute and enforce information technology investment  management processes and practices to ensure that its automation  initiatives support the agency’s mission and are aligned with its enterprise  architecture. Further, in light of its need for a more transparent and  collaborative work environment, we recommended that the agency  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, such as the assumptions underlying the  quota system and the need for required technical training.
USPTO generally agreed with our findings, conclusions, and  recommendations regarding its patent automation initiatives and  acknowledged the need for improvements in its management processes  by, for example, developing architectural linkages to the planning process  and implementing a capital planning and investment control guide.  Nonetheless, the agency stated that it only partially agreed with several  material aspects of our assessment, including our recommendation that it  reassess its approach to automating its patent process. Further, the agency  generally agreed with our findings, conclusions, and recommendations  regarding its workforce collaboration and suggested that it would 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.
Mr. Chairman, this concludes our statement. We would be pleased to  respond to any questions that you or other Members of the Committee  may have at this time.
section_title: Contacts and Acknowledgments
paragraphs: For further information, please contact Anu K. Mittal at (202) 512-3841or  Linda D. Koontz at (202) 512-6240. They can also be reached by e-mail at  mittala@gao.gov and koontzl@gao.gov, respectively. Other individuals  making significant contributions to this testimony were Valerie C. Melvin,  Assistant Director; Cheryl Williams, Assistant Director; Mary J. Dorsey,  Vijay D’Souza, Nancy Glover, Vondalee R. Hunt, and Alison D. O’Neill.
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