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

Letter

Background

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.

USPTO Has Made Greater Progress on Strategic Plan Initiatives That Enhance the Agency’s Capability Rather Than Productivity and Agility

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.

USPTO Has Made Substantial Progress on Its Capability Initiatives

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.

Workforce Skills Improvements

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.

Quality Assurance Enhancements

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.

Process Improvements Related to Legislative and Rule Changes

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.

USPTO Has Made Less Progress Implementing Its Productivity and Agility Initiatives

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.

USPTO Has Taken Steps to Help Attract and Retain a Qualified Patent Examiner Workforce, but Long- Term Success Is Uncertain

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.

USPTO Has Enhanced Recruiting Efforts to Attract Qualified Examiners

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.

USPTO Has Used Many Federal Human Capital Benefits to Attract and Retain Examiners

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.

Lack of Consistent Recruiting Efforts and Benefits, along with Changes in the Economy, Could Affect USPTO’s Efforts

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.

USPTO Faces Long- standing Human Capital Challenges That Could Undermine Its Recruiting and Retention Efforts

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.

USPTO Has Not Established Effective Mechanisms for Managers to Communicate and Collaborate with Examiners

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.

Examiners’ Monetary Awards Are Based on Outdated Assumptions about the Time It Takes to Process a Patent Application

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.

USPTO Does Not Require Ongoing Technical Education for Patent Examiners

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.

Conclusions

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.

Recommendations for Executive Action

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.

Agency Comments and Our Evaluation

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.

Scope and Methodology

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.

Comments from the U.S. Patent and Trademark Office

Progress on Strategic Plan Initiatives

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.

Strategic Theme: Capability

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).

Strategic Theme: Productivity

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).

Strategic Theme: Agility

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).

GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

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.