U.S. Patent and Trademark Office: Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog
Released: 2008-02-27T00:00:00

Letter

Background

To obtain a patent, inventors—or more usually their attorneys or agents— submit an application to USPTO that fully discloses and clearly describes one or more distinct innovative features of the proposed invention and pay 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 specializes in specific areas of science and engineering. Supervisors in each technology center then assign the application to a patent examiner for further review to determine if a patent is warranted. In making this determination, patent examiners must meet two specific milestones in the patent examination process: first actions and disposals.

First action. At this milestone, patent examiners notify applicants about the patentability of their invention. After determining if the invention is new and useful, or a new and useful improvement on an existing process or machine, patentability is determined through a thorough investigation of information related to the subject matter of the patent application and already available before the date the application was submitted, called prior art. Prior art includes, but is not limited to, scientific publications and U.S. and international patents.

Disposal. Patent examiners dispose of a patent application by determining, among other things, if a patent will be granted—called allowance—or not.

Patent examiners receive credit, called counts, for each first action and disposal, and are assigned production goals on the basis of the number of production units—comprised of two counts—they are expected to achieve in a 2-week period. The counts in a production unit may be any combination of first actions and disposals.

The production goals that are used today to measure patent examiner performance are based on the same assumptions that USPTO established in the 1970s. At that time, production goals were determined based on the belief that it should take a patent examiner a certain amount of time to review a patent application and achieve two counts based on their experience (as determined by their position in the agency) and the type of patent they are reviewing. As a result, these goals vary depending upon the patent examiner’s position based on the federal government’s general schedule pay scale (GS) and the technology center in which the patent examiner works. For example, a GS-12 patent examiner working on data processing applications is expected to achieve two counts in 31.6 hours, whereas a GS-12 patent examiner working on plastic molding applications is expected to do so in 20.1 hours. GS-7 patent examiners working on those types of applications, however, are expected to achieve two counts in 45.1 and 28.7 hours, respectively. Patent examiner achievements are recorded biweekly, and, at the end of each fiscal year, those patent applications that have not been reviewed for first action are counted as part of USPTO’s inventory of unexamined applications, otherwise known as the patent application backlog.

USPTO’s Annual Hiring Estimates Are Determined by Funding and Institutional Capacity and Are Unlikely to Reduce the Patent Application Backlog

In each of the last 5 years, USPTO has identified its annual hiring estimates primarily on the basis of available funding levels and its institutional capacity to train and supervise new patent examiners, and not on the basis of the number of patent examiners needed to reduce the existing backlog or review new patent applications. Although this process is consistent with workforce planning strategies established by the Office of Personnel Management (OPM) and has enabled the agency to better match its hiring estimates to its institutional capacity, USPTO’s ability to reduce the patent application backlog simply through its hiring efforts is unlikely.

Specifically, USPTO begins the process of identifying projected hiring estimates as part of creating its budget submission for the Office of Management and Budget (OMB) 18 months before the start of the hiring year in order to meet OMB’s submission timeline. After considering expected funding levels and available patent examiner workforce data, USPTO considers its institutional capacity to supervise and train patent examiners. For example, in identifying its fiscal year 2002 hiring estimate, USPTO determined that funding availability would limit the number of patent examiners the agency could hire, and established its estimate on the basis of the number of patent examiners the agency had hired in the most recent year. However, in fiscal years 2003 through 2006, USPTO determined that funding would not be a limiting factor, and the agency’s hiring estimates were based primarily on its institutional capacity to supervise and train patent examiners.

USPTO considers a number of factors in determining its institutional capacity to supervise and train new patent examiners. For example, it determines its supervisory capacity by considering the number of additional patent examiners who can be placed in a technology center. This number is limited by the number of supervisors available in each center who can sign patent application approvals and rejections and provide on-the-job-training for new patent examiners. Although new patent examiners can review the prior art relating to patent applications, only supervisors can authorize a new patent examiner’s decision to approve or reject a patent application. In an effort to avoid delays and inefficiencies in initial and final decisions on patent applications, the agency tries to ensure that the supervisor to patent examiner ratio is about 1 supervisor for every 12 patent examiners. Similarly, USPTO’s training capacity is determined by the number of patent examiners the agency believes it can train in a year. Training capacity was based on 2- or 3-week courses offered throughout the year and were led by supervisory patent examiners. The courses could accommodate about 16 patent examiners each, and in fiscal year 2004, according to USPTO, the agency offered about 28 training sessions.

Because USPTO’s projected hiring estimates are established at least 18 months in advance of the hiring year, the agency continually refines the estimates to reflect changes that might occur during this period. For example, in 2002, when it created its budget submission to OMB, USPTO projected it would hire 750 patent examiners for fiscal year 2004. However, due to budget constraints, the agency actually hired 443 patent examiners in fiscal year 2004. Figure 1 shows USPTO’s projected and actual hiring numbers for fiscal years 2002 through 2006.

The differences between projected hiring estimates and the number hired occurred primarily because of funding availability. In fiscal years 2003 and 2004, according to USPTO, the agency’s appropriations were significantly less than the agency’s budget requests. As a result, the agency could not financially support the number of new patent examiners it had initially planned to hire. In fiscal years 2005 and 2006, however, USPTO hired more patent examiners than originally planned because the agency’s appropriation for those years was greater than anticipated.

The way in which USPTO identifies annual patent examiner hiring estimates is generally consistent with workforce planning strategies endorsed by OPM. For example, OPM recommends that agencies regularly track workforce trends to ensure updated models for meeting organizational needs; base decisions on sources of information such as past workforce data; and include in its workforce planning process a workforce analysis system that identifies current and future losses due to attrition. We found that USPTO generally followed these processes.

Recognizing the need to increase its institutional capacity to hire more patent examiners, USPTO has taken steps to increase its training and supervisory capacity. To increase its training capacity, USPTO implemented an 8-month training program in fiscal year 2006 called the Patent Training Academy. According to USPTO, the academy provides the agency with a constant annual training capacity for 1,200 new patent examiners for each of the next 5 years. Moreover, USPTO officials believe that the academy may indirectly improve the agency’s supervisory capacity because new patent examiners should be better prepared to start work in a technology center and therefore will need less supervision and on-the-job training. USPTO plans to monitor new patent examiners after they have graduated from the academy to determine if the agency can use this approach to increase its institutional capacity and, therefore, its future annual hiring estimates.

Even with its increased hiring estimates of 1,200 patent examiners each year for the next 5 years, USPTO’s patent application backlog is expected to increase to over 1.3 million at the end of fiscal year 2011. The agency has also estimated that if it were able to hire 2,000 patent examiners per year in fiscal year 2007 and each of the next 5 years, the backlog would continue to increase by about 260,000 applications, to 953,643 at the end of fiscal year 2011. Despite its recent increases in hiring, the agency has acknowledged that it cannot hire its way out of the backlog and is now focused on slowing the growth of the backlog instead of reducing it.

Attrition Has Significantly Offset Hiring over the Last 5 Years, and Agency Management and Patent Examiners Disagree about the Reasons for Attrition

Although USPTO is hiring as many new patent examiners as it has the annual funding and institutional capacity to support, attrition has continued to increase among patent examiners—one patent examiner has been lost for nearly every two hired over the last 5 years. For example, from the beginning of fiscal year 2002 through fiscal year 2006, USPTO hired 3,672 patent examiners. However, the patent examination workforce only increased by 1,644 because 1,643 patent examiners left the agency and 385 patent examiners were either transferred or promoted out of the position of patent examiner. As shown in figure 2, approximately 70 percent of the patent examiners who left the agency had been at USPTO for less than 5 years, and nearly 33 percent had been at the agency for less than 1 year.

The attrition of patent examiners who were at the agency for less than 5 years is a significant loss for USPTO for a variety of reasons. First, attrition of these staff affects USPTO’s ability to reduce the patent application backlog because these less experienced patent examiners are primarily responsible for making the initial decisions on patent applications—the triggering event that removes applications from the backlog. Second, when these staff leave USPTO, the agency loses up to 5 years of training investment in them because patent examiners require 4 to 6 years of on-the-job experience before they become fully proficient in conducting patent application reviews. Third, the more experienced examiners who have the ability to examine more applications in less time have to instead devote more of their time to supervising and training the less experienced staff, thereby further reducing the agency’s overall productivity. Finally, these workforce losses reduce the pool of potential supervisory patent examiners for the future and therefore impair USPTO’s ability to increase its supervisory capacity and, ultimately, its hiring goals.

We found that USPTO management and patent examiners disagree significantly on the reasons for the agency’s attrition. According to USPTO management, personal reasons are the primary reasons that cause patent examiners to leave the agency. Some of these reasons include the following: The nature of the work at USPTO does not fit with the preferred working styles of some patent examiners, such as those with engineering degrees who are looking for more “hands-on” experiences.

Many patent examiners enter the workforce directly out of college and are looking to add USPTO to their resumes and move on to another job, rather than building a career at the agency, otherwise known as the “millennial problem.”

Patent examiners may choose to leave the area, as opposed to choosing to leave the agency, because their spouse transfers to a position outside of the Washington, D.C., area; the cost of living is too high; or the competition is too high for entry into the Washington, D.C., area graduate and post graduate programs for those patent examiners who would like to pursue higher education.

According to USPTO management, the agency has a number of ongoing efforts to help address these issues. For example, the agency is developing a recruitment tool to better assess applicant compatibility with the agency’s work environment; targeting midcareer professionals during the recruitment process; and considering the creation of offices located outside the Washington, D.C., area to provide lower cost-of-living alternatives for employees.

While Patent Office Professional Association officials—the union that represents patent examiners—agreed that in some cases personal reasons may contribute to patent examiners leaving the agency, they believe that the unrealistic production goals that the agency sets for patent examiners is primarily responsible for attrition. Specifically, according to union officials unrealistic production goals have created a “sweat shop culture” within the agency that requires patent examiners to do more in less time and has therefore been a significant contributor to patent examiners’ decisions to leave USPTO. To call attention to this concern, in April 2007 the union joined the Staff Union of the European Patent Office and other international patent examiner organizations in a letter declaring that the pressures on patent examiners around the world have reached such a level that in the absence of serious measures, intellectual property worldwide would be at risk. The letter recommended, among other things, an increase in the time patent examiners have to review patent applications.

Patent examiners who participated in our survey generally agreed with union officials. Specifically, approximately 67 percent of patent examiners, regardless of their tenure with the agency, said that the agency’s production goals were among the primary reasons they would consider leaving USPTO. Moreover, we estimated that 62 percent of patent examiners are very dissatisfied or generally dissatisfied with the time USPTO allots to achieve their production goals; and 50 percent of patent examiners are very dissatisfied or generally dissatisfied with how the agency calculates production goals. In addition, a number of respondents noted that the production goals are outdated, have not changed in 30 years, and some technologies for which they evaluate applications had not even been discovered at the time the agency’s production goals were set. Fifty-nine percent of patent examiners believed that the production system should be reevaluated, including altering the production goals to allow more time for patent examiners to conduct their reviews.

We and others have reported in the past that the assumptions underlying the agency’s production goals were established over 30 years ago and have not since been adjusted to reflect changes in science and technology. Moreover, USPTO uses these production goals to establish its overall performance goals for patent examiners, such as the number of first actions to be completed in a given year. However, from 2002 through 2006, the agency missed its projections in 4 of the 5 years. Furthermore, according to our survey, patent examiners are discontented with the actions they have to take in order to meet their production goals. Specifically, 70 percent of patent examiners who participated in our survey reported working unpaid overtime to meet their production goals during the last year, some reporting working over 30 extra hours in a 2- week period. In addition, we estimated that 42 percent of patent examiners had to work while they were on paid annual leave in order to meet their production goals. The percentage of patent examiners working while on paid leave was significantly higher for those with longer tenure at the agency. We estimated that 18 percent of patent examiners who had been at USPTO from 2 to 12 months worked to meet their production goals while on paid leave, compared with 50 percent of patent examiners with over 5 years’ experience. As one respondent to our survey explained, “Vacation time means catch up time.” Another respondent summed up the situation as follows: “I know that the production goals are set to keep us motivated in order to help get over the backlog but if a majority of examiners cannot meet those goals without relying on unpaid overtime or annual leave then something is wrong with the system.” According to our survey results, 59 percent of patent examiners identified the amount of unpaid overtime that they have to put into meeting their production goals as a primary reason they would choose to leave USPTO, and 37 percent identified the amount of time they must work during paid leave in order to meet their goals as a primary reason to leave the agency.

Even though the agency has not been able to meet its productivity goals for the last 4 years, this extensive amount of unpaid overtime patent examiners have to work in order to meet their production goals does not appear to be a concern for the agency. When we asked USPTO management about the agency’s policy for unpaid overtime to meet production goals, the Deputy Commissioner for Patent Operations told us, “As with many professionals who occasionally remain at work longer to make up for time during the day spent chatting or because they were less productive than intended, examiners may stay at the office (or remote location) longer than their scheduled tour of duty to work.”

Retention Incentives and Flexibilities Provided over the Last 5 Years Generally Align with the Primary Reasons Patent Examiners Identified for Staying at USPTO

From 2002 to 2006, USPTO offered a number of different retention incentives and flexibilities, as table 1 shows.

According to USPTO management officials, the three most effective retention incentives and flexibilities that they have offered are the special pay rates, the bonus structure, and opportunities to work from remote locations. More specifically: Special pay rate. In November 2006, USPTO received approval for an across-the-board special pay rate for patent examiners that can be more than 25 percent above federal salaries for comparable positions. For example, in 2007, a patent examiner at USPTO earning $47,610 would earn $37,640 in a similar position at another federal agency in the Washington, D.C., area.

Bonus structure. The agency awards bonuses to patent examiners who exceed their production goals by at least 10 percent. For example, according to USPTO, in fiscal year 2006, 60 percent of eligible patent examiners who exceeded production goals by 10 percent or more received a bonus. As table 2 shows, USPTO awarded 4,645 bonuses to patent examiners that totaled over $10.6 million in fiscal year 2006.

Opportunities to work from remote locations. In fiscal year 2006, approximately 20 percent of patent examiners participated in the agency’s telework program, which allows patent examiners to conduct some or all of their work away from their official duty station 1 or more days a week. In addition, when USPTO began a “hoteling” program in fiscal year 2006, approximately 10 percent of patent examiners participated in the program, which allows some patent examiners to work from an alternative location.

According to the results of our survey, patent examiners generally agreed that compensation-related retention incentives and efforts to enhance the work environment were among the most important reasons they would choose to stay at USPTO, as table 3 shows.

Current total pay (excluding benefits)

The availability of the flexible work schedule program The availability of a hoteling program The availability of a teleworking program The recent implementation of a special pay rate increase The ability to be promoted to the next GS level The availability of the law school tuition program The availability of monetary awards Access to an on-site fitness center The availability of a transit subsidy program The availability of on-site child care The availability of flexible spending accounts (i.e., the program that allows you to pay for eligible out-of-pocket health care and dependent care expenses with pre-tax dollars)

The availability of an on-site health unit Activities offered by the Work-Life Committee Despite USPTO’s efforts to hire more patent examiners annually and implement retention incentives and flexibilities over the last 5 years, the agency has had limited success in retaining new patent examiners.

Because the agency’s production goals appear to be undermining USPTO’s efforts to hire and retain a qualified workforce, we recommended in 2007 that the agency comprehensively evaluate the assumptions it uses to establish patent examiner production goals and revise those assumptions as appropriate.

The Department of Commerce agreed with our findings, conclusions, and recommendation and agreed that the agency’s hiring efforts are not sufficient to reduce the patent application backlog. It stated that USPTO is implementing initiatives to increase the productivity of the agency that will result in a more efficient and focused patent examination process. Once USPTO determines the effect of these initiatives on patent examiner productivity, it will reevaluate the assumptions used to establish patent examiner productions goals.

Mr. Chairman, this concludes my prepared statement. I would be happy to respond to any questions that you or Members of the Subcommittee may have at this time.

Contacts and Acknowledgments

For further information, please contact Robin M. Nazzaro at (202) 512-3841 or nazzaror@gao.gov. Other contributors to this statement include Vondalee R. Hunt, Assistant Director; Omari Norman; Jamie Roberts; Carol Herrnstadt Shulman, and Lisa Vojta.

This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.