Introduction
Chairman
Smith, Ranking Member Berman, and Members of the Subcommittee:
Thank
you for inviting me to testify today on this important issue. Patent quality is our top priority at the
United States Patent and Trademark Office (USPTO) and is the central focus in
everything from our day-to-day operations to our strategic planning. We have already implemented several
initiatives to improve quality, and will continue to evaluate and implement
additional initiatives. We also have
proposed changes to our rules of procedure, and we plan to propose more in the
future – that will have a positive impact on patent quality.
The
importance of intellectual property (IP) is growing -- within the business
community, the
of any
other nation in the world. And, U.S. IP
industries contribute nearly 40 percent of the growth achieved by all
Patent applications have increased
every year -- a good sign that innovation and competitiveness are alive and
well in
In
fiscal year 2005, we received over 400,000 patent applications -- an eight
percent increase over the previous year.
Of equal significance, the complexity of patent applications is
growing. A greater percentage is now
filed in more complex areas such as biotech and telecommunications. These require many more hours to examine than
traditional areas, such as general mechanical and chemical. So, our number of hours needed to examine the
average application filed is increasing as well.
That
volume and growth rate present significant operational challenges as does the
increasing complexity of those applications.
It is
now taking our Office an average of 21.1 months to take first action on a
patent application, and 29.1 months to issue a final decision. The vast majority of that time does not
represent actual examination but rather a waiting-in-line status. Without policy and operational changes, our
backlog would have continued to grow to unacceptable proportions.
So, the USPTO is taking many steps to address the backlog and improve
quality. We hired nearly 1,000 patent
examiners last year, and we will hire more than another 1,000 in fiscal year
2006. Before this hiring, we had fewer than 4,000
examiners, so this will represent hiring more than 50 percent of the current
professional staff within two years. We are also piloting a Patents’ Hoteling
Program, which will allow hundreds of patent employees to do their jobs from
home.
Quality
of the Patent Examination Process
At the USPTO, we have a strict
definition of quality. “Patent quality”
means that the application examination has been conducted to conform with
current law and Office procedure.
The USPTO reviews randomly sampled
patent applications – both during the examination process and when the examiner
believes the application is ready to be allowed. We check those applications for any type of
error. If there is even one allowed
claim that our quality reviewers believe should have been rejected or one
significant deficiency that would negatively impact the proper advancement of
prosecution in the case – that counts as an error.
We have a tremendously dedicated,
knowledgeable workforce. Our patent
examiners are professionals, and they hate making mistakes. Because of their expertise, we have a very
rigorous error standard. Using that
standard, in fiscal year 2005, our overall error rate was 4.6 percent. Those are errors we caught on all patent
examinations before they were issued.
Significant progress has been made since the midpoint of fiscal year
2005. Over the past 12 months, our allowance
error rate has dropped from 5.6% to less than 4%.
In the
past two years the USPTO has instituted a number of measures to improve patent
quality and also has implemented new metrics to measure the results. Results indicate that quality is improving. The percentage of patent examiners certified
for promotion to full performance level increased from 59% in FY 2004 to 70% in
FY 2005. The number of preliminary stage
office actions complying with applicable laws and rules during examination
improved to 86.2% from 82% the previous year.
We continue to show significant improvement in this area, with 89% of these
office actions currently complying with applicable laws and rules. The compliance rate for allowances improved
from 94.7% to 95.4% from FY 2004 to FY 2005.
Initiatives
to Improve Patent Quality
The
USPTO is working diligently to address quality throughout the patent
application review process to ensure the best possible results.
Patent
Reviews
We
currently have two levels of review for a sample of applications for each
examiner. Allowed applications are reviewed as an end-check. Applications
are also reviewed at various stages of prosecution. Further, individual
technology centers review a sample of allowed and in-process applications.
The
USPTO has determined that providing end-check reviews only is not the most
accurate and efficient way of assessing quality. We are working this year
to place more of our resources into building quality into examiner work product
by enhancing the review during the various stages of prosecution. We are
exploring ways to leverage the expertise of our quality reviewers so as to use
their expertise up front in the examination process rather than using them
primarily as end-checkers.
Our
concept is to team our current technology center quality reviewers with the
Office of Patent Quality Review (OPQR -- an office independent from the patent
examination corps) reviewers to do an in-depth assessment of the work product
within all art units of a technology center. On a biweekly basis, this
team would review sample cases from a particular art unit (a limited group of
examiners: 15-20), assess the results,
and develop/deliver specific training using examples from the reviews from the
unit. This will more specifically tailor the development of training to
effectively treat issues at the art unit level, as opposed to a
one-size-fits-all training model. Also, we are making better use of the
OPQR reviewer experience through the sharing of best practices with the technology
centers in an effort to improve the quality of examiners' work product.
Customer
Panel Quality Survey
As
part of our effort to build quality into examiner work product, we are
considering an effort to broaden customer input by conducting quarterly
customer surveys on patent examination quality.
The surveys would be administered to a representative customer panel and
would focus on key examination quality issues.
New
This
year our patent organization has implemented a new university-style training
program for almost two-thirds of the 1,000 new hires expected this year.
This training program is intended to not only provide more intensive
technology-based training following an aggressive curriculum, but also free
supervisors from this responsibility so they can focus more of their time to
mentor and train the junior employees already in their units.
This
training program will last for eight months and is intended to return new hires
to the examining corps who are capable of writing complete office actions for
supervisory review. It is our intention to increase this training program
to cover all incoming employees in fiscal year 2007. This new training
model will create a higher quality, better-trained new examiner who will be
able to examine applications more accurately and thoroughly than our
traditional one-on-one training model provides.
Examiner
Certification and Recertification
The
USPTO has implemented a thorough certification process for any employee seeking
to be promoted from the GS-12 level to the GS-13 level. This process includes a review of the work
product of the examiner and a certification exam similar to the patent bar exam
that patent attorneys and agents must pass.
In order to help examiners prepare for the certification exam, we offer
a one-week patent law and evidence class, which also assists them in their
day-to-day examination practice. In
2004, 178 examiners passed the certification exam; in 2005 we improved, with
275 examiners passing the exam. The
promotion to GS-13 represents a level of independence in which the supervisor
is no longer responsible for day-to-day intensive review of the examiner’s work
product. In order for the examiner to
achieve this level of independence, we are ensuring that they have the skills
required to perform their job requirements with a high level of quality.
In
addition to the certification process, we are also currently recertifying our
primary examiners. Every three years, we
assess the quality of our most senior employees by a thorough review of their
written work. This process involves a
detailed review of both allowances and rejections written by the examiner,
continuing education on patent practice and procedure. By the end of FY 2006, over 1200 primary
examiners will have undergone recertification.
About 95% of examiners have been successfully recertified in each of
2004 and 2005. The 5% of examiners who
were not recertified were subject to an improvement period and repetition of
the recertification review process the following year.
These
two programs ensure that those employees who are ready to be promoted are
promoted, while others who may require additional coaching and training are
provided that opportunity.
Proposed
Rules Changes to Improve Patent Quality
Patent
applications that are complete, clear, well-drafted with well-identified,
pertinent references take less time to properly examine. Better application input contributes directly
to more efficient processing and to quality, thereby benefiting both the
examiner and the applicant.
We have proposed a new patent rules package that encourages patent applicants to be more open and rigorous throughout the application process. Specifically, our rules package proposes to instill more discipline in filing continuations on patent applications and to focus examiners on representative claims in complex patent applications.
Continuations
In today’s legal system, parties in a dispute do not have an infinite
number of appeals. Currently,
our patent system allows for almost unlimited reworking of applications through
“continuations.”
In fiscal year 2005, more than 85,000 of the USPTO’s 400,000 new patent
applications were a continued prosecution of an application that had previously
been before an examiner in the examination process. That is, almost one-quarter of the
applications that examiners had to review were ones they had previously
rejected, that the applicant had then changed in the hope that they now would
be acceptable. Our proposed changes will
not limit the ability of an applicant to file one continuation. However, second and subsequent requests for
continuations would be subject to a more stringent review process before the
requests are granted. It is the second
and subsequent continuations that account for about 20,000 of the 85,000 total
continuations we receive each year.
Representative Claims
Another critical part of the patent application is “the claims,” which
of course define what is being patented.
Every year, a small number of applications are filed with an
extraordinary number of claims.
We have proposed rules that will help us find the right balance between
allowing inventors to submit such applications when needed, while making it
feasible for examiners to effectively examine such a high volume of
claims. We have proposed a system in
which the applicant and examiner can focus on a set of representative claims
initially. In other words, if we
received an application with 50 claims, we might look only at the first 10
claims throughout the process of rejections and amendments. Then, assuming the representative claims were
accepted – but before the final patent was
issued -- we would examine all the claims. We think this approach will improve
efficiency and quality.
Legislative Initiatives
There are two proposals pending before the Subcommittee that
are widely supported throughout the intellectual property community and would
directly improve patent quality: a post-grant review procedure and a new
procedure for submission of prior art.
The USPTO continues to review other proposals before the Subcommittee.
Post-Grant Review Procedure
A new post-grant review procedure, recommended by the USPTO
and under consideration in this Subcommittee, is intended to improve upon existing
administrative reexamination alternatives. It would serve as a quicker,
lower cost alternative to expensive litigation in reviewing patent validity
questions. Such a procedure would complement rather than displace ongoing
quality-focused initiatives at USPTO, which include measures to address the
hiring, training, certification and retention of an adequate number of
examiners.
We look forward to working with the Subcommittee in
developing a post-grant review procedure that effectively serves the interests
of the patent community.
Submission of Prior Art
While the USPTO currently has a procedure for submission of
prior art after publication, which allows submission by third parties within
two months of publication, the procedure does not allow explanations or other
information about the patents or publications. This Subcommittee is examining a procedure
for the submission of third-party prior art as part of H.R. 2795, the Patent
Reform Act of 2005.
We encourage consideration of a change to the statute
governing this procedure to allow protests or oppositions by third parties
after pre-grant publication. Such a
change would allow those interested parties to explain why the prior art would
have a negative impact on the patentability of the claims. This
process, which would provide the examiner with information he or she might not
otherwise obtain, should result in a higher quality, more reliable patent.
We look forward to working with the Subcommittee to develop
a submission procedure that effectively and fairly balances the interests of
the patent applicant, interested third parties and the general public.
Business Methods Patents
An area of particular concern in
terms of quality is business methods patents.
There has been some suggestion that these patents have less stringent
standards than those for other patents.
In fact, last year, the USPTO allowed 11 percent of all
business methods applications (those in our Class 705 Data Processing: Financial, Business Practice, Management, or
Cost/Price Determination). All business methods allowances
go through a review process that involves either a patentability conference or
a “second pair of eyes” review process.
We focus on allowance conferences.
However, we conduct a “second pair of eyes” review for those senior
examiners who do not participate in allowance conferences.
In
fiscal year 2005, we hired 34 examiners for a total of 132 examiners in the
business methods area. In fiscal year
2006, our hiring goal is 26 new examiners.
So we anticipate having 150 examiners in the business methods area by
the end of the year, including attritions.
Further,
the USPTO is continuing our partnership efforts with industry and the patent
community on business methods patents, and these partnerships have historically
been very productive.
Conclusion
The ever-increasing importance of IP in today’s economy is
putting greater pressures on the patent examination system. The USPTO
has taken important steps to improve patent quality and is considering and planning more
initiatives to keep up with future demands.
We know
that a more quality-focused, efficient patent system benefits everyone and is
vital to the American economy. We
appreciate this opportunity to discuss with the Subcommittee our efforts to
help ensure that our patent system will continue to serve innovation in the
21st century.
Thank you.