Mr. Chairman and Members of the Subcommittee:
Thank you for this opportunity to appear before you once
again to discuss the future of the United States Patent and Trademark Office
(USPTO). As always, Mr. Chairman, it is
a pleasure to work with you, Ranking Member Berman, and the other members of
the Subcommittee on the array of intellectual property issues which are so
vital to our nation’s economic security.
A little over three months ago, this Subcommittee conducted
an important oversight hearing on the operations and funding of the USPTO. At that hearing, I described the rather grave
situation that confronted the agency due to our increasingly large and complex
workload. For example, an
estimated seven million patent applications are currently pending in the
world’s examination pipeline, and the annual workload has been growing at a
rate of 20-30 percent. Because of this
unprecedented growth, patent pendency rates in the United States now average
over two years, and without significant changes to our method of processing
applications, data shows pendency soon will reach three to four years. The backlog of unexamined patent applications
continues to grow as well. We currently
have a backlog of approximately 400,000 applications, and this year we project
we will receive a total of 340,000 new patent applications. To complicate matters, the technologies we
are examining are increasingly complex, with applications sometimes accompanied
by the equivalent of millions of pages of supporting data.
At the April oversight hearing, I indicated that these trends might necessitate fundamental changes in the way USPTO operates if we are to accomplish our mission in a timely and quality-focused manner. To that end, earlier this year I initiated an aggressive top-to-bottom review of the agency to identify new and possibly nontraditional ways to improve quality and reduce pendency. Today I am pleased to report that, after a considerable team effort, that review is now complete. Most importantly, based upon our review, we have put forward a comprehensive plan -- the 21st Century Strategic Plan – to transform the USPTO into a quality-focused, highly productive, responsive organization supporting a market-driven intellectual property system. This Plan will boost productivity and substantially cut the size of the USPTO's inventory while transforming the agency into an information age, e-commerce based organization that reflects the values of President Bush's Management Agenda.
In
proposing this plan, Mr. Chairman, the USPTO has stepped up to the plate and
heeded the calls of the Administration, Congress, the owners of
intellectual property, the patent bar, and the public-at-large to boldly
address the challenges of improving quality, reducing pendency, and promptly
implementing e-Government. Not
surprisingly, the 21st Century Strategic Plan is not without controversy. It challenges the status quo and is
far-reaching. I submit, however, that
anything less would fall woefully short of what the times demand. Furthermore, it is the only existing plan
that addresses all of the challenges facing the agency, and does so within the
expectations articulated by Congress and the Administration.
* * *
The 21st Century
Strategic Plan is the USPTO’s roadmap for creating, over the next five years,
an agile and productive organization fully worthy of the unique leadership role
the American intellectual property system plays in the global economy. The Plan is predicated on behavioral changes
within the USPTO and a willingness to embrace change among all players in the
intellectual property system.
The Plan
is intended to incorporate the best ideas of American inventors and creators,
as well as our counterparts in other industrialized countries. It takes a global perspective by
envisioning the patent and trademark systems of the future that American
innovators will need to remain competitive around the world. It is built on the premise that American
innovators need to obtain enforceable intellectual property rights here and
abroad as seamlessly and cost-effectively as possible. The Plan emphasizes the need for the USPTO to
collaborate with other intellectual property organizations in automation,
global patent classification, and mutual reliance on search results.
The 21st
Century Strategic Plan pursues three main objectives. First, make USPTO’s processes simpler,
faster, and more accurate. Second,
listen more closely to the voices of USPTO applicants and to the demands of the
national and global marketplaces. Third,
be more productive while hiring 2,500 fewer examiners than was proposed
under the 2003 Business Plan -- and spending half a billion dollars less
than originally planned.
The new
initiatives in our Strategic Plan are targeted toward timeliness, e-Government,
employee development and competitive sourcing – all with a central quality
focus. If Congress provides
the USPTO with the funding and statutory changes necessary to implement this
new strategy, the Plan will:
Here are
some specifics on the Plan’s initiatives for improving quality and reducing
pendency.
Quality
must permeate every action taken by every employee of the USPTO. Accordingly, this Plan will assure quality by
hiring the people who make the best patent and trademark examiners, certifying
their knowledge and competencies throughout their careers at the USPTO, and
focusing on quality in all aspects of the examination of patent and trademark
applications. In addition, current
quality assurance programs will be enhanced by integrating reviews to cover all
stages of examination. For example,
quality will be engineered into our processing, including the selective
expansion of the “second-pair-of-eyes” review in advanced fields such as
semiconductors, telecommunications, and biotechnology. A statistically
meaningful sample of all first actions and final actions will be pulled on a
continuous basis and reviewed for quality and correctness, and information
regarding examination errors will be used for training and continuous quality
improvement actions. We believe
these initiatives will bolster confidence in the quality of U.S. patents and
trademarks, thereby spurring our economy and reducing litigation costs.
With
respect to pendency, the 21st Century Strategic Plan would
ensure a steady 18-month average examination duration time for patents – by far
the fastest in the world – and a 12-month pendency time for trademarks. This will be accomplished through a radical
redesign of the entire patent search and examination system based upon four
examination tracks, greater reliance on outside searches, and variable, incentive-driven
fees. Likewise, trademarks will
restructure the way it does business to be compatible with an e-Government
environment.
For
patents, the single-track examination process will be replaced by four
examination options that leverage search results of other organizations
and permit applicants to choose the timing of the processing of their
applications. As part of
this new process, the current basic filing fee (which now covers both the
search and the examination) will be replaced with a filing fee and separate examination fee.
This will allow applicants to file an application and delay deciding
whether to request examination for as long as 18 months from the earliest U.S.
filing date, giving them time to obtain a commercially provided search regarding
patentability and to decide whether the application has sufficient commercial
value to justify the costs of having an application examined. This change will eliminate
duplication of effort, encourage greater participation by the applicant
community and public, improve the quality of patents, and decrease processing
time. Indeed, we
anticipate that requiring a separate request for examination and a separate
examination fee could create a pre-examination “dropout” rate of about 10
percent of all applications. It should
be noted that this figure is a conservative estimate, and other industrial
property offices have even higher dropout rates. However, only actual experience with the new
system will show how much currently needless work will be saved.
In order
to achieve greater examiner productivity and reduce pendency, the Plan
also calls for outsourcing search and classification processes using
USPTO-certified search and classification firms and international patent
searches. With
approximately 45 percent of the USPTO’s applications coming from foreign
applicants who have filed in other patent offices first, this initiative will
enable us to leverage the work product from those other offices. This will result in increased productivity
for the USPTO and reduce the Office’s need to hire additional patent
examiners.
In
addition to separate filing and examination fees, other proposed revisions to
our fee structure in fiscal year 2003 include charging higher fees for
longer applications with more claims and charging less for shorter applications
with limited claims. Patent
applicants also will be given a new market-driven “rocket docket” option of
choosing an accelerated examination procedure with priority processing and a
pendency time of no longer than 12 months.
We are still finalizing the details for the “rocket docket” process,
however, so this option is not part of our proposed FY 2003 fee legislation.
Let me
make two important points on the proposed fee changes. First, enactment of our proposed FY 2003
fee legislation, while laying the groundwork for reforms of the examination
system such as four-track examination, only directly impacts our fee
structure. Separate legislation will
need to be enacted next year in order to fully institute the needed changes to
the examination system. Second, the Plan’s
proposed USPTO fee schedule compares quite favorably with the fee schedules at
other major industrial property offices.
For example, equivalent filing, issue and maintenance fees in the European
Patent Office and the Japan Patent Office would be approximately $54,000 and
$24,000, respectively, compared to our proposal of $12,000.
Once the 21st Century Strategic Plan is implemented,
market forces will drive our business model.
Fees will remain steady for the foreseeable future. Geography and time will be irrelevant when
doing business with the USPTO. We will
strengthen our ability to be ranked as one of the highest quality,
most-efficient intellectual property organizations in the world. Our products and services will be tailored to
meet the needs of customers. Examination
will be our core expertise. U.S.
industry and the public will benefit from stronger, more enforceable
intellectual property rights worldwide.
Our workplace will become a state-of-the art facility designed for the
21st Century.
The 21st
Century Strategic Plan will create a nimble, flexible enterprise that responds
rapidly to changing market conditions.
Under the Plan, we will make the USPTO a premier place to work; we will
rely on a cadre of highly trained and skilled employees; and we will place
greater reliance on the private sector, including drawing on the strengths of
the information industry. We will
enhance the quality of work life for our employees by exploring expansion of
work-at-home opportunities and moving to the new Carlyle campus facility in
Alexandria, Virginia. In addition, we
will establish alliances with our friends in other national and international
intellectual property organizations to strengthen American intellectual
property rights around the world.
* * *
This
Strategic Plan reflects both a thorough internal process review and a
systematic attempt to incorporate the best thinking of our applicants, USPTO
career experts, and the experiences and best practices of intellectual property
offices in other countries. We are
grateful for the wisdom and experience of the many individuals who contributed
to the Plan’s development, and for the candor and positive spirit of
representatives of industry groups and other associations who shared their
views. Key stakeholders also include our
dedicated employees, without whose commitment the Strategic Plan could not have
been developed and its success could not be assured.
This Strategic Plan
is only the first step toward creating a quality-focused, highly productive,
responsive USPTO that supports a market-driven intellectual property system for
the 21st Century. Once the initial
phases of this Plan have been supported, adopted and implemented, the USPTO
will explore further options to enhance its ability to operate more like a
business.
We intend to refine
and update our Strategic Plan periodically to adjust to changing conditions and
to incorporate the best thinking of the entire intellectual property
community. We are eager to work with
those who believe, as we do, that American innovators and businesses must have
the very best intellectual property system in the world. This 21st Century Strategic Plan represents
an important first step in the pursuit of this goal.
* * *
Mr. Chairman, the 21st Century Strategic Plan is
yet another manifestation of the Bush Administration’s firm commitment to
ensuring that the USPTO continues to lead the world in producing the most
timely and reliable intellectual property rights protection for American
innovators. I am hopeful that the
continued support of the members of this Subcommittee, coupled with the
Administration’s dedication to our agency, will enable the USPTO to meet the
challenges that lie ahead.
Implementation
of the 21st Century Strategic Plan will not be painless. It will require new ways of thinking among
USPTO employees and our users. It will
depend upon our ability to streamline operations and the enactment of President
Bush's budget request to fund these needed changes. It will require revisions to current
rules. It also will require
congressional support for enacting legislation relating to our fee schedule and
examination system.
Change is never easy, and there are those who say that they
cannot support a fee increase until USPTO is allowed to retain all of its fee
revenue. The USPTO does not have the
luxury of sitting back and waiting for that to occur. As many have stated before this Subcommittee,
the Office is in crisis and bold action is needed.
Mr. Chairman, we have embraced the counsel of many and put
forth an innovative, comprehensive plan for the future. We have upheld our end of the bargain. As noted earlier, the 21st Century
Strategic Plan is the only plan that exists that addresses all of the
challenges facing the Office and does so within the constraints imposed by
Congress and the Administration.
However, it is only a first step, and it must remain a continual work in
progress. President Franklin D.
Roosevelt once said: “Try something; if it doesn’t work, try something
else. But for goodness sake, try
something.” We have heeded that
advice. If aspects of the Plan fail to
meet expectations, we will say so and try something else. But failure to try is no longer an
option.
We need the support of this Subcommittee and of our user
community to ensure the USPTO can do the job our Founding Fathers intended us
to do: make the USPTO the world’s premier intellectual property office. This Plan offers a modern day roadmap to
remain faithful to their vision.