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United States Patent and Trademark Office
Performance and Accountability Report Fiscal Year 2003
Management Discussion and Analysis

Table of Contents |  Management |  Financial |  Supplemental |  Auditor |  IG |  Other

Trademark Performance

Photo showing Jeffery M. Samuels, the new Chairman of the Trademark Public Advisory Committee, being sworn in by Anne H. Chasser, Commissioner for Trademarks.

Jeffery M. Samuels, the new Chairman of the Trademark Public Advisory Committee, is sworn in by Anne H. Chasser, Commissioner for Trademarks.

The past year brought a number of new challenges and commitments to the Trademark Organization that required a dedicated redirection of talent and resources to prepare for significant changes in trademark operations going forward into FY 2004. The most urgent need was to prepare the rules and systems in accordance with legislation implementing the Madrid Protocol. Trademarks will deliver the first major commitments promised by this Administration as addressed in the 21st Century Strategic Plan: complete electronic processing of trademarks and implementation of the Madrid Protocol.

During FY 2003, a record number of trademark applications were registered and disposed, and pending inventories were substantially reduced. The number of trademarks registered increased by more than seven percent to 143,424, including 185,182 classes, which increased by more than 12 percent. Total Trademark Office disposals were 238,759, including 305,040 classes. The Trademark Organization’s inventory of total applications under examination was reduced by ten percent from 479,628 files with more than 654,533 classes at the start of the year, to 431,805 files, including 575,901 classes at year-end.

The USPTO received 218,596 trademark applications, including 267,218 classes for registration in FY 2003. Filings in FY 2003 were 3.2 percent higher than filings in FY 2002. The increase, however slight, followed two years of decline: 21 percent from FY 2000 to FY 2001 and nearly 13 percent from FY 2001 to FY 2002 that were preceded by two consecutive years with increases of 27 percent.

Given the continued uncertainty in new filings, our strategy was to prepare for the transition to an electronic process by focusing attention on reducing existing paper application inventories to be in a better position to implement electronic file management in FY 2004.

Trademark e-Government

Photo showing a few of the items displayed before 
the Agriculture Committee during hearings on the use of geographical indicators for food and drinks.

A few of the items displayed before the Agriculture Committee during hearings on the use of geographical indicators for food and drinks.

The Trademark Organization is well positioned to support the objectives of the USPTO’s 21st Century Strategic Plan, which relies on electronic communications to offer market-based services and improve the availability of trademark information to more effectively serve an increasingly larger, global client-base. Internet access has provided advantages that were not possible in a paper environment; customers may now access information at their convenience that previously may not have been known or available to them, file applications on-line, and correspond electronically. Electronic filing and access increases the opportunity for filing for Federal registration, which provides protection to business owners and consumers by providing notice of marks in use. Electronic filing and information systems serve customers in two very important ways; by improving the time and accessibility of information and by improving the quality of the initial application and, therefore, the quality of the data captured and shared in the publication and registration of trademarks.

In FY 2003, we received 57.5 percent of the initial applications for registration electronically, an increase of more than 50 percent over FY 2002. Electronic filings are continuing to increase, with 62.5 percent filed electronically in September 2003. Enhancements were made in a number of forms, which were designed to make electronic filing more attractive by encouraging greater use and acceptance among those who had not yet adopted electronic communications as their preferred way to transact business with the Trademark Organization.

Our customers have the ability to access the same data used internally in the processing and examination of trademarks and conduct nearly all their trademark-related business electronically on the USPTO website. Customers may conduct an electronic search to determine the status of pending and registered trademarks, conduct a preliminary search prior to filing an application, access general information, examination manuals, treaties, laws and regulations, obtain weekly information on marks published, registered and renewed, and file applications. Some of the systems available to our customers include the Trademark Electronic Search System, the Trademark Application Registration Retrieval system and the Trademark Electronic Application System.

Customers can also obtain the weekly Trademark Official Gazette, Registration Certificates, and Updated Registration Certificates for the five most recent weekly issues electronically from the USPTO website as well as electronic access to the Trademark Manual of Examining Procedure. Internally, USPTO employees utilize the Trademark Information Capture and Retrieval System as the source of the electronic trademark file and the File Administration System for Trademarks, which allow trademark applications to be processed electronically from receipt through the first office action.

Pending Inventory

Total trademark applications pending in the USPTO declined by ten percent in FY 2003 to 431,800 with 575,900 classes, which dropped by 12 percent. Twenty-seven percent of the pending file inventory is in a post Notice of Allowance status awaiting the filing of a statement of use. The inventory of applications available for examination by Trademark examining attorneys at the end of the year was 239,800 files containing 321,200 classes, essentially unchanged from the start of the fiscal year. The difference was in the composition of available work, which increased by 42 percent for applications that had not undergone initial examination. The number of applications pending following initial examination decreased by 15 percent due to the effort to complete work on applications already under examination pending approval for publication and registration. The rise of first action pendency was consistent with the increase in unexamined new applications. The decline in pending inventories was reflected in the record number of applications that were registered and disposed of.

Telecommuting

Photo showing Anne H. Chasser, Commissioner for Trademarks, 
		  accepting the Best Organization for Teleworkers Award on behalf of the USPTO from 
		  Pam Tucker, President, Mid-Atlantic Telework Advisory Council.

Anne H. Chasser, Commissioner for Trademarks, accepts the Best Organization for Teleworkers Award on behalf of the USPTO from Pam Tucker, President, Mid-Atlantic Telework Advisory Council.

The Trademark Organization continues to be recognized as a leader in telecommuting in the Federal Government. The Trademark telecommuting program was initially designed so that examining attorneys could perform the same work and access the same information technology systems from home as they do in the office. In FY 2002, the total number of employees who work from home was further expanded to include more employees who could perform some of their work without access to Office information systems. As of September 30, 2003, of the 239 Trademark employees who are considered eligible, 138, or 58 percent, are currently working at least one day a week from home.

Trademarks implemented "hoteling" for a portion of its work-at-home workforce. Under the terms of this program, examining attorneys may work from home for a majority of the workweek using an automated reservation system to assign office space on an as-needed basis. The program met its objective to greatly reduce office space requirements and their associated costs. All of its work-at-home examining attorneys work under the agreement, which has allowed the Trademark Organization to consolidate its workforce and reduce office space requirements.

The USPTO received the Telework Coalition Award for the Trademark Work-at-Home Program. The award is presented annually to leading businesses and government agencies that promote and successfully achieve excellence in their telework practices.

Photo showing Deputy Under Secretary Dudas testifying before the Agriculture Committee regarding geographical indications.

Deputy Under Secretary Dudas testifying before the Agriculture Committee regarding geographical indications.

Quality

During the past year, the Trademark Organization worked to establish more consistent quality measures that would better reflect the current quality of examination by setting better indicators to assess performance. The criterion expands on the issues to be considered and new standards were developed for determining the quality of in-process office actions as “excellent” or “deficient” to better reflect more meaningful and rigorous standards of quality. The information from these reviews has been used to identify training that is necessary to enhance overall product quality and to improve the consistency of examination. Three training modules and an exam guide were prepared to provide specific materials to address recurring problems that were determined based on analyses of the reviews.

Specific performance results related to Trademark Organization goals and measures are as follows:

GOAL: AGILITY– Address the 21st Century Economy by Becoming a More Agile Organization

Under the 21st Century Strategic Plan, the USPTO will work with our IP partners to improve the efficiency of our processing systems by increasing the number of applications and communications received and processed electronically, create more coordinated and streamlined work processes, and best position the USPTO for the globalization that characterizes the 21st century economy. The following performance measure has been established to reflect the USPTO’s success and progress in meeting the 21st Century Strategic Plan goals for agility.

NEW MEASURE: Applications Filed Electronically

TRADEMARK APPLICATIONS FILED ELECTRONICALLY

Graph summarizing the target and actual rates for trademark applications filed electronically for the last 4 Fiscal Years.D

DATA VALIDATION AND VERIFICATION

  • Data source: Trademark Reporting and Monitoring (TRAM) system.
  • Frequency: Daily input, weekly reporting.
  • Data storage: TRAM and automated systems.
  • Verification: Accuracy of supporting data is controlled through internal program edits in the TRAM system and cross checks against other automated systems.
  • Data Limitations: None.
Target and Actual rates for Trademark Applications Filed Electronically for the Last Four Fiscal Years
  FY 2000 FY 2001 FY 2002 FY 2003
Target - - - 80.0%
Actual - - - 57.5% not met

Discussion: Target not met. The measure indicates USPTO’s support of, and applicants’ willingness to operate in an e-Gov environment and identifies the percent of basic trademark applications filed electronically. The goal is intentionally ambitious. The rate of filing trademark applications has progressed steadily over the past five years as a result of promotional events, improved functionality and enhancements that have been made to appeal to more customers, increasing to more than 62 percent of filings in September 2003.

GOAL: CAPABILITY– Enhance the Quality through Workforce and Process Improvements

Under the 21st Century Strategic Plan, the Trademark Organization will enhance current quality assurance programs to include a more-in-depth review of work in progress. This will include the implementation of in-process reviews, “second pair of eyes” reviews, and end-process reviews. In addition, the Trademark Organization is creating new programs for certifying the KSAs of their employees.

With the 21st Century Strategic Plan, the USPTO has developed a number of new measures to assess its achievement toward the capability goals. For those new measures, the USPTO will need to establish its baseline performance during FY 2004 before establishing its out-year targets and annual goals.

MEASURE: Improve the quality of trademarks by reducing errors

EXAMINATION QUALITY OF TRADEMARKS

Graph summarizing the Trademark Error Rates for the last 4 Fiscal Years.D

DATA VALIDATION AND VERIFICATION

  • Data source: Office of Trademark Quality
    Review Report.
  • Frequency: Daily input, monthly reporting.
  • Data storage: Automated systems, reports.
  • Verification: Manual reports and analysis.
  • Data Limitations: None.
Target and Actual Error Rates for Trademarks Issued for the last 4 Fiscal Years
  FY 2000 FY 2001 FY 2002 FY 2003
Target 3.6% 6.0% 5.0% 4.0%
Actual 3.4% 3.1% 4.3% 2.3% met

Discussion: Target met. Examination quality was 97.7 percent based on existing standards for assessing the clear error rate for determining the type of errors that could affect the registrability of a mark. The objective is to measure performance with respect to quality of the services rendered and the quality of trademarks registered. The USPTO will develop a new quality measure that will consider a broader scope of examiner work to better address and reflect meaningful measures of examination quality for FY 2004.

Examination quality was 97.7 percent based on existing standards for assessing the clear error rate for determining the type of errors that could affect the registrability of a mark. The review of pending files by the Office of Trademark Quality Review determined the clear error rate to be 2.3 percent for the year. Errors related to marks that would be considered “confusing similar” under section 2(d) of the statute were determined in 3.6 percent of applications for a quality rating of 96.4 percent. The quality rate was 98.4 percent for findings on procedural errors alone.

DISCONTINUED MEASURE IN FY 2003: Improve overall customer satisfaction

TRADEMARK CUSTOMER SATISFACTION

Graph summarizing the increase in customer satisfaction for trademarks issued for the last 4 Fiscal Years.D

DATA VALIDATION AND VERIFICATION

  • Data source: Customer surveys.
  • Frequency: Surveys are conducted and results are reported annually.
  • Data storage: Paper files and electronic files.
  • Verification: Internal statistician develops data instrument, conducts survey, and compiles results. Review of results is performed internally by Trademark management.
  • Data Limitations: None.
Target and Actual Customer Satisfaction Rates for Trademarks Issued for the last 4 Fiscal Years
  FY 2000 FY 2001 FY 2002 FY 2003
Target 72% 65% 72% 75%
Actual 65% 70% 65% 70% not met

Discussion: Target not met. Trademarks derive quality targets from internal objective data and customer satisfaction data obtained through annual surveys.

Results of the annual customer satisfaction survey indicate that considering all customer experiences with the Trademark process, 70 percent of our customers report satisfaction with our service, an increase of five percentage points from last year’s results. Overall, the Trademark Organization received high marks for its quality improvement initiatives, and outstanding customer service and satisfaction with electronic filing.

The Trademark Assistance Center continued to expand the number of services offered, both internally and externally in the past year, in an effort to improve handling of customer complaints and focus more attention on problem resolution. Service level, a measure indicating the percent of phone calls responded to within 20 seconds, declined slightly from the past year to 73 percent. Improvements that focus on identifying the source of customer complaints with the objective of preventing future occurrences were implemented during the year.

GOAL: PRODUCTIVITY– Accelerate Processing Times Through Focused Examination

In support of the 21st Century Strategic Plan, the USPTO will reduce trademark pendency and substantially cut the size of the work backlog. Trademarks will restructure the way it does business to be compatible with an e-Gov environment. The timely registering of trademarks supports innovation, technology, employment, business investment, and economic growth.

MEASURE: Reduce average first action pendency (months)

TRADEMARK FIRST ACTION PENDENCY

Graph summarizing the first action pendency for trademarks issued for the last 4 Fiscal Years. D

DATA VALIDATION AND VERIFICATION

  • Data source: TRAM system.
  • Frequency: Daily input, monthly reporting.
  • Data storage: TRAM, automated systems, reports.
  • Verification: Accuracy of supporting data is controlled through internal program edits in the TRAM system. Final test for reasonableness is performed internally by examining trademark attorneys and supervisory and program management.
  • Data Limitations: None.
Target and Actual Trademark First Action Pendency for the last 4 Fiscal Years
  FY 2000 FY 2001 FY 2002 FY 2003
Target 4.5 6.6 3.0 3.0
Actual 5.7 2.7 4.3 5.4 not met

Discussion: Target not met. The time from filing to mailing an examiner’s first office action increased by the end of the fiscal year to 5.4 months from 4.3 months at the end of the prior fiscal year. The increase was due in part to shifting priorities for examination to completing applications already under examination.

MEASURE: Reduce average total pendency (months)

TOTAL TRADEMARK PENDENCY

Graph summarizing the total pendency for trademarks issued for the last 4 Fiscal Years.D

DATA VALIDATION AND VERIFICATION

  • Data source: TRAM system.
  • Frequency: Daily input, monthly reporting.
  • Data storage: TRAM, automated systems, reports.
  • Verification: Accuracy of supporting data is controlled through internal program edits in the TRAM system. Final test for reasonableness is performed internally by examining trademark attorneys and supervisory and program management analysts.
  • Data Limitations: None.
Target and Actual Total Trademark Pendency for the last 4 Fiscal Years
  FY 2000 FY 2001 FY 2002 FY 2003
Target 18.0 18.0 15.5 15.5
Actual 17.3 17.8 19.9 19.8 not met

Discussion: Target not met. High levels of applications under examination from prior years kept overall pendency to registration, notice of allowance, or abandonment above the 13-month goal at 19.8 months. As the total number of applications under examination continues to be reduced and first action pendency declines once again to the three-month goal, overall pendency to registration will decrease.

NEW MEASURE: Efficiency

EFFICIENCY

Graph summarizing the efficiency rates for trademarks issued for the last 4 Fiscal Years.D

DATA VALIDATION AND VERIFICATION

  • Data source: TRAM system, Momentum,
    Metify ABM.
  • Frequency: Daily input, quarterly reporting.
  • Data storage: TRAM, Data Warehouse, Metify ABM.
  • Verification: Accuracy of supporting data is controlled through internal program edits in TRAM, Momemtum, Metify ABM. Quality control review of data by ABC and Program Business Teams.
  • Data Limitations: None.
Target and Actual Efficiency Rates for Trademarks Issued for the last 4 Fiscal Years
  FY 2000 FY 2001 FY 2002 FY 2003
Target - - - $683
Actual $568 $501 $487 $433 met

Discussion: Target met. This measure is a relative indicator of the efficiency of the trademark process. The measure is calculated by dividing total USPTO expenses associated with the examination and processing of trademarks (including associated overhead and support expenses) by outputs (office disposals). It should be noted that this measure does not represent the average life cycle cost of a trademark since office disposals are only one measure of USPTO products and services.

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