Strategic Goal 1: Optimize Patent Quality and Timeliness

Under Secretary David Kappos and Commissioner for Patents Robert Stoll joined the Supervisory Patent Examiners and Classifiers Organization’s (SPECO) and the Patent examiner corps to launch an initiative aimed at significantly reducing the backlog.

FY 2010 was a remarkable year for the Patent organization. Despite the continued effects of the economic downturn, the Patent organization successfully launched new and innovative initiatives to meet our strategic goals. Many of our routine programs, such as replacement hiring and funding workload-related contracts, were suspended due to budget constraints. Yet our commitment to making progress focused on ways to be more efficient and effective in our business processes, human capital management, policy, and managing our workload.

A market-driven approach to patent application processing was introduced and methods were devised for providing applicants more control over examination timing. We moved forward on refining optimal timeliness and patent quality measures, and recognized the ultimate solution will need to blend applicant needs with efficient patent application processing. The challenges of timely application processing are being met by a combination of increasing examiner capacity, improving efficiency, and leveraging work sharing programs. A quality patent removes risks to patent holders and strengthens the entire IP system.

Progress toward our goal of optimizing patent quality and timeliness was accomplished by completing the following programs and objectives. We made significant progress towards reducing the backlog and patent pendency, despite continued funding and hiring challenges. The improvements and increased efficiencies are seen in our performance metrics. Our progress as measured in actions per disposal show a downturn from 2.7 in FY 2009 to 2.42 in FY 2010. Productivity was up by 3.6 percent over the same time last year. The year’s total production units were 522,407 versus 504,481 production units in FY 2009. Allowances have increased from 189,120 last year to 240,438 this year. Final rejections ended the year with 258,436 final rejections, compared to 238,497 for the same period in FY 2009. Interviews have increased approximately 37 percent from last year.

Objective 1: Re-Engineer Patent Process to Increase Efficiencies and Strengthen Effectiveness

The Patent organization identified and implemented tools and policies that increased patent quality and timeliness. Efficiencies were found by redesigning systems and procedures so that redundant processes were removed. Our improved processes required a minimum of resources to complete patent prosecution. A streamlined examination process was created to improve both patent quality and timeliness.

The patent examiner production (count) system was analyzed and re-engineered to set the foundation for long-term pendency improvements, incentivize quality work, identification of allowable subject matter earlier in the examination, and encourage actions that decrease rework and increase examiner morale. This re-engineering effort was one of the most fundamental changes to the 30 year-old examiner count system. Senior management and the Patent Office Professionals Association (POPA) crafted a system that will result in better examination rates and results.

Patent processing systems were closely studied to determine where the improvements would provide the greatest increase in efficiency or increase in examination capacity. A multi-track application pathway introduced in FY 2010 gives applicants control over prioritizing their applications, and assists patents management in balancing workload. This approach is efficient for both the applicant and patents management in that they can now identify areas where increased examination capacity may be required.

Two examination programs, the Green Technology Acceleration Program and Project Exchange Program, were developed to specifically give applicants greater control over examination timing:

• The Green Technology Acceleration Program allows inventors with pending patent applications to be accorded special status and given expedited examination for applications directed to environmental and energy conservation technologies. This program succeeded in getting 71 vital green technology innovations to market sooner with a 48.9 percent allowance rate.
• The Project Exchange Program allows advancement of applications out of turn in exchange for express abandonment of another application. The Project Exchange enables applicants to determine and prioritize their applications, thus freeing examiners from reviewing applications that are no longer of value to their owners. The program was intended for use by small entities, but was expanded to include any and all applications.

USPTO patent employees received the Patent Innovation and Creativity Competition trophy for their creative ideas for improving the patent organizational and administrative process. From left to right: Dave Ometz, Allen Parker, Lin Ye and Jason Chan.

In addition to process efficiencies, the Patent organization focused on improving the examination workflow to increase the effectiveness of patent prosecution. The Compact Prosecution concept is a collection of changes in examination practice and culture that encourages examiners to find the core issues in a patent application and resolve them early in their prosecution. Examiners may accomplish this by conducting a complete initial search, issuing a complete first office action, and identifying allowable subject matter so as to expedite prosecution. Compact prosecution contains several elements such as implementation of specific training programs to improve after-final practices and final rejections. The results of this workflow improvement effort are seen in increased allowance rate and decrease actions per disposal.

Within the Compact Prosecution framework is the First Action Interview Program (FAIP) designed to resolve issues and identify potentially allowable subject matter early in the examination process. The FAIP encourages discussion between applicant and examiner prior to the First Office Action determination on the merits. This program was enhanced and expanded in FY 2010 to include select areas in all technologies. The Office of Patent Training (OPT) provided examiner interview training designed to improve examiner communication skills and encouraged examiners to hold interviews earlier in prosecution. This training also encouraged interviews later in prosecution to prevent unnecessary Requests for Continued Examinations (RCE).

The FAIP program was successfully offered to examiners. These efforts resulted in a 32.3 percent first action allowance rate, compared to an overall first action allowance rate of 15.5 percent. The Patent Pendency Performance Measures are presented in the Goal 1 Performance Measures section.

Changes to examination workflow included providing for how the Patent organization works with customers to resolve issues. The Ombudsman pilot program was launched to enhance the USPTO’s ability to assist applicants and/or their representatives with issues that arise during patent application prosecution. The program provides the applicant community with a dedicated resource to assist them when examination has stalled within normal channels of the Technology Center (TC). The Ombudsman representative will work with TC staff to address the concerns expressed by the applicant and/or their representative to get the application “back on track”. The Ombudsman pilot program is an important step forward toward improving the quality and efficiency of patent examinations.

The Patent organization started a multi-year effort to re-engineer the entire patent examination process from the time an application is filed all the way through to the granting of a patent. This re-engineering effort will improve examination efficiency, timeliness, and quality by using automated processes and leveraging work sharing. This effort is paramount in order to upgrade and redesign our information technology (IT) processing systems, and to allow innovative redesign of the examination process supported by state-of-the-art automated workflow capabilities. The Patent Efficiency Performance Measure is presented in the Goal 1 Performance Measures section.

Objective 2: Increase Patent Application Examination Capacity

Increasing examination capacity includes hiring more examiners and providing training to make current examiners more effective. While not the sole answer to decreasing pendency and reducing the backlog, increasing our capacity by hiring examiners will make a significant impact on achieving this goal. In FY 2010, the USPTO initiated a new hiring model that targets applicants with previous IP experience. Of the total of 276 new hires, 98 included new hires with IP experience. The major benefits to hiring IP experienced hires are that they require less training time and they can begin examining applications quicker than non-IP hires. Additionally, we focused our attention on reducing attrition by improving coaching and mentoring, resulting in the lowest attrition rate in recent years.

In addition, our capacity can be greatly expanded by developing a nationwide workforce. The nationwide workforce model consists of examiners using telework from an off-site location. The plan targets hiring experienced IP professionals interested in joining the USPTO, but who do not want to relocate to the Washington, D.C. region. This model is expected to result in a lower attrition rate and faster transition for new examiners to become productive. A nationwide workforce will reduce the need to expand the current location. The presence of the USPTO will in turn expand our pool of examiner candidates.

Objective 3: Improve Patent Pendency and Quality by Increasing International Cooperation and Work-Sharing

The USPTO continues to develop relationships with the major IP offices to study, review, and implement work sharing efforts, such as Patent Prosecution Highway (PPH) and Strategic Handling of Applications for Rapid Examination (SHARE). Work sharing remains an important tool for speeding the processing of applications filed in multiple jurisdictions by enabling patent offices to avail themselves of work done by other patent offices.

EPO, KIPO, and USPTO officials participate in the PCT Collaborative Search and Examination Workshop to discuss the IP5 search and examination pilot.

PPH leverages fast-track patent examination procedures available in participating offices to allow applicants to obtain corresponding patents faster and more efficiently. The USPTO currently has bilateral agreements with twelve countries on Paris-route PPH filings. This year the USPTO added the Hungarian Patent Office and the Russian Federal Service for IP, Patents and Trademarks (Rospatent) to the PPH Program, and is in discussions with several other IP offices. The first PPH pilot started in July 2006. Today, 4,107 PPH applications have been filed through September 2010; 2,130 applications were filed in FY 2010 alone. The USPTO eliminated the PPH petition fee requirement on May 25, to reduce a potential barrier to entry into the PPH program. The improvements to the PPH program have resulted in significant benefits and efficiencies including:

• First action allowance rate for PPH applications (i.e., the rate at which an application is allowed the first time the examiner considers the merits of the claims) is approximately double the first action allowance rate for all applications;
• Overall allowance rate for PPH applications is about double the allowance rate for all applications;
• The number of actions per disposal for PPH applications is approximately 1.7 percent compared to 2.42 percent of all applications; and
• An observed reduction in the number of claims in PPH applications of 15-20 percent compared to the number of claims that would have been examined in the same application.

A new PPH pilot program was established that uses the PCT work products that can be leveraged to obtain participation in the PPH for a related national application. Pilots between the Trilateral Offices (USPTO, European Patent Office (EPO), and Japan Patent Office (JPO)), and Korean IP Office (KIPO) have begun and by fiscal year-end 45,701 PCT-PPH applications were received. The USPTO is now working cooperatively with the other offices and users to dramatically increase the usage of the PPH in order to maximize its benefits.

Discussions with our trilateral partners were the basis for establishing the SHARE agreements, which maximizes re-use between offices to minimize duplication of examinations. When applications are filed in multiple offices, agencies prioritize and balance workloads to maximize the re-use of foreign search and examination results, and minimize duplication of examination work done in other IP offices.

Several new agreements or projects were developed this fiscal year with our trilateral partners. A SHARE agreement with United Kingdom Intellectual Property Office (UK-IPO) on exchanging cross-filing information to identify potential volumes, charting timing, exchanging quality assurance information, and identifying access tools was finalized in March. The foundations for this project have been completed. The USPTO reached agreement this year with the JPO to provide lists of JPO applications with examination results that USPTO examiners can re-use in the corresponding domestic case. Outside of any structured framework or agreement, this “freeform” work sharing is aimed at increasing efficiencies in examination by providing examiners with tangible examination results from that office. The pilot program between the USPTO and the KIPO was established to gather empirical data and test the feasibility of the SHARE concept continued until the fiscal year-end.

Additionally, the five largest IP offices (the EPO, the JPO, the KIPO, China, and the USPTO) have formed a partnership to develop a collaborative IT structure, processes, and procedures for sharing information. The objective is to facilitate work sharing and information exchange by building a foundation for information and work exchange. Several meetings were held and critical accomplishments were achieved, including developing high-level project plans and resource estimates for 2010-2011.

Objective 4: Measure and Improve Patent Quality

Patent quality translates into more certainty and economic value for patent holders. It also means less risk from infringement and claims challenges. Our goal to improve the quality of patents includes defining quality and the quality metrics. A joint Quality Task Force between the USPTO and the Patents Public Advisory Committee was initiated to enhance the overall patent quality. Two roundtables were held in May to gather input on how to improve patent quality and how to define metrics to measure progress. The patent quality improvements focuses, inter alia, on improving the process for obtaining the best prior art, preparation of the initial application, and examination and prosecution of the application.

In the interim, we changed our focus from end-process reviews to an emphasis on front-end quality. Reviews occur after the first action on the merits, rather than after prosecution is completed. The purpose behind the standard is to highlight those errors in examination that cause the applicant, or the USPTO, serious difficulties and/or unnecessary rework or expense in the prosecution process. Our quality metrics show good improvement. The final rejection/allowance compliance rate is now 96.3 percent, as compared to 94.4 percent in FY 2009. And the non-final in-process compliance rate is 94.9 percent as compared to 93.6 percent in FY 2009. The Patent Quality Performance Measures are presented in the Goal 1 Performance Measures section.

Quality improvement continues to drive many of the Patent organization’s new initiatives. The Patent organization improved the quality of its products and services using in-depth reviews of work-in-progress and enhanced end-process reviews to provide feedback to examiners on areas for improvement, targeted training, and safeguards to ensure competencies.

Training both patent managers and examiners continues to be an important element for achieving quality patent examination. Particular focus was given to providing Supervisory Patent Examiners (SPE) with a Leadership Development Program. Patent managers and supervisors participated in a newly developed, state-of-the-art leadership development program to enhance their supervisory skill set.

The OPT has developed a catalog of refresher training courses for patent examiners to enhance the quality of examination. In FY 2010, over 1,700 requests for refresher training have been registered in the Commerce Learning Center. The OPT will continue to enhance and expand the courses being offered.

Members of the Patent Office Professional Association (POPA) labor union and Patent Management team established a joint task force to develop recommendations to move the Agency significantly forward towards a new examiner count system which is properly aligned to achieve both efficient and high-quality examination. From Left: POPA Secretary Kathleen Duda, Technology Center (TC) 3600 Director Kathy Matecki, Deputy Commissioner for Patent Operations Margaret Focarino, POPA President Robert Budens, Under Secretary and Director David Kappos, Assistant Deputy Commissioner for Patent Operations Andrew Faile, POPA Assistant Secretary Pamela Schwartz, POPA Vice President Howard Locker, and TC 2100 Director Wendy Garber.

Performance management is a major part of managing the process, and motivating and coaching the patent examiners is the responsibility of the SPE. Several key elements that reflect the change in culture and quality were not reflected in the SPE Performance Appraisal Plan (PAP). In FY 2010, a task force was established to craft a new PAP that is in alignment with the USPTO 2010-2015 Strategic Plan and reflects agency priorities: enhanced examination quality, reduced application pendency, and improved stakeholder responsiveness. The new SPE PAP provides increased recognition of key SPE activities in coaching and mentoring examiners in their “art” units. The new PAP reflects better the varying roles and responsibilities of SPEs, and gives rating officials greater flexibility to provide fair and accurate assessments of SPEs’ accomplishments.

Following the draft of the new SPE PAP, the USPTO established a task force consisting of management and the patent examiners’ union (POPA) to craft a new patent examiner performance plan and to address performance management issues. The goal of the task force was to increase our collective understanding and increase the transparency of the PAP as well as improve the consistency of PAP administration. The task force’s interest was in increasing coaching, counseling, and mentoring as a means of dealing with performance and issues of conduct within the workplace. The revised PAP includes a single quality element for all examiners. The workflow element was changed to provide examiners greater opportunity to use their professional discretion to manage their workflow. The changes provide examiners:

• More control over when work is counted;
• Replaces the customer service element with a stakeholder interaction element with an emphasis on interview practice;
• Creates a more significant pendency award targeted towards agency goals;
• Addresses performance issues as fixable and treats conduct issues in a progressive manner;
• Retains the right to grieve both oral and written warnings; and
• Aligns goals with those cited in the Supervisory Patent Examiner PAP.

Objective 5: Improve and Enhance the Patent Appeal and Post-Grant Processes

The BPAI issued numerous precedential and informative decisions on both substantive and procedural issues. This year’s decisions relate to current issues of concern to the IP community, including the standard of review, obviousness, and indefiniteness, patentable subject matter. BPAI precedential opinions help create consistent authority to be followed in future BPAI decisions and in the Patent Examining Corps.

The BPAI took the following substantive steps to streamline the appeals process:

• First, the BPAI eliminated the redundant reviews of briefs for compliance with the Rules. The BPAI is now the sole reviewer of the brief resulting in a decrease in Notices of Non-Compliance from 30 percent to less than eight percent of the briefs reviewed.
• Second, the BPAI has taken steps to reduce remands thereby eliminating the back and forth between the Patent organization and the BPAI. The BPAI improved communication with its stakeholders by holding a roundtable on the rules package in January.
• Third, BPAI held the first ever Board Conference in April 2010 featuring a full day of presentations and panel discussion aimed at increasing stakeholder knowledge.

Objective 6: Develop and Implement the Patent End-To-End Processing System

A high quality patent system that works in a timely manner is critical to innovators and the American economy. More than 68.1 percent of all patent applications were filed and processed on electronic systems. This achievement continues to demonstrate the importance of our IT system. The E-Filing of Patent Applications Performance Measure is presented in the Goal 1 Performance Measures section.

Investment in our IT processing systems will accelerate the USPTO towards its goal of high quality and timely patents. The improvement to our IT processing systems will begin the work of setting up a new system that will enable end-to-end electronic processing of patent applications. The new system will be driven by three guiding principles: stakeholders needs lead the process; build small, build fast; and own the design.

The new system design must fill gaps in legacy patent IT systems that now require patent employees and external stakeholders to perform labor-intensive, manual business processes as well as provide improved system availability and reliability. The USPTO plans to deploy a new graphical user interface that will eliminate the need to learn multiple systems while improving the sharing of data among various business functions. The new systems will provide the patent examiner with improved search tools and docket management systems. The current Web site will be improved through the use of Web 2.0 assistance technologies and make available the USPTO patent examiner search systems to the public via a Web 2.0 interface.

Goal 1 Performance Measures

Patent Pendency Performance

The two primary measures of the Patent organization’s processing time are: (1) Average First Action Pendency, which measures the average time in months from filing until an examiner’s initial determination is made of the patentability of an invention; and (2) Average Total Pendency, which measures the average time in months from filing until the application is issued as a patent or abandoned by the applicant.

Our measures of pendency, both Average First Action Pendency and Average Total Pendency, reflect a slight increase from the previous year. The measure of actual Average First Action Pendency for FY 2010 was 25.7 months, slightly missing the goal of 25.4 months. The actual Average Total Pendency of 35.3 months was slightly higher than the target of 34.8 months. During FY 2010, patent processing systems were closely studied to determine where improvements could be made to provide the greatest increase in efficiency, examination capacity, and workflow. The Patent organization then executed these improvements across the board. One significant change was the count system which gave examiners more time to examine each application as a clear sign that quality is our first priority. Even though incoming applications were four percent over projected filings, our workforce was very productive in significantly decreasing the backlog down to 726,331 utility, plant, reissue and design (UPRD) applications. We expect to meet or exceed next year’s targets as our improvements to workflow and patents systems are finalized; and our funding is sufficient to hire and utilize overtime at planned levels.

First Action Pendency

Final Action Pendency

Patent Quality Performance

Quality improvement continues to drive many of the Patent organization’s new initiatives. The Patent organization continues to improve the quality of its products and services using in-depth reviews of work-in-progress and enhanced end-process reviews to provide feedback to examiners on areas for improvement, targeted training, and safeguards to ensure competencies. In changing our focus from end-process reviews to an emphasis on front-end quality, the Patent organization has replaced prior year’s quality measures with two new measures: Final Rejection/Allowance Compliance Rate and the Non-Final In-Process Examination Compliance Rate. The final rejection/allowance compliance rate gives the percentage of UPRD allowances and final rejections reviewed that were found to be compliant with applicable rules and laws regarding final patentability determination. The non-final in-process examination compliance rate gives the percentage of UPRD office actions (prior to allowance or final rejection) that were found to be in compliant with applicable rules and laws.

Patent Final Rejection/Allowance Compliance Rate

Patent Non-Final In-Process Examination Compliance Rate

Patent E-Filing and E-Management

The USPTO also created a fully electronic patent application management process whereby all patent examiners, technical support staff, and adjunct users can access an electronic image of all patent applications. Patent automation includes more than a dozen specialized applications used in patent examination, multiple search systems, databases, and commonly used office applications.

The USPTO continues to provide and enhance the tools for applicant’s use for patent application filing. The use of electronic filing has risen dramatically from last year when only 82.4 percent of applications were filed electronically. We expect to meet or exceed next year’s targets as our improvements to workflow and patents systems are finalized.

Patent Efficiency

Measures the relative cost-effectiveness of the entire patent examination process over time, or the efficiency with which the organization applies its resources to production.