U.S. Patent And Trademark Office: Hiring Efforts Are Not	 
Sufficient to Reduce the Patent Application Backlog (04-SEP-07,  
GAO-07-1102).							 
                                                                 
Increases in the volume and complexity of patent applications	 
have lengthened the amount of time it takes the U.S. Patent and  
Trademark Office (USPTO) to process them. In addition, concerns  
have continued about USPTO's efforts to hire and retain an	 
adequate patent examination workforce that can not only meet the 
demand for patents but also help reduce the growing backlog of	 
unexamined patent applications. In this context, GAO was asked to
determine for the last 5 years (1) USPTO's process for		 
identifying its annual hiring estimates and the relationship of  
these estimates to the patent application backlog; (2) the extent
to which patent examiner hiring has been offset by attrition, and
the factors that may contribute to this attrition; and (3) the	 
extent to which USPTO's retention efforts align with patent	 
examiners' reasons for staying with the agency. For this review, 
GAO surveyed 1,420 patent examiners, and received an 80 percent  
response rate.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-1102					        
    ACCNO:   A75570						        
  TITLE:     U.S. Patent And Trademark Office: Hiring Efforts Are Not 
Sufficient to Reduce the Patent Application Backlog		 
     DATE:   09/04/2007 
  SUBJECT:   Attrition rates					 
	     Employee incentives				 
	     Employees						 
	     Hiring policies					 
	     Patents						 
	     Staff utilization					 
	     Strategic planning 				 
	     Human capital					 
	     Human capital management				 
	     Incentives 					 
	     Patent applications				 

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GAO-07-1102

   

     * [1]Results in Brief
     * [2]Background
     * [3]USPTO's Annual Hiring Estimates Are Determined by Funding an

          * [4]USPTO's Funding Levels and Supervisory and Training Capacity

     * [5]Attrition Has Greatly Offset Hiring over the Last 5 Years, a

          * [6]Over the Last 5 Years, One Patent Examiner Has Left USPTO fo
          * [7]USPTO Management Links Attrition to Employees' Personal Reas

     * [8]Retention Incentives and Flexibilities Provided over the Las
     * [9]Conclusion
     * [10]Recommendation for Executive Action
     * [11]Agency Comments and Our Evaluation
     * [12]GAO Contact
     * [13]Staff Acknowledgments
     * [14]GAO's Mission
     * [15]Obtaining Copies of GAO Reports and Testimony

          * [16]Order by Mail or Phone

     * [17]To Report Fraud, Waste, and Abuse in Federal Programs
     * [18]Congressional Relations
     * [19]Public Affairs

Report to the Ranking Member, Committee on Oversight and Government
Reform, House of Representatives

United States Government Accountability Office

GAO

September 2007

U.S. PATENT AND TRADEMARK OFFICE

Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog

GAO-07-1102

Contents

Letter 1

Results in Brief 4
Background 6
USPTO's Annual Hiring Estimates Are Determined by Funding and
Institutional Capacity and Are Unlikely to Reduce the Patent Application
Backlog 9
Attrition Has Greatly Offset Hiring over the Last 5 Years, and Agency
Management and Patent Examiners Disagree about the Reasons for Attrition
13
Retention Incentives and Flexibilities Provided over the Last 5 Years
Generally Align with the Primary Reasons Patent Examiners Identified for
Staying at USPTO 19
Conclusion 23
Recommendation for Executive Action 23
Agency Comments and Our Evaluation 23
Appendix I Objectives, Scope, and Methodology 25
Appendix II Selected Survey Results 31
Appendix III Comments from the Department of Commerce 36
Appendix IV GAO Contact and Staff Acknowledgments 38

Tables

Table 1: Retention Incentives and Flexibilities Provided by USPTO by
Category, and Other Retention Efforts, Fiscal Years 2002 through 2006 20
Table 2: Number of Bonuses and Bonus Amounts USPTO Awarded, and Number of
Patent Examiners Participating in the Telework Program in Fiscal Years
2002 through 2006 21
Table 3: Patent Examiners' Views on Compensation-Related and Enhanced Work
Environment Incentives and Flexibilities in Decreasing Order of Importance
22
Table 4: Summary of Patent Examiner Population and Survey Sample by
Stratum 27

Figures

Figure 1: USPTO Patent Examiner Projected Hiring Estimates and Actual
Number Hired, Fiscal Years 2002 through 2006 11
Figure 2: Patent Examiner Attrition by Years of Experience, Fiscal Years
2002 through 2006 14
Figure 3: Estimated and Actual First Actions Completed, Fiscal Years 2002
through 2006 18

Abbreviations

GS general schedule
OPM Office of Personnel Management
PALM Patent Application Locating and Monitoring
POPA Patent Office Professional Association
UPR utility, plant, and reissue
USPTO U.S. Patent and Trademark Office

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separately.

United States Government Accountability Office

Washington, DC 20548

September 4, 2007

The Honorable Tom Davis
Ranking Member
Committee on Oversight and Government Reform
House of Representatives

Dear Mr. Davis:

Protecting intellectual property rights and encouraging technological
progress are important for ensuring the current and future competitiveness
of the United States. The U.S. Patent and Trademark Office (USPTO) helps
protect the nation's competitiveness by granting patents for innovations
ranging from new treatments for diseases, to new wireless technology
applications, to new varieties of plants.^1 USPTO's ability to keep up
with the demand for patents is essential for achieving its mission.
However, increases in both the volume and complexity of patent
applications have lengthened the amount of time it takes the agency to
process them. As a result, the inventory of patent applications that have
not yet been reviewed, called the backlog, has been growing for over 15
years--since fiscal year 2002 alone, the backlog has increased by nearly
73 percent to about 730,000 applications.

Inventors submit applications to USPTO to obtain a patent for their
inventions and the right it affords the holder to exclude others from
making, using, or selling the patented item in the United States. USPTO is
funded by fees collected from the public for specific activities related
to processing applications. The spending of these fees is subject to
provisions determined by Congress in annual appropriations acts. USPTO
relies on a workforce of nearly 5,000 patent examiners--attorneys,
engineers, and other scientific and technical professionals--to review and
make decisions on patent applications. The number of these professionals
that USPTO hires, as well as the overall size and experience of the patent
examination workforce, affects the number of applications that can be
reviewed in any given year. As part of the review process, patent
examiners are assigned what is known as a biweekly "production goal" on
the basis of their position in the agency and the types of patent
applications they are assigned to review.^2 Production goals are the
number of specific actions and decisions that patent examiners must make
about patent applications they review during a 2-week period.^3 Patent
examiners' performance is assessed biweekly on their ability to meet their
production goals; their inability to meet these goals could have an impact
on their compensation and continued employment with the agency. However,
as we noted in 2005, the assumptions underlying the agency's production
goals were established over 30 years ago and have not since been updated.

^1USPTO, an agency within the Department of Commerce, consists of two
organizations: one for patents and one for trademarks. This report focuses
on the patent organization.

Since 2000, USPTO has implemented a variety of human capital flexibilities
intended to help recruit and retain enough patent examiners and maintain a
workforce that is sufficient to meet the demand for patents. These
flexibilities have included the use of recruitment bonuses, law school
tuition reimbursement, and a casual dress policy. In 2005, in response to
congressional concerns about USPTO's efforts to attract and retain a
qualified workforce, we reported that it was too soon to determine the
long-term success of USPTO's recruitment and retention efforts because, in
part, they had been inconsistently sustained during the limited time they
had been in effect, and that not all of the planned initiatives had been
implemented.^4 However, concerns have continued because of increasing
patent examiner attrition, especially among patent examiners who have been
at the agency for less than 5 years, which is causing the workforce to
grow at a slower rate than would be expected given the number of patent
examiners the agency has been hiring each year.^5

^2USPTO assigns patent applications to one of its eight technology centers
for review: (1) Biotechnology and Organic Chemistry; (2) Chemical and
Materials Engineering; (3) Computer Architecture, Software, and
Information Security; (4) Communications; (5) Semiconductors, Electrical
and Optical Systems and Components; (6) Transportation, Electronic
Commerce, Construction, Agriculture, National Security and License and
Review; (7) Mechanical Engineering, Manufacturing, and Products; and (8)
Designs for Articles of Manufacture.

^3USPTO tracks two key milestones in the patent application process to
evaluate patent examiners' performance. One milestone is the patent
examiner's initial action on the merits of the case. Most patent
applications are removed from the backlog when this initial action is
made. The other milestone is when the application is allowed, abandoned,
or sent to the Board of Patent Appeals and Interferences.

^4GAO, Intellectual Property: USPTO Has Made Progress in Hiring Examiners,
but Challenges to Retention Remain, [20]GAO-05-720 (Washington, D.C.: June
17, 2005).

In this context, you asked us to determine, for the last 5 years, (1)
USPTO's process for identifying its annual hiring estimates and the
relationship of these hiring estimates to the patent application backlog;
(2) the extent to which patent examiner hiring has been offset by
attrition at USPTO, and what factors may contribute to patent examiners'
decisions to leave the agency; and (3) the extent to which the retention
incentives and flexibilities USPTO has implemented align with patent
examiners' reasons for staying with the agency.

To determine USPTO's process for developing annual hiring estimates and
the relationship these estimates have to the patent application backlog,
we interviewed agency officials and reviewed agency documents and reports
by other organizations relating to USPTO's workforce planning process,
including data the agency used to identify the number of patent examiners
it planned to hire in each of the last 5 fiscal years. We analyzed patent
examiner and patent application data for the last 5 fiscal years, as well
as USPTO's projections of that data through fiscal year 2012. In addition,
we reviewed the Office of Personnel Management's (OPM) workforce planning
guidance and interviewed officials from OPM's Human Capital Assessment and
Accountability Framework Office to develop criteria to assess USPTO's
workforce planning process. To determine the extent to which patent
examiner hiring has been offset by attrition at USPTO over the last 5
years, we analyzed patent examiner workforce, hiring, and attrition data
from this time period. To determine factors that may contribute to patent
examiners' decisions to leave the agency, we conducted a Web-based survey
of a stratified random sample of 1,420 USPTO patent examiners. Overall, we
received an 80 percent response rate to our survey. Estimates based on
this survey allow us to project our results to all patent examiners at
USPTO with a 95 percent level of confidence. All percentage estimates
included in this report have a 95 percent confidence interval with plus or
minus 5 percentage points. To address this objective, we had to rely on
the views of current patent examiners because USPTO does not maintain
contact information for patent examiners that have left the agency and we
could not identify any organizations that maintain this information for
USPTO staff. In addition, we interviewed USPTO officials, representatives
of the patent examiner union--the Patent Office Professional Association
(POPA)--and an official from the American Intellectual Property Law
Association. To determine the extent to which the retention incentives and
flexibilities provided by USPTO align with patent examiners' reasons for
staying with the agency, we interviewed USPTO officials about the
retention incentives and flexibilities they have used in the past 5 years,
reviewed our previous report on USPTO's recruitment and retention efforts,
interviewed representatives from POPA and an official from the American
Intellectual Property Law Association to obtain their perspectives on
factors affecting patent examiner retention and workload, and used the
Web-based survey described above to obtain patent examiners' views on
USPTO's retention incentives and flexibilities. Specifically, we sought
patent examiners' views on the reasons they would choose to stay at the
agency. Appendix I contains a more detailed discussion of our scope and
methodology. We conducted our work from August 2006 through July 2007 in
accordance with generally accepted government auditing standards.

^5USPTO includes patent examiners who transfer or are promoted out of the
patent examination workforce to another position within the agency in its
attrition count, in addition to those patent examiners who leave the
agency. This report uses USPTO's inclusive definition of attrition in
order to be consistent with the agency's projections used in this report,
and therefore will be different from USPTO attrition data as reported by
the Office of Personnel Management, which does not include intra-agency
transfers or promotions as part of attrition.

Results in Brief

In each of the last 5 years, USPTO has identified its annual hiring
estimates on the basis of the agency's funding levels and institutional
capacity to support additional staff and not on the existing backlog or
the expected patent application workload. Because of its increasing
workload relative to its existing workforce, over the last 5 years, USPTO
has had to hire additional patent examiners each year. The primary factors
that determined USPTO's annual hiring estimates during this time have been
the agency's annual funding levels and its capacity to train and supervise
new patent examiners. About 18 months before the start of the hiring year,
USPTO considers these factors to determine its projected hiring estimates
for the coming year. During these 18 months, the agency refines these
estimates on the basis of its most current budget and patent examination
workforce data to determine the number of patent examiners the agency can
actually hire. In each of the last 5 years, for various reasons, the
number of patent examiners the agency actually hired differed from the
hiring estimate that the agency had originally projected. For example, the
projected hiring estimate for fiscal year 2004 was 750 patent examiners,
but the agency actually hired 443 because of subsequent funding
limitations. USPTO's current process is consistent with workforce planning
strategies endorsed by OPM, though it is a significant deviation from the
agency's previous workforce planning strategy, which was more directly
linked to the patent examination workload. Over the last 5 years the
agency has moved away from its prior strategy because it realized that it
did not have the institutional capacity to train and supervise the
relatively large number of new patent examiners it would need to hire
annually to keep pace with the increasing number of incoming patent
applications expected each year. Although shifting to its current approach
has enabled USPTO to better match its hiring estimates to its
institutional training and supervisory capacity, this approach does not
take into account how many patent examiners are needed to reduce the
backlog of existing patent applications or address the expected inflow of
new applications. Consequently, the patent application backlog has
continued to increase, and it is unlikely that the agency will be able to
reduce the backlog simply through its hiring efforts.

From 2002 through 2006, patent examiner attrition has continued to
significantly offset USPTO's hiring progress. Although USPTO is hiring as
many new patent examiners as it has the annual capacity to supervise and
train, for nearly every two patent examiners it has hired over the last 5
years at least one has left the agency. Specifically, USPTO hired 3,672
patent examiners between 2002 and 2006, and 1,643 patent examiners left
the agency during this time. More importantly, of those who left, 70
percent had been at USPTO for less than 5 years. This is a significant
loss to the agency because, according to USPTO officials, new patent
examiners are primarily responsible for making the initial decisions on
applications, which removes them from the backlog. We found that within
the agency there is significant disagreement about why patent examiners
are continuing to leave. According to USPTO management, patent examiners
leave primarily for personal reasons--for example, because the job is not
a good fit for them or they need to relocate because of a spouse's job. In
contrast, patent examiners, and the union officials who represent them,
identified unrealistic agency production goals, which were established 30
years ago, as one of the primary reasons patent examiners may choose to
leave. For example, union officials told us that attrition can primarily
be attributed to the insufficient amount of time provided to patent
examiners to meet their production goals. This was supported by our survey
of patent examiners, in which 67 percent indicated that the agency's
production goals were among the primary reasons they would consider
leaving USPTO. Moreover, to meet their production goals, the majority of
patent examiners had to work substantial unpaid overtime in the last 12
months, while many others worked while on annual leave. According to one
of our survey respondents, "vacation time means catch up time." Such a
large percentage of patent examiners working extra time to meet their
production goals, is an indication that USPTO's production goals may no
longer accurately reflect the time patent examiners need to review
applications. Given the high rate of attrition that may result, in part,
from such outdated production goals, we are recommending that USPTO
undertake a comprehensive evaluation of how it establishes these goals and
revise these goals as appropriate.

The retention incentives and flexibilities that USPTO has provided over
the last 5 years generally align with the primary reasons patent examiners
identified for staying at the agency. USPTO management told us that their
most effective retention efforts have been those that provide additional
compensation to and an enhanced work environment for patent examiners.
Specifically, USPTO officials identified the agency's special pay rates,
which can be more than 25 percent above federal salaries for comparable
positions; the agency's bonus structure, which allows patent examiners to
earn various cash awards for exceeding production goals; and opportunities
for patent examiners to work either part-time or full-time from remote
locations as being the most effective retention measures for the agency.
For example, in fiscal year 2006, USPTO awarded 4,645 bonuses to patent
examiners totaling over $10.6 million; patent examiners may receive up to
three different types of bonuses in a fiscal year. That same year,
approximately 20 percent of patent examiners participated in the agency's
telework program, which allows patent examiners to work some or all of
their time from an off-site location, and approximately 10 percent of
patent examiners were enrolled in the hoteling program, through which
USPTO provides equipment to those patent examiners who are approved to
work full-time from an off-site location. According to our survey, most
patent examiners generally identified these types of retention incentives
and flexibilities as among the most important reasons to stay at the
agency. For example, 58 percent of patent examiners identified salary, and
49 percent flexible work schedules, as the primary reasons for staying
with the agency.

In its written comments on a draft of our report (reprinted in app. II),
the Department of Commerce agreed with our findings, conclusions, and
recommendation. In addition, the agency provided technical comments that
we have incorporated as appropriate.

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. Patent
examiners review these applications 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.

           o First action. Patent examiners notify applicants about the
           patentability of their invention through what is called a first
           action. 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, publications and U.S. and international patents.

           o 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 (also known as quotas) on the
basis of the number of production units--composed 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 to measure patent examiner performance
are based on the same assumptions that USPTO established in the 1970s. At
that time, the agency set production goals in 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 the patent examiner's
experience (as determined by the patent examiner's position in the agency)
and the type of patent application reviewed. As a result, these goals vary
depending upon the patent examiner's position in the federal government's
general schedule (GS) pay scale and the technology center in which the
patent examiner works.^6 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. In contrast, GS-7 patent
examiners working on these two types of applications are expected to
achieve two counts in 45.1 and 28.7 hours, respectively.

^6Technology centers specialize in specific areas of science and
engineering.

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. In 2002,
we reported that the patent application backlog had increased by nearly
250 percent from 1990 to 2001, and that USPTO had projected that the
inventory would increase to between 393,000 and 512,000 in fiscal year
2002.^7 In addition, we reported that the agency had made three
significantly different predictions about the future of the backlog in
three separate reports that were based on different assumptions:

           o In its Fiscal Year 2002 Corporate Plan, in 2001, USPTO projected
           that the backlog would increase to almost 1.3 million by the end
           of fiscal year 2006.
           o In USPTO's Business Plan, in 2002, the agency projected that the
           backlog would increase to about 584,000 through fiscal year 2007.
           o In the 21st Century Strategic Plan, in 2002, USPTO projected
           that the backlog would decrease to about 144,000 through fiscal
           year 2007.^8

In 2005, we also reported on USPTO's efforts and challenges in attracting
and retaining a qualified patent examination workforce. Specifically, we
reported that USPTO faced human capital challenges because, among other
things, it had not established an effective mechanism for managers to
communicate and collaborate with patent examiners, and managers and patent
examiners had differing opinions on the need to update the monetary award
system that is based on assumptions of the time it takes to review a
patent application that were established in 1976. We recommended that
USPTO develop formal strategies to improve communication and collaboration
among management, patent examiners, and the union to resolve key issues
identified in the report, such as the assumptions underlying the quota
system. In response to that recommendation, USPTO conducted an internal
survey on communication, and is working to develop a communication
strategy on the basis of the results. However, the agency has not
addressed the issues we identified relating to the assumptions underlying
the quota system.

^7GAO, Intellectual Property: Information on the U.S. Patent and Trademark
Office's Past and Future Operations, [21]GAO-02-907 (Washington, D.C.:
Aug. 23, 2002).

^8USPTO's Corporate Plan was submitted with the fiscal year 2002 budget.
USPTO's Business Plan was the agency's first 5-year strategic plan. It was
replaced by the 21st Century Strategic Plan after a new Director decided
the Business Plan did not go far enough.

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

Over the last 5 years, as a result of its increasing workload relative to
its existing workforce, USPTO determined that it would need to hire
additional patent examiners each year. However, the agency 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. While
the process USPTO uses to identify its annual hiring estimates is
consistent with OPM's workforce planning strategies and has enabled the
agency to better match its hiring estimates to its institutional capacity,
it is unlikely that the agency will be able to reduce the patent
application backlog simply through its hiring efforts.

USPTO's Funding Levels and Supervisory and Training Capacity Determine Its
Annual Hiring Estimates

According to USPTO, during the last 5 years, the agency has used its
available funding levels and its capacity to supervise and train patent
examiners as the primary factors for identifying its projected annual
hiring estimates. 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 budget submission timeline. As part
of this process, the agency considers expected funding levels and patent
examiner workforce data that are available at that time.^9 On the basis of
these data, USPTO next 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 would be able to hire, and
used the number of patent examiners it had hired in the most recent year
as a guide for its projected hiring estimate. However, in fiscal years
2003 through 2006, USPTO determined that funding levels would not be a
limiting factor for hiring, and therefore established its hiring estimates
primarily based on its institutional capacity to supervise and train
patent examiners.

^9In commenting on a draft of this report, USPTO stated that it uses a
robust forecasting and modeling process to determine the optimal hiring,
staffing, and production levels. This model was evaluated by the National
Academy of Public Administration and determined to be appropriate. While
we acknowledge that USPTO uses this model to identify optimal hiring
levels, we found that the determination of projected estimates was made on
the basis of funding levels and the capacity to support additional staff.

In determining its institutional capacity to supervise and train new
patent examiners, USPTO considers a number of factors. For example, the
agency estimates its supervisory capacity by determining how many
additional patent examiners can be placed in each of the technology
centers. 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 a patent application, only
supervisors can authorize a new patent examiner's decision to approve or
reject a patent application.^10 Therefore, the agency tries to ensure that
the patent-examiner-to-supervisor ratio is about 1 supervisor for every 12
patent examiners; otherwise it could result in delays and inefficiencies
in making initial and final decisions on patent applications. Similarly,
USPTO's training capacity is determined by the number of patent examiners
the agency believes it can train in a year. Before fiscal year 2006,
training capacity was determined by how many patent examiners could be
accommodated in the required training courses offered by the agency to new
patent examiners. This training consisted of 2- or 3-week courses that
were 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, USPTO continues to refine them to
reflect changes that might occur during the 18-month period. For example,
in 2002 USPTO established a projected hiring estimate of 750 patent
examiners for fiscal year 2004 when it created its budget submission for
OMB. However, USPTO actually hired 443 patent examiners in fiscal year
2004 because of budget constraints that had to be considered after its
original estimates had been developed. Figure 1 shows USPTO's projected
and actual hiring numbers for fiscal years 2002 through 2006.

^10We are including both supervisory patent examiners and primary
examiners as supervisors for the purpose of this report.

Figure 1: USPTO Patent Examiner Projected Hiring Estimates and Actual
Number Hired, Fiscal Years 2002 through 2006

The reasons for the differences between projected hiring estimates and the
number of patent examiners hired in fiscal years 2002 through 2006 were
primarily related to 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. Conversely, in fiscal years 2005 and 2006, USPTO hired
more patent examiners than originally planned because the agency received
greater funding for those years than originally anticipated.

The way in which USPTO identifies annual patent examiner hiring estimates
is generally consistent with workforce planning strategies endorsed by
OPM. OPM has identified key elements that agencies should consider when
planning to hire additional personnel, and OPM officials told us that
these key elements are well recognized throughout the field of workforce
planning. 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 in identifying its hiring estimates, USPTO generally applies
these principles because it makes decisions on the basis of trends in
hiring, attrition, and total workforce data from recent years, and
identifies current losses due to attrition when identifying its annual
hiring estimates and estimates of attrition for the hiring year.

Although consistent with OPM's workforce strategies, USPTO's current
approach is significantly different from the approach that the agency used
prior to fiscal year 2002. At that time, the number of patent examiners
USPTO wanted to hire was based on the number of patent applications the
agency expected to receive in the hiring year, as well as on the
anticipated patent application backlog at the beginning of the hiring
year. According to USPTO officials, since fiscal year 2002, the agency has
moved away from this approach because it realized that it could no longer
supervise and train enough patent examiners to keep up with the increasing
workload.

However, USPTO recognizes that it needs to increase its institutional
capacity to hire more patent examiners, and in this regard is taking steps
to increase its training and supervisory capacity. For example, to
increase its training capacity, USPTO implemented an 8-month training
program in fiscal year 2006 called the Patent Training Academy that will
provide the agency a constant annual training capacity of 1,200 new patent
examiners for each of the next 5 years. USPTO also believes that the
academy may indirectly improve the agency's supervisory capacity because
it will better prepare new patent examiners to start work in a technology
center, and therefore they will need less supervision and on-the-job
training. USPTO plans to monitor new patent examiners after they have
graduated from the academy in order to determine if the agency can further
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 will
continue to grow, and is expected to increase to over 1.3 million at the
end of fiscal year 2011. According to USPTO estimates, even if the agency
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. The agency
has acknowledged that it cannot hire its way out of the backlog despite
its recent increases in hiring, and is now focused on slowing the growth
of the backlog instead of reducing it.

Attrition Has Greatly 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, increasing attrition among
patent examiners has resulted in the loss of one patent examiner for
nearly every two hired over the last 5 years. While agency officials cited
personal reasons for patent examiner attrition, patent examiners disagreed
and cited the agency's outdated production goals as one of the primary
reasons they would choose to leave the agency.

Over the Last 5 Years, One Patent Examiner Has Left USPTO for Nearly Every Two
Hired

Although USPTO hired 3,672 patent examiners from the beginning of fiscal
year 2002 through fiscal year 2006, the patent examination workforce
increased by only 1,644 because 2,028 patent examiners either left the
agency or moved to other positions. More specifically, during this time,
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, of the 1,643 patent examiners who left the agency,
approximately 70 percent had been at USPTO for less than 5 years, and
nearly 33 percent had been at USPTO for less than 1 year.^11

^11These percentages include patent examiners who transferred or were
promoted out of the patent examination workforce, but remained at USPTO,
and represent approximately 19 percent of patent examiner attrition from
fiscal year 2002 through 2006.

Figure 2: Patent Examiner Attrition by Years of Experience, Fiscal Years
2002 through 2006

Note: In each fiscal year, the number of patent examiners at USPTO for
less than 5 years is inclusive of those at USPTO 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,
because these less experienced patent examiners are primarily responsible
for making the initial decision on patent applications, which is the
triggering event that removes applications from the backlog, attrition of
these staff affects USPTO's ability to reduce the patent application
backlog. Second, because patent examiners require 4 to 6 years of
on-the-job experience before they become fully proficient in conducting
patent application reviews, when these staff leave USPTO the agency loses
as much as 5 years of training investment in them. Third, the continuous
churning of so many new patent examiners makes the overall workforce less
experienced. As a result, the more experienced patent 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 overall productivity of the agency.
Finally, these workforce losses affect the agency's supervisory capacity,
because they reduce the pool of potential supervisory patent examiners for
the future and therefore negatively affect USPTO's ability to increase its
capacity and ultimately its hiring goals.

USPTO Management Links Attrition to Employees' Personal Reasons, while Patent
Examiners Link It to the Agency's Production Goals

We found that USPTO management and patent examiners disagree significantly
on the reasons for the attrition that is occurring at the agency.
According to USPTO management, personal reasons are the primary reasons
that cause patent examiners to leave the agency. ^12 Some of these reasons
include the following:

           o 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.
           o 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 elsewhere rather than build a career at the agency,
           otherwise known as the "millennial problem."
           o 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 postgraduate programs for
           those patent examiners who would like to pursue higher education.

USPTO management told us that the agency is taking steps to help address
these issues through efforts such as 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 that would provide lower cost-of-living alternatives for employees.

While union officials agreed that in some cases personal reasons, such as
the high cost of living in the Washington, D.C., area, may lead to
attrition among patent examiners, they believe that attrition at USPTO can
be primarily attributed to the unrealistic production goals that the
agency sets for patent examiners.^13 Specifically, union officials
explained that the production goals do not allow adequate time for patent
examiners to do their work, especially in light of the increased scrutiny
and quality initiatives implemented by management. They told us that the
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 emphasize this concern, the union joined the Staff Union of the
European Patent Office and other international patent examiner
organizations in April 2007 to sign 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.

^12The term "primary reasons" in this report refers to the top three
reasons patent examiners leave the agency provided by USPTO management, as
well as the top three or more statistically significant reasons provided
by patent examiners in our survey.

According to our survey of patent examiners, 67 percent, regardless of
their tenure with the agency, agree with union officials that the agency's
production goals are 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 allotted by USPTO to
achieve their production goals. According to our survey, 50 percent of
patent examiners are also very dissatisfied or generally dissatisfied with
the way in which the agency's production goals are calculated, and 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. When asked for suggestions on how to improve
the production system, 59 percent of patent examiners felt that the system
needs to be reevaluated, including altering the production goals to allow
more time for patent examiners to conduct their reviews.

^13Union officials also identified a recent decision by USPTO management
to track when patent examiners enter and leave the building as another
reason why patent examiners would choose to leave the agency. Union
officials declined to rank the reasons they believe patent examiners leave
USPTO, preferring instead that we rely on patent examiner survey results.

USPTO employees who participated in OPM's 2006 Federal Human Capital
Survey reported similar results.^14 Specifically, 89 percent of the
respondents, comprising both patent examiners and managerial/supervisory
employees, reported that they believe the work they do is important.^15
However, respondents were almost evenly split on whether their workload
was reasonable, with 41 percent considering their workload reasonable and
40 percent considering it unreasonable.

We and others have noted in the past that the assumptions the agency uses
to calculate patent examiner production goals were established in the
1970s and have not since been adjusted to reflect changes in science and
technology. Moreover, the agency uses these production goals to establish
its overall performance goals, such as the number of first actions to be
completed in a given year.^16 However, the agency has missed its
projections for first actions completed in 4 of the last 5 years, as shown
in figure 3, which further suggests that these goals may be unrealistic.

^14OPM's Federal Human Capital Survey is a tool that measures employees'
perceptions of whether, and to what extent, conditions that characterize
successful organizations are present in their agencies.

^15USPTO respondents to the Federal Human Capital Survey included
employees from both the patent organization, which accounts for about 76
percent of the agency's resources, and the trademark organization.

^16USPTO predicts first actions by multiplying the number of patent
examiners in the workforce by production goals.

Figure 3: Estimated and Actual First Actions Completed, Fiscal Years 2002
through 2006

Furthermore, according to our survey, patent examiners are discontented
with the actions they have to take in order to meet their production
goals. According to our survey, during the last year, 70 percent of patent
examiners worked unpaid overtime to meet their production goals, some more
than 30 extra hours in a 2-week period. The percentage of patent examiners
who worked unpaid overtime increased with the length of tenure they had
with the agency. We estimated that while 46 percent of patent examiners
who had been at USPTO from 2 to 12 months had to work unpaid overtime to
meet their production goals; 79 percent of patent examiners with over 5
years' experience at the agency had to put in unpaid overtime. In
addition, we estimated that 42 percent of patent examiners had to work to
meet production goals while on paid annual leave during the past year. The
percentage of patent examiners working while on paid leave also was
significantly higher for those with a 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,
and 50 percent of patent examiners with over 5 years' experience at the
agency had to work to meet production goals while on annual leave. 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." We estimated that because of the amount of unpaid overtime
that they have to put into meeting their production goals, 59 percent of
patent examiners consider it one of the primary reasons they would choose
to leave USPTO, and 37 percent identified the amount of time they must
work during paid leave to meet their production goals among the primary
reasons they would leave the agency.

This extensive amount of unpaid overtime does not appear to be a concern
to USPTO management, even though the agency has not been able to meet its
productivity goals for the last 4 years. When we queried USPTO management
about the agency's policy regarding patent examiners working unpaid
overtime to meet their 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 in three main areas to improve the retention
of patent examiners, as shown in table 1.^17

17GAO reported on key practices for effective use of human capital
flexibilities in GAO, Human Capital: Effective Use of Flexibilities Can
Assist Agencies in Managing Their Workforces, [22]GAO-03-2 (Washington,
D.C.: Dec. 6, 2002).

Table 1: Retention Incentives and Flexibilities Provided by USPTO by
Category, and Other Retention Efforts, Fiscal Years 2002 through 2006

Category              Retention incentive, flexibility, or other       
Compensation       o Performance bonuses                               
                      o Flexible spending accounts that allow patent      
                      examiners to set aside funds for expenses related to
                      health care and care for dependents                 
                      o Law school tuition reimbursement program^a        
                      o Noncompetitive promotion to the full performance  
                      level                                               
                      o Recruitment bonuses of up to $9,900               
                      o Special pay rate^b                                
                      o Transit subsidy program                           
Enhanced work      o Casual dress policy                               
environment        o Flexible work schedules, including the ability to 
                      schedule hours off during the day                   
                      o Improved management communication techniques (e.g.,
                      town hall meetings, online chats with the Commissioner)
                      o No-cost health screenings at an on-site health unit
                      staffed with a registered nurse and part-time physician
                      o On-site child care and fitness centers            
                      o Creation of a committee to organize recreational and
                      social activities, such as a basketball tournament and
                      Halloween party                                     
                      o Work at home opportunities                        
Other retention    o Additional training for managers, such as         
efforts            workshops on intergenerational issues and technical 
                      training for patent examiners                       
                      o Formation of a Patents Retention Council to focus on
                      patent examiner retention issues at USPTO           
                      o A survey given to potential applicants during the 
                      recruiting process to better assess applicant       
                      compatibility with the USPTO work environment       

Source: GAO analysis of USPTO information.

^aUSPTO provided the law school tuition program for 2 years between fiscal
years 2002 and 2006.

^bThe special pay rate was approved in 2006 and went into effect in
January 2007.

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.

           o 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.

           o Bonus structure. The agency awards bonuses at the end of each
           fiscal year to patent examiners who exceed their production goals
           by at least 10 percent. For example, according to USPTO, 60
           percent of eligible patent examiners who exceeded production goals
           by 10 percent or more received a bonus in fiscal year 2006. As
           table 2 shows, USPTO awarded 4,645 bonuses totaling over $10.6
           million to patent examiners in fiscal year 2006.^18

           o 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 per 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.^19

Table 2: Number of Bonuses and Bonus Amounts USPTO Awarded, and Number of
Patent Examiners Participating in the Telework Program in Fiscal Years
2002 through 2006

                                                 2002  2003  2004  2005  2006 
Number of bonuses^a                          4,877 4,839 5,015 4,567 4,645 
Bonus amount (dollars in                     $10.3 $10.9 $11.5 $10.9 $10.6 
millions)                                                                  
Patent examiners in telework      Not applicable^b   800   345  1014   999 
program                                                                    

Source: USPTO.

^aUp to three types of bonuses may be awarded to one patent examiner in a
fiscal year, one of which may be awarded twice per fiscal year.

^bUSPTO did not offer a telework program in fiscal year 2002.

^18USPTO may award up to three types of bonuses to one patent examiner in
a fiscal year.

^19Patent examiners who qualify for hoteling are assigned USPTO computer
hardware and are not assigned permanent office space but share space when
it is necessary for them to come into the USPTO offices.

According to the results of our survey, patent examiners generally
identified compensation-related retention incentives and USPTO's efforts
to enhance the work environment as among the most important reasons for
staying with the agency. (See app. II for more detailed information on the
questions included in and the results of our survey.) Specifically, as
table 3 shows, patent examiners ranked current total pay, flexible work
schedules, the hoteling program, and federal benefits as among the primary
reasons they would choose to stay at USPTO. Similarly, 51 and 87 percent
of the USPTO employees who participated in OPM's 2006 Federal Human
Capital Survey reported that they were satisfied with their pay and
alternative work schedules, respectively.

Table 3: Patent Examiners' Views on Compensation-Related and Enhanced Work
Environment Incentives and Flexibilities in Decreasing Order of Importance

                                               Estimated percentage of patent 
                                               examiners who identified these 
USPTO incentives and flexibilities offered incentives and flexibilities as 
to patent examiners                        reasons to stay with the agency 
Current total pay (excluding benefits)                                  58 
The availability of the flexible work                                      
schedule program                                                        49 
The availability of a hoteling program                                  38 
Current federal benefits                                                30 
The availability of a teleworking program                               17 
The recent implementation of a special pay                                 
rate increase                                                           16 
Opportunities for career advancement                                    15 
The ability to be promoted to the next GS                                  
level                                                                   14 
The availability of the law school tuition                                 
program                                                                 10 
The availability of monetary awards                                      5 
The casual dress policy                                                  4 
Access to an on-site fitness center                                      4 
The availability of a transit subsidy                                      
program                                                                  2 
The availability of on-site child care                                   1 
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 pretax dollars)                                                     1 
The availability of an on-site health unit                               0 
Activities offered by the Work-Life                                        
Committee                                                                0 

Source: GAO survey.

Note: To determine the estimated percentages in this table, we included
the total number of times patent examiners identified a particular
retention incentive and flexibility as one of the three most important
reasons they would choose to stay at USPTO.

Conclusion

Despite its efforts to hire an increasing number of patent examiners
annually and implement a number of retention incentives and flexibilities
over the last 5 years, USPTO has had limited success in retaining new
patent examiners. While many of the measures implemented generally align
with the primary reasons that patent examiners would stay with the agency,
these efforts have not been enough to prevent the agency from losing one
patent examiner for nearly every two that it has hired, and especially
troubling is the high loss of patent examiners who have been with the
agency for less than 5 years. Although USPTO management does not agree,
the root of this high level of attrition appears to be the stress
resulting from the agency's outdated production goals. To meet the
agency's production goals, most patent examiners, regardless of their
tenure with the agency, have had to work unpaid overtime or work during
paid leave time, and therefore consider this to be a primary reason for
leaving USPTO. Because the production goals appear to be undermining
USPTO's efforts to hire and retain a highly qualified workforce, we
believe the agency will continue to be limited in its ability to meet the
increasing demand for U.S. patents and reduce the growth of the patent
application backlog, and ultimately may be unable to fulfill its mission
of ensuring U.S. competitiveness.

Recommendation for Executive Action

We recommend that the Secretary of Commerce direct the Under Secretary of
Commerce for Intellectual Property and Director of the U.S. Patent and
Trademark Office to undertake a comprehensive evaluation of the
assumptions that the agency uses to establish patent examiner production
goals and revise those assumptions as appropriate.

Agency Comments and Our Evaluation

We provided a draft of this report to the Department of Commerce and USPTO
for review and comment. In its comments, 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. In light of this issue, the Department of Commerce
stated that USPTO is implementing various initiatives designed 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 production goals. The agency
also provided technical comments that we have incorporated as appropriate.
The Department of Commerce's letter is included in appendix II.

As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from
the report date. At that time, we will send copies to interested
congressional committees and Members of Congress and the Secretary of
Commerce. We also will make copies available to others upon request. In
addition, the report will be available at no charge on the GAO Web site at
[23]http://www.gao.gov .

If you or your staff have questions about this report, please contact me
at (202) 512-3841 or [24][email protected] . Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made key contributions to this report
are listed in appendix IV.

Sincerely yours,

Ms. Anu K. Mittal
Director, Natural Resources and Environment

Appendix I: Objectives, Scope, and Methodology

To determine the U.S. Patent and Trademark's (USPTO) process for
developing annual hiring estimates and the relationship these estimates
have to the patent application backlog, we analyzed patent examiner data
that USPTO extracts from the National Finance Center, and patent
application data from the agency's Patent Application Locating and
Monitoring (PALM) system,^1 from fiscal years 2002 through 2006, and
projections of that data through fiscal year 2012.^2 Specifically, these
data included actual end of fiscal year numbers from 2002 through 2006 and
estimates from fiscal years 2002 through 2012 for patent examination
workforce, patent examiners hired, patent examiners lost to attrition,
first actions, received patent applications, and the patent application
backlog. USPTO provided the majority of these data to us in the form of
USPTO's fiscal years 2002 through 2008 Budget Requests of the President of
the United States. The budget requests for fiscal years 2003 through 2005
contained the hiring estimates for each of those years as well as those
projected for an additional 4 years, and the actual number of patent
examiners hired for fiscal years 2002 and 2003.^3 USPTO provided the
remaining estimates in an interview, and the remaining actual numbers
hired by extracting that information from the National Finance Center into
Excel documents.

We assessed the reliability of the patent examiner data USPTO extracted
from the National Finance Center and the agency's PALM system and
determined that they were acceptable for our purposes. We assessed the
reliability of patent examiner data by comparing the data to patent
examiner data in the Central Personnel Data File. To assess the
reliability of the PALM system, we interviewed the Acting Director of the
Office of Patent Audit and Evaluation. We also interviewed USPTO's
Administrator of the Office of Patent Resources Administration to gain an
understanding of the process through which USPTO identifies hiring
estimates and the role of the backlog in that process. In addition, we
reviewed reports by other organizations, such as the National Academy of
Public Administration, relating to USPTO's workforce planning process. We
reviewed the Office of Personnel Management's (OPM) workforce planning
guidance and interviewed officials from OPM's Human Capital Assessment and
Accountability Framework Office to develop criteria to assess USPTO's
workforce planning process. We compared USPTO's process for developing
annual hiring estimates to OPM's workforce planning strategies and other
best practice information we received from OPM's Human Capital Assessment
and Accountability Framework Office in order to determine if USPTO's
process for identifying annual hiring estimates was consistent with OPM's
recommended workforce planning strategies.

^1 PALM is an internal USPTO system that contains current patent
application status information.

^2USPTO officials explained that the agency does not store patent examiner
data on site, but relies on access to the National Finance Center to
obtain that information when necessary.

^3According to USPTO, the data requirements for the budget requests can
change and USPTO provides the required data to the Office of Management
and Budget accordingly. As a result, not all of the information we
requested was available in these documents.

To determine the extent to which hiring patent examiners has been offset
by attrition at USPTO over the last 5 years, we analyzed patent examiner
workforce, hiring, and attrition data from this time period as described
above. In addition, USPTO provided attrition data by years of experience
for each of those years in separate documents derived from the National
Finance Center. Specifically, we compared the total number of patent
examiners hired in each of the last 5 years to the total workforce growth
and the total patent examiner attrition in that time. To determine the
factors that may contribute to patent examiners' decisions to leave the
agency, we conducted a Web-based survey of a stratified random sample of
1,420 current patent examiners.^4 To address this objective, we had to
rely on the views of current patent examiners because USPTO does not
maintain contact information for patent examiners that have left the
agency, and we could not identify any organizations that maintain this
information for USPTO staff. Through the survey instrument, we gathered
patent examiners' views on satisfaction with various aspects of working at
USPTO, the time worked to meet production goals, and reasons they would
choose to stay with or leave the agency. In addition, we asked for their
views on ways to improve the production system.

The target population for our sample consists of patent examiners who were
employed by USPTO as of November 22, 2006, and were still employed as of
the survey closing date, February 28, 2007. We selected our sample from a
study population composed of all USPTO patent examiners as of November 22,
2006, and we asked agency officials to provide the names, e-mail
addresses, and length of time at USPTO for patent examiners at the agency
on that date. Patent examiners who were hired after November 22, 2006, are
not represented in our sample. Similarly, patent examiners who left or
retired from the agency between November 22, 2006, and February 28, 2007,
might be sampled but would not be a part of our target population (and
therefore are considered out of the scope of our survey). From that list,
we selected a random sample of patent examiners,^5 stratified by the
length of time they would have been at the agency at the beginning of the
survey period in late January 2007.^6 Our sample consisted of 1,420 patent
examiners, and we obtained complete survey responses from 1,129 of them,
for an overall response rate of about 80 percent. Table 4 summarizes
population size, sample size, and disposition of sample cases for each of
these strata.

^4While we also surveyed supervisory patent examiners, we did not include
their responses in our analysis and estimates because we determined during
the course of our review that they perform a very different function than
nonsupervisory patent examiners. Consequently supervisory patent examiners
have different job-related concerns and different reasons than
nonsupervisory patent examiners for choosing to stay with or leave USPTO.
Because our report focuses on why staff performing the patent examiner
function stay with or leave the agency, we focused only on the responses
of nonsupervisory patent examiners.

Table 4: Summary of Patent Examiner Population and Survey Sample by
Stratum

                                                              Out of Response 
Stratum^a                   Population Sample Respondents scope^a     rate 
1. Patent examiners: 2-12                                                  
months                           1,007    430         342       0      80% 
2. Patent examiners: 1-5                                                   
years                            1,506    480         385       0      80% 
3. Patent examiners: 5+                                                    
years                            2,305    510         402       8      80% 
Total                            4,818  1,420       1,129       8      80% 

Source: GAO.

^aFrom the initial notification, we identified 8 sampled individuals who
were outside the target population. Individuals were determined to be
outside the target population for reasons such as they performed a
function other than patent examination or they had since left the agency.

All sample surveys are subject to sampling error--that is, the extent to
which the survey results differ from what would have been obtained if the
whole population had been observed. Each patent examiner in the study
population has a known nonzero probability of being selected, and the data
for each respondent are appropriately weighted to account statistically
for all patent examiners in that stratum, including those that were not
selected. Because we followed a probability procedure based on random
selections, our sample is only one of a large number of samples that we
might have drawn. Since each sample could have provided different
estimates, we expressed our confidence in the precision of our particular
sample's results as a 95 percent confidence interval. This is the interval
that would contain the actual population value for 95 percent of the
samples we could have drawn. As a result, we are 95 percent confident that
each of the confidence intervals based on the survey includes the true
values in the sample population. Estimates based on this survey allow us
to project our results to all patent examiners at USPTO with a 95 percent
level of confidence. All percentage estimates in this report have a 95
percent confidence interval within plus or minus 5 percentage points of
the estimate itself. For example, our survey estimates that 42 percent of
patent examiners worked while on annual leave during the past year, and we
are 95 percent confident that the actual proportion of patent examiners
working while on leave during this period is within 5 percentage points of
42, i.e., between 37 and 47 percent. All reported comparisons of patent
examiner groups for a particular survey question are statistically
significant with a probability of 0.05.

^5We defined patent examiners as those responsible for reviewing utility,
plant, and reissue (UPR) patent applications.

^6For example, a person newly hired at the time the population frame was
created in late November 2006 would have been at the agency 2 months by
late January 2007. This is why the shortest tenure displayed in table 4 is
2 months.

In addition to the reported sampling errors, as previously indicated, the
practical difficulties of conducting any survey may introduce errors,
commonly referred to as nonsampling errors. For example, differences in
how a particular question is interpreted, the information sources
available to respondents, or the types of sample members who do not
respond can introduce unwanted variability into the survey results. Our
estimation method assumes that nonrespondents are missing at random. If
characteristics of respondents are different from those of nonrespondents
on key items, it could introduce a bias not accounted for in our analysis.
We took extensive steps in questionnaire development, data collection, and
the editing and analysis of the survey data to minimize nonsampling
errors. For example, the survey was developed by a GAO survey specialist
in conjunction with subject matter experts, and then reviewed by a second
independent survey specialist. In addition, we pretested the survey with
patent examiners. During these pretests, we asked the patent examiners to
complete the survey as they would when they received it. We then
interviewed the respondents to ensure that (1) the questions were clear
and unambiguous, (2) the terms used were precise, (3) the survey did not
place an undue burden on the patent examiners completing it, and (4) the
survey was independent and unbiased. We also provided a copy of the survey
to USPTO officials and representatives from the patent examiner union--the
Patent Office Professional Association (POPA)--to gain their thoughts on
the four previously mentioned criteria. On the basis of the feedback from
the pretests and our discussions with agency officials and union
representatives, we revised the questions, as appropriate.

Additionally, the statistical programs that produced our survey estimates,
including estimates of categories derived from content analysis, were
reviewed by a second independent programmer to ensure accuracy in the
logic and syntax of the program. Finally, to ensure security and data
integrity, we provided all participants with a user name and a personal
password that allowed them to access and complete the survey. No one else
could access that survey or edit its data. To reduce survey nonresponse,
we sent out e-mail reminder messages to encourage them to complete the
survey. We activated the survey and informed respondents of its
availability on January 25, 2007, and allowed respondents access to the
survey through February 28, 2007.

We conducted a computer-enabled content analysis to analyze a key
open-ended survey question soliciting respondents' suggestions for
improvements to the production system. Two reviewers collaboratively
developed content categories based on survey responses, and then
independently assessed and coded each survey response into those
categories. In cases where disagreements among the two reviewers regarding
the coding of responses into content categories were found, all
disagreements were resolved through reviewer discussion. Ultimately, there
was 100 percent agreement between the reviewers.

In addition to the survey mentioned above, we spoke with USPTO officials,
representatives from POPA, and an official from the American Intellectual
Property Law Association, a national bar association of lawyers involved
in fields of law affecting intellectual property, to gain their
perspectives on why patent examiners leave the agency.

To determine the extent to which the retention incentives and
flexibilities that USPTO provides align with patent examiners' reasons for
staying with the agency, we spoke with USPTO officials, union
representatives, and an official from the American Intellectual Property
Law Association to gain their perspectives on the effectiveness of the
retention incentives and flexibilities at USPTO. We also analyzed USPTO
policies and information regarding the agency's retention incentives and
flexibilities. In addition, we used the Web-based survey described above
to obtain patent examiners' views on the reasons they would choose to stay
at the agency.

We conducted our work from August 2006 through July 2007 in accordance
with generally accepted government auditing standards.

Appendix II: Selected Survey Results

The following tables contain summary results of selected questions from
our survey of patent examiners at USPTO. For each question reported below,
the estimated percentage is presented. All percentage estimates have a 95
percent confidence interval within plus or minus 5 percentage points of
the estimate itself. These tables do not include summary-estimate data for
the demographic questions and do not include the results from any
open-ended questions.

Q6. Over the past 12 months, on average, about how much
voluntary/uncompensated overtime have you worked per biweek to meet your
production goal?

Number of hours    Estimated percentage 
Less than 1 hour                      5 
1-10 hours                           62 
11-20 hours                          23 
21-30 hours                           5 
More than 30 hours                    5 

Source: GAO survey.

Note: Respondents to this question had self-identified in a previous
question as having worked voluntary/uncompensated overtime to meet their
production goals.

Q8. Over the past 12 months, on average, about how much annual leave have
you used per quarter to meet your production goal?

Number of hours    Estimated percentage 
Less than 1 hour                      2 
1-10 hours                           47 
11-20 hours                          29 
21-30 hours                          12 
More than 30 hours                   10 

Source: GAO survey.

Note: Respondents to this question had self-identified in a previous
question as having used annual leave to meet their production goals.

Q10a. How important, if at all, are each of the following factors as
reasons for you to stay with USPTO?

Very important or important reason to stay

Reason                                                Estimated percentage 
a. Your current total pay (excluding benefits)                          77 
b. Your current federal benefits                                        77 
c. The availability of monetary awards                                  45 
d. The recent implementation of a special pay rate                         
increase                                                                80 
e. The caliber of your current supervision                              58 
f. The extent to which resources, such as mentors,                         
are available to answer your questions                                  44 
g. Your opportunities for career advancement                            59 
h. Your ability to be promoted to the next GS level                     67 
i. The extent to which this job fits your work style                    71 
j. Your production goals                                                17 
k. The amount of paid leave that you must use to meet                      
production goals                                                        10 
l. The amount of voluntary/uncompensated overtime                          
that you must work to meet production goals                              9 
m. The amount of review of your work (i.e., for                            
quality purposes)                                                       14 
n. Activities offered by the Work-Life Committee                           
(e.g., 4 on 4 basketball tournament, trip to Atlantic                      
City, but NOT activities run by the PTO Society or                         
your Technology and/or Art Center)                                      11 
o. The availability of the law school tuition program                   43 
p. The availability of a hoteling program (i.e., the                       
opportunity for examiners to work full-time from an                        
off-site location)                                                      79 
q. The availability of a teleworking program (i.e.,                        
the opportunity for examiners to work some hours from                      
an off-site location)                                                   77 
r. The availability of the flexible work schedule                          
program                                                                 94 
s. 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 pretax dollars)                                           42 
t. The availability of a transit subsidy program                        58 
u. The availability of an on-site health unit                           37 
v. The casual dress policy                                              55 
w. The availability of on-site child care                               26 
x. Access to an on-site fitness center                                  47 
y. Other--Please specify below                                          34 

Source: GAO survey.

Q10b. How important, if at all, are each of the following factors as
reasons for you to leave USPTO?

Very important or important reason to leave

Reason                                                Estimated percentage 
a. Your current total pay (excluding benefits)                           8 
b. Your current federal benefits                                         3 
c. The availability of monetary awards                                   8 
d. The recent implementation of a special pay rate                         
increase                                                                 0 
e. The caliber of your current supervision                              11 
f. The extent to which resources, such as mentors,                         
are available to answer your questions                                  12 
g. Your opportunities for career advancement                            14 
h. Your ability to be promoted to the next GS level                      9 
i. The extent to which this job fits your work style                    10 
j. Your production goals                                                52 
k. The amount of paid leave that you must use to meet                      
production goals                                                        49 
l. The amount of voluntary/uncompensated overtime                          
that you must work to meet production goals                             61 
m. The amount of review of your work (i.e., for                            
quality purposes)                                                       27 
n. Activities offered by the Work-Life Committee                           
(e.g., 4 on 4 basketball tournament, trip to Atlantic                      
City, but NOT activities run by the PTO Society or                         
your Technology and/or Art Center)                                       2 
o. The availability of the law school tuition program                    1 
p. The availability of a hoteling program (i.e., the                       
opportunity for examiners to work full-time from an                        
off-site location)                                                       0 
q. The availability of a teleworking program (i.e.,                        
the opportunity for examiners to work some hours from                      
an off-site location)                                                    0 
r. The availability of the flexible work schedule                          
program                                                                  0 
s. 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 pretax dollars)                                            0 
t. The availability of a transit subsidy program                         1 
u. The availability of an on-site health unit                            0 
v. The casual dress policy                                               1 
w. The availability of on-site child care                                1 
x. Access to an on-site fitness center                                   0 
y. Other--Please specify below                                          39 

Source: GAO survey.

Q11. Looking at the list of reasons in question 10, what are the top three
reasons why you would choose to stay with USPTO?

Reason                                                Estimated percentage 
a. Your current total pay (excluding benefits)                          58 
b. Your current federal benefits                                        30 
c. The availability of monetary awards                                   5 
d. The recent implementation of a special pay rate                         
increase                                                                16 
e. The caliber of your current supervision                               9 
f. The extent to which resources, such as mentors,                         
are available to answer your questions                                   3 
g. Your opportunities for career advancement                            15 
h. Your ability to be promoted to the next GS level                     14 
i. The extent to which this job fits your work style                    15 
j. Your production goals                                                 1 
k. The amount of paid leave that you must use to meet                      
production goals                                                         0 
l. The amount of voluntary/uncompensated overtime                          
that you must work to meet production goals                              0 
m. The amount of review of your work (i.e., for                            
quality purposes)                                                        0 
n. Activities offered by the Work-Life Committee                           
(e.g., 4 on 4 basketball tournament, trip to Atlantic                      
City, but NOT activities run by the PTO Society or                         
your Technology and/or Art Center)                                       0 
o. The availability of the law school tuition program                   10 
p. The availability of a hoteling program (i.e., the                       
opportunity for examiners to work full-time from an                        
off-site location)                                                      38 
q. The availability of a teleworking program (i.e.,                        
the opportunity for examiners to work some hours from                      
an off-site location)                                                   17 
r. The availability of the flexible work schedule                          
program                                                                 49 
s. 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 pretax dollars)                                            1 
t. The availability of a transit subsidy program                         2 
u. The availability of an on-site health unit                            0 
v. The casual dress policy                                               4 
w. The availability of on-site child care                                1 
x. Access to an on-site fitness center                                   4 
y. Other--Please specify below                                           4 

Source: GAO survey.

Note: To determine the estimated percentages in this table, we included
the total number of times patent examiners identified a particular
retention incentive and flexibility as one of the three most important
reasons they would choose to stay at USPTO. Percentages total more than
100 percent because respondents selected three reasons each.

Q12. Looking at the list of reasons in question 10, what are the top three
reasons that would cause you to consider leaving USPTO?

Reason                                                Estimated percentage 
a. Your current total pay (excluding benefits)                          16 
b. Your current federal benefits                                         4 
c. The availability of monetary awards                                   6 
d. The recent implementation of a special pay rate                         
increase                                                                 1 
e. The caliber of your current supervision                              13 
f. The extent to which resources, such as mentors,                         
are available to answer your questions                                   8 
g. Your opportunities for career advancement                            15 
h. Your ability to be promoted to the next GS level                      8 
i. The extent to which this job fits your work style                    11 
j. Your production goals                                                67 
k. The amount of paid leave that you must use to meet                      
production goals                                                        37 
l. The amount of voluntary/uncompensated overtime                          
that you must work to meet production goals                             59 
m. The amount of review of your work (i.e., for                            
quality purposes)                                                       26 
n. Activities offered by the Work-Life Committee                           
(e.g., 4 on 4 basketball tournament, trip to Atlantic                      
City, but NOT activities run by the PTO Society or                         
your Technology and/or Art Center)                                       1 
o. The availability of the law school tuition program                    1 
p. The availability of a hoteling program (i.e., the                       
opportunity for examiners to work full-time from an                        
off-site location)                                                       2 
q. The availability of a teleworking program (i.e.,                        
the opportunity for examiners to work some hours from                      
an off-site location)                                                    1 
r. The availability of the flexible work schedule                          
program                                                                  2 
s. 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 pretax dollars)                                            0 
t. The availability of a transit subsidy program                         0 
u. The availability of an on-site health unit                            0 
v. The casual dress policy                                               1 
w. The availability of on-site child care                                0 
x. Access to an on-site fitness center                                   0 
y. Other--Please specify below                                           7 

Source: GAO survey.

Note: To determine the estimated percentages in this table, we included
the total number of times patent examiners identified a particular
retention incentive and flexibility as one of the three most important
reasons they would choose to leave USPTO. Percentages total more than 100
percent because respondents selected three reasons each.

Appendix III: Comments from the Department of Commerce

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Anu K. Mittal, (202) 512-3841

Staff Acknowledgments

In addition to the contact named above, Vondalee R. Hunt (Assistant
Director), Nancy Crothers, Nancy Hess, Stuart Kaufman, Grant Mallie,
Rebecca Shea, Michelle K. Treistman, Lisa Vojta, and Greg Wilmoth made
significant contributions to this report. Scott Derrick and Omari Norman
also contributed to this report.

(360742)

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Highlights of GAO-07-1102, a report to the Ranking Member, Committee on
Oversight and Government Reform, House of Representatives

September 2007

U.S. PATENT AND TRADEMARK OFFICE

Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog

Increases in the volume and complexity of patent applications have
lengthened the amount of time it takes the U.S. Patent and Trademark
Office (USPTO) to process them. In addition, concerns have continued about
USPTO's efforts to hire and retain an adequate patent examination
workforce that can not only meet the demand for patents but also help
reduce the growing backlog of unexamined patent applications. In this
context, GAO was asked to determine for the last 5 years (1) USPTO's
process for identifying its annual hiring estimates and the relationship
of these estimates to the patent application backlog; (2) the extent to
which patent examiner hiring has been offset by attrition, and the factors
that may contribute to this attrition; and (3) the extent to which USPTO's
retention efforts align with patent examiners' reasons for staying with
the agency. For this review, GAO surveyed 1,420 patent examiners, and
received an 80 percent response rate.

[31]What GAO Recommends

GAO recommends that USPTO undertake a comprehensive evaluation of the
assumptions that the agency uses to establish its production goals. USPTO
generally agreed with this recommendation.

In each of the last 5 years, USPTO primarily identified its projected
annual hiring estimates on the basis of available funding levels and its
institutional capacity to support additional staff and not on the existing
backlog or the expected patent application workload. USPTO's process for
identifying its annual hiring estimates is generally consistent with
accepted workforce planning strategies. Each year the agency determines
how many new patent examiners it has the budget and supervisory and
training capacity to hire. However, because this approach does not take
into account how many examiners are needed to reduce the existing patent
application backlog or address the inflow of new applications, it is
unlikely that the agency will be able to reduce the growing backlog simply
through its hiring efforts.

Although USPTO is hiring as many new patent examiners as its budget and
institutional capacity will support, attrition is offsetting hiring
progress, and agency management and patent examiners disagree about the
causes for attrition. From 2002 through 2006, one patent examiner left
USPTO for nearly every two the agency hired. This represents a significant
loss to the agency because 70 percent of those who left had been at the
agency for less than 5 years and new patent examiners are primarily
responsible for the actions that remove applications from the backlog.
According to USPTO management, patent examiners leave the agency primarily
for personal reasons, such as the job not being a good fit or family
reasons. In contrast, 67 percent of patent examiners identified the
agency's production goals as one of the primary reasons examiners may
choose to leave USPTO. These production goals are based on the number of
applications patent examiners must complete biweekly and have not been
adjusted to reflect the complexity of patent applications since 1976.
Moreover, 70 percent of patent examiners reported working unpaid overtime
during the past year, in order to meet their production goals. Such a
large percentage of patent examiners who are working extra time to meet
their production goals and would choose to leave the agency because of
these goals may be an indication that the production goals do not
accurately reflect the time patent examiners need to review applications
and is undermining USPTO's hiring efforts.

The retention incentives and flexibilities provided by USPTO over the last
5 years generally align with the primary reasons identified by patent
examiners for staying with the agency. Between 2002 and 2006, USPTO used a
variety of retention flexibilities such as a special pay rate, performance
bonuses, flexible work schedules, and a telework program to encourage
patent examiners to stay with the agency. According to USPTO management
the most effective retention efforts were those related to compensation
and an enhanced work environment. GAO's survey of patent examiners
indicates that most patent examiners generally approved of USPTO's
retention efforts, and ranked the agency's salary and other pay incentives
as well as the flexible work schedule among the primary reasons for
staying with the agency.

References

Visible links
  20. http://www.gao.gov/cgi-bin/getrpt?GAO-05-720
  21. http://www.gao.gov/cgi-bin/getrpt?GAO-02-907
  22. http://www.gao.gov/cgi-bin/getrpt?GAO-03-2
  23. http://www.gao.gov/
  24. mailto:[email protected]
  25. http://www.gao.gov/
  26. http://www.gao.gov/
  27. http://www.gao.gov/fraudnet/fraudnet.htm
  28. mailto:[email protected]
  29. mailto:[email protected]
  30. mailto:[email protected]
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