U.S. Patent and Trademark Office: Hiring Efforts Are Not	 
Sufficient to Reduce the Patent Application Backlog (27-FEB-08,  
GAO-08-527T).							 
                                                                 
The U.S. Patent and Trademark Office (USPTO) helps protect U.S.  
competitiveness by granting patents for new ideas and		 
innovations. Increases in the volume and complexity of patent	 
applications have extended the time for processing them. Concerns
continue about the agency's efforts to attract and retain	 
qualified patent examiners who can meet the demand for patents	 
and help reduce the growing backlog of unexamined patent	 
applications. In 2007, GAO reported on (1) USPTO's process for	 
making 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 examiners'  
reasons for staying with the agency. GAO recommended that USPTO  
comprehensively evaluate the assumptions it uses to establish its
production goals. USPTO agreed to implement this recommendation  
once it determines the effect of recent initiatives designed to  
increase the productivity of the agency through a more efficient 
and focused patent examination process. This testimony is based  
on GAO's 2007 report, which was based in part on a survey of	 
1,420 patent examiners. See, GAO, U.S. Patent and Trademark	 
Office: Hiring Efforts Are Not Sufficient to Reduce the Patent	 
Application Backlog, GAO-07-1102.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-527T					        
    ACCNO:   A81111						        
  TITLE:     U.S. Patent and Trademark Office: Hiring Efforts Are Not 
Sufficient to Reduce the Patent Application Backlog		 
     DATE:   02/27/2008 
  SUBJECT:   Attrition rates					 
	     Employee incentives				 
	     Employees						 
	     Hiring policies					 
	     Human capital					 
	     Human capital management				 
	     Patents						 
	     Productivity in government 			 
	     Staff utilization					 
	     Strategic planning 				 
	     Incentives 					 
	     Patent applications				 

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GAO-08-527T

   

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Testimony: 

Before the Subcommittee on Courts, the Internet, and Intellectual 
Property, Committee on the Judiciary, House of Representatives: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 1:30 p.m. EST: 

Wednesday, February 27, 2008: 

U.S. Patent And Trademark Office: 

Hiring Efforts Are Not Sufficient to Reduce the Patent Application 
Backlog: 

Statement of Robin M. Nazzaro, Director: 

Natural Resources and Environment: 

GAO-08-527T: 

GAO Highlights: 

Highlights of GAO-08-527T, testimony before the Subcommittee on Courts, 
the Internet, and Intellectual Property, Committee on the Judiciary, 
House of Representatives. 

Why GAO Did This Study: 

The U.S. Patent and Trademark Office (USPTO) helps protect U.S. 
competitiveness by granting patents for new ideas and innovations. 
Increases in the volume and complexity of patent applications have 
extended the time for processing them. Concerns continue about the 
agencyï¿½s efforts to attract and retain qualified patent examiners who 
can meet the demand for patents and help reduce the growing backlog of 
unexamined patent applications. 

In 2007, GAO reported on (1) USPTOï¿½s process for making 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 USPTOï¿½s retention efforts align 
with examinersï¿½ reasons for staying with the agency. GAO recommended 
that USPTO comprehensively evaluate the assumptions it uses to 
establish its production goals. USPTO agreed to implement this 
recommendation once it determines the effect of recent initiatives 
designed to increase the productivity of the agency through a more 
efficient and focused patent examination process. 

This testimony is based on GAOï¿½s 2007 report, which was based in part 
on a survey of 1,420 patent examiners. See, GAO, U.S. Patent and 
Trademark Office: Hiring Efforts Are Not Sufficient to Reduce the 
Patent Application Backlog, GAO-07-1102. 

What GAO Found: 

USPTO primarily determined its annual hiring estimates on the basis of 
available funding levels and 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 of patent 
applications or review new patent applications. USPTOï¿½s process for 
identifying its annual hiring estimates is generally consistent with 
accepted workforce planning strategies. However, because this approach 
does not consider how many examiners are needed to reduce the existing 
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 significantly 
offsetting the agencyï¿½s hiring efforts, and agency management and 
patent examiners disagree about the causes of attrition. Specifically, 
from 2002 through 2006, one patent examiner left USPTO for nearly every 
two hiredï¿½70 percent of those who left had been at the agency for less 
than 5 years. This represents a significant loss to the agency because 
new patent examiners are primarily responsible for the actions that 
remove applications from the backlog. According to USPTO management, 
patent examiners primarily leave the agency because of personal 
reasons, such as finding that the job is not a good fit. In contrast, 
67 percent of patent examiners identified the agencyï¿½s production goals 
among the primary reasons they would consider leaving the agency. These 
goals are based on the number of applications patent examiners must 
complete during a 2-week period. However, the assumptions underlying 
these goals were established over 30 years ago and have not since been 
adjusted to reflect changes in the complexity of patent applications. 
Moreover, 70 percent of patent examiners reported working unpaid 
overtime during the past year in order to meet their production goals. 
The large percentage of examiners working overtime to meet production 
goals and who would choose to leave the agency because of these goals 
may indicate that these goals do not accurately reflect the time needed 
to review applications and are undermining USPTOï¿½s hiring efforts. 

The retention incentives and flexibilities USPTO has provided over the 
last 5 years generally align with the primary reasons patent examiners 
identified for staying with the agency. Between 2002 and 2006, USPTO 
used a variety of retention flexibilities, such as a special pay rate, 
performance bonuses, and a flexible work place to encourage patent 
examiners to stay with the agency. According to USPTO management, their 
most effective retention efforts were those related to compensation and 
an enhanced work environment. GAOï¿½s survey of patent examiners 
indicates that most patent examiners generally approved of USPTOï¿½s 
retention efforts, and ranked the agencyï¿½s salary and other pay 
incentives as well as the flexible work schedule among the primary 
reasons for staying with the agency. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-527T]. For more information, contact 
Robin M. Nazzaro at (202) 512-3841 or [email protected] 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss GAO's recent report on the 
U.S. Patent and Trademark Office (USPTO).[Footnote 1] Protecting 
intellectual property rights and encouraging technological progress are 
important for ensuring the current and future competitiveness of the 
United States. As you know, USPTO helps protect the nation's 
competitiveness by issuing patents that protect new ideas and 
investments in innovations, ranging from new treatments for diseases to 
new wireless technology applications.[Footnote 2] However, recent 
increases in both the complexity and volume of patent applications have 
lengthened the time it takes the agency to process them and raised 
concerns among intellectual property organizations, patent holders, and 
others about the quality of the patents that are issued. Over the last 
15 years, the number of patent applications that have not yet been 
reviewed, called the backlog, has continued to grow--increasing since 
fiscal year 2002 by nearly 73 percent to about 730,000 applications. 

USPTO relies on a workforce of nearly 5,000 patent examiners to review 
and make decisions on patent applications. The number of patent 
applications that can be reviewed in any given year is determined by, 
among other things, the number of examiners hired, as well as the 
overall size and experience of the patent examination workforce. Patent 
examiners are assigned a biweekly "production goal," which represents 
the number of specific actions and decisions that patent examiners must 
make about patent applications they review in a 2-week period.[Footnote 
3] USPTO assesses patent examiners' performance on their ability to 
meet their goals. However, as we noted in 2005 and again in 2007, the 
assumptions underlying the agency's production goals have not been 
updated since 1976. 

Since 2000, USPTO has implemented a variety of human capital 
flexibilities, such as recruitment bonuses and law school tuition 
reimbursement, to help attract and retain enough patent examiners to 
meet the growing demand for patents. Nevertheless, the rate of 
attrition for patent examiners has continued to increase, especially 
among patent examiners who have been with the agency for less than 5 
years. 

My testimony today summarizes findings from GAO's 2007 report, 
specifically (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 the factors that 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. This report was conducted in accordance with generally accepted 
government auditing standards. Those standards require that we plan and 
perform the audit to obtain sufficient, appropriate evidence to provide 
a reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 

In summary, we found the following: 

* In each of the last 5 years, USPTO identified its projected annual 
hiring estimates primarily on the basis of how many new patent 
examiners it has the budget and supervisory and training capacity to 
support, and not on the existing backlog or the expected patent 
application workload. Although USPTO's process for identifying its 
annual hiring estimates is generally consistent with accepted workforce 
planning strategies, this process does not consider how many examiners 
are needed to reduce the existing patent application backlog or address 
the inflow of new applications. As such, it is unlikely that the agency 
will be able to reduce the growing backlog simply through its hiring 
efforts. 

* Attrition is significantly offsetting USPTO's hiring progress, and 
agency management and patent examiners disagree about the causes for 
this attrition. From 2002 through 2006, one patent examiner left USPTO 
for nearly every two the agency hired. Of those who left, 70 percent 
had been at the agency for less than 5 years. This represents a 
significant loss to the agency because 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 we 
surveyed as part of our 2007 report identified the agency's production 
goals as one of the primary reasons examiners may choose to leave 
USPTO. 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 choosing 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 are undermining USPTO's hiring efforts. 

* The retention incentives and flexibilities USPTO has provided over 
the last 5 years generally align with the primary reasons patent 
examiners identified for staying with the agency. According to USPTO 
management, the most effective retention efforts were those related to 
compensation and an enhanced work environment. Specifically, between 
2002 and 2006, USPTO used a variety of retention flexibilities, such as 
a special pay rate, performance bonuses, flexible work place, and a 
telework program to encourage patent examiners to stay with the agency. 
Most patent examiners who participated in our survey indicated that 
they 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. 

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. USPTO 
evaluates the application for completeness, classifies it by the type 
of patent and the technology involved,[Footnote 4] and assigns it for 
review to one of its operational units, called technology centers, that 
specializes in specific areas of science and engineering. Supervisors 
in each technology center then assign the application to a patent 
examiner for further review 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. 

* First action. At this milestone, patent examiners notify applicants 
about the patentability of their invention. 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, scientific publications and U.S. and international 
patents. 

* 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 on the basis of the 
number of production units--comprised 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 today to measure patent examiner 
performance are based on the same assumptions that USPTO established in 
the 1970s. At that time, production goals were determined based on 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 their 
experience (as determined by their position in the agency) and the type 
of patent they are reviewing. As a result, these goals vary depending 
upon the patent examiner's position based on the federal government's 
general schedule pay scale (GS) and the technology center in which the 
patent examiner works. 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. GS-7 patent examiners 
working on those types of applications, however, are expected to 
achieve two counts in 45.1 and 28.7 hours, respectively. 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. 

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

In each of the last 5 years, USPTO has 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. Although this 
process is consistent with workforce planning strategies established by 
the Office of Personnel Management (OPM) and has enabled the agency to 
better match its hiring estimates to its institutional capacity, 
USPTO's ability to reduce the patent application backlog simply through 
its hiring efforts is unlikely. 

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 submission timeline. After considering 
expected funding levels and available patent examiner workforce 
data,[Footnote 5] USPTO 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 
could hire, and established its estimate on the basis of the number of 
patent examiners the agency had hired in the most recent year. However, 
in fiscal years 2003 through 2006, USPTO determined that funding would 
not be a limiting factor, and the agency's hiring estimates were based 
primarily on its institutional capacity to supervise and train patent 
examiners. 

USPTO considers a number of factors in determining its institutional 
capacity to supervise and train new patent examiners. For example, it 
determines its supervisory capacity by considering the number of 
additional patent examiners who can be placed in a technology center. 
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 patent 
applications, only supervisors can authorize a new patent examiner's 
decision to approve or reject a patent application. In an effort to 
avoid delays and inefficiencies in initial and final decisions on 
patent applications, the agency tries to ensure that the supervisor to 
patent examiner ratio is about 1 supervisor for every 12 patent 
examiners. Similarly, USPTO's training capacity is determined by the 
number of patent examiners the agency believes it can train in a year. 
Training capacity was based on 2-or 3-week courses 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, the agency continually refines 
the estimates to reflect changes that might occur during this period. 
For example, in 2002, when it created its budget submission to OMB, 
USPTO projected it would hire 750 patent examiners for fiscal year 
2004. However, due to budget constraints, the agency actually hired 443 
patent examiners in fiscal year 2004. Figure 1 shows USPTO's projected 
and actual hiring numbers for fiscal years 2002 through 2006. 

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

This figure is a combination bar graph showing USPTO patent examiner 
projected hiring estimates and actual number hired, between fiscal 
years 2002 and 2006. The X axis represents the fiscal year, and the Y 
axis represents patent examiners. One par represents the patent 
examiner hiring estimates, and the other represents the patent 
examiners hired.

[See PDF for image] 

Source: USPTO. 

[End of figure] 

The differences between projected hiring estimates and the number hired 
occurred primarily because of 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. In fiscal years 2005 and 2006, 
however, USPTO hired more patent examiners than originally planned 
because the agency's appropriation for those years was greater than 
anticipated. 

The way in which USPTO identifies annual patent examiner hiring 
estimates is generally consistent with workforce planning strategies 
endorsed by OPM. 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 USPTO generally followed these processes. 

Recognizing the need to increase its institutional capacity to hire 
more patent examiners, USPTO has taken steps to increase its training 
and supervisory capacity. To increase its training capacity, USPTO 
implemented an 8-month training program in fiscal year 2006 called the 
Patent Training Academy. According to USPTO, the academy provides the 
agency with a constant annual training capacity for 1,200 new patent 
examiners for each of the next 5 years. Moreover, USPTO officials 
believe that the academy may indirectly improve the agency's 
supervisory capacity because new patent examiners should be better 
prepared to start work in a technology center and therefore will need 
less supervision and on-the-job training. USPTO plans to monitor new 
patent examiners after they have graduated from the academy to 
determine if the agency can 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 is 
expected to increase to over 1.3 million at the end of fiscal year 
2011. The agency has also estimated that if it 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. Despite its 
recent increases in hiring, the agency has acknowledged that it cannot 
hire its way out of the backlog and is now focused on slowing the 
growth of the backlog instead of reducing it. 

Attrition Has Significantly 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, attrition has 
continued to increase among patent examiners--one patent examiner has 
been lost for nearly every two hired over the last 5 years. For 
example, from the beginning of fiscal year 2002 through fiscal year 
2006, USPTO hired 3,672 patent examiners. However, the patent 
examination workforce only increased by 1,644 because 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, approximately 70 percent of the patent examiners who 
left the agency had been at USPTO for less than 5 years, and nearly 33 
percent had been at the agency for less than 1 year.[Footnote 6] 

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

This figure is a combination bar graph showing patent examiner 
attrition by years of experience between fiscal years 2002 and 2006. 
The X axis is the fiscal year, and the Y axis is the patent examiners. 
One bar represents the patent examiners at USPTO for less than 1 year, 
the other represents the patent examiners at USPTO for less than 5 
years, and the last represents the patent examiners at USPTO for 5  
years or more. 

[See PDF for image] 

Source: USPTO. 

[End of figure] 

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, attrition of these staff affects USPTO's ability to reduce the 
patent application backlog because these less experienced patent 
examiners are primarily responsible for making the initial decisions on 
patent applications--the triggering event that removes applications 
from the backlog. Second, when these staff leave USPTO, the agency 
loses up to 5 years of training investment in them because patent 
examiners require 4 to 6 years of on-the-job experience before they 
become fully proficient in conducting patent application reviews. 
Third, the more experienced 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 agency's overall productivity. Finally, these 
workforce losses reduce the pool of potential supervisory patent 
examiners for the future and therefore impair USPTO's ability to 
increase its supervisory capacity and, ultimately, its hiring goals. 

We found that USPTO management and patent examiners disagree 
significantly on the reasons for the agency's attrition. According to 
USPTO management, personal reasons are the primary reasons that cause 
patent examiners to leave the agency.[Footnote 7] Some of these reasons 
include the following: 

* 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. 

* 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, 
rather than building a career at the agency, otherwise known as the 
"millennial problem." 

* 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 post graduate programs for those patent examiners who 
would like to pursue higher education. 

According to USPTO management, the agency has a number of ongoing 
efforts to help address these issues. For example, the agency is 
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 to provide lower cost-of- 
living alternatives for employees. 

While Patent Office Professional Association officials--the union that 
represents patent examiners--agreed that in some cases personal reasons 
may contribute to patent examiners leaving the agency, they believe 
that the unrealistic production goals that the agency sets for patent 
examiners is primarily responsible for attrition.[Footnote 8] 
Specifically, according to union officials unrealistic 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 call attention to this concern, in April 2007 the union joined the 
Staff Union of the European Patent Office and other international 
patent examiner organizations in 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. 

Patent examiners who participated in our survey generally agreed with 
union officials. Specifically, approximately 67 percent of patent 
examiners, regardless of their tenure with the agency, said that the 
agency's production goals were 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 USPTO allots to achieve their production goals; and 50 percent 
of patent examiners are very dissatisfied or generally dissatisfied 
with how the agency calculates production goals. In addition, 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. Fifty-nine percent of patent examiners 
believed that the production system should be reevaluated, including 
altering the production goals to allow more time for patent examiners 
to conduct their reviews. 

We and others have reported in the past that the assumptions underlying 
the agency's production goals were established over 30 years ago and 
have not since been adjusted to reflect changes in science and 
technology. Moreover, USPTO uses these production goals to establish 
its overall performance goals for patent examiners, such as the number 
of first actions to be completed in a given year.[Footnote 9] However, 
from 2002 through 2006, the agency missed its projections in 4 of the 5 
years. Furthermore, according to our survey, patent examiners are 
discontented with the actions they have to take in order to meet their 
production goals. Specifically, 70 percent of patent examiners who 
participated in our survey reported working unpaid overtime to meet 
their production goals during the last year, some reporting working 
over 30 extra hours in a 2-week period. In addition, we estimated that 
42 percent of patent examiners had to work while they were on paid 
annual leave in order to meet their production goals. The percentage of 
patent examiners working while on paid leave was significantly higher 
for those with 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, compared 
with 50 percent of patent examiners with over 5 years' experience. 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." According to our survey results, 59 percent 
of patent examiners identified the amount of unpaid overtime that they 
have to put into meeting their production goals as a primary reason 
they would choose to leave USPTO, and 37 percent identified the amount 
of time they must work during paid leave in order to meet their goals 
as a primary reason to leave the agency. 

Even though the agency has not been able to meet its productivity goals 
for the last 4 years, this extensive amount of unpaid overtime patent 
examiners have to work in order to meet their production goals does not 
appear to be a concern for the agency. When we asked USPTO management 
about the agency's policy for unpaid overtime to meet 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, as table 1 shows. 

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

Category; . 

Category: Compensation; 
Retention incentive, flexibility, or other: 
* Flexible spending accounts that allow patent examiners to set aside 
funds for expenses related to health care and care for dependents; 
* Law school tuition reimbursement program[A]; 
* Noncompetitive promotion to the full performance level; 
* Recruitment bonuses up to $9,900; 
* Special pay rate[B]; 
* Transit subsidy program; 

Category: Enhanced work environment; 
Retention incentive, flexibility, or other: 
* Casual dress policy; 
* Flexible work schedules, including the ability to schedule hours off 
during the day; 
* Improved management communication techniques (e.g., town hall 
meetings, online chats with the Commissioner); 
* No-cost health screenings at an on-site health unit staffed with a 
registered nurse and part-time physician; 
* On-site child care and fitness centers; 
* Creation of a committee to organize recreational and social 
activities, such as a basketball tournament and Halloween party; 
* Work at home opportunities. 

Category: Other retention efforts; 
Retention incentive, flexibility, or other: 
* Additional training for managers, such as workshops on 
intergenerational issues and technical training for patent examiners; 
* Formation of a Patents Retention Council to focus on patent examiner 
retention issues at USPTO; 
* 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. 

[A] USPTO provided the law school tuition program for two years between 
fiscal years 2002 and 2006. 

[B] The special pay rate was approved in 2006 and went into effect in 
January 2007. 

[End of table] 

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. More specifically: 

* 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. 

* Bonus structure. The agency awards bonuses to patent examiners who 
exceed their production goals by at least 10 percent. For example, 
according to USPTO, in fiscal year 2006, 60 percent of eligible patent 
examiners who exceeded production goals by 10 percent or more received 
a bonus. As table 2 shows, USPTO awarded 4,645 bonuses to patent 
examiners that totaled over $10.6 million in fiscal year 2006.[Footnote 
10] 

* 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 a 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.[Footnote 11] 

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: 

Number of bonuses; 
2002: 4,877; 
2003: 4,839; 
2004: 5,015; 
2005: 4,567; 
2006: 4,645. 

Bonus amount (dollars in millions); 
2002: $10.3; 
2003: $10.9; 
2004: $11.5; 
2005: $10.9; 
2006: $10.6. 

Patent examiners in telework program; 
2002: [NOT APPLICABLEA]; 
2003: 800; 
2004: 345; 
2005: 1,014; 
2006: 999. 

Source: USPTO. 

[A] USPTO did not offer a telework program until fiscal year 2002. 

[End of table] 

According to the results of our survey, patent examiners generally 
agreed that compensation-related retention incentives and efforts to 
enhance the work environment were among the most important reasons they 
would choose to stay at USPTO, as table 3 shows. 

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

USPTO incentives and flexibilities offered to patent examiners: Current 
total pay (excluding benefits); 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 58. 

USPTO incentives and flexibilities offered to patent examiners: The 
availability of the flexible work schedule program; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 49. 

USPTO incentives and flexibilities offered to patent examiners: The 
availability of a hoteling program; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 38. 

USPTO incentives and flexibilities offered to patent examiners: Current 
federal benefits; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 30. 

USPTO incentives and flexibilities offered to patent examiners: The 
availability of a teleworking program; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 17. 

USPTO incentives and flexibilities offered to patent examiners: The 
recent implementation of a special pay rate increase; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 16. 

USPTO incentives and flexibilities offered to patent examiners: 
Opportunities for career advancement; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 15. 

USPTO incentives and flexibilities offered to patent examiners: The 
ability to be promoted to the next GS level; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 14. 

USPTO incentives and flexibilities offered to patent examiners: The 
availability of the law school tuition program; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 10. 

USPTO incentives and flexibilities offered to patent examiners: The 
availability of monetary awards; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 5. 

USPTO incentives and flexibilities offered to patent examiners: The 
casual dress policy; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 4. 

USPTO incentives and flexibilities offered to patent examiners: Access 
to an on-site fitness center; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 4. 

USPTO incentives and flexibilities offered to patent examiners: The 
availability of a transit subsidy program; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 2. 

USPTO incentives and flexibilities offered to patent examiners: The 
availability of on-site child care; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 1. 

USPTO incentives and flexibilities offered to patent examiners: 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 pre-tax dollars); 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 1. 

USPTO incentives and flexibilities offered to patent examiners: The 
availability of an on-site health unit; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 0. 

USPTO incentives and flexibilities offered to patent examiners: 
Activities offered by the Work-Life Committee; 
Estimated percentage of patent examiners who identified these 
incentives and flexibilities as reasons to stay with the agency: 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. 

[End of table] 

Despite USPTO's efforts to hire more patent examiners annually and 
implement retention incentives and flexibilities over the last 5 years, 
the agency has had limited success in retaining new patent examiners. 
Because the agency's production goals appear to be undermining USPTO's 
efforts to hire and retain a qualified workforce, we recommended in 
2007 that the agency comprehensively evaluate the assumptions it uses 
to establish patent examiner production goals and revise those 
assumptions as appropriate. 

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. It stated that 
USPTO is implementing initiatives 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 productions goals. 

Mr. Chairman, this concludes my prepared statement. I would be happy to 
respond to any questions that you or Members of the Subcommittee may 
have at this time. 

Contacts and Acknowledgments: 

For further information, please contact Robin M. Nazzaro at (202) 512- 
3841 or [email protected]. Other contributors to this statement include 
Vondalee R. Hunt, Assistant Director; Omari Norman; Jamie Roberts; 
Carol Herrnstadt Shulman, and Lisa Vojta. 

[End of section] 

Footnotes: 

[1] GAO, U.S. Patent and Trademark Office: Hiring Efforts Are Not 
Sufficient to Reduce the Patent Application Backlog, GAO-07-1102 
(Washington, D.C.: Sept. 4, 2007). 

[2] USPTO, an agency within the Department of Commerce, consists of two 
organizations, one for patents and one for trademarks. This statement 
focuses on the patent organization, which accounts for approximately 76 
percent of the agency's resources. 

[3] USPTO tracks two key milestones in the patent application process 
to evaluate a patent examiner's 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 occurs when the application is allowed, 
abandoned, or sent to the Board of Patent Appeals and Interferences. 

[4] Patents typically fall into one of three categories: (1) utility-- 
for useful inventions, such as processes, machines, articles of 
manufacture, or composition of matter; (2) design--for changes in 
configuration, shape, or surface ornamentation that do not involve 
changes in function; or (3) plant--for asexually reproducible plants. A 
fourth category, "reissue patents," refers to patents USPTO grants as 
replacements for any patent that was in some way defective; these 
patents constituted less than one-half of 1 percent of patents issued 
in fiscal year 2003. 

[5] 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. 

[6] These 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. 

[7] The term "primary reasons" 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. 

[8] Union officials also identified a recent decision by USPTO 
management to track when patent examiners enter and leave the building 
as another reason 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. 

[9] USPTO predicts first actions by multiplying the number of patent 
examiners in the workforce by production goals. 

[10] USPTO may award up to three types of bonuses to one patent 
examiner in a fiscal year, one of which may be awarded twice per fiscal 
year. 

[11] Patent 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. 

*** End of document. ***