Detailed Information on the
U.S. Patent and Trademark Office - Patents Assessment

Investing in strategic plan initiatives to improve patent pendency, quality, and implementation of e-government.

Incorporating cost-efficiency targets into manager performance plans.

Develop and publish a new Strategic Plan. USPTO goals to be reviewed and updated to fully support the FY 2007-2012 Strategic Plan

Measure: Applications filed electronically

Explanation:This measure indicates USPTO's support of, and applicants' willingness to operate in, an e-government environment and identifies the percent of patent applications filed electronically.

Measure: Allowance error rate

Explanation:Assesses product quality through internal reviews. An error is defined as at least one claim within the randomly selected allowed application that would be held invalid in a court of law, if the application were to issue as a patent without the required correction.

Measure: Average first action pendency

Explanation:The average time, in months, from the filing date of the application to the mailing of the first office action.

Measure: Average total pendency

Explanation:The average time, in months, for a complete review of a patent applications, from the filing date to issue or abandonment of the application.

Measure: Efficiency

Explanation:Relative indicator of the efficiency of the patent process as measured by the total cost of programs that support the examination of patents compared to its core outputs.

Is the program purpose clear?

Explanation: USPTO administers the laws relating to patents (and trademarks) while ensuring the creation of valid, prompt, and proper Intellectual Property rights and by advising the administration on all domestic and all global aspects of Intellectual Property.

Evidence: USPTO's mission statement

Does the program address a specific and existing problem, interest, or need?

Explanation: USPTO addresses the promotion of industrial and technological progress in the US by providing intellectual property protection. The granting of a patent establishes the right to exclude others from making any use of the patented invention in return for a full and complete disclosure of the invention to society.

Evidence: USPTO's mission statement and U.S. patent law as codified in 35 U.S.C. "Patents"

Is the program designed so that it is not redundant or duplicative of any Federal, state, local or private effort?

Explanation: USPTO is the only governmental agency in the United States which administers patent laws and grants patents.

Evidence: No other comparable U.S. Entity and the authority for the U.S. government to administer laws relating to trade and commerce are found in the commerce clause of the U.S. Constitution. 35 U.S.C. "Patents" USPTO Performance and Accountability Report

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The patent program has established user fees that support the costs of administering the patent program that convey special benefits to recipients beyond those that accrue to the general public. However, due to problems meeting performance goals PTO began implementation of a new strategic plan in FY 2002 to accelerate implementation of e-government in patents, enhance examination quality, and restructure the patent fee schedule through legislative changes.

Evidence: USPTO 21st Century Strategic Plan, USPTO Performance and Accountability Report

Is the program effectively targeted, so program resources reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: The direct beneficiaries are customers (applicants) who pay fees for the patent program's products and services that convey special benefits to those entitled under the law. Publishing patents benefits the public by disclosing new technology and protecting Intellectual Property ownership rights.

Evidence: USPTO's mission statement; USPTO 21st Century Stategic Plan; U.S. patent law as codified in 35 U.S.C. "Patents"

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The patent program has the following long-term goals: Improve the quality of patent products and services and optimize patent processing times, and create a more flexible organization through transitioning patent applications to e-government operations. The specific long-term performance measures supporting these goals are 1) Improve the quality by reducing the error rate, 2) Reduce first action and total pendency, 3) Improve the efficiency of the patent processing system by enabling electronic processing for patents.

Evidence: USPTO Performance and Accountability report, USPTO 21st Century Strategic Plan

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: In general, PTO's long-term targets are ambitious. The targets for 2009 are the following: (a) 30% of patent applications filed electronically; (b) improve patent quality by reducing the error rate to 3%; (c) reduce average patent first office action pendency to 15.9 months; (d) reduce total average patent pendency to 29.5 months; and (e) achieve a cost of $3,685 per patent production unit.

Evidence: FY 2005 Budget Request and Agency Performance Plan.

Does the program have a limited number of specific annual performance measures that demonstrate progress toward achieving the program's long-term measures?

Explanation: USPTO has established several annual measures and goals that contribute to desired long-term results, including patent pendency, error rate, electronic filing and processing of patent applications, and unit costs per patent disposal.

Evidence: FY 2005 Budget Request and Agency Performance Plan.

Does the program have baselines and ambitious targets and timeframes for its annual measures?

Explanation: The FY 2005 patent program targets are: (a) 4% of patent applications filed electronically; (b) improve patent quality by reducing the error rate to 3.75%; (c) reduce average patent first office action pendency to 21.1 months; (d) reduce total average patent pendency to 31.1 months; and (e) achieve a cost of $4,052 per patent production unit. While some of the annual targets are less ambitious, as a whole, these targets are reasonable and incorporate planned increases in pendency, as PTO implements its strategic plan initiatives to complete patent e-Government and modify the patent examination process. Completion of the strategic plan initiatives should allow PTO to meet the long-term targets.

Evidence: The USPTO Performance and Accountability Report contain targets and actual performance results compared to annual performance goals. The FY 2004 and 2005 Agency Performance Plans contain most targets and baseline results.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, etc.) commit to and work toward the annual and/or long-term goals of the program?

Explanation: USPTO partners with United States Trade Representative on international negotiations. The USPTO also partners with significant contractors to meet specific time frames for processing. To reduce workloads and duplication of efforts, USPTO has also undertaken a pilot project with the European Patent Office (EPO) and the Japanese Patent Office (JPO) to assess the benefits of mutual exploitation of patent search and examination results.

Evidence: USPTO 21st Century Strategic Plan USPTO Record of Discussion with EPO and JPO

Are independent and quality evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: In the past, the USPTO has not had regular, independent evaluations. The GAO and DOC Office of Inspector General have conducted infrequent reviews of PTO's performance. In the future, USPTO plans to perform independent reviews of proofs of concepts performed for The 21st Century Strategic Plan. USPTO also conducts internal reviews of the quality of patent examination by agency officials. These internal reviews focus on (1) identifying patentability errors, (2) assessing adequacy of the field of search and proper classification, and (3) assessing proper examination practice and procedures. USPTO contracts with independent auditors to audit annual performance and accountability reports and to compile the results of the annual customer satisfaction surveys.

Evidence: Government Accounting Office Audits/reports: GAO-02-907, Information on the US Patent and Trademark Office's Past and Future Operations, August 2002. Office of Inspector General audits/reports: BTD-14432-2-0001, Patent Examiner Hiring Process Should Be Improved., March 2002. FSD-14429, Minor Improvements Needed in Reporting Performance Results, March 2002. Patent Quality Review Reports. Patent Public Advisory Committee Annual Reports

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: USPTO identifies program goals and performance measures by patent and trademark business in the preparation of its budget request and displays the funding associated with each of the major goals and objectives. USPTO has developed Activity Based Costing models that align all obligations within USPTO with either the patent or trademark business areas to determine actual expenses and forecast future budget obligations by revenue source.

Evidence: The FY 2004 and 2005 USPTO budget submission reflects the division of the agency budget into two business lines - Patents and Trademarks.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: In June 2002, USPTO developed the 21st Century Strategic Plan that promotes changes to trademark practices and procedures to improve quality, pendency, and fully implement e-government operations. The agency has developed detailed implementation plans to support and monitor the achievement of those initiatives. In February 2003, the USPTO published revised action papers and plans that addressed concerns of stakeholders in making changes to the trademark process. The USPTO plans to conduct a "proof of concept" and disclosing the results to stakeholders prior to implementing major new initiatives.

Evidence: USPTO 21st Century Strategic Plan

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: USPTO is designated a "performance-based organization" (PBO) and regularly collects data on productivity, pendency, quality, administrative, and financial performance for use by managers to review against baseline and annual targets. The agency also shares data with its international counterparts, including measures of performance and cost.

Evidence: Patent Application Location and Monitoring (PALM) reports Quality Review reports Monthly Process Production reports; American Inventor's Protection Act of 1999 PL 106-113

Are Federal managers and program partners (grantees, subgrantees, contractors, cost-sharing partners, etc.) held accountable for cost, schedule and performance results?

Explanation: Although performance plans at USPTO are linked to the organization's goals, performance plans of managers do not include cost efficiency goals. PTO is working to develop cost efficiency targets and incorporate them into performance plans.

Evidence: Employee Annual Performance Plans Annual performance contract between the Commissioner for Patents and the Secretary of Commerce.

Are all funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: USPTO develops operating plans for each organization based on appropriated funding levels and USPTO goals and priorities and periodically monitors spending against established program plans.

Evidence: Bi-weekly Execution reports produced by the Office of Corporate Planning FY 2002 patent organization direct funds were 99.8% obligated through September 2002. As of May 15, 2003 74.3% of patent funds were used. Audited statements contained in the USPTO Performance and Accountability Report.

Does the program have procedures (e.g., competitive sourcing/cost comparisons, IT improvements, approporaite incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: USPTO has a consistent track record for competitively sourcing non-inherently governmental functions (e.g. mail, payroll, clerical support, Information Technology development and maintenance). USPTO has productivity performance measures that are appropriate for its mission and program objectives. USPTO has developed annual efficiency measures to evaluate the level of resources consumed and the unit costs of providing services that support the processing and examination of patents.

Evidence: USPTO Corporate Plans ad Budget Requests USPTO Performance and Accountability report USPTO's 21st Century Strategic Plan further increases competitive sourcing of patent classification and search functions.

Does the program collaborate and coordinate effectively with related programs?

Explanation: Though USPTO is the only federal entity that addresses patent law and policy, the USPTO regularly collaborates with its international intellectual property counterparts to share systems, exchange information, and discuss changes to patent laws and practices. To reduce workloads and duplication of efforts, PTO has also undertaken a pilot project with the European Patent Office (EPO) and the Japanese Patent Office (JPO) to assess the benefits of mutual exploitation of patent search and examination results. USPTO also consults with the Copyright Office of the Library of Congress on intellectual property policy formulation and proposed legislation and collaborates with other agencies to screen patent applications for security implications.

Evidence: Reports of annual trilateral meetings of USPTO, Japan Patent Office and European Patent Office and participation with working groups sponsored by the World Intellectual Property Organization.

Does the program use strong financial management practices?

Explanation: Although USPTO declared a material weakness under the FMFIA in FY 2002 due to DOC IG evaluations that found that eight critical information systems at PTO were not certified and accredited, this did not affect financial management practices. In FY 2002, the USPTO core financial system was maintained and operated off-site at the US Department of Interior. The FY 2002 Financial Statement audit revealed an unqualified audit opinion with no material weakenesses or reportable conditions. FY 2002 marked the 10th year of an unqualified audit opinion and 6th year without material internal control weakenesses supporting the financial management practices.

Evidence: USPTO Performance and Accountability Report Office of Inspector General/Government Accounting Office Audits/Reports For FY 2002 OIG Report: OSE-15250 Independent Evaluation of USPTO's Information security Program Under the Government Information Security Reform Act (September 2002)

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The 21st Century Strategic Plan takes a proactive approach to strengthening program management through ensuring achievement of desired goals and objectives. This includes training and compensation initiatives to improve performance and ensure management officials have the skills, capabilities, and incentives needed to carry out the plan.

Evidence: USPTO 21st Century Strategic Plan

Has the program demonstrated adequate progress in achieving its long-term outcome performance goals?

Explanation: In FY02 and FY03, the patent program meet most of its performance targets. However, pendency remains high and the number of patent applications awaiting first action increased by 38,000 (9%) from FY 2002 to FY 2003. Full implementation of the strategic plan should improve pendency and qualilty by 2009. During FY 2003, PTO has also made progress implementing electronic processing for patents by implementing its electronic application processing.

Evidence: USPTO Performance and Accountability Report USPTO 21st Century Strategic Plan

Does the program (including program partners) achieve its annual performance goals?

Explanation: In FY 2003, the patent program met three of its five measures under the goals of improving the quality of patent products and services and optimizing patent processing times. PTO did not meet its error rate target (an indicator of the quality of patents); but did meet its average total pendency target and first office action pendency target. However, patent processing times have increased between FY 2000 and FY 2003.

Evidence: USPTO Performance and Accountability Report

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program performance goals each year?

Explanation: The strategic plan includes steps to improve efficiency and cost effectiveness, including implementing e-Government programs, continuing competitive-sourcing efforts, and conducting pre-employment testing of job applicants. To date, unit costs per patent disposed production unit have increased while average total and first office action pendency remain high.

Evidence: USPTO 21st Century Strategic Plan; USPTO Performance and Accountability Report.

Does the performance of this program compare favorably to other programs, including government, private, etc., that have similar purpose and goals?

Explanation: There are no other similar Federal programs. However, USPTO compares favorably with the other two major international intellectual property offices. USPTO has the lowest pendency and lowest cost to the applicant for obtaining and maintaining a patent.

Evidence: USPTO data on costs and timeliness for Europe, Japan, and PTO in FY 2003 Budget Submission. (European Patent Office fees collected per 20 year-life of typical patent: $37K, Japanese Patent Office costs: $12K, and PTO costs: $8K).

Do independent and quality evaluations of this program indicate that the program is effective and achieving results?

Explanation: PTO does not have regular, independent evaluations. However, several internal evaluations are conducted to examine progress meeting performance targets and PTO's 21st Century Strategic Plan was endorsed by industry and user groups as an effective approach to improving quality, reducing pendency, and achieving electronic filing and processing of applications. PTO should consider more external evaluations of the new initiatives within the strategic plan.

Evidence: Patent Quality Review Reports USPTO 21st Century Strategic Plan USPTO Performance and Accountability Report