ployed. We believe the automated patent system will improve the quality of patents we issue and that it will provide to the Office and to the public the most advanced data base in the world of technological information, one that will be a vastly more efficient search tool than the existing paper-base system. On the trademark side, the story is equally as positive. We have had a system in place for a number of years. That system is now nearing the end of its usable life. During the remainder of this year and next, the system will be upgraded to improve the quality and timeliness of searches and to provide more and better information to the users. Nevertheless, concerns about PTO's automation effort remain in the user community. As requested by Members of Congress, the GAO is currently reviewing our systems again. When they issue a final report, we will be pleased to review their recommendations and work with the Congress to modify our plans to any extent the Congress may deem advisable. We are not hesitant, however, to affirm the following conclusions: The Office cannot continue over the long term to rely on paperbased examination systems. Neither the technology nor our budget resources will permit it. We must proceed without delay if we are to have an electronic system that will enable us to adequately fulfill our statutory examination responsibilities during the latter part of this decade. The funds requested in this authorization cycle are reasonable and necessary if we are to stay on track with the completion and deployment of these systems. În conclusion, I would like to say that our objective is to provide the best possible products to the users of this Patent and Trademark Office. In that vein, I would note that we have reached an agreement recently with our public employee unions to radically expand the total quality management program to all aspects of the PTO's operations. We have learned from experience that this will enhance the quality of service we provide, while reducing the cost. The total quality management program focuses on implementing continuous improvements in products and processes and it is driven by regular customer input and objective performance criteria. It is widely in use in the private sector. We believe that the program we have outlined, given the resources available to us, will achieve our objective. As always, we want to work closely with this committee to assure that we provide the level of stewardship that is rightfully expected of us by the Congress and the public. That concludes my oral remarks. I would be pleased to answer questions. Statement of Douglas B. Comer Acting Assistant Secretary and Acting Commissioner of Patents and Trademarks FISCAL YEAR 1992 ACTIVITIES The result of the authorization process last year was Public Law 102-204, the Patent and Trademark Office Authorization Act of 1991. This Act not only authorized the Office for fiscal year 1992 but also provided for increases in patent and trademark-related fees in fiscal year 1992. The Authorization Act was predicated on a fee recovery level of $426,000,000, but only $419,441,000 was appropriated to the Office. Given this level of funding, the U.S. Patent and Trademark Office has taken steps to ensure that our expenditures do not exceed available program funds for fiscal year 1992. FISCAL YEAR 1993 PLANS For fiscal year 1993, we have requested a program level of $486,000,000 that will be funded solely by fee income. We are not proposing any new goals or objectives - the pendency, automation, quality, and other priority initiatives which were authorized for fiscal year 1992 will simply be continued next year. We expect that the number of patent applications will increase four percent to 182,000 and the number of trademark applications will increase approximately six percent to 130,000. We will do our best, given the resources we have, to decrease the patent pendency period, but our best projection now is that in fiscal year 1993 the pendency period will be 20 months. On the trademark side, we expect to do better, and reduce the pendency period to our long-standing goal of 13 months by the end of 1993. AUTOMATION OF THE PATENT AND TRADEMARK OFFICE Since December 1982, we have embarked on a massive effort to fully automate the patent and trademark functions. It is natural that this effort has been one of our most studied and contentious issues in light of the cost it entails. Nevertheless, we are convinced that completion of the patent and trademark automation improvements program is critical to the future viability of our industrial property system. Automation is now providing benefits to the public that could not be achieved in a paper system. We now have a pilot program that is providing the capability to search the text portion of patent documents at 14 Patent and Trademark Depository Libraries located throughout the country. Also, our investment in the APS system has enabled us to provide these Libraries with new CD-ROM products containing patent and trademark information. Furthermore, studies by our Office of Quality Review show that the APS has improved the quality of the patents we issue. This is due to the fact that the APS provides for more secure files, that is all of the references are always available to the examiner. Examiners are able to extract more references that are pertinent to the application under examination, and the APS provides better and more powerful search tools. For all of these reasons, we are convinced that the path we are on is the Statement of Douglas B. Comer Acting Assistant Secretary and Acting Commissioner before the Subcommittee on Patents, Copyrights and Trademarks United States Senate May 12, 1992 Mr. Chairman and Members of the Subcommittee: Thank you for this opportunity to appear before the Subcommittee to discuss our activities since our last oversight hearing in April 1991, and to describe some of our plans for the remainder of fiscal year 1992 and for fiscal year 1993. As you may recall, during the last authorization process for fiscal year 1992, we divided our proposed budget changes into four areas. The first category was "Inflation and Base Adjustments". This category included the additional funds needed to provide the same level of service in fiscal year 1992 as in fiscal year 1991. These funds would pay for the higher rents charged to the Office, the cost of the statutorily mandated pay raises, and other increased costs beyond the control of the Patent and Trademark Office, such as publications, and contract inflation charges. The second category was "Workload". This category included the cost of processing the increasing level of services and products requested from the Office, including the number of patent and trademark applications filed in fiscal year 1992 over the levels filed in fiscal year 1991. These increased costs included not only compensation for additional examiners, but compensation for the additional support staff required and the materials and space that they need to do their job. The third category was "Automation" which included the costs of moving forward with an aggressive deployment plan for the Automated Patent System, modernization of the trademark search system, and enhancing the dissemination of patent and trademark information to the public. Finally, the fourth category was entitled "Priorities" or "Quality Improvements". In this category, we placed a number of initiatives to improve the quality or timeliness of the services we provide. For example, we planned to increase the examiner's access to commercial data bases, to hire more biotechnology examiners, and to provide special pay grades for patent examiners in critical technologies. FISCAL YEAR 1992 ACTIVITIES The result of the authorization process last year was Public Law 102-204, the Patent and Trademark Office Authorization Act of 1991. This Act not only authorized the Office for fiscal year 1992 but also provided for increases in patent and trademark-related fees in fiscal year 1992. Furthermore, it authorized yearly increases in those fees proportional to fluctuations in the Consumer Price Index in subsequent years. The Authorization Act was predicated on a fee level of $426,000,000, an amount which was $36,000,000 less than requested by the Administration. The actual appropriation, however, was $419,441,000, $6,559,000 less than authorized. Given this level of funding, the U.S. Patent and Trademark Office has taken steps to ensure that our expenditures do not exceed available program funds for fiscal year 1992. In the "Inflation and Base Adjustment" category, two actions were taken by the Office that enabled us to spend less for maintaining the current level of services. First, we requested and received lower rental payments to the General Services Administration. Second, the Office, on its own initiative, restricted hiring and overtime. With regard to the "Workload" category, we will reduce our spending by approximately $25,000,000. On the patent side, we will achieve reductions by hiring only that number of examiners that we will lose through attrition, except for special areas such as biotechnology. This was possible in part because fewer applications were filed than we originally anticipated, although applications continued to increase in absolute numbers. Improved retention rates also mitigated the effect of the reduction in hiring somewhat as the average experience and production levels per examiner remained higher than originally expected. Nevertheless, we now expect the patent pendency period to rise to 19.1 months by the end of fiscal year 1992, instead of 18.4 months as we originally expected. In the trademark arena, we froze hiring of examining attorneys and eliminated overtime. of this fiscal year than at the beginning. We have also had to draw on reserve funds that had been accumulated during previous years to meet the requirements of the trademark program. These accumulated funds will not be available to the Office in fiscal year 1994. In the "Automation" category, we have reduced our planned improvements by about $7,000,000. We have delayed the development work on "PAM", the Patent Application Management system, which would enable the Office to receive and process applications electronically and deferred its completion until 1997. This deferment means that we will not realize savings from PAM until then. For example, it could save over $15,000,000 annually in costs of printing patent documents. We have delayed the development work that would have enabled us to load foreign patent information into the Automated Patent System (APS) in fiscal year 1993. The availability of this type of information has been highlighted by industry as a critical concern. In the "Quality Improvements" category, we will spend approximately $7,000,000 less than requested. We have reduced by 60 percent our planned expansion of access to commercial data bases. Also, we were forced to defer needed reclassification activities by reducing the planned number of patents reclassified this year by twenty percent. Focusing on the biotechnology area, we were forced to scale back the number of examiner hires by 17 percent. We have reduced by 37 percent funds that would have been available for biotechnology examiners to access commercial data bases, to access non-patent technical literature, and to hire personnel for biotech examiners support. FISCAL YEAR 1993 PLANS For fiscal year 1993, we have requested a program level of $486,000,000 that will be funded solely by fee income. There are three fundamental aspects of this request that I want to emphasize: 1. We are not proposing any new goals or objectives the pendency, automation, quality, and other priority initiatives which were authorized for fiscal year 1992 will simply be continued next year; 2. We are no longer seeking taxpayer support for the Office's operations the $486,000,000 program budget we are requesting will be financed totally by user fee revenues; and 3. Over 96 percent of the total program request is connected with the maintenance of current services (inflation, base adjustments, and workload). |