81
independent claim in excess of 3 was raised from $86 to $200.
87
The patent bar and users of the
patent system, including many signatories to this letter, supported these increases precisely
because USPTO assured us that backlog would decline if only they had the funds to dramatically
increase staffing and establish incentives that improved examiner retention. Users of the patent
system agreed that Congress had “starved” USPTO during the period 1992-2003 by diverting
rting
hundreds of millions of dollars of user fee revenue:
88, 89
AIPLA supported the fee increase, which was said to be necessary “to
substantially cut the size of [the PTO’s] inventory,” because we believed that it
it
would allow the PTO to both improve quality of the patents it granted and reduce
e
the pendency of its backlog of patent applications. Congress did increase patent
fees beginning in fiscal year 2005, and the PTO is now in the second year of that
increase. It hired approximately 1,000 new patent examiners in FY 2005 and plans
to hire 1,000 more for each of the next four years. We understand that the Office
has experienced some difficulties in training and retaining these new examiners.
We also understand that the Office has developed a new approach to training
examiners and is targeting new hires that will be more likely to make their career
in the PTO.
On the other hand, the Office has repeatedly stated, without providing any
justification, that it “cannot hire its way out” of the backlog situation in which it
it
finds itself. Absent some compelling evidence to back up this claim, AIPLA
cannot accept this mere statement as justification for the proposed rule changes.
While it is true that hiring additional examiners would not instantly reduce the
backlog of pending applications, any search for a remedy to this problem must
consider the PTO’s current situation and how it got there. Congress essentially
starved the PTO of the resources it needed to keep pace with the increase in patent
application filings from roughly FY 1992 through FY 2003, diverting nearly $800
million in fees generated by this increase. Hundreds of examiners, who would be
fully trained and experienced today, were not hired. Many of the examiners in the
87
Compare 37 C.F.R. § 1.17 from 2004 and today (Attachment P). For example, an application
ion
with 10 independent claims and 52 total claims would incur $3,000 (= {(10-3) ×
3) ×
$200} + {(52-20) ×
×
$50}) in “excess claims,” in addition to the $1,000 filing fee for a basic application. Thus a moderately
ly
complex application costs four times the filing fee of a basic application.
88
See AIPLA’s comment letter on the Continuations Rule, April 24, 2006, http://www.uspto.gov/
web/offices/pac/dapp/opla/comments/fpp_continuation/aipla.pdf at page 3 (page 4 of the pdf) (“Congress
essentially starved USPTO of the resources it needed to keep pace with the increase in patent application
filings from roughly FY 1992 through FY 2003, diverting nearly $800 million in fees generated by this
increase. Hundreds of examiners, who would be fully trained and experienced today, were not hired.”)
)
89
AIPLA’s letter, loc. cit.; Figueroa v. United States, 466 F.3d 1023, 1027-28 (Fed. Cir. 2006)
2006)
(describing the history of “fee diversion,” Congressional failure to authorize USPTO’s authority to spend
pend
the fee income it earned).
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PTO at that time have aged and are retiring. Now the Office must find and train the
needed examiners, and must provide an attractive workplace and appealing
working conditions in order to retain them. This solution will take time; it will not
happen overnight. But neither did the crisis in which the Office finds itself arise
overnight.
The purpose of the additional user fee revenue was to increase hiring, and indeed, USPTO
forecasts that with these new hires and low attrition, the pendency time will be under 35 months
in 2011, while without hiring pendency would have exceeded 40 months.
90
Now USPTO
officials say that the Office “cannot hire its way out” of the backlog.
og.
91
III.
Continued Examinations Require Less Examining Resources than Initial
Applications
In the preamble to the proposed Continuations Rule, USPTO assumes that the resources
s
needed to examine initial and continuation applications are identical. Therefore, every continuing
application not submitted means an initial application will be examined instead.
92
There are three
scenarios under which this assumption could hold: the first is rare, and the other two are highly
implausible. The rare scenario requires that the examiner who reviewed a parent application not
review the corresponding continuation application. The first implausible scenario concedes that
the same examiner reviews both applications, but assumes that at the time he reviews the
continued examination he has no recollection of the earlier application.
93
In the second
implausible scenario, all effort expended in earlier examination becomes irrelevant and unusable
in continued examination. USPTO has presented no evidence supporting any of these
propositions. In fact, common sense suggests that they are true only in unusual circumstances
s
and therefore should not be used as the basis for extrapolating changes in USPTO output.
.
Continuations are almost always reviewed by the same examiner – the only routine exception is
when the earlier examiner leaves USPTO employment. The typical time lag between rounds of
examination is five to ten months, so a complete lack of recollection is unlikely.
90
See Chicago Town Hall Slides at 51.
91
Eric Yeager, “USPTO Commissioner Doll Says That Limiting Continuations Will Improve
Patent Landscape,” 72 Patent, Trademark & Copyright Journal 704ff (“‘We can’t hire our way out of the
the
patent application backlog, and that is certain,’ Doll said.”). Even if it is assumed that USPTO’s forecasts
casts
are valid and reliable, the effect of these two rules would be to reduce pendency by just three months. See
Attachment N, slide 53 of the Chicago Town Hall Slides, reproduced at Attachment H, section II.
II.
92
71 Fed. Reg. 50, col. 1.
93
A parallel is easy to make to OMB’s experience in regulatory review. Staff turnover sometimes
means final proposed and draft final rules are reviewed by different Desk Officers, especially when a
significant period of time has elapsed. Rarely, however, does a Desk Officer reviewing a draft final rule
have no recollection of his own prior review of the draft proposed rule.
.
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Instead, it is far more likely that the same examiner reviews both the original and
continuation applications, and recalls a significant amount of detail.
94
Examiners reuse the prior
art search (the single largest time commitment in reviewing a new application for the first time)
from earlier rounds of examination, and only do “follow up” searches of prior art that was
as
recently published. Therefore, the examining resources necessary to examine a continuation are
e
almost certain to be less than those needed to examine a new application. That means for every
continued application USPTO does not examine, it will examine a fraction of one new
application with the same resources.
95
Continuation applications, CIPs, and RCEs appear to be at least self-funding
ng
96
and may
be profit centers for USPTO. We predict, for example, that continuation applications on average
require significantly less examination resources and generate higher levels of maintenance fee
revenue than original applications. We also predict that a well-conducted Regulatory Impact
t
Analysis would show that the perverse incentive structures described in Section I, and problems
ms
the Office has recruiting and retaining competent examiners, are greater contributors to backlog
than the application attributes it proposes to regulate.
97
If the inefficiencies created internally by
USPTO were addressed, we predict that USPTO’s backlog would be brought under control. Of
Of
course, performing a Regulatory Impact Analysis that complies with Circular A-4 would allow
low
USPTO to evaluate these various issues and enable it to structure reforms that attack the
underlying problem rather than unrelated but observable symptoms.
IV.
USPTO Has Serious Problems Recruiting and (Especially) Retaining Competent
Examiners
To work as a patent examiner, one must have earned a college degree in a relevant
technical field plus, in some technological fields, have a higher lever degree, such as a master’s
s
or Ph.D. Job postings on the USPTO web site give a starting salary of $38,435, and promotion
94
USPTO will have ample data that can be analyzed to determine how often the examiner of the
continuation application is not the same as the examiner of the earlier application. We encourage USPTO
to include an analysis of this data in preparing a complete regulatory analysis of the impact of the
Continuations Rule.
95
The parallel to OMB review applies here as well. The resources it needs to review draft rules
and ICRs would be significantly greater if every submission were new and there was no institutional
memory.
96
If they are not, then USPTO has set its fees in violation of statute, and has both the obligation
and authority to reset its fees. 35 U.S.C. § 41(d)(2) (“The Director shall establish fees … to recover the
e
estimated average cost to the Office…”); see also footnote 29.
29.
97
See Section IV below and Chicago Town Hall slides (Attachment N) at 20 (shows hiring and
d
attrition over the past few years).
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potential limited to GS-14 equivalent.
nt.
98
Postings indicate that higher salaries ($63,885 -
-
$83,052) are available for examiners with Ph.D. degrees or the equivalent.
.
99
These salaries may
be competitive for newly minted degree-holders, but they probably are not sufficient to retain
employees, especially in the expensive metropolitan Washington, DC area. GS-15 positions pay
better ($120,982-$145,400), but they require years of experience and usually involve
lve
management responsibilities.
The retention problem is made worse by the fact that examiners obtain extremely
valuable, specialized human capital while employed at USPTO, and they must leave government
service to capitalize on it.
100
Starting private sector salaries for persons with similar skills and
human capital are much higher – for example, a median starting salary in the Virginia suburbs
for an electrical engineer with a Master’s Degree and one year experience in some technical
ical
fields is about $70,000 per year. Many examiners leave USPTO to attend law school, or more
frequently attend law school at night while still employed at the USPTO, to become patent
lawyers. Attorneys with 7-9 years’ experience in law firms earn about $200,000 per year.
ear.
101
In short, examiner retention is a significant problem and one that may well be endemic to
the nature of USPTO’s work. It may, in fact, be an impossible problem to solve without
ut
returning to the deferred compensation civil service model, which rewarded long term service.
102
Labor markets are brutally efficient at allocating resources, and USPTO simply may not be able
to overcome normal market forces with any of the tools at its disposal.
98
See
http://jobsearch.usajobs.opm.gov/getjob.asp?JobID=53094580&jbf574=CM56&brd=3876&AVSDM=20
07%2D04%2D14+13%3A00%3A07&q=EXAMINER&vw=d&Logo=0&FedPub=Y&caller=%2Fa9pto
%2Easp&FedEmp=N&SUBMIT1.x=0&SUBMIT1.y=0&ss=0&SUBMIT1=Search+for+Jobs&TabNum=
1&rc=3.
99
See
http://jobsearch.usajobs.opm.gov/getjob.asp?JobID=53094737&AVSDM=2007%2D04%2D14+13%3A0
0%3A05&Logo=0&q=EXAMINER&FedEmp=N&jbf574=CM56&brd=3876&vw=d&ss=0&FedPub=Y
&caller=/a9pto.asp&SUBMIT1.x=0&SUBMIT1.y=0&SUBMIT1=Search+for+Jobs.
100
Attrition also has social benefits: e.g., the corps of patent experts outside the government
ent
performs better because there is a cohort that has worked on the “other side” of the table. The challenge to
e to
USPTO is to avoid excess attrition, especially among its most competent examiners.
101
American Intellectual Property Law Assn, Report of the Economic Survey 2005, page I-52.
.
102
We are aware of no serious interest in such a change. We mention it only to point out that
potential solutions may exist if the problem of retention per se is deemed crucial.
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