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P e r f o r m a n c e a n d T A B A c c o u n t a b i l i t y L E O F C R e p o r t : O N T F i s c a l E N T Ye a r 2 0 0 3 S Message from the Under Secretary of Commerce for Intellectual Property and 2 Director of the United States Patent and Trademark Office (USPTO) Message from the Chief Financial Officer 4 Management Discussion and Analysis 7 Mission and Organization of the USPTO Performance Goals and Results 9 11 Patent Performance 15 Trademark Performance 23 Intellectual Property Policy and Leadership Performance 35 Management Challenges 41 The President’s Management Agenda 43 Management Controls and Compliance with Laws and Regulations 45 Financial Highlights 49 Financial Section 61 Basic Financial Statements and Related Notes 61 Required Supplemental Information 81 Independent Auditors’ Report 85 Management and Performance Challenges Identified by the Inspector General 93 Other Accompanying Information Glossary of Acronyms and Abbreviation Lists 99 137 Web address for the USPTO Performance and Accountability Report http://www.uspto.gov/web/offices/com/annual/2003/index.html U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e MESSAGE FROM THE UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE U. S. PATENT AND TRADEMARK OFFICE s the Under Secretary of Intellectual Property and Director of the United States Patent and Trademark Office (USPTO), I have the privilege of serving at the helm of the agency that is the Federal Government’s tangible expression of commitment to innovation and creativity. It is a commitment that goes back to the first days of our country. When the Founding Fathers created our new Republic, they carefully drafted our Constitution to be limited in scope and Federal authority. As they painstakingly crafted the institutions of our new government, the Founders also saw fit to include a clause anticipating the establishment of a patent system and the protection of intellectual property (IP). With their attention focused on the birth of a new Republic, why did they feel the need to deal with what appears to be, at first blush, an obscure area of law? A The answer is as important to our generation as it was to theirs. They understood that their agrarian colony would never grow to be an economic and technological giant unless there was an incentive for inventors to create, and for other inventors to study and improve upon those creations. From this foresight came the American systems of patents, trademarks, and copyright protection, which give inventors and authors the ability to enjoy, for a limited period of time, the exclusive economic benefits of their genius. As the importance of patents, trademarks, and other forms of IP to our economy has grown, the USPTO workload has skyrocketed. For example, since 1992 the number of patent applications we receive has doubled. In addition, the complexity of the technology in these applications is increasing rapidly. As a result, processing times are increasing and the quality of examination is threatened. As the clearinghouse for American innovation, the USPTO can ill afford to operate under these conditions. If we are to continue to serve as a catalyst for technological innovation, we must be equipped to meet the challenges of the 21st century. Our customers deserve - and the reality of trade and investment today demands – that we provide the highest quality services in the shortest possible timeframe. Issuing a quality patent and registering a quality trademark is our primary goal. Issuing them in a timely manner is essential. Balancing quality and timeliness is our challenge. Our 21st Century Strategic Plan, which I unveiled last year, provides a detailed road map for transforming the agency into a quality-driven, highly productive, cost-effective organization. The key features of the plan will: Enhance the quality of patent and trademark examining operations; Accelerate processing time by transitioning from paper to electronic government (e-Gov) processing; Control patent and trademark pendency and reduce time to first Office actions; Concentrate office expertise as much as possible on core examination functions; Provide for the hiring of almost 3,000 new patent examiners over the next five years; and Expand our bilateral and multilateral discussions to strengthen IP rights globally and, through work sharing, reduce duplication of effort among offices. In July 2003, the House Judiciary Committee passed the fee-restructuring component of the Strategic Plan unanimously. As we work to get this enacted, the USPTO continues to move forward aggressively on a number of quality and e-Gov initiatives. 2 M e s s a g e f r o m t h e D i r e c t o r P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 I am committed to hiring the people who make the best patent and trademark examiners, certifying their knowledge and competencies throughout their careers, and focusing on quality in all aspects of the examination of patent and trademark applications. To that end, this year we initiated programs to certify the knowledge and abilities of patent examiners and trademark examining attorneys - before they are hired and throughout their career. We also hosted a number of customer partnership meetings in the biotechnology/pharmaceutical/organic chemistry, semiconductor, and business method areas. By sharing concerns and information, establishing cooperative training programs for examiners, identifying sources of prior art, and helping applicants better understand the patent examination process, these meetings help to improve patent quality. In addition to these quality enhancement initiatives, shifting from outmoded paper processing to more efficient, customer friendly electronic processing has been a major priority. The USPTO continues to be a government-wide leader in implementing e-Gov services for our customers. Despite budgetary limitations, this year we accelerated implementation time frames for the Patent e-Gov program by adapting existing software developed by the European Patent Office (EPO). Using Patent e-Gov, all of our customers will be able to file their applications, monitor application status, and provide supplemental materials on-line via the USPTO web site (www.uspto.gov). Our achievements on the operational front have also been matched this year on the international policy front, as we work to protect American IP abroad. We seek a harmonized system that will allow for uniform worldwide treatment of patents and trademarks, which will eventually provide faster, more affordable one-stop shopping for American businesses and entrepreneurs who wish to protect their inventions and products abroad. This year, through our newly established Offices of International Relations and Enforcement, we provided technical assistance to foreign governments to improve their IP systems, trained foreign officials on IP enforcement, and worked with the United States Trade Representative (USTR) in drafting IP sections in bilateral investment treaties and trade agreements. For example, USPTO experts helped to successfully conclude negotiations on IP issues in free trade agreements with Singapore and Chile, which were approved by Congress in July 2003. We also played a lead role in the ongoing negotiations of IP chapters of Free Trade Agreements (FTA) with Australia, Morocco, Central American countries, and Latin America. Our Nation possesses creative talents that make the world a better place. We rely on inventors to improve our lives, and we all share the responsibility to make sure that our Nation's inventive tradition continues to flourish. Unbridled invention is one hallmark of our legacy of freedom. If we foster this freedom and disseminate it around the world, there is no end to what we can accomplish for tomorrow. This Performance and Accountability Report summarizes the USPTO’s achievements and challenges for fiscal year 2003. I am pleased to certify, with reasonable assurance that, except for the one Federal Information Security Management Act (FISMA) material weakness regarding information technology (IT) security specifically identified in the management control section of this report, our agency’s systems of management control, taken as a whole, comply with Section 2 of the Federal Managers’ Financial Integrity Act (FMFIA) of 1982. Our agency is also in substantial compliance with applicable Federal accounting standards and the United States (U.S.) General Ledger at the transaction level and with Federal financial system requirements. Accordingly, our agency fully complies with Section 4 of the FMFIA, with no material nonconformances. In addition, we are confident that the USPTO’s financial and performance data is reliable, accurate, and consistent, as we improve our ability to measure progress toward performance objectives. For the 11th consecutive year, we received an unqualified audit opinion on our annual financial statements. In addition, the independent auditors’ report did not identify any material weaknesses, reportable conditions, or instances of noncompliance. JAMES E. ROGAN Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office December 1, 2003 M e s s a g e f r o m t h e D i r e c t o r 3 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e MESSAGE FROM THE CHIEF FINANCIAL OFFICER am pleased to present the USPTO's Fiscal Year (FY) 2003 Performance and Accountability Report. This is my first report since becoming Chief Financial Officer and Chief Administrative Officer in February 2003. It was an honor to be selected for this role and I look forward to leading this fine organization. I This is our 11th consecutive year of unqualified audit opinions on our financial statements and the seventh year in which our auditors noted no material weaknesses in our control structure. In addition, this past year we received the prestigious Certificate in Excellence in Accountability Reporting from the Association of Government Accountants for our FY 2002 Performance and Accountability Report. This was the first time we applied for the award. It was a tribute to our hard-working staff that we earned it on our initial attempt and that we were the first sub-departmental agency to do so. During the third quarter of FY 2003, the Office of the Inspector General (OIG) reviewed the USPTO Information Technology Security Program and reported substantial improvement over the previous year. In FY 2002, none of our critical information systems were certified and accredited (C&A). At that time, OIG recommended declaration of material weakness until the C&A had been completed for all mission critical and classified systems. By contrast, in FY 2003 we accomplished rigorous C&A in accordance with Government standards for all mission critical and classified systems. While the OIG reflected the progress made in its annual FISMA review for the U.S. Department of Commerce (Commerce), the report recommends that USPTO repeat its FISMA material weakness declaration in FY 2003 until all mission critical and classified systems receive full authority to operate. The corrective action plan for addressing this weakness in FY 2004 is discussed in the management controls section of this report. Before I touch on some of the events that shaped this past year, I would like to reaffirm our organizational goals. These goals center on continued support for the enterprise-wide transformation envisioned in our 21st Century Strategic Plan and include continuing our own emphasis on becoming a world-class financial and administrative operation. Our primary goal is to continue serving our customers with high-quality services. We will support our program offices in meeting their 21st Century Strategic Plan performance commitments by providing them with high-performing recruits; we will support our employees with superior services, including quality systems and effective training programs; we will serve our patent and trademark customers with responsive financial services; and we will ensure our vendors receive timely payment and courteous service. Finally, for everyone impacted by our move to the USPTO’s new headquarters in Alexandria, Virginia, we will ensure an efficient transition with minimal disruption to normal operations. A corollary to the above goal is to continue producing relevant and reliable information for analysis and decision support. This means continuing our successes in accountability reporting and taking every opportunity to participate in day-to-day decision-making in all program and administrative areas. Our 21st Century Strategic Plan reflects the goals of the President's Management Agenda, especially with regard to e-Gov, integrating budget, performance, and cost data, and the strategic management of human capital. It is our intention to provide the direction, advice, and resources to ensure that the Agenda goals are met. 4 M e s s a g e f r o m t h e C h i e f F i n a n c i a l O f f i c e r P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 This past year significant progress was made on the construction of our state-of-the-art facility in Alexandria. This complex will allow us to meet the logistical, operational, and security requirements included in our 21st Century Strategic Plan. The first phase of occupancy began in December 2003. At the beginning of the year, we implemented a new core financial accounting and reporting system, Momentum Financials. I am pleased to say that all of our financial and procurement systems are certified and accredited in accordance with designated standards. We also made progress in a variety of other areas, including building more flexibility and security into our on-line transaction processing, creating innovative procurement strategies, and ensuring smooth implementation of recent international trademark standards. As noted in so many Chief Financial Officer messages like this government-wide, past achievements and challenging goals can only be accomplished by the truly dedicated efforts of our workforce. I am privileged to be part of this fine community of individuals and to have the honor of leading them in their continuing efforts. I am also pleased to have the opportunity to contribute to the government-wide effort to accomplish the President’s Management Agenda, and to restore respect and sound stewardship to government financial and administrative operations. Jo-Anne Barnard Chief Financial Officer December 1, 2003 M e s s a g e f r o m t h e C h i e f F i n a n c i a l O f f i c e r 5 6 Management Discussion and Analysis P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 M I S S I O N A N D O R G A N I Z AT I O N O F T H E U S P T O USPTO VISION The USPTO will lead the way in creating a quality-focused, highly productive, responsive organization supporting a market-driven Intellectual Property system for the 21st Century. M I S S I O N S TAT E M E N T The USPTO mission is to ensure that the Intellectual Property system contributes to a strong global economy, encourages investment in innovation, and fosters entrepreneurial spirit. Intellectual Property is an invention or creation embodied in the form of a patent, trademark, trade secret, or copyright. For over 200 years, the basic role of the USPTO has remained the same - to promote the progress of science and the useful arts by securing, for limited times to inventors, the exclusive rights to their respective discoveries (Article 1, Section 8 of the United States Constitution). American industry has flourished under this system of protection as new products have been invented; new uses for inventions have been discovered; and employment opportunities have been created for millions of Americans. Patents and trademarks have long protected American creativity and ingenuity. The first patent was issued in 1790 for a method of making potash fertilizer and the oldest active trademark was originally registered in 1884 for SAMSON, a design for “cords, lines, and ropes.” The strength and vitality of our economy depends directly on effective mechanisms that protect new ideas and investments in innovation and creativity. The continued demand for patents and trademarks underscores the ingenuity of American inventors and entrepreneurs. The USPTO is at the cutting edge of our Nation’s technological progress and achievement. The primary services provided by the USPTO are processing patent and trademark applications and disseminating patent and trademark information. Through issuing patents, we encourage technological advancement by providing incentives to invent, invest in, and disclose new technology. Through registering trademarks, we assist businesses in protecting their investments, promoting quality goods and services, and safeguarding consumers against confusion and deception in the marketplace. By disseminating both patent and trademark information, we promote a global understanding of IP protection and facilitate the development and sharing of new technologies worldwide. Under Secretary Rogan congratulates former Senator John Glenn after presenting him with the Life-Time Achievement Award from the National Inventors Hall of Fame. M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s 9 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e L O C AT I O N , O R G A N I Z AT I O N A L S T R U C T U R E , A N D W O R K F O R C E The USPTO is a Federal agency in Commerce. During FY 2003, the office occupied a combined total of over 1,400,000 square feet in 18 buildings in the Crystal City neighborhood of Arlington, Virginia. In addition, the USPTO has two storage facilities in Springfield and Alexandria, Virginia and leased storage space in Boyers, Pennsylvania. On September 30, 2003, the USPTO workforce was comprised of 6,723 Federal employees, including 3,637 patent examiners and 355 trademark examining attorneys. In addition, USPTO has approximately 4,300 contract employees. The USPTO has evolved into a unique Government agency. Since 1991 - under the Omnibus Budget Reconciliation Act (OBRA) of 1990 - the USPTO has operated in much the same way as a private business, providing valued products and services to our customers in exchange for fees that are used to fund our operations. The powers and duties of the USPTO are vested in an Under Secretary of Commerce for Intellectual Property and Director of the USPTO who consults with the Patent Public Advisory Committee and Trademark Public Advisory Committee. The USPTO has two major business lines - Patents and Trademarks - as shown in the following organization chart: U N I T E D STATES PATENT A ND TRA D EMA RK OF F ICE Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office Patent Public Advisory Committee Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office Trademark Public Advisory Committee Office of Public Affairs Commissioner for Patents Deputy Commissioner for Patent Operations Deputy Commissioner for Patent Examination Policy Commissioner for Trademarks Deputy Commissioner for Patent Resources and Planning Deputy Commissioner for Trademark Operations Trademark Law Offices Technology Centers Chief Financial Officer and Chief Administrative Officer 10 M a n a g e m e n t Deputy Commissioner for Trademark Examination Policy Administrator for External Affairs D i s c u s s i o n a n d Office of the General Counsel A n a l y s i s Chief Information Officer P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 P E R F O R M A N C E G O A L S A N D R E S U LT S U S P T O S T R AT E G I C P L A N The Government Performance and Results Act (GPRA) requires that agencies plan and measure the performance of their programs. In carrying out GPRA, the USPTO prepares a Strategic Plan, an Annual Performance Plan, and an Annual Performance Report. The USPTO began FY 2003 guided by the Strategic Plan that was developed in FY 1994 and updated in FY 1999, which includes the period FY 1999 through 2004. While the mission, goals, and strategies have served us well, the environment in which the IP system operates worldwide has changed dramatically. There are an estimated 11.9 million pending patent applications in the world’s examination pipeline. Technology has become increasingly complex, and customer demands for higher quality products and services have escalated. This dynamic, along with Congressional concerns about the USPTO’s ability to continue to operate under a traditional Under Secretary Rogan confers with Subcommittee Chairman Lamar Smith prior to testifying before the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property. business model, led to the development of the 21st Century Strategic Plan. To deal with these concerns, the USPTO developed a response to the environmental challenges facing the USPTO and to address the issues raised by the Congress and our stakeholders. The 21st Century Strategic Plan is a far-reaching and aggressive plan designed to transform the USPTO into an organization that is responsive to the global economy. After implementation of the plan, market forces will drive our business model, geography and time will be irrelevant when doing business with the USPTO, products and services will be tailored to customer needs, and examination will be our core expertise. The plan is centered around three long-term cross-cutting strategic goals: Agility – Address the 21st Century economy by becoming a more agile organization. We will create a flexible organization whose leadership and work processes can handle the increasing expectations of our markets, the growing complexity and volume of our work, and the globalization that characterizes the 21st Century economy. We will work with our partners, both bi-laterally and multi-laterally, to create a stronger, better-coordinated, and more streamlined framework for protecting IP around the world. We will transform the USPTO workplace by radically reducing laborintensive paper processing. M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s 11 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e Capability – Enhance quality through workforce and process improvements. We will make patent and trademark quality our highest priority by emphasizing quality in every component of the plan. Through timely issuance of highquality patents and trademarks, we will respond to market forces by promoting advances in technology, expanding business opportunities, and creating jobs. Productivity – Accelerate processing times through focused examination. We will reduce patent and trademark pendency, substantially cut the size of our backlog of work, and recover our investments in people, processes, and technology. The 21st Century Strategic Plan was made public in June 2002. At the same time, the USPTO proposed a reallocation of FY 2003 resources to fund the 21st Century Strategic Plan and the USPTO put forth proposed legislation to restructure the USPTO’s fee schedule to generate additional fee income needed to make critical investments in support of the 21st Century Strategic Plan. Although the USPTO was applauded for putting forth an innovative and comprehensive plan, a number of key components - many related to the USPTO’s fee structure - generated controversy. The USPTO has listened to stakeholders and applicants and is consulting with the Patent and Trademark Public Advisory Committees to identify alternative actions that would be amenable to applicants and the public while addressing the challenges the USPTO is facing in the 21st century. In FY 2003, the USPTO continued adopting the goals and objectives put forth in the plan, to the extent they were consistent with Congressional intent and supported by our stakeholders and applicants. The 21st Century Strategic Plan was reissued in February 2003 and received support from organizations throughout the patent community. The 21st Century Strategic Plan can be found on the USPTO web site: http://www.uspto.gov/web/offices/com/strat21/index.htm Under Secretary Rogan welcomes a group of newly hired patent examiners, part of the 308 examiners hired in FY 2003. 12 M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 P E R F O R M A N C E D ATA V E R I F I C AT I O N A N D VA L I D AT I O N Jo-Anne Barnard, Chief Financial Officer and Chief Administrative Officer, Nick Godici, Commissioner of Patents, and Michelle Picard, Director, Office of Finance, (seated left to right) pose with members of the Annual Performance Review team. The team received the “Certificate of Excellence in Accountability Reporting Award,” from the Association of Government Accountants for the USPTO Fiscal Year 2002 Performance and Accountability Report. In accordance with GPRA requirements, the USPTO is committed to making certain that performance information reported is reliable, accurate, and consistent. To ensure the highest quality data, the USPTO has developed a strategy to validate and verify the quality of the USPTO’s performance information. The USPTO has undertaken the following: Quality reviews – USPTO conducts ongoing reviews on the quality of patent and trademark examination. The focus of the review for patent applications is threefold: (1) identify patentability errors, (2) assess adequacy of the field of search and proper classification, and (3) assess proper examination practice and procedures. For trademark applications, the review includes four areas: (1) substantive statutory criteria for registrability, (2) search for confusingly similar marks, (3) proper examination practice and procedure, and (4) proper application of judicial precedents. The information from these reviews helps our business units identify necessary training with the goal of enhancing overall product quality and improving the consistency of examination. Analysis of review data is reported to patent and trademark management. These reports serve as a tool for educating examiners and examining attorneys. In addition to reporting specific errors, the analysis identifies recurring problems and trends. Certification – The Patent and Trademark Organizations are responsible for providing performance data. The USPTO holds program managers accountable for ensuring data accuracy, and that the performance measurement source is complete and reliable. The OIG also contributes to the USPTO’s efforts to assure audit and evaluation coordination and coverage of USPTO goals. The OIG conducted the following types of audits and evaluations: Program evaluations – Program evaluations are cyclical in nature. While no program evaluations were completed in FY 2003, one was completed in FY 2002. The OIG reviewed the USPTO’s performance measures included in the Commerce’s Annual Performance Plan (Minor Improvements Needed in Reporting Performance Results, FSD14429/March 2002). The purpose of the review was to validate the measures and the data collection tools and methods. M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s 13 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e The results of the audit showed that management controls were in place and operating effectively regarding the collection, validation, and reporting of performance measures. In addition, the report stated that the USPTO was committed to developing and producing quality performance measures. Several minor recommendations were reported and have subsequently been implemented by the USPTO in FY 2003. This report can be found at: www.oig.doc.gov/reports/2002-3/20023-14429.01.pdf. Financial statement audit – During the FY 2003 financial statement audit, various tests and reviews of the primary accounting system and internal controls were conducted as required by the Chief Financial Officers' Act. In their FY 2003 report, the auditors reported no material weaknesses in internal controls or material compliance violations. The auditors issued an unqualified opinion on USPTO's FY 2003 financial statements. USPTO PERFORMANCE GOALS The USPTO Performance Plan, which is included in our annual budget submission, has three core goals and ten performance measures for FY 2003. Information on the goals and measures is contained in the next two sections: Patent Performance and Trademark Performance. Deputy Under Secretary Dudas swears in Rick D. Nydegger, the new Chairman of the Patent Public Advisory Committee. 14 M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 PATENT PERFORMANCE The core process of the Patent Organization is the examination of an inventor’s application for a patent by comparing the claimed subject matter of the application to a large body of technological information to determine whether the claimed invention is new, useful, and non-obvious to someone knowledgeable in that subject matter. In the course of examining a patent application, a patent examiner makes a determination on the patentability of the claimed subject matter. Examiners are also responsible for preparing examiner’s answers on appealed applications and preparing interference proceedings to determine priority of ownership. Other phases of the examination process include: pre-examination, where the application receives an initial administrative review; post-examination, where the published application or issued patent is disseminated to the public; and a quality review function, which reviews a random sample of both in-process and allowed applications. Additionally, the Patent Cooperation Treaty (PCT) office administers the processing of international patent applications. The Search and Information Resources Administration is responsible for managing all Patent automation activities, implementing and maintaining classification schemes for organizing and retrieving technical information contained in patents and other documents in the search files, and acquiring, maintaining, and providing access to scientific and technical literature in support of the examination process. The Board of Patent Appeals and Interferences (BPAI) conducts interference proceedings, as well as decides appeals regarding issues of patentability. In FY 2003, the Patent Organization received 333,452 Utility, Plant, and Reissue patent applications. Additionally, preliminary data indicates that 243,007 pending applications were published within 18 months after filing and 173,072 patents were granted. The Patent Organization made significant strides towards achieving the e-Gov and quality goals of the 21st Century Strategic Plan by implementation of the Image File Wrapper (IFW) and quality initiatives. The IFW is an electronic version of the paper patent application file wrapper, and is created by scanning all papers in the file wrapper using a modified version of the software initially developed by the EPO. The IFW provides instant and concurrent access to a patent application, eliminates examiner interruption for paper entry, and eliminates lost or damaged papers from paper patent applications. The IFW has already been deployed to the Office of Initial Patent Examination and portions of the Patent Examination Corps, with an expectation of full deployment by October 2004. As a result, over 225,000 electronic applications are now considered the official file, and all newly filed patent applications are now processed in an electronic environment. The quality initiatives implemented by the Patent Organization include: a pre-employment assessment of communication skills for new hires through oral interviews and writing samples, supervisory training for effective work product reviews, redesigning the quality review process by expanding in process reviews, pilot training programs in art units for new examiners, and finalizing the process for certifying the formal knowledge, skills, and abilities (KSA) required of examination staff at various stages of their careers. The Patent Organization quality initiatives will ensure the highest quality patent examination possible by certifying that patent examiners, supervisory patent examiners, and quality assurance specialists have the requisite skills by providing the most pertinent and up-to-date training and enhanced review processes. M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s 15 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e Specific performance results related to the Patent Organization goals and measures are as follows: GOAL: AGILITY – Address the 21st Century Economy by Becoming a More Agile Organization Under the 21st Century Strategic Plan, the USPTO will work with our IP partners to improve the efficiency of our processing systems by increasing the number of applications and communications received and processed electronically, create more coordinated and streamlined work processes, and best position the USPTO for the globalization that characterizes the 21st century economy. The following performance measure has been established to reflect the USPTO’s success and progress in meeting the 21st Century Strategic Plan goals for agility. NEW MEASURE: Applications Filed Electronically A P P L I C A T I O N S F I L E D E L E C T R O N I C A L L Y P E R C E N T DATA VALIDATION AND VERIFICATION 2 Data source: Patent Application Location and Monitoring (PALM) system. Frequency: Daily input, weekly reporting. Data storage: PALM and automated systems. Verification: Accuracy of supporting data is controlled through internal program edits in the PALM system and cross checks against other automated systems. Data Limitations: None. 1 0 FY 2003 Target Actual FY 2000 FY 2001 FY 2002 FY 2003 Target — — — 2.0% Actual — — — 1.3% not met Discussion: Target not met. This measure indicates USPTO’s support of, and applicants’ willingness to operate in, an e-Gov environment and identifies the percent of basic patent applications filed electronically. There is some reluctance on the part of the patent applicants to file electronically including: 1) customers are familiar with the paper based systems already in place; 2) they have not invested the time and resources necessary to upgrade their internal processes to enable them to file electronically; and 3) they would like to receive some incentive (in the form of fee reduction) for filing electronically. 16 M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 GOAL: CAPABILITY – Enhance the Quality through Workforce and Process Improvements Under the 21st Century Strategic Plan, Patents will enhance current quality assurance programs to include a more in-depth review of work in progress. This will include the implementation of in-process reviews, “second pair of eyes” reviews, and end-process reviews. In addition, the Patent Organization is creating new programs for certifying the KSAs of their employees. With the 21st Century Strategic Plan, the USPTO developed a number of new measures to assess its achievement toward the capability goals. For those new measures, the USPTO will need to establish its baseline performance during FY 2004 before establishing its out-year targets and annual goals. MEASURE: Improve the quality of patents by reducing the error rate Q U A L I T Y O F P A T E N T S P E R C E N T 10 DATA VALIDATION AND VERIFICATION 8 Data source: Office of Patent Quality Review Report. Frequency: Daily input, monthly reporting. Data storage: Automated systems, reports. Verification: Manual reports and analysis. Data Limitations: None. 6 4 2 0 FY 2000 FY 2001 FY 2002 Target FY 2003 Actual FY 2000 Target — Actual 6.6% 5.5% – 5.4% 6.6% FY 2002 FY 2003 5.0% FY FY 2001 2000 4.0% 4.2% 4.4% not met Discussion: Target not met. An error is defined as at least one claim within the randomly selected allowed application under quality review that would be held invalid in a court of law, if the application were to issue as a patent without the required correction. Some examples of errors include the issuance of a claim having anticipatory prior art under 35 U.S.C. 102, or relevant prior art under 35 U.S.C. 103 that would render the allowed claim obvious. Other errors include lack of compliance of the claim to the other statutory requirements (e.g., 35 U.S.C. 101, 35 U.S.C. 112) and judicially created doctrines. The error rate is the ratio of allowed applications with errors to the total number of allowed applications reviewed. The USPTO fell short of its FY 2003 target; however, under the 21st Century Strategic Plan, the Patents Organization is enhancing current quality assurance programs to include a more in-depth review of work in progress. M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s 17 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e DISCONTINUED MEASURE IN FY 2003: Improve overall customer satisfaction I N C R E A S I N G C U S T O M E R S A T I S F A C T I O N P E R C E N T 75 DATA VALIDATION AND VERIFICATION 70 Data source: Frequency: 65 Data storage: 60 Verification: 55 50 FY 2000 FY 2001 FY 2002 Target FY 2003 Customer surveys. Surveys are conducted and results are reported annually. Paper files and contractor electronic files. Internal statistician develops data instrument, conducts survey, and compiles results. Review of results is performed internally by Patents management. Data Limitations: None. Actual FY 2000 FY 2001 FY 2002 FY 2003 Target 60% 67% 67% 67% Actual 64% 64% 63% 67% met Discussion: Target met. The USPTO improved its customer service score four percentage points over FY 2002 and achieved its target. Key drivers of customer satisfaction -- satisfaction with overall search, as well as problem resolution, increased 23 percent and nine percent, respectively. The USPTO has been surveying customers of the patent process since FY 1995. GOAL: PRODUCTIVITY – Accelerate Processing Times Through Focused Examination In support of the 21st Century Strategic Plan, the USPTO will reduce patent pendency and substantially cut the size of the work backlog. This will be accomplished through a radical redesign of the entire patent search and examination system based upon multi-examination tracks, greater reliance on commercial service providers, and variable, incentive-driven fees. While the USPTO’s long-term patent pendency goal remains 18 months, this goal will not be achieved in the near future because of the higher priority placed on quality and patent e-Gov initiatives. However, USPTO will produce, on average, a first Office action for first-filed U.S. non-provisional applications at the time of 18-month publication. In addition, a patent search report for other patent applications will be issued in the same time frame. The two primary measures of Patent Organization processing time are: (1) first action pendency, which measures the average time in months until an examiner’s initial determination is made of the patentability of an invention; and (2) total pendency, which measures the average time in months until an examiner either allows the patent to issue or the application is abandoned by the applicant. 18 M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 MEASURE: Reduce average first action pendency (months) F I R S T A C T I O N P E N D E N C Y 25 DATA VALIDATION AND VERIFICATION M O N T H S 20 Data source: Frequency: Data storage: Verification: PALM system. Daily input, monthly reporting. PALM, automated systems, reports. Accuracy of supporting data is controlled through internal program edits in the PALM system. Final test for reasonableness is performed internally by patent examiners and supervisory and program management analysts. Data Limitations: None. 15 10 5 0 FY 2000 FY 2001 FY 2002 Target FY 2003 Actual FY 2000 14.2 13.9 Actual 13.6 14.4 6.6% – FY 2002 FY 2003 14.7 18.4 16.7 FY 2001 2000 FY Target 18.3 met Discussion: Target met. The initiatives identified in the USPTO 21st Century Strategic Plan will continue to reduce patent pendency, substantially cut the size of the work backlog, and recover our investments in people, processes, and technology. MEASURE: Reduce average total pendency (months) T O T A L P A T E N T M O N T H S 30 P E N D E N C Y DATA VALIDATION AND VERIFICATION Data source: Frequency: Data storage: Verification: 20 10 0 FY 2000 FY 2001 FY 2002 Target FY 2003 PALM system. Daily input, monthly reporting. PALM, automated systems, reports. Accuracy of supporting data is controlled through internal program edits in the PALM system. Final test for reasonableness is performed internally by patent examiners and supervisory and program management analysts. Data Limitations: None. Actual FY 2000 FY 2001 FY 2002 FY 2003 Target 26.2 26.2 26.5 27.7 Actual 25.0 24.7 24.0 26.7 met Discussion: Target met. Total pendency is the estimated time in months from filing to issue or abandonment of the application. M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s 19 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e NEW MEASURE: Efficiency E F F I C I E N C Y D O L L A R S $3,600 DATA VALIDATION AND VERIFICATION Data Source: Frequency: Data storage: $3,400 $3,200 $3,000 $2,800 $2,600 FY 2000 FY 2001 FY 2002 Target FY 2003 PALM system. Daily input, quarterly reporting. PALM, Data Warehouse, Metify Activity Based Management (ABM). Verification: Accuracy of supporting data is controlled through internal program edits in PALM, Momentum, Metify ABM. Quality control review of data by Activity Based Cost Accounting (ABC) team and program business teams. Data Limitations: None. Actual FY 2000 FY 2001 FY 2002 FY 2003 Target — — — $3,444 Actual $2,917 $3,210 $3,376 $3,329 met Discussion: Target met. This measure is a relative indicator of the efficiency of the patent process. The measure is calculated by dividing total USPTO expenses associated with the examination and processing of patents (including associated overhead and support expenses) by production units. It should be noted that in prior years, patent output was represented by disposals. That has been changed to production units and all patent measures, both actuals and targets have been recalculated using production units. It should be noted that this measure does not represent the average life cycle cost of a patent since office production units are only one measure of USPTO products and services. 20 M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 PAT E N T C O M M I S S I O N E R ’ S P E R F O R M A N C E F O R F Y 2 0 0 3 The American Inventors Protection Act (AIPA), Title VI, and Subtitle G, the Patent and Trademark Office Efficiency Act, established the USPTO as an agency of the U.S., within Commerce, on March 29, 2000. The legislation provides for appointment of a Commissioner for Patents as the Chief Operating Officer for Patents, and a Commissioner for Trademarks as the Chief Operating Officer for Trademarks. It also requires that an annual performance agreement be established between the Commissioners and the Secretary of Commerce. The agreement outlines measurable organizational goals and objectives for the organization. The Commissioners may be rewarded a bonus, based upon an evaluation of their performance as defined in the agreement, of up to 50 percent of their base salary. The Patent Organization goals form the foundation for the annual performance agreement between the Commissioner for Patents and the Secretary of Commerce, as required by AIPA. The performance agreement outlines measurable organizational goals and objectives for the Patent Organization based on the above goals and performance measures. These performance measures incorporated the milestones and objectives to achieve Patent goals: improving quality of examination, implementing e-Gov initiatives, and achieving the lowest possible pendency. At the time of publication, the performance bonus for the Commissioner of Patents had not been finalized. Deputy Under Secretary Dudas and Supervisory Patent Examiner Gary Kunz inspect a model of DNA strand on the 50th anniversary of its discovery. M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s 21 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e T H E PAT E N T O R G A N I Z AT I O N – W H AT ’ S A H E A D The USPTO challenges include managing a substantial workload and fully migrating to an electronic environment while reducing pendency and increasing quality. Patents will meet these challenges in the coming year by: Continuing to refine the system planned for October 1, 2004 implementation that will process patent applications electronically, including image capture of all incoming and outgoing paper documents; Recertifying the KSAs of one third of primary examiners; Proceeding with the plan to certify patent examiners before promotion to GS-13; Conducting a transactional customer service survey; Beginning the move to our new consolidated headquarters; Expanding training art units; Developing a program to improve the quality of Technical Support products and services in the Technology Centers; Making all applications published after 18 months electronically available to the public; Hiring additional patent examiners to meet our pendency goals; and Evaluating the pilot search results exchange program with the EPO and Japan Patent Office (JPO). Patent applicants are concerned that the USPTO does not have full access to the fees applicants pay for their patent applications in the year the fees are collected. The USPTO’s 21st Century Strategic Plan will assist in addressing these challenges and will transform the USPTO into a quality-driven, highly-productive, and cost-effective organization that will promote expansion of business opportunities, stimulate research and development, and expand U.S. businesses globally. Full implementation of the USPTO’s 21st Century Strategic Plan is predicated on the passage of proposed legislation to restructure the patent and trademark fee system. Anything less would fall short of the expectations of Congress, the applicants for, and owners of, patents, the patent bar, and the public at large. B O A R D O F PAT E N T A P P E A L S A N D I N T E R F E R E N C E S By the end of FY 2003, the BPAI has met the goals of the five-year plan that it instituted in FY 1998. At the beginning of FY 1998, BPAI had 9,201 patent appeals and 448 interferences pending. The pending appeals represented an inventory of 39 months, and interferences took on average, over 36 months to complete. To reduce the appeal inventory backlog to six months and the average interference pendency to two years, the USPTO increased the number of Administrative Patent Judges (APJs), instituted an APJ incentive performance award program, re-instituted appeals conferences in the Patent examining corps, and made efficiency improvements at the Board. As of the end of FY 2003, BPAI had reduced the inventory of patent appeals to 1,968, or six months, and the average pendency of interferences to 22 months. The number of interferences pending at the end of the fiscal year was 107, the lowest number in 20 years. These numbers represent a 78 percent reduction in the inventory of patent appeals and a 76 percent reduction in the inventory of pending interferences since the beginning of FY 1998. 22 M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 TRADEMARK PERFORMANCE Jeffery M. Samuels, the new Chairman of the Trademark Public Advisory Committee, is sworn in by Anne H. Chasser, Commissioner for Trademarks. The past year brought a number of new challenges and commitments to the Trademark Organization that required a dedicated redirection of talent and resources to prepare for significant changes in trademark operations going forward into FY 2004. The most urgent need was to prepare the rules and systems in accordance with legislation implementing the Madrid Protocol. Trademarks will deliver the first major commitments promised by this Administration as addressed in the 21st Century Strategic Plan: complete electronic processing of trademarks and implementation of the Madrid Protocol. During FY 2003, a record number of trademark applications were registered and disposed, and pending inventories were substantially reduced. The number of trademarks registered increased by more than seven percent to 143,424, including 185,182 classes, which increased by more than 12 percent. Total Trademark Office disposals were 238,759, including 305,040 classes. The Trademark Organization’s inventory of total applications under examination was reduced by ten percent from 479,628 files with more than 654,533 classes at the start of the year, to 431,805 files, including 575,901 classes at year-end. The USPTO received 218,596 trademark applications, including 267,218 classes for registration in FY 2003. Filings in FY 2003 were 3.2 percent higher than filings in FY 2002. The increase, however slight, followed two years of decline: 21 percent from FY 2000 to FY 2001 and nearly 13 percent from FY 2001 to FY 2002 that were preceded by two consecutive years with increases of 27 percent. Given the continued uncertainty in new filings, our strategy was to prepare for the transition to an electronic process by focusing attention on reducing existing paper application inventories to be in a better position to implement electronic file management in FY 2004. M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s 23 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e TRADEMARK E-GOVERNMENT The Trademark Organization is well positioned to support the objectives of the USPTO’s 21st Century Strategic Plan, which relies on electronic communications to offer market-based services and improve the availability of trademark information to more effectively serve an increasingly larger, global client-base. Internet access has provided advantages that were not possible in a paper environment; customers may now access information at their convenience that previously may not have been known or available to them, file applications on-line, and correspond electronically. Electronic filing and access increases the opportunity for filing for Federal registration, which provides protection to business owners and consumers by providing notice of marks in use. Electronic filing and information systems serve customers in two very important ways; by improving the time and accessibility of information and by improving the quality of the initial application and, therefore, the quality of the data captured and shared in the publication and registration of trademarks. A few of the items displayed before the Agriculture Committee during hearings on the use of geographical indicators for food and drinks. In FY 2003, we received 57.5 percent of the initial applications for registration electronically, an increase of more than 50 percent over FY 2002. Electronic filings are continuing to increase, with 62.5 percent filed electronically in September 2003. Enhancements were made in a number of forms, which were designed to make electronic filing more attractive by encouraging greater use and acceptance among those who had not yet adopted electronic communications as their preferred way to transact business with the Trademark Organization. Our customers have the ability to access the same data used internally in the processing and examination of trademarks and conduct nearly all their trademark-related business electronically on the USPTO website. Customers may conduct an electronic search to determine the status of pending and registered trademarks, conduct a preliminary search prior to filing an application, access general information, examination manuals, treaties, laws and regulations, obtain weekly information on marks published, registered and renewed, and file applications. Some of the systems available to our customers include the Trademark Electronic Search System, the Trademark Application Registration Retrieval System, and the Trademark Electronic Application System. 24 M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 Customers can also obtain the weekly Trademark Official Gazette, Registration Certificates, and Updated Registration Certificates for the five most recent weekly issues electronically from the USPTO website as well as electronic access to the Trademark Manual of Examining Procedure. Internally, USPTO employees utilize the Trademark Information Capture and Retrieval System as the source of the electronic trademark file and the File Administration System for Trademarks, which allow trademark applications to be processed electronically from receipt through the first office action. PENDING INVENTORY T otal trademark applications pending in the USPTO declined by ten percent in FY 2003 to 431,800 with 575,900 classes, which dropped by 12 percent. Twenty-seven percent of the pending file inventory is in a post Notice of Allowance status awaiting the filing of a statement of use. The inventory of applications available for examination by Trademark examining attorneys at the end of the year was 239,800 files containing 321,200 classes, essentially unchanged from the start of the fiscal year. The difference was in the composition of available work, which increased by 42 percent for applications that had not undergone initial examination. The number of applications pending following initial examination decreased by 15 percent due to the effort to complete work on applications already under examination pending approval for publication and registration. The rise of first action pendency was consistent with the increase in unexamined new applications. The decline in pending inventories was reflected in the record number of applications that were registered and disposed of. TELECOMMUTING T he Trademark Organization continues to be recognized as a leader in telecommuting in the Federal Government. The Trademark telecommuting program was initially designed so that examining attorneys could perform the same work and access the same information technology systems from home as they do in the office. In FY 2002, the total number of employees who work from home was further expanded to include more employees who could perform some of their work without access to Office Anne H. Chasser, Commissioner for Trademarks, accepts the Best Organization for Teleworkers Award on behalf of the USPTO from Pam Tucker, President, Mid-Atlantic Telework Advisory Council. M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s 25 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e information systems. As of September 30, 2003, of the 239 Trademark employees who are considered eligible, 138, or 58 percent, are currently working at least one day a week from home. Trademarks implemented "hoteling" for a portion of its work-at-home workforce. Under the terms of this program, examining attorneys may work from home for a majority of the workweek using an automated reservation system to assign office space on an as-needed basis. The program met its objective to greatly reduce office space requirements and their associated costs. All of its work-at-home examining attorneys work under the agreement, which has allowed the Trademark Organization to consolidate its workforce and reduce office space requirements. The USPTO received the Telework Coalition Award for the Trademark Work-at-Home Program. The award is presented annually to leading businesses and government agencies that promote and successfully achieve excellence in their telework practices. Deputy Under Secretary Dudas testifying before the Agriculture Committee regarding geographical indications. QUALITY D uring the past year, the Trademark Organization worked to establish more consistent quality measures that would better reflect the current quality of examination by setting better indicators to assess performance. The criterion expands on the issues to be considered and new standards were developed for determining the quality of in-process office actions as “excellent” or “deficient” to better reflect more meaningful and rigorous standards of quality. The information from these reviews has been used to identify training that is necessary to enhance overall product quality and to improve the consistency of examination. Three training modules and an exam guide were prepared to provide specific materials to address recurring problems that were determined based on analyses of the reviews. 26 M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 Specific performance results related to Trademark Organization goals and measures are as follows: GOAL: AGILITY – Address the 21st Century Economy by Becoming a More Agile Organization Under the 21st Century Strategic Plan, the USPTO will work with our IP partners to improve the efficiency of our processing systems by increasing the number of applications and communications received and processed electronically, create more coordinated and streamlined work processes, and best position the USPTO for the globalization that characterizes the 21st century economy. The following performance measure has been established to reflect the USPTO’s success and progress in meeting the 21st Century Strategic Plan goals for agility. NEW MEASURE: Applications Filed Electronically A P P L I C A T I O N S F I L E D P E R C E N T 100 E L E C T R O N I C A L L Y DATA VALIDATION AND VERIFICATION Data source: Trademark Reporting and Monitoring (TRAM) system. Frequency: Daily input, weekly reporting. Data storage: TRAM and automated systems. Verification: Accuracy of supporting data is controlled through internal program edits in the TRAM system and cross checks against other automated systems. Data Limitations: None. 50 0 FY 2003 Target Actual FY 2000 FY 2001 FY 2002 FY 2003 Target — — — 80.0% Actual — — — 57.5% not met Discussion: Target not met. The measure indicates USPTO’s support of, and applicants’ willingness to operate in an e-Gov environment and identifies the percent of basic trademark applications filed electronically. The goal is intentionally ambitious. The rate of filing trademark applications has progressed steadily over the past five years as a result of promotional events, improved functionality and enhancements that have been made to appeal to more customers, increasing to more than 62 percent of filings in September 2003. M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s 27 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e GOAL: CAPABILITY – Enhance the Quality through Workforce and Process Improvements Under the 21st Century Strategic Plan, the Trademark Organization will enhance current quality assurance programs to include a more-in-depth review of work in progress. This will include the implementation of in-process reviews, “second pair of eyes” reviews, and end-process reviews. In addition, the Trademark Organization is creating new programs for certifying the KSAs of their employees. With the 21st Century Strategic Plan, the USPTO has developed a number of new measures to assess its achievement toward the capability goals. For those new measures, the USPTO will need to establish its baseline performance during FY 2004 before establishing its out-year targets and annual goals. MEASURE: Improve the quality of trademarks by reducing errors E X A M I N A T I O N Q U A L I T Y O F P E R C E N T 10 T R A D E M A R K S DATA VALIDATION AND VERIFICATION 8 Data source: Office of Trademark Quality Review Report. Frequency: Daily input, monthly reporting. Data storage: Automated systems, reports. Verification: Manual reports and analysis. Data Limitations: None. 6 4 2 0 FY 2000 FY 2001 FY 2002 Target FY 2003 Actual FY 2001 2000 FY FY 2000 Target 3.6% 6.0% Actual 3.4% 3.1% 6.6% – FY 2002 FY 2003 5.0% 4.0% 4.3% 2.3% met Discussion: Target met. Examination quality was 97.7 percent based on existing standards for assessing the clear error rate for determining the type of errors that could affect the registrability of a mark. The objective is to measure performance with respect to quality of the services rendered and the quality of trademarks registered. The USPTO will develop a new quality measure that will consider a broader scope of examiner work to better address and reflect meaningful measures of examination quality for FY 2004. Examination quality was 97.7 percent based on existing standards for assessing the clear error rate for determining the type of errors that could affect the registrability of a mark. The review of pending files by the Office of Trademark Quality Review determined the clear error rate to be 2.3 percent for the year. Errors related to marks that would be considered “confusing similar” under section 2(d) of the statute were determined in 3.6 percent of applications for a quality rating of 96.4 percent. The quality rate was 98.4 percent for findings on procedural errors alone. 28 M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s P e r f o r m a n c e a n d A c c o u n t a b i l i t y R e p o r t : F i s c a l Ye a r 2 0 0 3 DISCONTINUED MEASURE IN FY 2003: Improve overall customer satisfaction T R A D E M A R K C U S T O M E R S A T I S F A C T I O N P E R C E N T 100 DATA VALIDATION AND VERIFICATION 90 Data source: Frequency: 80 Data storage: Verification: 70 60 50 FY 2000 FY 2001 FY 2002 Target FY 2003 Data Limitations: Customer surveys. Surveys are conducted and results are reported annually. Paper files and electronic files. Internal statistician develops data instrument, conducts survey, and compiles results. Review of results is performed internally by Trademark management. None. Actual FY 2000 Target 72% 65% Actual 65% 70% 6.6% – FY 2002 FY 2003 72% FY 2001 2000 FY 75% 65% 70% not met Discussion: Target not met. Trademarks derive quality targets from internal objective data and customer satisfaction data obtained through annual surveys. Results of the annual customer satisfaction survey indicate that considering all customer experiences with the Trademark process, 70 percent of our customers report satisfaction with our service, an increase of five percentage points from last year’s results. Overall, the Trademark Organization received high marks for its quality improvement initiatives, and outstanding customer service and satisfaction with electronic filing. The Trademark Assistance Center continued to expand the number of services offered, both internally and externally in the past year, in an effort to improve handling of customer complaints and focus more attention on problem resolution. Service level, a measure indicating the percent of phone calls responded to within 20 seconds, declined slightly from the past year to 73 percent. Improvements that focus on identifying the source of customer complaints with the objective of preventing future occurrences were implemented during the year. M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s 29 U n i t e d S t a t e s P a t e n t a n d T r a d e m a r k O f f i c e GOAL: PRODUCTIVITY – Accelerate Processing Times Through Focused Examination In support of the 21st Century Strategic Plan, the USPTO will reduce trademark pendency and substantially cut the size of the work backlog. Trademarks will restructure the way it does business to be compatible with an e-Gov environment. The timely registering of trademarks su