Trademark Public Advisory Committee
Annual Report
November 30, 2000
I. INTRODUCTION
The recently appointed Trademark Public Advisory Committee (T-PAC)
members were sworn in by Under Secretary Q. Todd Dickinson and that
Committee had its initial meeting in Arlington, Virginia on August 22nd and
23rd for the purpose of receiving a comprehensive orientation briefing.
Excellent and informative presentations were made by Anne H. Chasser,
Commissioner for Trademarks, and Nicholas Godici, Commissioner for Patents,
as well as by: Dennis Shaw, CIO, on information systems; Clarence
Crawford, CFO/CAO, on budget process and fees; Robert Stoll, Administrator,
External Affairs, on legislative matters; Mary Lee, Administrator, Quality
Management, on quality initiatives; Kimberly Walton, Deputy CAO, on
workforce and labor management issues; and Jo-Anne Barnard, Administrator
for Space and Acquisition, on space and facilities.
These initial briefings provided a base of information for T-PAC that
will prove to be valuable when the United States Patent and Trademark
Office (USPTO) presents various proposals and studies to the Committee and
seeks its advice on those materials. The information will also be useful
to evaluate and advise on the general steps that are being taken and those
being proposed for consideration to improve the performance of trademark
operations at the USPTO. The presentations also placed the members of the
Committee in a better position to consider the proposed 2002 budget that
was prepared by the USPTO for submission to the Office of Management and
Budget (OMB). The 2002 budget was reviewed by the T-PAC during an
executive session meeting on October 23, 2000. Obviously, because of the
uncertainty regarding the availability of fees collected by the USPTO in
payment for services, the budgeting process is infinitely more difficult
than if the Agency knew in advance that all fee collections would be
available for expenditure as needed. The uncertainty regarding the
availability of funding severely limits the USPTO's ability to address
critical problems arising from the proliferation of work above levels
experienced in the past. As noted below, the T-PAC believes planning and
funding problems would be significantly ameliorated if the goal of having
full access to user fees to fund the operations of the USPTO as a
Performance-Based Organization (PBO) had been realized.
It is our understanding that as a PBO, the USPTO is expected to conduct
its business from a performance, financial and accountability standpoint in
a manner comparable to a private business. As such, it must rely on
customer demand and payments, as well as customer satisfaction and product
quality, rather than being viewed by its users and the public as having
some of the inefficient attributes associated by many with a Government
operation. Thus, the T-PAC firmly believes that the USPTO must seek to
parallel the best attributes of both a private and public enterprise. We
believe that by designating the USPTO as a PBO, as indicated in the
testimony introduced at the hearings and passage of the U.S. Patent and
Trademark Office Efficiency Act (Pub. L. No. 106-113 (1999)), Congress
intended the USPTO to be a self-funding organization accountable for its
policies and performance. Further, it is clear that the only source of
revenue available to the USPTO is user fees. It is also manifestly apparent
that any policy which imposes responsibility for performance without
having available the revenue generated from its operations, is a policy
that, in the opinion of the T-PAC, is antithetical to the effective
operation of the USPTO and the best interest of its customers, users and
fee payers, as well as the general public and the U.S. economy which relies
heavily upon the protection of intellectual property rights.
In this report, the T-PAC offers a preliminarily review of the USPTO
Trademark Operation (Trademarks), notwithstanding the fact the appointment
of members took place in the latter part of the fiscal year covered by this
first report. We recognize that under the legislation establishing the
T-PAC, we have been chosen "to represent the interests of diverse users of
the USPTO" regarding Trademarks, and to this end our Committee includes
"members who represent small and large entity applicants located in the
United States." We acknowledge and are committed to our duties, which
include: (1) the review of "the policies, goals, performance, budget and
user fees" of the USPTO "with respect to trademarks"; and (2) advising the
Director on these matters.
In addition, we are required and committed, within sixty days after the
end of the fiscal year, to prepare an annual report on the matters
referred to in Paragraph (1) and to "transmit the report to the President,
the Secretary of Commerce and the Committees on the Judiciary of the
Senate and House of Representatives" and to "publish the report in the
Official Gazette" of the USPTO.
II. MEMBERS OF T-PAC
Since any report involves the subjective and objective views of the
T-PAC, it may be helpful for the recipients of this report to have a list
of the members of T-PAC and a brief statement regarding their background.
Chair:
Miles J. Alexander of Atlanta, GA, is Senior Partner in the Intellectual
Property Group and Co-Chairman of Kilpatrick Stockton LLP, a law firm which
has over 500 attorneys in Georgia, North Carolina, Washington, D.C.,
Virginia, Florida, London, Brussels and Stockholm. He is former General
Counsel to the International Trademark Association (INTA).
Members:
Helen M. Korniewicz of Corte Madera, CA, manages the Trademark group at
the Chevron Corporation Law Department. In addition to foreign and domestic
trademark and copyright issues, she is responsible for legal services for
the e-commerce and communications activities of several Chevron entities
and has extensive experience in commercial and consumer credit services.
Susan C. Lee of Bethesda, MD, is of counsel to the firm of Pena &
Associations, P.C. and specializes in trademarks, copyrights, trade
secrets, unfair competition and Internet law. From 1988-1993, she served as
a trademark attorney with the United States Patent and Trademark Office,
including representing the USPTO before the U.S. Trademark Trial and
Appeal Board.
David M. Moyer of Terrence Park, OH, is the Associate General Counsel
for Trademarks and Trade Relations at the Procter and Gamble Company, with
global responsibility for its trademark portfolio. He is also a past
board member of the International Trademark Association, and has chaired
INTA's Membership Committee.
Joseph Nicholson of New York, NY, is a partner at Kenyon & Kenyon whose
principal practice is trademark and unfair competition, including large
international trademark portfolios. In addition to trademark practice,
licensing and litigation, he has significant background in Internet
commerce and domain name issues, and has served and continues to serve on
various committees of the INTA.
Louis T. Pirkey of Austin, TX, is a member of the firm of Fulbright and
Jaworski in Austin, TX. He served as the immediate past president of the
American Intellectual Property Law Association (AIPLA) and is Adjunct
Professor of Trademark Law at the University of Texas School of Law.
Griffith B. Price, Jr. of Bethesda, MD, is a partner at the firm of
Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P. He specializes in
trademark and unfair competition matters. He is the former chair of the
USPTO Public Advisory Committee for Trademarks, and the founding chair of
the American Intellectual Property Law Association Trademark Law Practice
Group.
John T. Rose, II of White Plains, NY, is Vice President for Human
Resources at ESPN. He previously served as Senior Vice President for
Player Relations and Administration for the NBA, where he was responsible
for brand protection and trademarks worldwide, and organized an industry-
wide task force on intellectual property protection. Prior to that, as
Vice President for Law at NBC, he provided legal services on human
resources, labor relations, finance, operations and engineering matters.
David C. Stimson of Rochester, NY, is the Chief Trademark Counsel for
the Eastman Kodak Company. He has worldwide responsibility for Kodak's
trademarks, including clearance, registration, oppositions, litigation and
licensing. He is a past president of the International Trademark
Association and has chaired INTA's Legislation, Finance, and Planning
Committees.
In addition to the above voting members, the statute provides us with the
benefit of the views of three non-voting members representing the USPTO
unions. They are:
Virginia Cade - Area Vice President for the Trademark Building and
Treasurer and Steward of the National Treasury Employees Union (NTEU),
Chapter 243, representing Support Staff. Ms. Cade is currently an
Applications Classifier and has been with the USPTO for twenty-eight years.
Howard Friedman - President of National Treasury Employees Union (NTEU),
Chapter 245, representing trademark attorneys in the Trademark Office,
as well as attorneys at the Trademark Trial and Appeal Board. Joined the
USPTO in 1993.
Lawrence Oresky - Vice President of the Patent Office Professional
Association (Union) for the past eighteen years. Mr. Oresky is a Patent
Examiner and joined the USPTO thirty years ago after obtaining a Masters
Degree in Aeronautical Engineering from the University of Illinois.
III. INITIAL IDENTIFICATION OF PROGRAMS TO BE REVIEWED
The T-PAC, in considering the policies, goals, programs, budget and fees
of the USPTO, will be reviewing and addressing, where appropriate, a wide
range of issues that have been specifically identified to, or raised by, us
following the comprehensive briefing we received at the end of August of
this year. The leadership of the USPTO is constructively addressing
important challenges it faces. They include, inter alia:
Electronic filing
Providing incentives for and mandating of electronic filings
Trademark Office Budget
Current and future general budgetary issues
Under-funding resulting from diversion of user fees
Analysis of fees
Trademark registration rules and practice
Legislation
Rules changes
Creative means of addressing substantive legal issues and needs
for legislation
Madrid Protocol, TRIPS, and other treaty compliance issues
The international role of the USPTO
Ethical considerations
Office administration and management
Current and long-time space needs
Automation
Expanded use of technology
Consolidation of operations
Examination overload
Likely trend for applications filed and increasing demands on
the USPTO
Impact of e-commerce and Internet on trademark operations
Quality control and accountability
Trademark Examining Corps and other Trademark Office personnel
issues
Home, flex-time, and part-time employment; standards and
guidelines
Incentive programs and compensation issues
General productivity concerns
Employee relations, satisfaction, recruitment and retention
Impact of private sector compensation levels on recruitment and
retention
Staff training and educational programs
User needs and resources
Measurers of customer satisfaction
Large user needs
Small user needs
Facilitating input from the trademark community (and T-PAC's
role in doing so)
Maintenance of the existing trademark search library
User educational programs
Trademark Trial and Appeal Board
Fulfilling TTAB mission
IV. ANNUAL REPORT
Although it is premature to fully report on our Committee's views of the
policies, goals, performance, budget, user fees and the topics listed
above, many of which will be addressed by the T-PAC during the coming year,
we have been able to reach conclusions with respect to three matters of
great importance. Thus, we make the following observations in this report,
which is submitted to the President, the Secretary of Commerce and the
Committees on the Judiciary of the Senate and the House of Representatives,
as required by the legislation creating the United States Patent and
Trademark Office Public Advisory Committees. In accordance with the
provisions of the law, we have advised the Director of our views.
Funding: The unprecedented increase in trademark applications filed since
1992, and in particular in the past two years when they increased at rates
of 27% each year, and the growing complexity of fulfilling the mission of
the USPTO in the e-commerce world, make it clear that the failure to
provide all user fees on a current basis to the USPTO does a tremendous
disservice to the agency, its users and the American public. The annual
diversion of USPTO user fees during the budget process through "scoring,"
"carryovers," or other measures, which take customer user fees and
withhold them temporarily or permanently for purposes other than trademark
operations creates a barrier, in the opinion of the T-PAC, to the ability
of the USPTO to fulfill its mission. The fact that the USPTO is self-
funded by the users and that those funds are being diverted to other
purposes appears to the T-PAC to have no reasonable justification and to
work serious and consistent hardship on the USPTO operations. Finally, we
would like to note that although Trademark customers paid almost $166
million in fees in FY 2000, Trademarks only had access to approximately
$130 million to fund activities associated with the registration of
increasing numbers of trademarks.
Electronic Filing: A second conclusion reached by the T-PAC is that the
USPTO should take immediate steps to expedite the use of technology in
fulfilling its mission by mandating electronic filing, to the extent
allowed by law, and by replacing paper based processes and information
with processes designed to best leverage technology to conduct its
business. Most importantly, it needs to move on an expedited basis to
mandatory electronic filing of new applications and other papers, to the
extent allowed by law. This is necessary for the USPTO to be able to meet
the exponentially increasing demands placed upon its workforce and
facilities.
Madrid Convention: The T-PAC believes that if the U.S. adopts the Madrid
Protocol, the benefits to trademark owners and the public who are served by
the USPTO would outweigh the costs of implementation to the USPTO.
Although the T-PAC will continue its study of funding, electronic filing
and the Madrid Protocol, we believe it would be a disservice to the
recipients of this Report to fail to provide our unequivocal conclusions in
these areas, even as we undertake to address a wide range of other issues
during our first full year of service.
FY 2000 Performance: Considering the limitations on the availability of
user fees and the effect this has on resources, T-PAC has been briefed by
the USPTO on, a nd would like to highlight, a number of its reported
successes this past year.
Pendency and Production: Pendency to mailing first actions increased
from 4.6 months to 5.7 months during FY 2000. However, it is of note
that applications increased at an unanticipated rate above the prior
year (i.e., 27.2% over 295,165 received in FY 1999) to a total of
375,428 new applications. This was substantially above the initial
budget planning level for FY 2000 of 282,000 applications that
established funding and staffing levels for FY 2000. Although the
staffing level planned for FY 2000 with 282,000 new applications would
have been sufficient to reduce pendency to the long standing goal of
three months, the higher than planned filings clearly had a negative
impact on pendency. To note, pendency rose by only one month when the
excess filings (i.e., 375,428 minus 282,000) represent approximately
four months of potential additional pendency. This reflects very
favorably on Trademark's focus on achieving a high level of customer
service and the dedication of its employees. It should also be noted
that this is the second year in a row that applications increased by 27%
which has had a substantial impact on workload distribution and
inventories of pending applications in Trademarks. The inability of
Trademarks to have full access to funds received to process these
applications has a substantial and continuing detrimental impact on the
organization's ability to improve, or even maintain, services.
Despite its limited resources, Trademark operations had an impressive
production year. The Trademark Operation completed 352,400 first
actions, a new record and an increase of 4% from the prior year,
275,440 disposals, again a new record and an increase of 21% from the
prior year, and 106,383 trademark registrations including 127,794
classes, an increase of more than 29% over the number of registrations
issued in 1999. However, Trademarks ended the fiscal year with more
than 677,000 classes under examination, an increase of 37% over the
prior year. The T-PAC anticipates this examination backlog will
continue to rise and service will deteriorate so long as user fees are
diverted.
Electronic Filing and E-Commerce Examination Offices: In its ongoing
efforts to incorporate reengineered, electronic processes into Trademark
operations, Trademarks has continued to champion the Trademark
Electronic Application System (TEAS) as the best alternative to paper
filing for Trademark customers. Electronic filing and payment have now
increased to over 15% of the total applications filed, and in the first
two years of TEAS operations, Trademarks received more than 64,800
electronic applications (including 74,900 classes) for registration of
trademarks. Further, Trademark customers now have the option of filing
seven other trademark forms electronically. To take better advantage of
electronic filing, Trademarks established two e-Commerce law offices
in late July. These offices are unique in that they handle all
electronically filed applications - processing the applications directly
into the law office - and they have incorporated all other examination
and process activities into the offices creating one-stop electronic
examination for customers who file electronically. The T-PAC strongly
supports this initiative as a step in the right direction and believes
that the e-Commerce law office activity should serve as the foundation
for new trademark processes as the office moves from paper to
electronic processing.
The T-PAC also notes that in the past year, TEAS has been recognized
for excellence in two national competitions. TEAS was recognized as a
semi-finalist in the 2000 Innovations in American Government Awards
Program, sponsored by the Ford Foundation and the Kennedy School of
Government at Harvard University, and has been declared a winner of the
2000 Government Technology Leadership Award sponsored by the Government
Technology Leadership Institute and the Government Executive Magazine.
Recognition in both competitions is clear evidence of the success of
this innovative electronic application, and a significant accomplishment
for Trademarks considering the level of competition and publicity these
programs provide. We would like to add our congratulations for TEAS and
strongly encourage Trademarks to continue with innovations of this
nature. We commit to work with the USPTO to develop further ways to
encourage use of these systems.
Trademarks on the Internet: The T-PAC would also like to recognize the
successful efforts of Trademarks for setting up the Trademark Electronic
Business Center on the USPTO web-site. It provides a convenient single
source for locating a multitude of trademark related information and by
accessing the Trademark Electronic Business Center over the Internet,
customers have access to general information and the same data that is
used internally by the Office to process and examine applications. Now
the citizens of this country may search the text and images for over
2.7 million active, pending and retired marks, and also locate status
information for pending and registered marks over the Internet. No
longer is access to this information confined to those who travel to
Arlington, Virginia to search in paper files. From anywhere in the
world, a potential applicant may conduct a search of U.S. registered
trademarks through the Trademark Electronic Search System (TESS),
complete and file and pay for a trademark application electronically
using TEAS, and check the status of pending applications through TARR,
the Trademark Application and Registration Retrieval system.
Trademark Work-at-Home (TW@H): Because of the extensive use of automated
processes andinformation to support Trademark operations, Trademarks
has established an innovative work-at-home program. The T-PAC endorses
considering the expansion of this program as evidence of a focus on
intelligent use of resources focused on dealing with the issues related
to scarcity of financial resources. Specifically, TW@H allows
Trademarks to add employees without adding office space. By the end of
calendar year 2000, Trademarks will have the equivalent of approximately
three law offices of examining attorneys working at home three-four days
each week. The organization is preparing to move to a "hotel" concept
to house TW@H examining attorneys when they are in the office, which
will allow for the expansion of the examining corps if compensation
funds are available without a commensurate need for additional office
space. Further, given that the Agency will begin moving to new space in
2004, TW@H allows Trademarks to expand operations without incurring
additional lease costs or long-term commitments to space that could
result in increased expenses as the Agency leaves Crystal City. Without
the extensive reengineering of processes and moves to electronic
processing that have already taken place, programs such as electronic
filing and TW@H would not be possible.
We compliment the leadership in the Trademark Office for their focus on
the future and willingness to consider forward looking concepts of
operation that are of great value to both the customers of the Agency who
provide the funds for operations and to its employees who derive on-the-job
satisfaction from these programs. We commend these programs to the rest of
the Government as an example for alternative ways of conducting business.
Finally, the T-PAC believes that if Trademarks had the assurance of access
to all of the fees paid by its customers for services, it would greatly
facilitate progress toward reengineering its operations because the annual
clash between funding production versus change would be alleviated.
V. CONCLUSION
The T-PAC looks forward to working with the USPTO in addressing the
challenges that have been presented to it.
We hope to contribute to the success of the governmental organization
that is so critical to our country meeting the needs of the intellectual
property community and the public during the 21st Century.