House Judiciary subcommittee questions Lee on preventing time and attendance abuse at USPTO

Michelle K. Lee, USPTO Director

On the afternoon of Tuesday, September 13th, the intellectual property subcommittee of the U.S. House of Representatives Judiciary Committee convened for a hearing on oversight of practices and procedures operating at the U.S. Patent and Trademark Office. The day’s sole panelist was USPTO director Michelle K. Lee. The day’s discussion focused on recent reports from federal governmental agencies regarding issues at the USPTO surrounding patent litigation as well as time and attendance abuses among USPTO examiners.

Congressman Darrell Issa (R-CA)

A press release posted in advance of the hearing and containing statements from both House Judiciary Committee chairman Bob Goodlatte (R-VA) and Courts, Intellectual Property, and the Internet subcommittee chairman Darrell Issa (R-CA) provided a good indication of the direction the hearing would take. Both statements reflected a wariness regarding timesheet abuses among USPTO employees. “The amount of wasted man-hours that could have been spent reducing the patent backlog is astounding, not to mention the millions of taxpayer dollars that were wasted paying USPTO employees for work they were not doing,” Goodlatte’s statement read. Issa added, “If the PTO can’t even guarantee sufficient oversight of its employees timecards, how can we be assured patent examiners aren’t just rubberstamping ideas without oversight as well?”

The concerns of both Congressmen stem from an examiner time and attendance report issued August 31st by the Office of the Inspector General (OIG) within the Department of Commerce. The commerce department’s OIG found 288,000 unsupported hours of work claimed by examiners over a 15-month period, which was equated to more than $18.3 million in potential waste. The OIG report also found multiple weak points in USPTO policy which limits the agency’s ability to detect fraud, including no requirement for teleworking examiners to log into computers during workdays as well as no requirement for workers with average or high performance ratings to provide supervisors with work schedules.

The testimony delivered by Lee to the House judiciary subcommittee spoke to the results of the OIG report and the work which had been undertaken at the USPTO to meet the recommendations of that report. The agency, Lee reported, had taken many actions consistent with OIG recommendations, including a new policy requiring all supervisors and teleworkers to remain logged into the USPTO’s IT system during working hours, the use of collaborative tools like instant messaging and presence indicators, as well as guidance handed down to supervisors instructing them to review employee-specific data to monitor production and timeliness performance.

“My team and I do not tolerate time and attendance abuse,” Lee told the subcommittee. While she did note that the USPTO had taken disciplinary actions against examiners that have abused time and attendance reports, such actions ranging from counseling to expulsion and repayment for hours not worked, she added that there was evidence that instances of time and attendance abuse were not widespread. She cited a report on the USPTO’s telework program issued by the National Academy of Public Administration (NAPA) in July 2015. The report found that “It would appear to be unlikely that [time and attendance] abuse is widespread or unique to teleworkers, and it does not appear to reflect the actions of the workforce as a whole.” Additionally, the report indicated that the agency’s telework program saved the agency $7 million each year on average by allowing examiners to continue working in spite of government shutdowns caused by weather or other reasons.

Congressman Jerrold Nadler (D-NY)

The methodology used during the OIG’s study on time and attendance abuse was also questioned by Congressman Jerrold Nadler (D-NY). Nadler’s prepared remarks noted that the unsupported work hours identified in the OIG’s report amounted to less than 2 percent of all hours worked by examiners during the 15-month period of the study. “In fact, the IG acknowledges that after the USPTO instituted certain reforms to its telework policy, six months into the study, the percentage of unsupported hours dropped to just 1.6%, an efficiency rate that most employers would boast about,” Nadler’s prepared remarks stated. “But, the IG buried this fact in a footnote deep in the report.” During questioning, Nadler argued that the OIG’s methodology was unlikely to identify all hours that examiners worked. For example, the OIG’s findings relied upon a digital footprint created by teleworkers when they logged in remotely to the USPTO’s network, which would not account for any work performed offline, such as would be the case if a teleworker printed prior art examples to study without being logged into the USPTO’s network.

Lee discussed digital tools provided by the USPTO to supervisors which provide for more effective management of examiners, especially an online dashboard for examiner work. The dashboard allows supervisors to see when work products land on a specific examiner’s desk, when that work has been picked up and whether that work was on schedule. When used in conjunction with collaborative messaging tools and presence indicators, these digital tools give supervisors an accurate idea of the actual time being spent by an examiner on work, Lee said.

Members of the House judiciary IP subcommittee were also piqued by a report published this June by the U.S. Government Accountability Office (GAO). The GAO’s report connected a rise in patent litigation, which increased from about 2,000 lawsuits in 2007 to more than 5,000 lawsuits in 2015, with low patent quality. “Several stakeholders told GAO that it is easy to unintentionally infringe on patents associated with [software-related and computer and communications] technologies because the patents can be unclear and overly broad,” the GAO’s report states.

Despite these issues, Lee maintained that the USPTO was doing a good job of addressing problems while improving the quality of issued patents. Lee mentioned that the USPTO expects to receive more than 600,000 patent applications during this fiscal year, a figure representing an average annual increase in patent application filings of 4 percent. Despite increased patent application numbers, the agency has been able to reduce its backlog of unexamined patent applications from 750,000 in 2009 down to about 550,000 currently. First action pendency was reduced from an average 25.9 months in January 2009 down to 16.1 months this July, and average total pendency dropped from 33.8 months to 25.6 months during the same time period, according to Lee.

The Patent Trial and Appeal Board (PTAB) was brought up by Lee as a critical piece of the system for ensuring that high quality patents were being issued. The USPTO is also engaged in various initiatives to improve patent quality, according to Lee, including the Enhanced Patent Quality Initiative. This program is designed to enhance examiner training, prosecution and post-examination processes. Lee also lauded an improved prior art search tool developed in conjunction with multiple foreign patent offices which improve USPTO examiners’ ability to see prior art references and other invalidating references determined by examiners in foreign offices, noting that it can be difficult to find such references without a personal knowledge of the foreign language.

During questioning, Goodlatte harped upon issues of incremental innovation, specifically citing the example of the EpiPen, which Goodlatte believed only enjoyed patent protection covering a safety cap on the autoinjector’s needle. Goodlatte wondered aloud if such an invention met patentability standards for obviousness. “We’re not talking about the lightbulb here,” he stated. He asked if an inter partes review (IPR) proceeding had been filed upon the EpiPen patent and Lee responded that she did not know, but that PTAB proceedings were open to anyone who wanted to file such an IPR. Later, a line of questioning by Issa seemed to support such patenting for so-called incremental innovation, especially in the biopharma industry. In one hypothetical example, he mused upon the patentability of processes of preparing and using various combinations of opiates. “If efficacy is unknown for any substance and efficacy for a dosage in combination with something is discovered separate from other things,” Issa opined, “don’t we have a fundamental advancement in science that Congress could choose to write patent law to allow that to be patentable without being inconsistent with the Founding Fathers?”

The issue of venue shopping was also brought up by members of the subcommittee. Issa, who noted the high percentage of patent infringement cases going through the U.S. District Court for the Eastern District of Texas (E.D. Tex.), asked about the implications of In re TC Heartland currently in front of the U.S. Court of Appeals for the Federal Circuit (Fed. Cir.). Lee noted that the USPTO was considering filing an amicus brief in that case but was awaiting further guidance from the U.S. Department of Justice before doing so.

The day’s hearing also touched upon pre-GATT patent applications, or so-called submarine patent applications, which have been pending in some cases for decades. While Lee argued that it would be hard to consider an absolute time limit on patent applications, the USPTO had been able to reduce the number of pre-GATT patent applications by 80 percent down to 20 such applications.

At the end of the hearing, Lee implored the subcommittee to consider extending the agency’s fee setting authority, which is set to expire in 2018. Lee noted that the ability to set fees for services at the USPTO, which funds its activities through the collection of such fees, has been incredibly helpful to the agency in recent years.