Intellectual Property
Key Processes for Managing Patent Automation Strategy Need Stengthening Gao ID: GAO-05-336 June 17, 2005The volume and complexity of patent applications to the U.S. Patent and Trademark Office (USPTO) have increased significantly in recent years, lengthening the time needed to process patents. Annual applications have grown from about 185,000 to over 350,000 in the last 10 years and are projected to exceed 450,000 by 2009. Coupled with this growth is a backlog of about 750,000 applications. USPTO has long recognized the need to automate its patent processing and, over the past two decades, has been engaged in various automation projects. Accordingly, GAO was asked to, among other things, assess progress to date and any problems facing USPTO as it develops the capability to efficiently handle patent information electronically.
As part of its strategy to achieve a paperless, electronic patent process, USPTO had planned to deliver an operational patent system by October 2004. It has been able to deliver important capabilities, such as allowing patent applicants to electronically file and view the status of their patent applications and the public to search published patents. Nonetheless, after spending over $1 billion on its efforts from 1983 through 2004, the agency's existing automation has not provided the fully integrated, electronic patent process articulated in its automation plans, and when and how this process will be achieved is uncertain. Key systems that USPTO is relying on to help reach this goal--an electronic application filing system and a document imaging system--have not provided capabilities that are essential to operating in a fully electronic environment. Contributing to this situation is that the agency took an ad hoc approach to planning and managing its implementation of these systems, in which it lacked effective analysis of system requirements, alternatives, and costs; made acquisition decisions based on management judgment; and acquired software that did not meet its needs. USPTO's ineffective planning and management of its patent automation initiatives, in large measure, can be attributed to enterprise-level, systemic weaknesses in its information technology investment management processes. Although the agency had begun instituting essential investment management mechanisms, such as its enterprise architecture framework, it had not yet finalized its capital planning and investment control process nor established necessary linkages between the process and its architecture to guide the development and implementation of its information technology. The Under Secretary of Commerce for Intellectual Property and USPTO's chief information officer acknowledged the need for improvement, but specific plans for resolving problems have not yet been developed.
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Director: Team: Phone:GAO-05-336, Intellectual Property: Key Processes for Managing Patent Automation Strategy Need Stengthening
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entitled 'Intellectual Property: Key Processes for Managing Patent
Automation Strategy Need Strengthening' which was released on June 17,
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Report to Congressional Committees:
June 2005:
Intellectual Property:
Key Processes for Managing Patent Automation Strategy Need
Strengthening:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-336]:
GAO Highlights:
Highlights of GAO-05-336, a report to congressional committees:
Why GAO Did This Study:
The volume and complexity of patent applications to the U.S. Patent and
Trademark Office (USPTO) have increased significantly in recent years,
lengthening the time needed to process patents. Annual applications
have grown from about 185,000 to over 350,000 in the last 10 years and
are projected to exceed 450,000 by 2009 (see figure). Coupled with this
growth is a backlog of about 750,000 applications.
USPTO has long recognized the need to automate its patent processing
and, over the past two decades, has been engaged in various automation
projects. Accordingly, GAO was asked to, among other things, assess
progress to date and any problems facing USPTO as it develops the
capability to efficiently handle patent information electronically.
What GAO Found:
As part of its strategy to achieve a paperless, electronic patent
process, USPTO had planned to deliver an operational patent system by
October 2004. It has been able to deliver important capabilities, such
as allowing patent applicants to electronically file and view the
status of their patent applications and the public to search published
patents. Nonetheless, after spending over $1 billion on its efforts
from 1983 through 2004, the agency‘s existing automation has not
provided the fully integrated, electronic patent process articulated in
its automation plans, and when and how this process will be achieved is
uncertain. Key systems that USPTO is relying on to help reach this
goal”an electronic application filing system and a document imaging
system”have not provided capabilities that are essential to operating
in a fully electronic environment. Contributing to this situation is
that the agency took an ad hoc approach to planning and managing its
implementation of these systems, in which it lacked effective analysis
of system requirements, alternatives, and costs; made acquisition
decisions based on management judgment; and acquired software that did
not meet its needs.
USPTO‘s ineffective planning and management of its patent automation
initiatives, in large measure, can be attributed to enterprise-level,
systemic weaknesses in its information technology investment management
processes. Although the agency had begun instituting essential
investment management mechanisms, such as its enterprise architecture
framework, it had not yet finalized its capital planning and investment
control process nor established necessary linkages between the process
and its architecture to guide the development and implementation of its
information technology. The Under Secretary of Commerce for
Intellectual Property and USPTO‘s chief information officer
acknowledged the need for improvement, but specific plans for resolving
problems have not yet been developed.
Actual and Projected Patent Applications, Fiscal Years 1994–2009:
[See PDF for image]
[End of figure]
What GAO Recommends:
To better position USPTO to improve its patent process through the use
of automation, GAO is making recommendations to the Secretary of
Commerce that address the agency‘s management of its patent automation
strategy and related information technology investments. In commenting
on this report, USPTO generally agreed with our findings, conclusions,
and recommendations. However, the agency only partially agreed with
several material aspects of our assessment.
www.gao.gov/cgi-bin/getrpt?GAO-05-336.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Linda Koontz at (202) 512-
6240 or koontzl@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
USPTO Continues to Pursue a Fully Automated Patent Process, but Is Not
Effectively Managing Its Strategy for Achieving This Capability:
USPTO's Patent Automation Is Not Supported by Essential Information
Technology Investment Management Processes:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Comments from the U.S. Patent and Trademark Office:
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Figures:
Figure 1: USPTO Actual and Projected Patent Applications, Fiscal Years
1994-2009:
Figure 2: USPTO's Patent Process:
Figure 3: USPTO's Patent Automation Progress:
Abbreviations:
APS: Automated Patent System:
OCIO: Office of Chief Information Officer:
OCR: optical character recognition:
PDF: portable document format:
SIRA: Search and Information Resources Administration:
TEAM: Tools for Electronic Application Management:
USPTO: United States Patent and Trademark Office:
Letter June 17, 2005:
The Honorable Frank R. Wolf:
Chairman:
Subcommittee on Science, the Departments of State, Justice, and
Commerce, and Related Agencies:
Committee on Appropriations:
House of Representatives:
The Honorable F. James Sensenbrenner, Jr.:
Chairman:
Committee on the Judiciary:
House of Representatives:
The United States Patent and Trademark Office (USPTO) helps to promote
industrial and technological progress in the United States and to
strengthen the national economy by administering the laws relating to
patents and trademarks. A critical part of the agency's mission is to
examine patent applications and issue patents. However, the rapid
growth in both the volume and complexity of applications to USPTO has
lengthened the time necessary to process patents and raised concerns
about the quality of the patents that are issued. The number of patent
applications filed annually has increased 91 percent over the last 10
years, from about 185,000 in 1994 to over 350,000 in 2004. Coupled with
this growing workload is a 28-month backlog of approximately 750,000
applications.
USPTO has long recognized the need to improve its patent processing
capability and, for the past two decades, has engaged in various
efforts to automate its patent process. In light of the agency's
actions, at your request, this report describes USPTO's strategy for
automating its patent process and assesses its progress and any
problems faced in developing and using electronic information and
systems to achieve this capability. We plan to issue a separate report
that will address the agency's progress in achieving its strategic
milestones and maintaining a qualified workforce.[Footnote 1]
To accomplish this objective, we reviewed USPTO's current and selected
past initiatives to develop and implement automated patent processing
capabilities. We analyzed programmatic and technical documentation
describing the agency's patent process, current electronic processing
capabilities, and plans for future automation. We also evaluated
available project management documentation, such as project plans, time
lines, and status reports, to determine its progress in implementing a
fully automated patent process. In addition, we assessed the agency's
consideration of key information technology investment management
processes and practices in planning and managing the patent automation
initiatives. Further, we reviewed agency information on the cost of its
automation efforts; however, we did not verify the accuracy of the cost
data. To supplement our analysis, we interviewed senior patent
officials, including the Deputy Commissioner for Patent Resources
Planning and the USPTO chief information officer and, as part of a
series of focus groups, selected patent examiners regarding the
implementation and use of the systems supporting USPTO's patent
process. We also discussed the patent automation efforts with the Under
Secretary of Commerce for Intellectual Property (who serves as the
director of USPTO). We conducted our study from June 2004 through April
2005 in accordance with generally accepted government auditing
standards. Appendix I contains a detailed discussion of the scope and
methodology of our review.
Results in Brief:
USPTO is pursuing a long-standing strategy to implement a paperless,
electronic patent process, with the goal of replacing the manual
processing of applications with capabilities for electronically
researching patent information and viewing and manipulating application
text throughout all processing phases. To achieve this electronic
process, the agency plans to integrate its existing systems that enable
capabilities such as electronic filing of applications with new
document imaging and text processing and sophisticated document
management and workflow capabilities. As part of its 21st Century
Strategic Plan, issued in 2002, the agency announced an acceleration of
its goal of delivering an operational system to electronically process
patents--from fiscal year 2006 to October 1, 2004.
USPTO has made progress in delivering functionality through information
systems that it has implemented, such as electronic filing and patent
application classification and search, as well as Internet access for
patent applicants and the public, respectively, to view the status of
their applications and to search existing published patents.
Nonetheless, collectively, these automated functions have not provided
the fully integrated end-to-end patent processing capability
articulated in USPTO's automation plans. Two of the primary systems
that the agency is relying on to enhance its capabilities--its
electronic filing system and a document imaging system that it acquired
from the European Patent Office called Image File Wrapper--have not
yielded processing improvements that the agency had deemed essential to
operate successfully in an electronic environment. Specifically, patent
filers have stated that the electronic filing system is cumbersome,
time-consuming, and costly, and does not meet their business and
technical needs; thus, fewer than 2 percent of all patent applications
are submitted to USPTO electronically. In addition, the Image File
Wrapper has experienced performance problems and, according to patent
officials, has not provided many of the capabilities deemed essential
to eliminating manual actions and improving worker productivity.
Contributing to this situation is that the agency took an ad hoc
approach to planning and managing its implementation of these systems.
Information technology best practices emphasize the need for agencies
to undertake projects in a disciplined manner based on well-established
business cases that articulate agreed-upon business and technical
requirements; include analyses of project alternatives, costs, and
benefits; and include measures for tracking project costs, schedules,
and performance through their life cycle. However, patent officials did
not rely on such critical measures to guide their implementation of
these key initiatives.
USPTO's ineffective planning and management of its patent automation
projects, in large measure, can be attributed to enterprise-level,
systemic weaknesses in the agency's overall information technology
investment management processes. A key premise of the Clinger-Cohen Act
of 1996[Footnote 2] is that agencies should have established processes,
such as capital planning and investment controls, to help ensure that
information technology projects are implemented at acceptable costs and
within reasonable and expected time frames, and contribute to tangible,
observable improvements in mission performance. In addition, as our
Enterprise Architecture Framework[Footnote 3] stresses, information
technology projects should show evidence of compliance with the
organization's architecture. Although USPTO had begun instituting
certain essential information technology investment management
mechanisms, it had not yet finalized its capital planning and
investment control process nor established necessary linkages between
the process and its enterprise architecture to ensure that projects
will comply with the architecture. Further, a study commissioned by the
agency in 2004 found that its Office of Chief Information Officer was
not organized to help accomplish the automation goals set forth in its
strategic plan and that the agency's investment management processes
did not ensure appropriate reviews of automation initiatives. As a
result, USPTO had not rigorously assessed its patent systems'
compliance with the enterprise architecture, and it lacked reliable
experience-based data to consistently demonstrate the costs and
benefits of its systems.
In light of the problems that USPTO has encountered with its existing
capabilities, we are recommending that the agency, before proceeding
with any new patent automation initiatives, (1) reassess, and, where
necessary, revise its approach for implementing and achieving effective
uses of information systems supporting a fully automated patent
process; (2) establish disciplined processes for planning and managing
the development of patent systems based on well-established business
cases; and (3) fully institute and enforce information technology
investment management processes and practices to ensure that its
automation initiatives support the agency's mission and are aligned
with its enterprise architecture.
In its written comments on a draft of our report (reprinted in app.
II), USPTO generally agreed with our findings, conclusions, and
recommendations. The agency acknowledged weaknesses in its processes
used to manage patent automation and agreed with the need for key
improvements, such as (1) developing architectural linkages to the
planning process, (2) implementing a capital planning and investment
control guide, and (3) completing planned organizational changes.
Nonetheless, the agency stated that it only partially agreed with
several material aspects of our assessment. For example, the agency
pointed to our awareness of it having initiated a review of the
architectural linkages to its investments and key decision-making
processes. However, during our study, agency officials did not inform
us of any specific actions that had been taken in this regard. As the
agency moves forward with actions to improve its patent automation,
having firmly established and enforced investment management practices
will be essential to achieving more effective use of its information
technology.
Background:
A patent is a property right granted by the U.S. government to an
inventor who secures, generally for 20 years from the date of initial
application in the United States, his or her exclusive right to make,
use, offer for sale, or sell the invention in exchange for disclosing
it.[Footnote 4] As indicated in figure 1, the number of patent filings
to USPTO continues to grow and, by 2009, the agency is projecting
receipt of over 450,000 patent applications annually.
Figure 1: USPTO Actual and Projected Patent Applications, Fiscal Years
1994-2009:
[See PDF for image]
[End of figure]
USPTO has repeatedly cited the growing workload of patent applications
and the difficulty in managing the volumes of paper associated with
patent processing as impediments to carrying out its mission.
Patent processing essentially involves three phases: pre-examination,
examination, and post-examination. The process begins when an applicant
files a patent application and pays a filing fee. As part of the pre-
examination phase, USPTO staff document receipt of the application and
process the application fee, scan and convert the paper documents to
electronic format, and conduct an initial review of the application and
classify it by subject matter. During the subsequent examination phase,
the application is assigned to a patent examiner with expertise in the
subject area,[Footnote 5] who searches existing U.S. and foreign
patents, journals, and other literature (called "prior art") and
sometimes contacts the applicant to resolve questions and obtain
additional information to determine whether the proposed invention can
be patented.[Footnote 6] Examiners document their determinations on the
applications in formal correspondence, referred to as office actions.
Applicants may abandon their applications at any time during this
process. After the examiner has determined that a patent is warranted,
a supervisor reviews and approves the determination and the applicant
is informed of the outcome. The application then enters the post-
examination phase. Upon payment of an "issue fee," a patent is granted
and published. To keep the patent active, the patentee must pay
maintenance fees at 3.5 years, 7.5 years, and 11.5 years. Historically,
the time from the date that a patent application is filed to the date
that the patent is either granted or the application is abandoned has
been called "patent pendency." Figure 2 summarizes USPTO's patent
process.
Figure 2: USPTO's Patent Process:
[See PDF for image]
[End of figure]
In 1999, Congress gave USPTO broad responsibility for managing its
operations and controlling its budget allocations and expenditures,
personnel decisions and processes, procurement, and information
technology operations.[Footnote 7] USPTO's Search and Information
Resources Administration (SIRA) within the Office of Patent Resources
Planning, along with its Office of Chief Information Officer (OCIO),
are responsible for ensuring that the agency's goal of providing an
automated patent process is met. SIRA is responsible for identifying
patent processing business needs, ensuring that the systems developed
meet those needs, and providing program resources. OCIO determines how
best to use information technology to fulfill the identified business
needs and is responsible for the acquisition, development, and
integration of the information systems.
Because of long-standing concerns about the increasing volume and
complexity of patent applications, USPTO has been undertaking projects
to automate its patent process for about the past two decades. One of
the agency's most substantial undertakings was the Automated Patent
System (APS)--a project begun in 1983 with the intent of automating all
aspects of the paper-intensive patent process. With this system, USPTO
anticipated significant improvements in patent quality and
productivity. APS was to be deployed in 1990, maintained through 2002,
and, when completed, consist of five integrated subsystems that would
(1) fully automate incoming patent applications; (2) allow examiners to
electronically search the text of granted U.S. patents and access
selected abstracts of foreign patents; (3) scan and allow examiners to
retrieve, display, and print images of U.S. patents; (4) help examiners
classify patents; and (5) support on-demand printing of copies of
patents.
In reporting on APS more than 10 years following its inception, we
noted that USPTO had deployed and was operating and maintaining certain
parts of the system, supporting text search, limited document imaging,
order-entry and patent printing, and classification
activities.[Footnote 8] However, it had not yet developed the system
that was expected to fully automate incoming applications and the
management of these applications as they moved through USPTO, and the
estimated date for full deployment of APS had been delayed 7 years, to
1997.
Our report raised concerns about USPTO's ability to adequately plan and
manage this major project, pointing out that the agency's processes for
exercising effective management control over APS were weak. We noted
that the agency lacked reliable, experience-based data to show that
patent quality had improved and expected benefits were being achieved
and its officials were relying on management judgment alone in setting
APS development and deployment priorities. In light of these concerns,
we recommended to the Secretary of Commerce that USPTO establish a
process for identifying and measuring expected benefits to users of the
system, implement a systematic and repeatable process for estimating
the system's costs, and monitor progress against baselines. USPTO
agreed with the need for such measures.
Through 2002, the agency continued to enhance its capabilities enabling
examiners to search patent images and text, and upgraded its patent
application classification and tracking systems.[Footnote 9] It also
began providing electronic bibliographic information from patents to
the public. Nonetheless, USPTO never fully developed and deployed APS
to achieve the integrated, end-to-end patent processing system that it
envisioned. The agency reported spending approximately $1 billion on
the initiative from 1983 through 2002.[Footnote 10]
In 1998, the agency added to its automated capability by implementing
an Internet-based electronic filing system, enabling applicants to
submit their applications online. It further enhanced the electronic
filing system in 2002, and again in 2004. USPTO reported spending a
total of $10 million for this system.
USPTO Continues to Pursue a Fully Automated Patent Process, but Is Not
Effectively Managing Its Strategy for Achieving This Capability:
Recognizing that growth in the number and complexity of patent
applications has outpaced its ability to meet demands and effectively
manage its workload in a paper-based environment, USPTO has continued
to pursue a strategic agenda emphasizing paperless, end-to-end,
automated patent processing, as was its intent with APS. However, while
progress has been made, the agency has not yet achieved a fully
electronic patent processing capability. Key systems that USPTO is
relying on to help achieve this capability have not yielded essential
processing improvements, in part resulting from the agency's ad hoc
approach to planning and managing their implementation. Contributing to
this situation is that USPTO has not yet fully instituted disciplined
processes and practices for managing its information technology
investments.
USPTO's Strategy Called for a Fully Electronic Patent Process:
As part of its automation strategy, USPTO planned to develop and
integrate multiple systems that are intended to move all of its
critical patent processing components to an electronic business
environment. To support this strategy, in 2001, the agency undertook
its Tools for Electronic Application Management (TEAM) automation
project with the intent of delivering an end-to-end capability to
process patent applications electronically by fiscal year 2006. TEAM
was to support the entire patent application process in electronic
mode, beginning with the filing of an application and proceeding
through pre-examination, examination, and post-examination to
electronic records archiving.
Under the TEAM concept, the agency had planned to integrate its
existing electronic filing system and the classification and search
capabilities from the earlier APS project with new document management
and workflow capabilities, and with image-and text-based
processing[Footnote 11] of patent applications to achieve a
sophisticated means of handling documents and tracking patent
applications throughout the examination process. By implementing image-
and text-based capabilities, USPTO had anticipated that patent
examiners would be able to view and process applications online, as
well as manipulate and annotate text within a patent application, thus
eliminating manual functions and improving processing accuracy,
reliability, and productivity, as well as the quality of the patents
that are granted.
In 2002, USPTO altered its approach to accomplishing the patent
automation with the issuance of its 21st Century Strategic
Plan.[Footnote 12] Developed partly in response to a recognized need to
improve patent quality, aggressively implement electronic
government,[Footnote 13] and reduce the number of patent applications
pending at any one time, the strategic plan identified, among other
factors, the agency's high-level information technology goals for fully
automating the patent process as part of an aggressive 5-year
modernization effort. The plan incorporated the automation concepts
from the TEAM project, but announced an accelerated goal of delivering
an operational system to electronically process patent applications
earlier than had been scheduled under TEAM--by October 1, 2004.
Progress Made, but Ad Hoc Implementation of Key Systems Has Prevented
Achieving Full Electronic Processing of Patent Applications:
In carrying out its patent automation plans, USPTO has made progress
toward delivering important processing capabilities through the various
information systems that it has implemented. For example, an automated
search capability, available since 1986, has eliminated the need for
patent examiners to manually search for prior art in paper files, and
the classification and fee accounting capabilities have helped with
assigning applications to the correct subject areas and with managing
collections of applicable fees. In addition, using the electronic
filing system that has existed since 1998, applicants can file their
applications with the agency via the Internet. Also, using the
Internet, patent applicants can review the status of their applications
online and the public can electronically access and search existing
published patents. Further, as a result of an imaging system
implemented in August 2004, known as the Image File Wrapper, USPTO
currently has the capability to scan patent applications and related
documents, which can then be stored in a database and retrieved and
reviewed online. Figure 3 illustrates the agency's progress in
implementing its automated patent functions.
Figure 3: USPTO's Patent Automation Progress:
[See PDF for image]
[End of figure]
Nonetheless, even with the progress that has been made, collectively,
USPTO's automated functions have fallen short of providing the fully
integrated, electronic patent processing capability articulated in the
agency's automation plans. Two of the key systems that it is relying on
to further enhance its capabilities--the electronic filing system and
the Image File Wrapper--have not yielded the processing improvements
that the agency has deemed essential to successfully operate in a fully
integrated, electronic environment.
Specifically, in implementing its electronic filing system in 1998,
USPTO had projected significant increases in processing efficiencies
and quality by providing patent applicants the capability to file
online, thus alleviating the need for them to send paper applications
to the agency or for patent office staff to manually key application
data into the various processing systems. However, even after
enhancements in 2002 and 2004, the electronic filing system has not
produced the level of usage among patent filers that the agency had
anticipated. While USPTO's preliminary justification for acquiring the
electronic filing system had projected an estimated usage rate of 30
percent in fiscal year 2004, patent officials reported that, as of
April 2005, fewer than 2 percent of all patent applications were being
submitted to the agency via this system. As a result, anticipated
processing efficiencies and quality improvements through eliminating
the manual re-keying of application data have not yet been realized.
In September 2004, USPTO convened a forum of senior officials
representing the largest U.S. corporate and patent law firm filers to
identify causes of patent applicants' dissatisfaction with the
electronic filing system and determine how to increase the number of
patents being filed electronically. According to the report resulting
from this forum, the majority of participants viewed the system as
cumbersome, time-consuming, costly, inherently risky, and lacking a
business case to justify its usage. Specifically, among the barriers to
system usage that the participants identified were (1) users' lack of a
perceived benefit from filing applications electronically, (2)
liability concerns associated with filers' unsuccessful use of the
system or unsuccessful transmission of patent applications to USPTO,
and (3) significant disruptions to filers' normal office/corporate
processes and workflow caused by factors such as difficulty in using
the automated tools and the inability to download necessary software
through firewalls.
Further, forum participants identified features that they considered
critical to increasing their use of the electronic filing system. These
included implementing a more user-friendly system supported by Web-
based processes; introducing a system that accepts portable document
format (PDF) files;[Footnote 14] and enabling electronic filing of all
documents, versus requiring paper filings of certain parts of the
application, as is necessary with the current system. As incentives to
increasing system usage, the participants suggested, among other
strategies, that USPTO make electronic filings of applications a
priority over paper filings, reduce the fee for electronic filings, and
confirm the date on which the agency receives electronic applications.
Several concerns raised during the forum mirrored those that USPTO had
earlier identified in a 1997 analysis of a prototype for electronic
filing. However, as of April 2005, the agency had not yet completed
plans to show how they would address the concerns regarding use of the
electronic filing system.
Beyond electronic filing, the Image File Wrapper also has not resulted
in critical patent processing improvements. Patent officials explained
that, to meet the accelerated date for delivering an operational system
as outlined in the strategic plan, the agency had decided in 2002 to
acquire and use a document-imaging system owned by the European Patent
Office, called ePhoenix, rather than develop the integrated patent
processing system that had been described in the agency's automation
plans. The officials stated that the director, at that time, had
considered ePhoenix to be the most appropriate solution for further
implementing USPTO's electronic patent processing capabilities given
(1) pressures from Congress and from customers and stakeholders to
implement an electronic patent processing system more quickly than
originally planned and (2) the agency's impending move to its new
facility in Alexandria, Virginia, which did not include provisions for
transferring and storing paper patent applications.[Footnote 15]
Accordingly, in November 2002, patent officials had signed a memorandum
of agreement with the European Patent Office, in which that office
agreed to provide USPTO with a license to use its patent processing
software and to provide technical assistance in customizing the
software to meet USPTO's needs. In turn, USPTO agreed to reimburse the
European Patent Office for the cost of modifying the software. It began
deploying the system--which it renamed Image File Wrapper--in July 2003
and completed implementation in August 2004, at a reported total cost
of approximately $14 million.[Footnote 16]
The system includes image technology for storage and maintenance of
records associated with patent applications and currently provides the
capability to scan each page of a submitted paper application and
convert the pages into electronic images. According to comments made by
patent examiners in a majority of the focus groups that we conducted,
the system has provided them with the ability to easily access patent
applications and related information. In addition, patent officials
stated that the system has enabled multiple users to simultaneously
access patent applications.
However, patent officials acknowledged that the system has experienced
performance and usability problems. Specifically, in speaking about the
system's performance, patent officials and agency documentation stated
that, after its implementation, the Image File Wrapper had been
unavailable for extended periods of time or had experienced slow
response times, resulting in decreased productivity. In commenting on
this matter, the USPTO director stated that the system's performance
has improved over the last 6 months. Further, in discussing the
system's performance, OCIO and patent officials acknowledged this
system problem, and told us that they had recently taken measures to
alleviate its impact by, for example, developing a backup tool, which
can store images of an examiner's most recent applications so that the
applications can be accessed when the examiner cannot use the Image
File Wrapper. However, given the recent (February 2005) implementation
of this tool, the officials were not able to show any quantitative
benefits from its use.
Regarding the usability of the system, patent officials and focus group
results indicated that the Image File Wrapper does not fully meet
processing needs. Specifically, the officials stated that, as an image-
based system, the Image File Wrapper does not fully enable patent
examiners to electronically search, manipulate, or track and log
changes to application text, which are key processing features
emphasized in the agency's automation plans. The agency's documentation
also indicated that patent examiners have to print images to paper to
perform certain functions such as signing their names to office
actions. The examiners commented that a limited capability to convert
images to text, which was intended to assist them in copying and
reusing information contained in patent files, is error-prone,
contributing to their need to download and print the applications for
review. In addition, examiners in the focus groups expressed concerns
about the Image File Wrapper's capability to manage their workload and
route documents to and from examiners, noting that these capabilities
are confusing and difficult to use. Further, because the office's
legacy systems are not integrated with the Image File Wrapper,
examiners are required to manually print correspondence from these
systems, which then must be scanned into the Image File Wrapper in
order to be included as part of an applicant's electronic file.
Patent and OCIO officials largely attributed the system's performance
and usability problems to the agency's use of the software that it
acquired from the European Patent Office. They indicated that the
original design of the ePhoenix system had not been compatible with
USPTO's technical platform for electronic patent processing.
Specifically, they stated that the European Patent Office had designed
the system to support only the printing of files for subsequent manual
reviews, rather than for electronic review and processing. The
officials also stated that the system had not been designed for
integration with other legacy systems or to incorporate additional
capabilities, such as text processing, with the existing imaging
capability. Further, an official of the European Patent Office noted
that ePhoenix had supported their office's much smaller volume of
patent applications.[Footnote 17] Thus, with USPTO's patent application
workload being approximately twice as large as that of its European
counterpart, the agency placed greater stress on the system than it was
originally designed to accommodate. OCIO officials overseeing the Image
File Wrapper told us that, although they had tested certain aspects of
the system's capability, many of the problems encountered in using the
system were not revealed until after the system was deployed and
operational.
The European Patent Office official serving as liaison to USPTO
identified similar technical problems with the Image File Wrapper. The
official acknowledged that the version of the ePhoenix software that
USPTO had acquired did not provide some of the capabilities that the
agency wanted, such as text processing. He added that the European
Patent Office was developing a newer version of the software that would
include text-and image-based processing capabilities. At the time of
our discussion, the official said that USPTO officials had not informed
them of their plans to use the newer version of the software.
Patent and OCIO officials acknowledged the problems with the Image File
Wrapper and that the agency had acquired ePhoenix, although senior
officials were aware that the original design of the system had not
been compatible with USPTO's technological platform for electronic
patent processing. They stated that, despite knowing about the many
problems and risks associated with using the software, the agency had
nonetheless proceeded with this initiative because senior officials,
including the former USPTO director, had stressed their preference for
using ePhoenix in order to expedite the implementation of a system. The
officials also acknowledged that management judgment, rather than a
rigorous analysis of costs, benefits, and alternatives, had driven the
agency's decision to use the system.
In January 2005, patent officials told us that, given the performance
and usability problems, they planned to begin replacing the Image File
Wrapper in September 2005 with a system that would provide the
capabilities, including text-and image-based processing, that were
outlined in the agency's automation plans. Preliminary information that
the agency provided about the replacement system indicated that it
would cost approximately $56 million over 6 years, and would not
include continued use of the European Patent Office's software.
However, while having made this determination about a new system, the
agency had not developed a supporting business case--based on
requirements, cost/benefit, and alternatives analyses--to justify this
particular acquisition, or a project plan to guide the system's
implementation. Thus, it is difficult to gauge the soundness of this
planned investment or how it will enable USPTO to accomplish its
automation plans. In response to our concerns about the lack of project
documentation to support the planning and management of this
initiative, the officials stated that they would reconsider their
approach to planning and carrying out this project.
USPTO's difficulty in realizing intended improvements through its
electronic filing system and Image File Wrapper can largely be
attributed to the fact that the agency has taken an ad hoc approach to
planning and managing its implementation of these systems, driven in
part by its accelerated schedule for implementing an automated patent
processing capability. The Clinger-Cohen Act, as well as information
technology best practices and our prior reviews, emphasize the need for
agencies to undertake information technology projects in a disciplined
manner, based on well-established business cases that articulate agreed-
upon business and technical requirements; effectively analyze project
alternatives, costs, and benefits; include measures for tracking
projects through their life cycle against cost, schedule, benefit, and
performance targets; and ultimately, provide the basis for credible and
informed decision making and project management. Yet, patent officials
did not rely on established business cases to guide their
implementation of these key automation initiatives.
With its ad hoc approach to implementing the electronic filing system
and the Image File Wrapper, USPTO has continued a practice of
ineffective project management that characterized its implementation of
APS of two decades ago. The absence of sound project planning and
management for these initiatives has left the agency without critical
capabilities, such as text processing, and consequently, impeded its
successful transition to an integrated and paperless patent processing
environment. By continuing to implement information systems in this
manner, USPTO undermines the intent of its patent automation strategy
and jeopardizes its credibility regarding improving the efficiency of
the patent process. At the conclusion of our review, the Under
Secretary of Commerce for Intellectual Property, who also serves as the
director of USPTO, stated that he recognized and intended to implement
measures to address the weaknesses in the agency's planning and
management of its automated patent systems.
USPTO's Patent Automation Is Not Supported by Essential Information
Technology Investment Management Processes:
USPTO's ineffective planning and management for its patent automation
projects, in large measure, can be attributed to enterprise-level,
systemic weaknesses in the agency's information technology investment
management processes. A key premise of the Clinger-Cohen Act is that
agencies have established processes, such as capital planning and
investment control, to help ensure that information technology projects
are implemented at acceptable costs and within reasonable and expected
time frames, and contribute to tangible, observable improvements in
mission performance. Such processes guide the selection, management,
and evaluation of information technology investments by aiding
management in considering whether to undertake a particular investment
in information systems and providing a means to obtain necessary
information regarding the progress of an investment in terms of cost,
capability of the system to meet specified requirements, timeliness,
and quality.
Further, as emphasized in our Enterprise Architecture Framework,
information technology projects should show evidence of compliance with
the organization's enterprise architecture, which serves as a blueprint
for systematically and completely defining an organization's current
(baseline) operational and technology environment and as a roadmap
toward the desired (target) state. Effective implementation of an
enterprise architecture can facilitate an agency by serving to inform,
guide, and constrain the decisions being made for the agency, and
subsequently decrease the risk of buying and building systems that are
duplicative, incompatible, and unnecessarily costly to maintain and
interface.
At the time of our study, USPTO had begun instituting certain essential
information technology investment management mechanisms, such as a
framework for its enterprise architecture and components of a capital
planning and investment control process. However, it had not yet
established the necessary linkages between its enterprise architecture
and its capital planning and investment control process to ensure that
its automation projects will comply with the architecture or fully
instituted enforcement mechanisms for investment management. For
example, USPTO drafted a capital planning and investment control guide
in June 2004 and issued an agency administrative order requiring unit
heads to use the guide in February 2005. However, according to senior
agency officials, many of the processes and procedures in the guide had
not been completed and fully implemented. In addition, while the agency
had completed the framework for its enterprise architecture, it had not
aligned its business processes and information technology in accordance
with the architecture. Also, according to OCIO officials, the
architecture review board responsible for enforcing compliance with the
architecture was not yet in place; thus, current architecture reviews
are only of an advisory nature and are not required for system
implementation. Our analysis of architecture review documents that
system officials provided for the electronic filing system and Image
File Wrapper confirmed that the agency had not rigorously assessed
either of these systems' compliance with the enterprise architecture.
Beyond these concerns, USPTO lacked reliable, experienced-based data
and a process for consistently demonstrating that expected benefits of
the systems are being achieved. As noted in our prior work, key system
development decisions should be based on reliable data showing that
resource investments will produce commensurate value, and as systems
are developed, expected benefits and estimated costs should be
periodically validated through actual experience. Although patent
officials asserted that processing improvements had resulted from the
automation that had been implemented, they acknowledged that the agency
had not established performance metrics to aid in measuring the impact
of the automation or validated actual experiences against established
baselines. Rather, patent officials told us, they had based their
accounts of performance improvement, such as reductions in the number
of lost or destroyed paper patent applications as a result of the Image
File Wrapper, largely on ad hoc occurrences and/or feedback from patent
examiners and clerical and administrative staff. As a result, the
agency lacked a basis for substantiating benefits from its automation
efforts.
In addition, USPTO lacked reliable cost data for the patent automation
initiatives due to weaknesses in the agency's processes for tracking
and reporting project expenses. Our guide on agencies' information
technology investment decision-making stresses the need for reliable
and current project cost data to aid management in making critical
investment decisions.[Footnote 18] While the agency had systems in
place to track the costs of specific tasks, particularly those assigned
to its contractors, it did not have an effective means of providing
aggregate cost information for its overall patent automation effort.
Patent officials stated that they faced difficulties in accessing and
providing comprehensive cost information for the patent systems because
the agency had modified its approach to capturing and reporting cost
information, along with the information systems containing this
information. The difficulty that USPTO management faced in providing
comprehensive information on its patent automation costs could
compromise the agency's ability to provide a credible accounting for
its investments and make informed management decisions about them.
Adding to these conditions, a study commissioned by USPTO's senior
management in 2004 found that OCIO was not organized to help USPTO
achieve its mission or accomplish the goals set out in its automation
strategy.[Footnote 19] The study, undertaken by an independent
contractor, noted that the agency's investment management processes did
not ensure appropriate reviews of automation initiatives and that the
chief information officer's organization lacked sufficient credibility
with its business units to ensure an effective partnership. During our
review, USPTO's director made changes in key leadership positions
within OCIO and the Patent Resources and Planning Office, which he
considered essential to defining and implementing the patent automation
strategy and bringing stability to the agency's operations. However,
officials had not yet begun to improve the investment management
processes to ensure appropriate reviews of the agency's automation
initiatives.
USPTO has an explicit responsibility for ensuring that the automation
initiatives that it is counting on to enhance its overall patent
process are consistent with the agency's priorities and needs and are
supported by the necessary planning and management to ensure that they
are successfully accomplished. USPTO's 21st Century Strategic Plan was
intended to help the agency accomplish a smooth transition to
performance-based operations, and having firmly established and
enforced investment management practices will be crucial to achieving
this. At the conclusion of our review, USPTO's director and the new
chief information officer, appointed in February 2005, told us that
they were aware of organizational and management weaknesses within OCIO
and acknowledged the need to strengthen the agency's investment
management processes and practices and effectively apply them to
USPTO's patent automation initiatives.
Conclusions:
USPTO has been attempting to implement an integrated, paperless patent
process for about two decades and, in the process, has delivered
important automated capabilities. Nonetheless, after spending over a
billion dollars on its efforts, the agency is still not yet effectively
positioned to process patent applications in a fully automated
environment; moreover, when and how it will actually achieve this
capability remains uncertain. System performance and usability
problems, resulting largely from ineffective planning and management of
its automated capabilities, have limited the effectiveness of key
systems that the agency has implemented to support critical patent
processes. USPTO's director and new chief information officer have
recognized the need to improve the agency's planning and management of
its automation initiatives. However, weaknesses in key information
technology management processes needed to guide the agency's
investments in patent automation, such as incomplete capital planning
and investment controls and a lack of reliable cost data, could
preclude its ability to successfully accomplish this. Under such
circumstances, USPTO risks continuing to implement information
technology that does not support the agency's needs, and that threatens
its overall goal of achieving a fully electronic capability to process
its growing patent application workload.
Recommendations for Executive Action:
To more effectively position USPTO to achieve key patent processing
improvements through the use of information technology, we recommend
that the Secretary of Commerce direct the Under Secretary of Commerce
for Intellectual Property to take the following actions before
proceeding with any new patent automation initiatives:
* reassess, and where necessary, revise the approach for implementing
and achieving effective uses of major information systems to support a
fully automated patent process, including electronic filing and image-
and text-based patent processing capabilities;
* establish disciplined processes for planning and managing the
development of patent systems based on well-established business cases
that articulate agreed-upon business and technical requirements;
include analyses of project alternatives, costs, and benefits; and
include measures for tracking projects through their life cycle against
cost, schedule, benefit, and performance targets; and:
* fully institute and enforce at the enterprise level, information
technology investment management processes and practices to ensure that
automation initiatives support the agency's mission and are aligned
with the agency's enterprise architecture, to include (1) finalizing
and implementing a capital planning and investment control guide, (2)
establishing an architecture review board and requiring its oversight
of major information technology investments, (3) establishing a process
to identify expected benefits to internal and external users of
information systems and to measure performance against expected
benefits, and (4) establishing a process for tracking and reporting
aggregate cost information for automation initiatives.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, the Under Secretary of
Commerce for Intellectual Property and Director of USPTO generally
agreed with our findings, conclusions, and recommendations. The agency
acknowledged weaknesses in its processes used to manage patent
automation and agreed with the need for key improvements, such as (1)
developing architectural linkages to the planning process, (2)
implementing a capital planning and investment control guide, and (3)
completing planned organizational changes. The Under Secretary
emphasized that USPTO had already initiated reforms to ensure more
effective implementation of its automation projects, including
personnel changes in key patent-management positions, and indicated
that the agency would rely on the results of our study in conjunction
with other assessments that have been conducted to further improve
management processes guiding the agency's use of information
technology.
Nonetheless, the agency only partially agreed with several specific
aspects of our assessment. The Under Secretary pointed out, for
example, that in February 2005, USPTO had issued an agency
administrative order covering its information technology investment
review board and reemphasizing its commitment to integrated investment
decision practices. In addition, the agency pointed to our awareness of
it having also initiated a review of the architectural linkages to its
investments and key decision-making processes being implemented.
Further, it stated that it had instituted investment decision papers to
provide its investment review board members with improved
documentation, including more thorough financial, technical, and
alternatives analyses, to assist in making appropriate investment
decisions.
The actions that USPTO stated that it has taken could help to improve
its overall investment management and decision making. In mid-April
2005, patent officials provided us with a finalized copy of the agency
administrative order requiring unit heads to use the capital planning
and investment control guide in selecting, controlling, and evaluating
information technology investments. However, they stated that the
agency had not yet completed the capital planning and investment
control processes and procedures. Nonetheless, we have revised our
report to reflect the agency's issuance of this order. Further, during
our study, agency officials did not inform us of any specific actions
that had been initiated to review architectural linkages to investments
and gave no indication that the agency had instituted investment
decision papers to improve information technology investment
documentation and related decision making. Therefore, we lack a basis
for evaluating and/or commenting on these particular actions.
USPTO also provided comments on the recommendations contained in our
report. Specifically, regarding our recommendation to reassess, and
where necessary, revise the approach for implementing and effectively
using information systems to support a fully automated patent process,
the agency commented that it was changing the method of implementing
and achieving effective use of its information technology. The agency
stated that it had chosen to follow a more systematic and phased
approach to using information technology, in which alternatives are
thoroughly considered and evaluated against architectural standards,
implementation costs, and the ability to effectively meet users' needs,
and that detailed investment decision papers are being prepared for all
major investments. It added that future patent development initiatives,
including those for electronic filing and text-based processing
capabilities, would be subjected to this approach to ensure that
automated systems are used most effectively to achieve patent program
goals. As the agency takes action to achieve more effective use of its
information technology, we look forward to monitoring its use of these
measures to successfully implement future patent automation
initiatives.
Regarding our recommendation to establish disciplined processes for
planning and managing the development of patent systems based on well-
established business cases, USPTO stated that it was in the process of
improving its capital planning and investment control process. For
example, it stated that an already-established committee had proposed a
format for developing improved business cases that would articulate
business needs and expected benefits, require consideration of
alternative solutions, and reflect compliance with the agency's
enterprise architecture. As stressed in our report, such measures are
essential to ensuring effective management of the agency's information
technology initiatives and to achieving patent processing improvements
through the use of information technology.
Finally, in commenting on our recommendation that the agency fully
institute and enforce information technology investment management
processes and practices at the enterprise level, USPTO (1) reiterated
its actions toward improving its capital planning and investment
control process; (2) stated that its Office of Applications
Architecture and Services functions as the agency's architectural
review board with responsibility for ensuring that information
technology systems' designs comply with the enterprise architecture;
(3) stated that it would, upon completion of its capital planning and
investment control guide, formally establish procedures for reviewing
its investments' performance against expected benefits; and (4) stated
that it is refining its tools to more completely capture the total cost
of its information technology investments.
Such measures, if successfully applied, could substantially improve
USPTO's accountability for its information technology investments.
However, it is important to note that, during our study, the agency
could not provide evidence of a functioning architecture review board.
Patent officials told us that such an organization had not been
established and that reviews had not been required to ensure that
planned information technology projects were consistent with the
enterprise architecture. As stated earlier in this report, our analysis
of documentation supporting the electronic filing system and Image File
Wrapper determined that the agency had not rigorously assessed either
of these systems' compliance with the enterprise architecture. Given
this finding, we continue to stress the need for the agency to enforce
its architecture review board's oversight of major information
technology initiatives.
Beyond these points of discussion, USPTO offered detailed comments on
its Image File Wrapper. While agreeing with the need for more rigorous
decision making to support its implementation of this system, the Under
Secretary nonetheless believed that moving forward with this initiative
was an appropriate step that had fulfilled the agency's promise to
provide electronic (paperless) processing of patent applications, and
that had provided numerous benefits for the agency in a short period of
time. For example, the Under Secretary stated that the Image File
Wrapper had eliminated the agency's need for space to house paper
patents and, in conjunction with Internet access to patent
applications, had alleviated problems associated with lost application
files and file integrity. As such, the agency did not see a need to
assess the key management processes guiding its decision to undertake
this investment.
As reflected in this report, we recognize that the Image File Wrapper,
along with Internet access to patent applications, has provided USPTO
with important capabilities to support the processing of patents.
However, patent officials and examiners acknowledged that performance
and usability problems had rendered the system incapable of fully
meeting processing needs. Further, patent and OCIO officials had
largely attributed the system's problems to known limitations in the
design of the software that the agency had acquired from the European
Patent Office. They added that, given the performance and usability
problems, the agency planned to replace the Image File Wrapper. Thus,
while certain benefits should be inherent from having this system in
place, in our view, the agency could nonetheless take important lessons
from the ad hoc approach in which this investment was undertaken. USPTO
opted to undertake this initiative in a manner that did not ensure that
it had fully evaluated its patent processing requirements against the
most cost-efficient and effective solution for addressing its needs.
Moreover, in undertaking the initiative without full consideration of
potential alternatives, costs, and benefits, the agency put itself at
risk of not fully realizing desired outcomes in terms of improved
processing of patent applications.
Appendix II contains the text of USPTO's comments on our draft report.
The agency also provided technical comments, which we have
incorporated, as appropriate.
We are sending copies of this report to the Secretary of Commerce, the
Under Secretary of Commerce for Intellectual Property, and the
Director, Office of Management and Budget. Copies will also be
available at no charge on our Web site at [Hyperlink,
http://www.gao.gov].
Should you have any questions on matters contained in this report,
please contact me at (202) 512-6240. I can also be reached by email at
[Hyperlink, koontzl@gao.gov]. Contact points for our Office of
Congressional Relations and Public Affairs may be found on the last
page of this report. Key contributors to this report are listed in
appendix III.
Signed by:
Linda D. Koontz:
Director, Information Management Issues:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To accomplish our objective, we reviewed USPTO's 21st Century Strategic
Plan, Tools for Electronic Application Management project
documentation, and related information technology plans to determine
the agency's vision for and approach to automating its patent process.
We also assessed current and selected past initiatives that USPTO has
undertaken to develop and implement its automated patent processing
capabilities. Specifically, we analyzed programmatic and technical
documentation describing the agency's patent process, current
electronic patent processing capabilities, and plans for future
automation. We evaluated available project management documentation,
such as project plans, time lines, and project status reports to
determine the agency's progress in implementing a fully automated
patent processing system. In addition, to assess key decisions and
actions related to the USPTO's development and use of specific
electronic information and systems to support patent processing, we
examined the agency's consideration of key information technology
investment management procedures and practices, such as capital
planning and investment control, enterprise architecture, and risk
management, in planning and managing the patent automation initiatives.
Further, we examined cost information for USPTO's patent automation
initiatives, as provided by the agency; however, we did not verify the
accuracy of this reported information.
As part of our review, we also examined internal reports documenting an
independent contractor's assessment of USPTO's information technology
organization. We did not independently validate the findings contained
in the reports; however, in discussing their contents with us, USPTO's
chief information officer generally concurred with the findings. In
addition, we reviewed relevant reports discussing the patent operations
that had been prepared by the Department of Commerce's Office of
Inspector General.
To supplement our analysis, we interviewed senior patent officials,
including the Deputy Commissioner for Patent Resources Planning; the
Administrator, Search and Information Resources Administration; and the
USPTO chief information officer, who was appointed in February 2005. We
also discussed the agency's patent automation efforts with the Under
Secretary of Commerce for Intellectual Property, who serves as the
director of USPTO. In addition, we met with relevant systems officials
who were involved in or knowledgeable about the development and
implementation of the automated patent capabilities and with patent
managers in charge of the systems' operations. We also interviewed
officials of the European Patent Office who worked with USPTO on its
implementation of the Image File Wrapper and representatives of the
patent examiners union. In these interviews, we discussed USPTO's
strategy and supporting plans for automating the patent processes and
elicited their views about and understanding of key management
decisions and challenges associated with the automation initiatives.
Further, as part of a series of 11 focus groups undertaken by GAO, we
obtained patent examiners' views of and experiences with the automated
patent processes. The focus groups consisted of from 6 to 11 employees
each and included supervisory patent examiners (3 groups) and patent
examiners (8 groups). In total, 91 examiners participated in the focus
groups. The 91 participants were randomly selected from the seven
technical areas at USPTO's two locations (in Crystal City and
Alexandria, Virginia), and all participants had been employed at the
agency for at least 9 months. A GAO facilitator led each focus group.
The responses were then systematically analyzed using a content
analysis.
We conducted our study from June 2004 through April 2005, in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the U.S. Patent and Trademark Office:
UNITED STATES PATENT AND TRADEMARK OFFICE:
UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF
THE UNITED STATES PATENT AND TRADEMARK OFFICE:
JUN 2 2005:
Ms. Linda D. Koontz:
Director, Information Management Issues:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, D.C. 20548:
Dear Ms. Koontz:
Thank you for the opportunity to comment on the Government
Accountability Office (GAO) draft report titled, "Intellectual
Property: Key Processes for Managing Patent Automation Need
Strengthening." We very much appreciate the effort your team made in
reviewing the United States Patent and Trademark Office's (USPTO)
processes for managing patent information technology (IT) initiatives.
When I became the Acting Under Secretary of Commerce for Intellectual
Property and Director of the United States Patent and Trademark Office
in January 2004, I was fortunate to have had exposure to the management
culture of the USPTO. Since joining the USPTO in 2002 as the Deputy
Under Secretary, I observed the way in which USPTO's Patent management,
Office of the Chief Information Officer (OCIO) management, and other
senior managers handled decisions on IT investment and planning.
I first came to the USPTO as the Deputy Under Secretary. Then Under
Secretary James Rogan made clear that a critical priority was to re-
establish USPTO's reputation as an agency that makes promises and keeps
promises. A key aspect of re-establishing credibility was fulfilling
the commitment, made almost thirty years ago, that the USPTO would
electronically process patent applications. Begun during Under
Secretary Rogan's tenure in 2002, I was proud to announce fulfillment
of the electronic-processing promise in August 2004 with the
availability of Internet access to patent application files, just two
years after beginning this historic project.
For me, an unanticipated aspect of the IFW process was exposure to the
deeper issues that had prevented USPTO from fulfilling its promises and
achieving its potential. During the planning and implementation of IFW,
and other IT-related Strategic Plan initiatives, I better understood
what needed to be changed, and why.
Based on my observations and experience, when I became the Acting Under
Secretary, I was determined to make changes to comport with my personal
commitment to accountability, transparency, and results, as a steward
of the USPTO on behalf of the American people.
Initially, I worked with the existing Patent and OCIO management, to
encourage "change from within." However, as the head of an agency that
is the repository of great technical expertise, I soon appreciated that
expert advice of a different nature was necessary. Therefore, in April
2004, I directed my personal staff in the Office of the Under Secretary
to conduct, using an outside, independent consulting firm with a
national reputation for excellence in the field of IT organizational
analysis, a complete review of USPTO's IT operations, with a focus on
delivery capability to our business areas: Patents; Trademarks; Office
of General Counsel; Office of the Chief Financial Officer; and Office
of the Chief Administrative Officer.
As Deputy Under Secretary, I had directed an independent review of a
discrete IT project --the electronic filing forms for the Madrid
Protocol (a trademark treaty). The results of that review were
magnified in the larger OCIO assessment, which was formally concluded
in early 2005, but whose significant findings were available to me as
early as July 2004.
Based both on the earlier, discrete review, and the comprehensive
organizational assessment I requested, it was clear to me that
significant management changes were necessary. By October 2004, USPTO
was conducting a nationwide search for a new CIO, and by early December
2004 we had identified an experienced candidate, who ultimately became
our new CIO.
The OCIO organizational assessment pointed out challenges in the
business areas as well. Again, based in part on information received
from that comprehensive study, as well as on my observations of certain
executives' responses to the GAO's own efforts, I realized that wider
management changes were necessary. Therefore, in January 2005, I made
personnel changes in key Patent-management positions, including the SES
position responsible for Patent IT projects.
When GAO's study was announced, I was grateful because I was certain
the study would function as yet another independent assessment of the
USPTO's patent IT management practices, giving us even more useful data
with which to work. Based on my own reform efforts, I am fully aware
that our current team of managers is faced with the challenging, but
achievable, task of rebuilding confidence in the USPTO's IT systems,
its methods of implementation and expenditure, and its relationship
with the user community. I am proud that we have in fact changed our
approach.
Specifically, I have put in place managers who are committed to
service, to accuracy, to integrity, and to transparency. Further, I am
confident that our new CIO and our Acting Commissioner for Patents are
fully committed to my vision of a USPTO that is completely accountable.
They are already implementing reforms, mindful of the risk that too
much change too quickly can lead to its own set of problems.
Based on my comments above, it will come as no surprise to find that we
agree with GAO's conclusion that there have existed weaknesses in the
management process used to direct patent automation, especially when
viewed in the broad time frame from GAO's last review of the process in
the early 1980s. However, we can only partially agree with several
material aspects of GAO's assessment.
As noted above, I directed a comprehensive assessment of the Office of
the CIO, one result of which was the hiring of our new CIO. In February
2005, we issued an Agency Administrative Order (AAO) covering the IT
Investment Review Board. The AAO reemphasizes the agency's commitment
to integrated investment decision practices. As you know, we have also
initiated a review of the architectural linkages to investments, and
the key processes for decision-making, which is currently under way.
Further, we have instituted Investment Decision Papers (IDP) to provide
the Investment Review Board members with improved investment
documentation. The IDPs give the board members more thorough financial
and technical analysis, and offer a variety of viable options and
alternatives, to help the Board make appropriate investment decisions.
The following are our comments on the specific recommendations
contained in the Draft Report:
Recommendation 1- "reassess, and where necessary, revise the approach
for implementing and achieving effective uses of major information
systems to support a fully automated patent process, including
electronic filing and image-and text-based patent processing
capabilities;"
The USPTO is changing the method of implementing and achieving
effective use of IT. We have elected to follow a more systematic,
phased implementation, rather than the prior holistic approach.
Alternatives are being thoroughly considered, and evaluated against
architectural standards, costs of implementation and support, and the
ability to effectively deliver an IT solution that meets the needs of
the users. Detailed Investment Decision Papers are being prepared for
all major IT investments. These papers are being reviewed by USPTO's
Management Council, which sits as the Investment Review Board (IRB).
The Management Council/IRB approves all major IT investments. Any
future patent development initiatives, including those for electronic
filing and text-based processing capabilities, will be subject to this
more systematic, phased implementation in order to ensure that
automated systems are used most effectively to achieve patent program
goals.
Recommendation 2 - "establish disciplined process for planning and
managing the development of patent systems based on well-established
business cases that articulate agreed-upon business and technical
requirements; include measures for tracking projects through their life
cycle against cost, schedule, benefit, and performance targets;"
A committee has been established to improve the Capital Planning and
Investment Control (CPIC) process at the USPTO. This committee has
already proposed a format for business cases that recites the business
need and expected benefits; that requires the consideration of at least
three viable alternatives, and the total cost of each alternative; and
that indicates compliance with the enterprise architecture, including
whether the investment is based on current, emerging, twilight or
sunset architecture. The business case must be accompanied by an
investment schedule that includes a list of milestones with dates; a
listing of assumptions, constraints, and a risk assessment with
mitigation strategies; and a list of critical success factors for the
project. Finally, the investment schedule must explain how the proposed
approach aligns with the USPTO's 21st Century Strategic Plan, and with
the President's Management Agenda (PMA).
Following approval of the business case and selection of the preferred
alternative, project plans will be developed, and schedules, costs and
progress will be managed against these plans, using Earned Value
Management (EVM). All investments will also be evaluated against the
proposed benefits.
As a result of the independent assessment conducted at my direction, we
realized the need to strengthen our IT planning and management
processes. Our new CIO is engaged in implementing organizational
improvements that will focus on Quality Management and overall IT
process improvements.
Recommendation 3 - `fully institute and enforce at the enterprise
level, information technology investment management processes and
practices to ensure that automation initiatives support the agency's
mission and are aligned with the agency's enterprise architecture, to
include (1) finalizing and implementing a capital planning and
investment control guide, (2) establishing an architecture review board
and requiring its oversight of major information technology
investments, (3) establishing a process to identify expected benefits
to internal and external users of information systems and to measure
performance against expected benefits, and (4) establishing a process
for tracking and reporting aggregate cost information for automation
initiatives."
In reference to item 1, as noted in our response to the previous
recommendation, the USPTO is addressing its CPIC process. Once this is
made final, the existing capital planning and investment control guide
will be updated to reflect the enhanced procedures.
Concerning the second item, IT project architectures are currently
reviewed by the Office of Applications Architecture and Services. This
office is responsible for ensuring compliance of IT systems' designs
with the USPTO Enterprise Architecture. This group executes the
functions performed by an architectural review board.
Regarding item 3, as the committee completes the CPIC guide, it will
formally establish the procedures for review of the expected benefits
from an IT investment and the evaluation of the performance of the
investment against providing those expected benefits.
Finally, concerning item 4, the USPTO has the tools in place to
aggregate the cost information for automation initiatives, and is
refining use of those tools to more completely capture the total cost
of any IT investment.
Image File Wrapper (IFW):
Given the importance of IFW to the USPTO, it is appropriate to offer
detailed comments on this undertaking.
We agree that the IFW decision-making and implementation process could
have been more rigorous, and would have benefited from more rigor.
However, we are certain that both GAO and Congress recognize the very
positive results, for our examiners and the public, which resulted from
the timely deployment of the IFW system.
First, in 2004, the USPTO fulfilled a decades-old promise to the public
by finally providing a working paperless system for processing patent
applications. In the space of two years, USPTO concluded an effort that
had been promised since the 1980s. Second, at a very practical level,
lFW eliminated the need for USPTO to retain space to house the patent
paper collection stored at the USPTO's Crystal City campus. Because of
the IFW system, the USPTO did not have to relocate paper patent
application files to our Alexandria headquarters. Third, both examiners
and the public have seen the benefits of IFW since multiple users can
access the same file at the same time. There is no need to wait to see
an electronic file.
In addition, our Public PAIR tool offers Internet access to published
patent applications, allowing users around the globe the ability to
review information. Private PAIR offers patent applicants the same type
of access to their unpublished application files, in a secure Internet
environment. It goes without saying that the issue of lost papers or
application files has been monumentally reduced. Further, problems with
file integrity, that is, problems created when papers were returned to
a file out of order, ripped or otherwise degraded through wear, or even
lost completely, have been virtually eliminated. As a practical matter,
the need to photocopy has been greatly reduced, since files can be
printed directly.
To reiterate, in the space of two years, the USPTO presented the public
and our examiners with historic electronic access. The manifold
benefits of IFW would almost certainly not be available today had USPTO
moved at a more traditional pace.
As a lesson of IFW, USPTO fully appreciates that implementation of
automation and additional automated tools for both our examiners and
public users must be preceded and accompanied by careful planning and
documentation. But we make no apologies for having fulfilled promises
and provided access and convenience for customers and employees alike.
In light of the progress that the USPTO has made even during the period
of GAO's assessment, we do not believe that such significant gaps exist
as to warrant a pause and reassessment of our key management processes.
We have also included an enclosure with a list of specific comments
that clarify and/or correct certain points covered in your report.
We do agree with GAO's finding that key improvements need to be made,
such as:
* Improving architectural linkages to the planning process;
* Making final and implementing the draft Capital Planning and
Investment Control (CPIC) Guide; and:
* Completing planned organizational changes.
Before concluding this letter, I would like to express personal thanks
to GAO, and to mention Mary J. Dorsey, Vijay D'Souza, Valerie Melvin,
Evan Gillman, Nancy Glover and J. Michael Resser. I understand that Ms.
Dorsey and Mr. D'Souza, in particular, spent many hours talking to
USPTO employees, conducting interviews, and of course, reviewing
documents and writing the draft report itself. We are fortunate to have
had the opportunity to work with such dedicated fellow civil servants.
Actions speak louder than words. As Under Secretary, I have taken the
painful measures necessary to correct problems I saw with our patent
automation strategy, including making personnel changes in key USPTO
management positions. However, difficult as an organizational
assessment and resulting personnel changes have been, they were and are
the correct course of action and will result in a USPTO that is able to
deliver and support, in a timely and cost-effective manner, the
electronic tools that will see our Nation's patent and trademark office
through the 21st Century.
Again, we appreciate this opportunity to comment on the GAO's draft
report.
Signed by:
JON W. DUDAS:
Under Secretary and Director:
Enclosure:
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Linda D. Koontz (202) 512-6240:
Staff Acknowledgments:
In addition to the individual named above, Valerie Melvin, Mary J.
Dorsey, and Vijay D'Souza made significant contributions to this
report. Evan Gilman, Nancy Glover, and J. Michael Resser also
contributed to this report.
(310720):
FOOTNOTES
[1] GAO, Intellectual Property: USPTO Has Made Progress in Hiring
Examiners, but Challenges to Retention Remain, GAO-05-720 (Washington,
D.C.: June 17, 2005).
[2] 40 U.S.C. sec. 11312.
[3] GAO, Information Technology: A Framework for Assessing and
Improving Enterprise Architecture Management (Version 1.1), GAO-03-
584G (Washington, D.C.: April 2003).
[4] According to 35 U.S.C. sec. 154(a)(1), a patentee may also exclude
others from importing the patented invention into the United States.
[5] USPTO has eight technology centers that define its subject areas as
follows: Biotechnology and Organic Chemistry; Chemical and Materials
Engineering; Computer Architecture, Software, and Information Security;
Communications; Semiconductors, Electrical and Optical Systems and
Components; Designs for Articles of Manufacture; Transportation,
Construction, Electronic Commerce, Agriculture, National Security and
License and Review; Mechanical Engineering, Manufacturing, and
Products.
[6] A proposed invention is patentable if it is a new or useful
process, machine, manufacture, or composition of matter, or any new and
useful improvement thereof.
[7] The American Inventors Protection Act of 1999, 35 U.S.C. sec. 1(a)
gave USPTO greater flexibility and independence for decisions regarding
the management and administration of its operation, while the Secretary
of Commerce retained policy direction. In addition, 35 U.S.C. sec.
2(b)(2)(F) empowered the USPTO director to establish regulations that
provide for the development of a performance-based process that
includes quantitative and qualitative measures and standards for
evaluating cost-effectiveness and is consistent with principles of
impartiality and competitiveness.
[8] GAO, Patent and Trademark Office: Key Processes for Managing
Automated Patent System Development Are Weak, GAO/AIMD-93-15
(Washington, D.C.: Sept. 30, 1993).
[9] The initial deployment of USPTO's patent tracking system occurred
in 1980. This system provides workflow tracking, status reporting, and
examiner production information.
[10] The reported cost included system enhancements and maintenance
through the end of the project's life cycle in 2002.
[11] Image-based processing uses a graphic representation of documents
produced by scanning paper documents or by converting electronic
documents into images. To transform image content into text, optical
character recognition (OCR) software is used to derive text from the
image. OCR can convert image documents to hidden text, which is
searchable. In text-based processing, the words and sentences in the
document are retained as text and can be stored, processed, and
retrieved by a document management system. Unlike image-based
processing, text-based processing allows the text to be searched and
extracted.
[12] USPTO's 21st Century Strategic Plan was originally released in
2002 and updated in 2003.
[13] Electronic government refers to the use of information technology
to enhance the access to and delivery of government information and
service to citizens, business partners, and employees, and among
agencies at all levels of government.
[14] PDF is a file format that helps reduce errors when files are
transferred from one user to another. A PDF file can contain fonts,
images, printing instructions, keywords, and other information related
to document production.
[15] In December 2003, USPTO began relocating its headquarters from
Arlington (Crystal City), Virginia, to Alexandria, Virginia, with the
intent of consolidating all of its major operations in a central
facility. The agency anticipates completing this move in approximately
July 2005.
[16] The $14 million represents a compilation of costs--provided by
USPTO--for the Image File Wrapper system.
[17] Over the past 2 years, the European Patent Office reported
processing about 160,000 to 170,000 patent applications per year using
ePhoenix.
[18] GAO, Assessing Risks and Returns: A Guide for Evaluating Federal
Agencies' IT Investment Decision-making, GAO/AIMD-10.1.13 (Washington,
D.C.: February 1997).
[19] We did not independently assess the results of this study, but
USPTO's chief information officer generally concurred with its
findings.
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