1. The United States Patent and Trademark Office January 27, 2005

2. Patent Operations Peggy Focarino Deputy Commissioner for Patent Operations

3. 3 Quality of Products Fiscal Year 2004 1600170021002600280036003700Design FY 04 Total FY 05 Target Patent In-Process Examination Compliance Rate 1 76.4%83.1%88.3%74.2%86.8%79.6%81.7%90.4%82.0%84% Patent Allowance Error Rate 2 4.40%8.03%3.05%2.53%3.39%7.54%9.01%3.28%5.32%4.0% 1 Compliance is the percent of office actions reviewed and found to be free of any in-process examination deficiency (an error that has significant adverse impact on patent prosecution). 2 Patent allowance error rate is the percent of allowed applications reviewed having at least one claim which is considered unpatentable on a basis for which a court would hold a patent invalid. “Allowance” occurs before a patent is issued, so these errors are caught before any patent is actually granted.

4. 4 FY 04 Patent Pendency FY 04 Patent Pendency Technology Center Average FAOM Pendency 1 (months) Average Total Pendency 2 (months) 1600 - Biotechnology and Organic Chemistry19.2 29.9 1700 - Chemical and Materials Engineering 17.9 27.6 2100 - Computer Architecture Software and Information Security 33.3 41.1 2600 - Communications31.440.5 2800 - Semiconductor, Electrical, Optical Systems14.023.9 3600 - Transportation, Construction, Electronic Commerce15.6 24.1 3700 - Mechanical Engineering, Manufacturing and Products15.224.1 UPR Total 20.227.6 1 “Average FAOM pendency” is the average age from filing to FAOM (First Action on the Merits) for a newly filed application, completed during 4 th quarter FY 2004. 2 “Average total pendency” is the average age from filing to issue or abandonment of a newly filed application, completed during 4 th quarter FY 2004.

5. 5 FY 05 Patent Pendency (as of 12/31/04) FY 05 Patent Pendency (as of 12/31/04) Technology Center Average FAOM Pendency (months) Average Total Pendency (months) 1600 - Biotechnology and Organic Chemistry20.2 29.7 1700 - Chemical and Materials Engineering 18.1 28.2 2100 - Computer Architecture Software and Information Security 34.2 41.9 2600 – Communications31.240.8 2800 - Semiconductor, Electrical, Optical Systems14.323.9 3600 - Transportation, Construction, Electronic Commerce16.6 24.8 3700 - Mechanical Engineering, Manufacturing and Products15.624.2 UPR Total (as of 12/31/2004) 20.726.8 FY 05 Target 20.731.0 1 “Average FAOM pendency” is the average age from filing to FAOM (First Action on the Merits) for a newly filed application, completed during 1 st Quarter of FY 2005. 2 “Average total pendency” is the average age from filing to issue or abandonment of a newly filed application, completed during 1 st Quarter FY 2005.

6. 6 FAOM Pendency by Art Areas High Pendency Art Areas Pendency 1 (months) Low Pendency Art Areas Pendency 1 (months) 1630 – Molecular Biology, DNA/RNA, Gene Therapy 24.2 1625 – Heterocyclic Compounds and Uses 12.4 1764 – Distillation, Mineral Oil and Hydrocarbons 27.31752 – Radiation Imagery12.9 2128 – Simulation and Modeling, Emulation of Computer Components 43.7 2125 – Manufacturing Control Systems and Chemical/ Mechanical/Electrical Control 20.5 2611 – Interactive Video Distribution 44.0 2636 – General Electrical Communication 16.5 2836 – Control Circuits22.52833 – Electrical Connectors9.5 3626 – Health Care, Insurance43.03643 – Animal and Plant Husbandry9.9 3762 – Body Treatment, Kinestherapy, and Exercising 25.43742 – Thermal Combustion Technology10.3 1 “Pendency” is the average age from filing to the FAOM ( First Action on the Merits) for a newly filed application, completed during 1 st Quarter FY 2005.

7. 7 FY 04FY 05 Target UPR 1 FAOM 2 288,315297,614 UPR Disposals 3 286,991295,456 UPR Production Units 4 287,653296,535 PCT 5 Production Units*16,88225,748 Production 1 “ UPR” = Utility, Plant, and Reissue Applications. 2 “ FAOM” = First Action on the Merits – does not include restrictions or other miscellaneous actions. 3 “ Disposal” = An allowance, abandonment, interference, or examiner answer. 4 “ Production Unit” = FAOMs plus disposals divided by 2. 5 “ PCT” = Patent Cooperation Treaty. PCT applications are processed differently and tracked separately from US National stage applications. *Equivalent to 185 examiner FTEs in FY 04 and 281 examiner FTEs in FY 05.

8. 8 FY 04 UPR Applications Filed FY 04 UPR 1 Applications Filed Technology Center FY 04 FY 03 to FY04 Growth Rate 1600 - Biotechnology and Organic Chemistry38,164 -1.2% 1700 - Chemical and Materials Engineering 49,334 -0.5% 2100 - Computer Architecture Software and Information Security 34,653 17.9% 2600 - Communications48,21016.1% 2800 - Semiconductor, Electrical, Optical Systems81,1447.6% 3600 - Transportation, Construction, Electronic Commerce47,489 4.8% 3700 - Mechanical Engineering, Manufacturing and Products56,5335.5% UPR Total 355,5276.6% 1 “UPR” = Utility, Plant, and Reissue Applications

9. 9 1600170021002600280036003700TotalDesign New Applications 1 55,40263,92371,77897,38077,65156,73865,005487,87718,451 Overall Pending Applications 2 95,006105,447102,440138,822137,458101,097108,039788,30927,599 FY 04 TC Application Inventory 1 “ New Application inventory” is the number of new applications designated or assigned to a technology center awaiting a first action. 2 “ Overall Pending Application inventory” is the total number of applications designated or assigned to a technology center in an active status. Includes new applications; rejected awaiting response; amended; under appeal or interference; suspended; reexams and allowed applications awaiting grant publication.

10. 10 Examples of Projected Backlogs by Art Areas High Inventory Art Areas Months of Inventory* Low Inventory Art Areas Months of Inventory* 1614, 1615, and 1617 – Drugs, Bio-affecting and Body Treatment 47 – 531620 – Organic Chemistry17 1743 – Chemical Analysis37 1734 – Adhesive Bonding and Coating Apparatus 11 2127 – Computer Task Management62 2125 – Manufacturing Control Systems and Chemical/ Mechanical/Electrical Control 14 2611 – Interactive Video Distribution72 2651, 2653 – Information Storage and Retrieval 17 2836 – Control Circuits442831 – Electrical Conductors9 3620 – Business Methods34 – 1063651 – Conveying9 3731 and 3737 – Medical Instruments, Diagnostic Equipment 46 – 54 3742 – Thermal and Combustion Technology 10 *The number of months it would take to reach a first action on the merits (e.g., an action addressing patentability issues) on a new application filed as of Jan 2005 at today’s estimated production rate. Today’s estimated production rate means that there are no changes in production due to hiring, attrition, changes to examination processing or examination efficiencies, and that applications are taken up in the order of filing in the given art unit/area. Of course, Congress has authorized hiring additional patent examiners and the USPTO is taking aggressive steps to ensure changes that will significantly lower the inventory rates in high-inventory art areas.

11. 11 Hires and Attritions 1600170021002600280036003700CorpsDesign FY 04 Hires753511511631264544315 FY 04 Attritions302658825843393364 FY 05 Hiring Goal100352001501609012586020

12. Patent Policy Joseph J. Rolla Deputy Commissioner for Patent Examination Policy

13. 13 Rule Making Published Actions – Interim Rule – Comment period closes Feb. 10, 2005: Changes to Implement the Cooperative Research and Technology Enhancement Act of 2004 (CREATE Act) – revises rules of practice to implement the CREATE Act. Upcoming Actions – Final Rule: Changes to Implement the Patent Fee Related Provisions of the Consolidated Appropriations Act, 2005 – revises patent fees in general, and provides for a search fee and examination fee that are separate from the filing fee during fiscal years 2005 and 2006.

14. 14 Rule Making (continued) Upcoming Actions Related to the Consolidated Appropriations Act – Interim Rule: Revision of Search and Examination Fees for PCT Applications Entering the National Stage in the US – reduces the search fee and examination fee for certain PCT applications. – Proposed Rule: Changes to the Practice for Handling Patent Applications Filed Without the Appropriate Fees – requires the late filing surcharge if any of the filing fee, search fee, or examination fee are not present on filing. – Proposed Rule: Request for Continued Reexamination and Revision of Ex Parte and Inter Partes Reexamination Practice – provides for a request for continued reexamination practice to permit entry of submissions after a final action.

15. 15 Rule Making (continued) Under Consideration – Proposed Rule: Changes to Implement the Refund Provisions of the USPTO Fee Modernization Act of 2004 – proposes changes to implement provisions for refunding part or all of the excess claim fee and the search fee in certain situations.

16. E-Government John Doll Deputy Commissioner for Patent Resources and Planning

17. 17 Electronic Filing System E-filing Forum – September 28, 2004 – efiling user community urged that the USPTO should focus on implementing a web based interface permitting pdf 1 submissions. EFS Web Interface Goals – Simple, Safe, and Secure eFiling process. – EFS Web Architecture keeps users in their comfort zone using files and tools they are familiar with. – EFS Web provides authoring choices, file format options & Internet security, and browser flexibility to the eFiler to match their business processes and current environments. – Permits the filing of all follow-on documents. 1 “pdf” is an internationally accepted standard format for electronic documents.

18. 18 Electronic Filing System (continued) EFS Web Phased Implementation – Continuous communication with eFiling Forum Participants through all phases will minimize risk and increase functionality – Three Phases n Alpha – Through 3 rd quarter FY 05 – Validate & Refine Design, Standards, and Functionality from a user perspective – New Utility, Design, Provisional, & Follow On papers n Beta – Through 4 th quarter FY 05 – Limited production of full EFS Web functionality – Validate Standards and usability from both USPTO and user perspective n Full Production – 1 st quarter FY 06

19. 19 Document Exchange Trilateral Dossier Access with EPO – USPTO and the European Patent Office (EPO) have entered into an agreement that will allow electronic access to the contents of published USPTO and EPO patent applications to examiners in both offices. When accessing these documents, USPTO examiners may: – View and print the EPO dossier. – Review references cited and applied to claims. – View EPO correspondence for consideration in the examiner’s own examination. – Review EP examiner’s arguments and attorney’s responses.

20. 20 Document Exchange (continued) Priority Document Exchange – The USPTO will electronically request and receive public priority documents (PDs) from the EPO in the form of application document images (IFW compatible). n The USPTO will receive all the PDs contained in the referenced EPO file. n Incoming PDs will be imported to IFW, indexed and Closed. – The EPO will electronically request and receive public priority documents from the USPTO in the form of application document images (IFW).

21. 21 PFW Program Patent File Wrapper (PFW) Goal - Move from the electronic image based applications (IFW) to electronic text based applications (PFW) Total Electronic Processing (end-to-end) – Examination n Search Capability within Applications n Interference Search Capability – Administrative Processing (e.g., automated formalities review) – Publications (e.g., text available for Publications contractor) Improve electronic workflow management Increase reliability and scalability of electronic application database Improve electronic capture of paper documents Increase patent electronic filing