`
`
`
`
`
`
`
`
`Case: IPR2018-01592
`Patent No.: 9,320,122
`
`EXHIBIT 1025
`
`PRIME WIRE & CABLE, INC.
`
` Petitioner,
`
`v.
`
`CANTIGNY LIGHTING
`CONTROL, LLC.
`
` Patent owner
`
`JASCO PRODUCTS, INC.
`
` Licensee
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`
`
`
`
`
`

`

`Cau ETD
`
`-u/ DEQ. 3, 1901..
`
`S
`
`
`YEAR=i\)UI
`FISCAL
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`UNITED STATES PATENT AND TRADEMARK OFFICE
`PERFORMANCE AND
`PERFORMANCE AND
`ACCOUNTABILITY REPORT
`ACCOUNTABILITY REPORT
`
`FISCAL YEAR
`
`CARYL
`ofthe First Patent Act
`1790-2015
`
`
`
`

`

`PERFORMANCE AND ACCOUNTABILITY REPORT
`
`FINANCIAL AND RELATED HIGHLIGHTS
`
`(Dollars In Thousands)
`
`Fund Balance with Treasury
`Property, Plant, and Equipment, Net
`Other Assets
`Total Assets
`
`Deferred Revenue
`Accounts Payable
`Accrued Payroll, Benefits, and Leave
`Other Liabilities
`Total Liabilities
`Net Position
`Total Liabilities and Net Position
`
`Total Program Cost
`Total Earned Revenue
`Net Income from Operations
`
`Budgetary Resources Available for Spending
`Net Outlays/(Collections)
`
`Federal Personnel
`On-Time Payments to Vendors
`
`Performance Measures
`Patent Average First Action Pendency (months)
`Patent Average Total Pendency (months)
`Patent Quality Composite Score
`Trademark Average First Action Pendency (months)
`Trademark Average Total Pendency (months)
`Trademark First Action Compliance Rate
`Trademark Final Compliance Rate
`Exceptional Office Action
`Trademark Applications Processed Electronically
`Percentage of prioritized countries for which country teams have
`made progress on at least 75% of action steps in the country-specific
`action plans along the following dimensions:
`•
`Institutional improvements of intellectual property (IP)
`office administration for advancing IP rights,
`Institutional improvements of IP enforcement entities,
`Improvements in IP laws and regulations, and
`Establishment of government-to-government cooperative
`mechanisms.
`Number of Foreign Government Officials Trained on Best
`Practices to Protect and Enforce IP
`* The performance result of a given measure is either met (100% or greater of target), slightly below (95–99% of the target), or not met (below 95% of target).
`
`•
`•
`•
`
`75%
`
`100%
`
`6,300
`
`5,283
`
`% Change
`2015 over 2014
`
`For the year ended
`September 30, 2015
`
`For the year ended
`September 30, 2014
`
`(0.4%)
`23.6%
` 70.3%
`2.7%
`
`(5.7%)
`3.0%
`7.6%
`9.9%
`(1.9%)
`8.2%
`2.7%
`
`10.3%
`1.9%
`(78.6%)
`
`0.9%
`(104.7%)
`
` 1.7%
` (2.0%)
`PERFORMANCE HIGHLIGHTS
`FY 2015 Target
`16.4
`27.7
`83–91
`2.5–3.5
`12.0
`95.5%
`97.0%
`36.0%
`80.0%
`
`$ 2,494,267
`405,740
`23,916
`$ 2,923,923
`
`$ 1,027,460
`116,211
`217,666
` 161,429
`$ 1,522,766
` 1,401,157
`$ 2,923,923
`
`$ 3,012,833
` (3,074,001)
`$   (61,168)
`
`$  3,680,369
`$ 23,140
`
`12,667
`97%
`
`FY 2015 Actual
`17.3
`26.6
`42.9
`2.9
`10.1
`96.7%
`97.6%
`48.3%
`82.2%
`
`$ 2,504,977
`328,290
` 14,041
`$ 2,847,308
`
`$ 1,089,812
`112,809
`202,362
` 146,917
`$ 1,551,900
`1,295,408
`$  2,847,308
`
` $  2,732,378
` (3,018,044)
`$ (285,666)
`
`$ 3,648,414
`$ (494,974)
`
`12,450
`99%
`
`Performance Results*
`Not Met
`Met
`Not Met
`Met
`Met
`Met
`Met
`Met
`Met
`
`Met
`
`Not Met
`
`

`

`Table of Contents
`
`MESSAGE
`From the Under Secretary of Commerce for Intellectual Property and
`Director of the United States Patent and Trademark Office
`
`INTRODUCTION
`About This Report
`Your Guide to Using This Report
`
`
`
`
`
`
`
`
`MANAGEMENT’S DISCUSSION AND ANALYSIS
`Mission and Organization of the USPTO
` Our Organization
` Patent Organization
` Trademark Organization
` Our People
`Significant Case Law Developments
` Recent Decisions
`Performance Highlights
`Introduction to Performance
`Strategic Performance Framework
`Summary of Strategic Goal Results
`Management Challenges and What’s Ahead
`Sustainable Funding
`Managing the Patent Business’ Transition to Maintenance Mode
`Administering AIA Provisions
` Establishment of Office of the Deputy Commissioner for Trademark Administration
` Relationships with Oversight Entities
` Reliance on Information Technology
` Legal Challenges
`Systems and Controls
`Management Assurances
`Other Compliance with Laws and Regulations
`Other Systems and Control Considerations
`Financial Discussion and Analysis
` Financial Highlights
`
`
`
`
`
`
`
`
`PERFORMANCE INFORMATION
`Introduction to the USPTO’s Performance Goals and Results
`White House Executive Actions for Innovation
`Performance Audits and Evaluations
`Performance Data Verification and Validation
`Commissioners’ Performance for FY 2015
`
`1
`
`6
`7
`8
`
`10
`11
`11
`13
`13
`14
`15
`15
`17
`17
`17
`20
`22
`22
`22
`22
`23
`23
`24
`24
`25
`25
`26
`28
`29
`29
`
`47
`48
`48
`49
`50
`51
`
`i
`
`

`

`Patents: Strategic Goal I
` Strategic Goal I: Optimize Patent Quality and Timeliness
`
`Trademarks: Strategic Goal II
` Strategic Goal II: Optimize Trademark Quality and Timeliness
`
`Intellectual Property: Strategic Goal III
` Strategic Goal III: Provide Domestic and Global Leadership to Improve Intellectual Property Policy,
` Protection, and Enforcement Worldwide
`
`52
`54
`
`72
`74
`
`85
`
`87
`
`Management Goal
` Management Goal: Achieve Organizational Excellence
`
`100
`101
`
`118
`119
`
`122
`155
`157
`
`166
`167
`168
`169
`170
`174
`175
`176
`178
`183
`
`213
`
`216
`
`
`
`
`
`
`
`
`
`
`
`FINANCIAL SECTION
`Message
` From the Chief Financial Officer
`Principal Financial Statements and Related Notes
`Required Supplementary Information
`Independent Auditor's Report
`
`OTHER INFORMATION
`Combined Schedule of Spending
`Inspector General’s Top Management Challenges Facing the USPTO
`Summary of Financial Statement Audit & Management Assurances
`Improper Payments Information Act (IPIA) of 2002, as Amended
`Freeze the Footprint
`Civil Monetary Penalty Act
`FY 2015 USPTO Campus Updates
`The Nature of the Training Provided to USPTO Examiners
`FY 2015 USPTO Workload Tables
`
`GLOSSARY OF ACRONYMS AND ABBREVIATION LIST
`
`INDEX OF URLs
`
`ii
`
`PERFORMANCE AND ACCOUNTABILITY REPORT
`
`

`

`MESSAGE
`
`1
`
`www.uspto.gov
`
`

`

`Michelle K. Lee
`
`MESSAGE FROM THE UNDER SECRETARY OF
`COMMERCE FOR INTELLECTUAL PROPERTY AND
`DIRECTOR OF THE UNITED STATES PATENT AND
`TRADEMARK OFFICE
`Two hundred twenty-five years ago, President George Washington signed into
`law the first Patent Act, grounded in the Constitutional authority of Congress
`to “promote the Progress of Science and useful Arts, by securing for limited
`Times to Authors and Inventors the exclusive Right to their respective
`Writings and Discoveries.” Since then, our intellectual property system has
`evolved side-by-side with the tremendous technological advances this
`country has witnessed. Now that technology is more important than ever, the
`U.S. Patent and Trademark Office (USPTO) must remain vigilant in fulfilling
`the duties of its Congressionally-mandated role so that it can continue to play
`its part in promoting technological and scientific progress.
`
`As the USPTO commemorates the 225th anniversary of the Patent Act,
`we once again carefully scrutinize our performance, observe where we are
`doing well and have made progress, and consider how we can continue to
`make improvements. In the pages that follow, we will set forth details of
`how our agency helps to foster innovation, competitiveness, and economic
`growth—domestically and internationally—by delivering high-quality and
`timely examination of patent and trademark applications, guiding domestic
`and international intellectual property policy, and delivering intellectual
`property resources and education.
`
`Patent Quality
`A key priority of mine at the USPTO is an enhanced focus on patent quality.
`We are now positioned to increase our quality focus because of significant
`reductions in our patent application backlog and pendency, improved
`patent operations and procedures, and more secure funding. In February
`we launched our Enhanced Patent Quality Initiative, a cornerstone of our
`effort to produce the highest quality work product, to provide exceptional
`customer service, and to measure our performance through the most
`rigorous quality metrics. By engaging the public on this topic, we have
`received more than 1,200 comments on a wide array of possible patent
`quality initiatives. Through a two-day Patent Quality Summit in March and
`through other meetings, we have received even more feedback from both
`our examiners and external stakeholders. We have been working diligently
`to review, analyze, and incorporate this invaluable input into our patent
`quality improvement efforts, which you will learn more about in this report.
`
`One key to high quality is hiring skilled and capable employees. We believe
`that we achieved this with our fiscal year (FY) 2015 hires, which included new
`patent examiners, administrative judges, and staff. As an example of how this
`hiring has been crucial to the success of our operations, in FY 2015, the Patent
`Trial and Appeal Board (PTAB) received nearly three times the expected
`
`2
`
`PERFORMANCE AND ACCOUNTABILITY REPORT
`
`

`

`number of petitions for the PTAB trials created by the Leahy-Smith America
`Invents Act and yet still met every legally mandated deadline. Critically
`important to meeting this Congressional mandate was the hiring of 33 new
`judges, including 13 in our regional offices.
`
`In addition, we continue to believe in the importance of hiring highly
`qualified veterans throughout the agency. By the end of FY 2015, nearly
`26 percent of all non-patent examiner hires and nearly 15 percent of patent
`examiner hires had veterans’ preference status.
`
`New Leadership
`We also made key senior leadership appointments in FY 2015. In December
`of last year, U.S. Secretary of Commerce Penny Pritzker named Mary Boney
`Denison as our new Commissioner for Trademarks; in March of this year,
`named Russ Slifer as the new Deputy Undersecretary of Commerce for
`Intellectual Property and Deputy Director of the USPTO; and finally, in July of
`this year, named Andrew Hirshfeld as the new Commissioner for Patents.
`Commissioners Denison and Hirshfeld both have had distinguished careers
`at the agency, and we are pleased to have hired Russ Slifer, a highly regarded
`intellectual property practitioner from the private sector. We are grateful to
`all three for their service to the American people.
`
`Regional Offices (formerly “Satellite Offices”)
`FY 2015 has also been a time of progress for our four regional offices.
`We had the grand openings for the permanent locations of our Silicon Valley
`United States Patent and Trademark Office in San Jose, CA, in October 2015
`and our Texas Regional United States Patent and Trademark Office in Dallas,
`TX, in November 2015. Even before the “official” openings, these offices were
`serving as local hubs of innovation, education, and outreach in temporary
`offices. Our two other regional offices—the Elijah J. McCoy Midwest Regional
`United States Patent and Trademark Office in Detroit, MI, and the Rocky
`Mountain Regional United States Patent and Trademark Office in Denver,
`CO—marked their three- and one-year anniversaries, respectively, this past
`year. All four offices provide a broad range of USPTO services to the local
`innovation communities, while acting as a more direct and convenient conduit
`for feedback from stakeholders on how the agency can better serve their needs.
`
`Information Technology
`Every aspect of USPTO’s operation relies on information technology (IT)
`systems. Indeed, the quality of patent and trademark operations is directly
`related to IT performance. In FY 2015, we began to deliver next generation
`software and service platforms, transforming and streamlining our patent
`and trademark IT systems. Improved technological capabilities also
`provided further reliability and enhancements to our telework program, a
`vital part of the USPTO that both saves us millions of dollars each year by
`allowing continued operations during shutdowns of the physical office and
`contributes to USPTO’s consistent ranking as one of the “Best Places to
`Work in the Federal Government®.”
`
`3
`
`www.uspto.gov
`
`

`

`Trademark Performance
`The Trademarks business unit continues to excel. Despite record levels
`of new trademark applications, the agency in FY 2015 not only met but
`exceeded its target performance levels. Moreover, trademark fee reductions
`for new filings and maintenance of registrations saved applicants and
`registrants more than $21.6 million in user fees over the past year. Those
`fee reductions were given to applicants who agreed to forgo paper
`correspondence, thereby leading to a more efficient and cost-effective
`examination process.
`
`Global Intellectual Property Leadership
`The USPTO successfully transitioned to the Cooperative Patent Classification
`(CPC) system on January 1, 2015, playing a global leadership role in its early
`adoption and implementation. The CPC was developed in partnership with
`the European Patent Office, and using it will help to improve access to prior
`art, increase efficiency, lower costs, and improve quality. In addition, in early
`FY 2015, I signed a Memorandum of Agreement with the Korean IP Office
`that commits that nation to converting to CPC, thus ensuring the adoption
`and use of CPC across three continents.
`
`Another important international development in FY 2015 was the
`U.S. ratification of the Hague Agreement concerning the international
`registration of industrial designs. Critically important for American
`businesses and entrepreneurs, the treaty—which took effect on May 13,
`2015—enables U.S. applicants pursuing protection for industrial designs
`to file a single application with either the USPTO or the World Intellectual
`Property Organization. USPTO also issued new rules for filing under the
`Hague Agreement, allowing for applicants to register a design in more than
`60 territories with only one filing.
`
`In FY 2015, the agency entered into a new Memorandum of Agreement
`with China’s State Intellectual Property Office, further strengthening our
`ties to China’s principal intellectual property agencies and allowing for
`advancement of U.S. interests. In addition, I had the opportunity to meet
`with Chinese Vice Premier Wang Yang, amongst other key officials, while in
`Beijing in May. During the meeting, Premier Yang emphasized China’s desire
`to strengthen intellectual property protection and enforcement, explaining
`that his nation needs intellectual property protection to transition from a
`manufacturing-based economy of inventions developed elsewhere to an
`innovation-based economy with technologies developed in China. This
`is a welcome message. Its receipt, however, does not lessen this
`Administration’s determination to ensure strong intellectual property
`protections and rule of law in all foreign markets. The USPTO continues
`to work with China and U.S. companies in China by providing input on its
`
`4
`
`PERFORMANCE AND ACCOUNTABILITY REPORT
`
`

`

`legislative proposals and training for its judiciary, examiners, and law
`enforcement officials, and helping to address intellectual property issues
`of concern to our stakeholders.
`
`Assessment of Data Reliability/Independent Auditors Report
`We are confident that the USPTO’s financial and performance data are
`complete, reliable, accurate, and consistent as we improve our ability to
`measure progress toward our performance goals. For the 23rd consecutive
`year, we earned an unmodified audit opinion on our annual financial
`statements. For FY 2015 financial reporting, the independent auditors
`did not identify any material weaknesses, or instances of non-compliance
`with laws and regulations.
`
`So, as we at America’s “Innovation Agency” reflect on our past and look to
`our future, we recommit to fulfilling the central promise of the Patent Act of
`1790 and the Progress Clause of the U.S. Constitution that authorized its
`passage. I am very honored and proud of the role that I play in advancing
`this mission while guiding an exceptional and dedicated workforce.
`
`Michelle K. Lee
`
`Under Secretary of Commerce for Intellectual
`Property and Director of the United States
`Patent and Trademark Office
`
`November 12, 2015
`
`5
`
`www.uspto.gov
`
`

`

`PERFORMANCE AND ACCOUNTABILITY REPORT
`
`INTRODUCTION
`INTRODUCTION
`
`6
`
`PERFORMANCE AND ACCOUNTABILITY REPORT
`
`

`

`About This Report
`
`The U.S. Patent and Trademark Office (USPTO) Performance and
`Accountability Report (PAR) provides information on the USPTO’s
`programs and the results of the agency’s programmatic and financial
`performance for fiscal year (FY) 2015. This report demonstrates to
`Congress, the Administration, and to the public the USPTO’s efforts to
`promote transparency and accountability over the resources entrusted to
`the agency. This report is available on the USPTO’s website at www.uspto.
`
`gov/annualreport and satisfies the reporting requirements contained in
`the following legislation:
`
`• Title 35 U.S.C. § 13;
`• Leahy–Smith America Invents Act (AIA) of 2011;
`• Federal Managers’ Financial Integrity Act of 1982;
`• GPRA Modernization Act of 2010;
`• Government Management Reform Act of 1994;
`• Accountability of Tax Dollars Act of 2002;
`• Improper Payments Information Act of 2002, as amended;
`• Reports Consolidation Act of 2000;
`• Federal Financial Management Improvement Act of 1996; and
`• Chief Financial Officers Act of 1990.
`
`
`The USPTO’s program and financial performance is summarized in
`the USPTO Citizen Centric Report, available on the USPTO website at
`www.uspto.gov/annualreport.
`
`Last year’s PAR cover and
`AGA’s Certificate of Excellence
`in Accountability Reporting
`
`7
`
`www.uspto.gov
`
`

`

`Your Guide to Using This Report
`
`MANAGEMENT’S DISCUSSION AND ANALYSIS SECTION
`This section provides an overview of the USPTO’s historical facts, mission,
`organization, and its strategic framework. A summary of significant case law
`developments and the agency’s FY 2015 program and financial performance
`is also provided along with management’s assessment of the challenges the
`USPTO faces and assurances on the USPTO’s internal controls. The program
`performance information is provided in more detail in the Performance
`Information Section and the financial information is provided in more detail
`in the Financial Section.
`
`PERFORMANCE INFORMATION SECTION
`The Performance Information Section details the USPTO’s performance
`accomplishments relative to the agency’s strategic plan as required by Office
`of Management and Budget (OMB) Circular A-11, “Preparation, Submission,
`and Execution of the Budget.” This section identifies the USPTO’s key and
`supporting performance metrics and results achieved under the strategic
`goals and objectives. An overview is also provided of how the performance
`data are verified and validated.
`
`FINANCIAL SECTION
`A message from the USPTO’s Chief Financial Officer opens this section,
`followed by the agency’s audited financial statements, accompanying notes,
`required supplementary information, and the independent auditors’ report.
`
`OTHER INFORMATION SECTION
`This section provides a Schedule of Spending, which ties back to the
`Statement of Budgetary Resources in the Financial Section, detailing
`resources available and how and where money was spent. This section also
`
`provides the top management challenges facing the USPTO, as identified
`by the Inspector General; matters related to the Civil Monetary Penalty Act;
`a summary table of financial statement audit and management assurances;
`information on the agency’s efforts to eliminate improper payments;
`
`information on the government-wide effort to freeze the federal footprint;
`the FY 2015 USPTO Campus Update; and reporting requirements required
`under USPTO legislation (FY 2015 Workload Tables and the Nature of
`Training Provided to the USPTO examiners).
`
`THIS REPORT IS ORGANIZED INTO
`FOUR MAJOR SECTIONS, PLUS A
`GLOSSARY AND URL INDEX.
`
`8
`
`PERFORMANCE AND ACCOUNTABILITY REPORT
`
`

`

`GLOSSARY OF ACRONYMS AND ABBREVIATIONS
`The glossary details and lists the acronyms used throughout this report.
`
`URL INDEX
`For those using the paper version of the USPTO PAR, the items underlined
`can be found in the Uniform Resource Locator (URL) Index on page 216. It
`provides full Web addresses for all hyperlinks included in the Management’s
`Discussion and Analysis narrative.
`
`9
`
`www.uspto.gov
`
`

`

`MANAGEMENT’S
`DISCUSSION AND
`ANALYSIS
`
`10
`
`PERFORMANCE AND ACCOUNTABILITY REPORT
`
`

`

`Mission and Organization
`of the USPTO
`
`The USPTO’s mission is derived from Article I, Section 8, Clause 8, of the
`Constitution, “to promote the progress of science and useful arts, by securing
`for limited times to authors and inventors the exclusive right to their respective
`writing and discoveries,” and the Commerce Clause of the Constitution (Article 1,
`Section 8, Clause 3) supporting the federal registration of trademarks.
`
`For most of the last century, the United States has been the clear leader in
`developing new technologies, products, and entire industries that provide
`high-value jobs for Americans, enabling the USPTO to maintain its
`economic and technological leadership.
`
`As an agency of the U.S. Department of Commerce, the USPTO is uniquely
`situated to support the Department’s mission to create conditions
`for economic growth and opportunity by promoting innovation,
`entrepreneurship, competitiveness, and stewardship.
`
`OUR ORGANIZATION
`As shown in Figure 1, the USPTO is led by the Under Secretary of Commerce
`for Intellectual Property and Director of the USPTO, who consults with the
`Patent Public Advisory Committee (PPAC) and the Trademark Public
`Advisory Committee (TPAC). The USPTO is composed of two major
`components, the Patent Business Line and the Trademark Business Line,
`both of which are teamed with several other supporting units, as shown in
`the organization chart labeled Figure 1.
`
`In FY 2015, the USPTO saw the swearing in of a new Under Secretary of
`Commerce for Intellectual Property and Director and also a Deputy Under
`Secretary of Commerce for Intellectual Property and Deputy Director.
`Michelle K. Lee was sworn in as the USPTO’s Under Secretary on January 13,
`2015. Russ Slifer was sworn in as Deputy Under Secretary in March. Secretary
`of Commerce Penny Pritzker also appointed a new Commissioner for Patents
`and a new Commissioner for Trademarks. Andrew Hirshfeld was appointed
`the new Commissioner for Patents on July 30, 2015. Earlier this fiscal year,
`Mary Boney Denison was sworn in as the Commissioner for Trademarks.
`
`Headquartered in Alexandria, VA, the USPTO also has regional offices in
`Detroit, MI, and in Denver, CO. In early FY 2016, the USPTO opened its
`Silicon Valley Regional Office in San Jose, CA, on October 15, 2015, and
`opened its Texas Regional Office in Dallas on November 9, 2015 (Figure 2).
`The USPTO began referring to satellite offices as regional offices in FY 2015.
`
`USPTO MISSION
`“Fostering innovation,
`competitiveness and
`economic growth,
`domestically and abroad by
`delivering high quality and
`timely examination of patent
`and trademark applications,
`guiding domestic and
`international intellectual
`property policy, and delivering
`intellectual property
`information and education
`worldwide, with a highly-
`skilled, diverse workforce.”
`
`11
`
`www.uspto.gov
`
`

`

`Figure 1.
`U.S. PATENT AND TRADEMARK OFFICE ORGANIZATIONAL CHART
`
`Under Secretary of Commerce for Intellectual Property and
`Director of the United States Patent and Trademark Office
`
`Deputy Under Secretary of Commerce for Intellectual Property and
`Deputy Director of the United States Patent and Trademark Office
`
`Patent Public
`Advisory Committee
`
`Patent Trial and
`Appeal Board
`
`Trademark Public
`Advisory Committee
`
`Trademark Trial and
`Appeal Board
`
`Commissioner
`for Patents
`
`Commissioner
`for Trademarks
`
`Chief Policy
`Officer and
`Director for
`International
`Affairs
`
`Chief
`Administrative
`Officer
`
`Chief
`Communications
`Officer
`
`Chief
`Financial
`Officer
`
`Chief
`Information
`Officer
`
`Director
`of EEO and
`Diversity
`
`General
`Counsel
`
`See www.uspto.gov/about-us for more details about the USPTO organization.
`
`Figure 2.
`MAP OF THE USPTO AND
`REGIONAL OFFICES
`
`12
`
`This change reflects the expanded presence these offices have assumed
`in their respective regions. Finally, the USPTO has two storage facilities
`located in Virginia and Pennsylvania.
`
`The USPTO has evolved into a unique government agency. In 1991, under
`the Omnibus Budget Reconciliation Act (OBRA) of 1990, the USPTO
`became fully supported by user fees to fund its operations. In 1999,
`the American Inventors Protection Act (AIPA) established the USPTO
`as an agency with performance-based attributes, for example, a clear
`mission statement, measurable services, a performance measurement
`system, and known sources of funding. In 2011, President Obama signed
`into law the Leahy–Smith America Invents Act (AIA). The AIA promotes
`innovation and job creation by improving patent quality, clarifying patent
`rights, reducing the application backlog, and offering effective alternatives
`
`to costly patent litigation. It also provides temporary fee-setting authority
`that is essential to the USPTO’s sustainable funding model.
`
`
`
`PERFORMANCE AND ACCOUNTABILITY REPORT
`
`

`

`As the clearinghouse for U.S. patent rights, the USPTO is an important
`catalyst for U.S. economic growth, because it plays a key role in fostering
`the innovation that drives job creation, investment in new technology, and
`economic recovery. Through the prompt granting of patents, the USPTO
`promotes the economic vitality of American business, paving the way for
`investment, research, scientific development, and the commercialization of
`new inventions. The USPTO also promotes economic vitality by ensuring
`that only valid patent applications are granted, thus providing certainty that
`enhances competition in the marketplace.
`
`PATENT ORGANIZATION
`The Patent organization examines patent applications to determine
`whether the claimed invention is eligible for patent protection, useful,
`adequately disclosed, clearly defined, and evaluates the claimed
`invention in comparison to a large body of technological information
`to determine whether it is novel and non-obvious. Patent examiners also
`respond to Appeal Briefs on applications appealed to the Patent Trial
`and Appeal Board (PTAB) and prepare preliminary examination reports
`for international applications filed under the Patent CooperationTreaty
`(PCT). The patent process includes performing an administrative review
`of newly filed applications, publishing pending applications, issuing
`patents to successful applicants, and disseminating issued patents
`to the public.
`
`TRADEMARK ORGANIZATION
`The Trademark organization registers marks (trademarks, service marks,
`certification marks, and collective membership marks) that meet the
`requirements of the Trademark Act of 1946, as amended, and provides
`notice to the public and businesses of the trademark rights claimed in
`the pending applications and existing registrations of others. The core
`process of the Trademark organization is the examination of applications
`for trademark registration. As part of that process, examining attorneys
`make determinations of registrability under the provisions of the
`Trademark Act, which includes searching the electronic databases for
`any pending or registered marks that are confusingly similar to the mark
`in a subject application, preparing letters informing applicants of the
`attorney’s findings, approving applications to be published for opposition,
`and examining statements of use in applications filed under the Intent-to-
`Use provisions of the Trademark Act.
`
`In the domestic arena, the USPTO provides technical advice and
`information for executive branch agencies on intellectual property (IP)
`matters and trade-related aspects of IP rights. In the international arena,
`the USPTO works with foreign governments to establish regulatory and
`
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`Figure 3.
`USPTO STAFFING
`
`Patent Examiners (9,161)
`Trademark Examining Attorneys (456)
`Remaining USPTO Staff (3,050)
`
`enforcement mechanisms that meet international obligations relating
`to the protection of IP.
`
`Contributors
`The financial and program performance information presented in this report
`is the joint effort of the Under Secretary’s office, the Patent organization, the
`Trademark organization, the Office of Policy and International Affairs (OPIA),
`the Office of the Chief Information Officer (OCIO), the Office of the Chief
`Administrative Officer (OCAO), the Office of Equal Employment Opportunity
`and Diversity (OEEOD), the Office of the Chief Communications Officer
`(OCCO), the Office of the General Counsel (OGC), and the Office of the
`Chief Financial Officer (OCFO).
`
`OUR PEOPLE
`At the end of FY 2015, the USPTO workforce (Figure 3) was composed
`of 12,667 federal employees (including 9,161 patent examiners and 456
`trademark examining attorneys).
`
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`PERFORMANCE AND ACCOUNTABILITY REPORT
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`

`

`Significant Case Law Developments
`
`RECENT DECISIONS
`The USPTO continues to play a critical role in shaping IP law through
`litigation, as both a party and as an amicus (i.e., “friend of the court”).
`The agency’s IP litigation responsibilities fall primarily on the Office of
`the Solicitor within the USPTO’s OGC. The Solicitor’s Office defends,
`among other things, the decisions of the agency’s two administrative boards
`(i.e., the PTAB and Trademark Trial and Appeal Board (TTAB)), the decisions
`of the Director, and the agency’s rulemaking and policies in court. This
`litigation encompasses a wide variety of subject matter, affecting both
`agency practice and substantive patent and trademark law, and implicating
`a broad spectrum of legal issues.
`
`Notably, the USPTO is currently involved in two controversial appeals
`arising from separate TTAB decisions issued pursuant to section 2(a)
`of the Lanham Act (15 U.S.C. § 1052(a)), which prohibits the registration
`of marks that may disparage persons or bring them into contempt or
`disrepute: BlackHorse v. Pro-Football, Inc., and In re Tam. The appeals will
`be decided by different appellate courts with potentially different results,
`though involving the same statutory provision.
`
`In the more highly publicized of the two cases, Blackhorse v. Pro-Football, Inc.,
`a Native American group seeks the cancellation of various trademark
`registrations for use of the term “REDSKINS” in relation to professional
`football services. The TTAB found that the petitioner, Blackhorse, presented
`sufficient evidence to establish that the marks were disparaging to Native
`Americans at the time of their registration, and issued a decision holding that
`the registrations must be canceled. Pro-Football challenged the TTAB’s
`decision in the U.S. District Court for the Eastern District of Virginia, making
`various constitutional claims, for example, arguing that barring federal
`registration of disparaging marks violates Pro-Football’s right to freedom
`of speech under the First Amendment. On the USPTO’s recommendation,
`the United States intervened to defend the constitutionality of Section 2(a),
`and the Solicitor’s Office worked closely with the Department of Justice
`on the briefs. In its July 8, 2015, decision, the District Court upheld the
`statute’s constitutionality and affirmed the TTAB’s determination that
`the marks were disparaging to Native Americans at the time they were
`registered. Pro-Football has appealed to the U.S. Court of Appeals for
`the Fourth Circuit, which will hear argument in the case in 2016.
`
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`Though less well publicized than BlackHorse, Tam may potentially have more
`significant implications for federal trademark law because the U.S. Court of
`Appeals for the Federal Circuit—that is, the primary reviewing court for TTAB
`decisions—will rehear this case to decide whether Section 2(a)’s bar to
`registration of disparaging marks is unconstitutional. Tam involves an
`unsuccessful attempt by The Slants, a Portland-based band composed of
`musicians of Asian-American descent, to federally register with the USPTO
`the term “THE SLANTS” for use in music entertainment services. On initial
`appeal to the Federal Circuit, the Solicitor’s Office defended and won an
`affirmance of the TTAB’s determination that the mark disparages Asian
`Americans, despite the applicant’s contention that the band’s adoption of
`the name The Slants was “a way to reclaim a racial slur and to assert
`Asian pride.” The Federal Circuit panel also rejected the applicant’s First
`Amendment challenge under binding circuit precedents, such as In re
`McGinley, 66