The inspector general of the United States Department of Commerce recently released a scathing report titled “Analysis of Patent Examiners’ Time and Attendance,” which painstakingly details what appears to be widespread patent examiner financial fraud on the United States Patent and Trademark Office.
The investigative report—prompted by interest in the infamous “Examiner A,” who falsely claimed he worked 730 hours in fiscal year 2014—concluded that from Aug. 10, 2014, through Nov. 28, 2015, patent examiners submitted 288,479 hours that could not be supported or verified as being worked. These unsupported hours equated to $18.3 million in overpayments.
According to the inspector general, a conservative approach to the evidence was taken to ensure that the amount of unsupported hours did not unfairly assume any particular examiner was not working when he or she claimed to be working. However, the report explains that a less conservative methodology would “have increased the total unsupported hours by an additional 327,000 unsupported hours,” making the total of unsupported hours 615,479—which would then correspond to more than $39 million in overpayments to patent examiners.
Even using the conservative methodology ultimately settled upon by the inspector general, there are several findings that jump off the page of the report: • Approximately 28.5 percent of the total unsupported time consisted of overtime hours.
• 415 patent examiners accounted for 43 percent of the unsupported hours, which if worked would have lessened the patent backlog by an estimated 15,990 cases.
• 310 of those 415 patent examiners received above-average annual performance ratings and yet accounted for nearly 98,000 unsupported hours.
• 56 of those 415 patent examiners claimed unsupported hours equivalent to three full days for every 80 hours or computer-related work time.
This shows hundreds of patent examiners are receiving high performance evaluations and yet apparently bilking the government. This alone is a serious indictment against institutional controls at the USPTO. If the patent office doesn’t even know what its stellar and above-average employees are really doing, what does it know about what other patent examiners are really doing?
Production goals data
But wait, things get worse. The report alleges: “USPTO is paying production bonuses to examiners who are possibly defrauding the agency.” The report addresses this conclusion where it discusses
examiner production goals, which are characterized as out of date and not reflective of current efficiencies. The report concludes that examiner production goals need upward revision, which will not be well received by the union or those patent examiners who have not been engaging in financial abuses.
The report explains: “The OIG’s (Office of the Inspector General) analysis—particularly the data regarding examiners who claimed a significant amount of unsupported hours and received high performance ratings—suggests that the USPTO’s production goals need revision upwards. As noted above, the majority of unsupported hours identified in the OIG’s analysis are associated
with examiners who received above-average or exceptional performance ratings. In fact, the vast majority of the 296 examiners with 10% or more unsupported time during the 9-month period
received “Commendable” or “Outstanding” ratings on their annual performance evaluations. Therefore, according to the USPTO’s rating system, their scores indicate that they are high performers
who meet or exceed their production goals on a consistent basis. They also received production bonuses for meeting their goals. Yet those examiners accounted for 42,384 unsupported hours, with
14,416 unsupported hours of that total paid as overtime.”
These findings suggest that those examiners met—or even exceeded—their performance goals by completing their work assignments in less time than allotted by their production goals. This calls into question the adequacy of those production goals and suggests that a potential abuse of time is possible because the production goals for many of the art units do not reflect efficiencies in work processes. The findings also suggest that the USPTO is paying production bonuses to examiners who are possibly defrauding the agency.
The production goals for examiners were adopted in 1976 and have been revised up several times, but not reevaluated. The report concludes this has made it easier for patent examiners to meet their production goals, even as technological improvements have facilitated patent review.
And just when things couldn’t get any worse for the patent office, the report takes a swipe at office management: “[T]he sheer volume of unsupported hours suggests that the USPTO’s internal
control system used to monitor and prevent time and attendance abuse remains deficient.”
The USPTO’s response
In a prepared statement that responded to the inspector general’s report, USPTO Chief Communications Officer Patrick Ross wrote that “This report serves as a resource in our ongoing efforts
“It is important to recognize and understand that the OIG report did not focus on individual employees; instead, it was based on a comparative analysis of large computer record data sets. The
OIG concluded that there was a lack of a digital footprint in approximately 2% of the total hours claimed by the patent examiners during the 15-month period—a percentage that continued to
shrink following the introduction of new USPTO controls, and during the course of the IG review. The USPTO recognizes that there may be many reasons for the lack of a digital footprint and
is committed to analyzing the recommendations offered by the OIG, continuing to conduct our own review, and, if needed, improving the extensive measures already implemented.”
The office control mechanisms are deficient, and patent examiners seem to be defrauding the agency. It is also further proof of what has continued to come to light in recent weeks about how some patent examiners simply ignore office policy, ignore the Patent Trial and Appeal Board, ignore the U.S. Court of Appeals for the Federal Circuit (preventing cases from reaching appeal), and issue bogus rejections with impunity. There seems to be a near-complete breakdown in institutional control at the patent office.
Based on the findings of the investigation, the inspector general made the following recommendations:
1. The USPTO should reevaluate its examiner production goals for each art unit and revise them, to the extent necessary, to reflect efficiencies in work processes from automation and other enhancements.
2. USPTO management should require all examiners to provide supervisors with their work schedules, regardless of performance and ratings.
3. The USPTO should reinstate its requirement that employees use their USPTO-issued ID badges to exit the facilities through the controlled-access turnstiles during weekday working hours.
4. The USPTO should require all teleworkers to remain logged into the USPTO network during their working hours when the network is available to the teleworker.
5. The USPTO should review its policies, procedures and practices pertaining to overtime hours to identify and eliminate areas susceptible to abuse.
6. The USPTO should consider deploying SOHO routers by all teleworkers.
There is no doubt that many—likely the vast majority—of patent examiners take their jobs very seriously. I know patent examiners who are very conscientious and struggle to meet their production
goals because they do a good job and do not simply issue frivolous rejections. As with so many cases of abuse, those who are abusing the system will make it that much more difficult for everyone else. This is why the patent office must regain control and establish a new culture.
Management has absolutely no institutional control over patent examiners, as evidenced by struggles to get patent examiners to allow patents and follow office guidance and policy. That being
the case, this story about patent examiners committing financial fraud on the patent office rings true and fits within the narrative that we know. Patent examiners doing whatever they want feeds
the ongoing narrative of an office that is out of control.
Patent examiners fudging time sheets or even outright submitting fraudulent time sheets is further proof that some examiners can and do get away with whatever they want. The office seems incapable of doing anything about it on any level. But as much as we can and should point to a lack of certain institutional and management controls, the real problem is that the USPTO cannot realistically fire anybody even for cause. It is more difficult to fire a federal government employee past their probationary period than it is to fire a tenured professor. Unless and until that changes, or unless and until the patent office brings back the old practice of imposing internal exile upon those who refuse to follow office policy, nothing productive or useful will be accomplished.