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The USPTO generated a net income of $80.2
million in FY 2006, an increase of $124.0 million over the net cost in
FY 2003 of $43.8 million.
Typically, federal governmental agencies reflect a fiscal year gross
cost of operations that exceed the total obligations incurred in that
same fiscal year. This is due to including the costs of non-budgetary
items, such as imputed costs. However, beginning in FY 2005, the USPTO’s
gross cost of operations was less than obligations incurred. This difference
is partly due to a change in the method to recognize the cost of post-employment
benefits. In prior years, the USPTO recognized an imputed financing source
and corresponding expense to represent its share of the cost to the federal
government of providing pension and post-retirement health and life insurance
benefits to all eligible USPTO employees. Beginning in FY 2005, the USPTO
is now using fees to fund the cost of post-retirement benefits, resulting
in increased obligations of approximately $42.7 million each fiscal year.
Another contributing factor for the gross cost of operations being less
than obligations incurred arises from decisions that were made to promote
more efficient operations of the agency. As the USPTO receives no-year
reimbursable appropriations, the agency was able to make optimal use of
the funding structure during FY 2006 by realigning the period of performance
for many contracts to increase effectiveness and by investing in several
significant projects to advance the electronic operating environment,
such as the PFW, disaster recovery, and technology improvements.
Due to the increase in pendency (the amount of time an application is
waiting before a patent is issued or trademark is registered), the USPTO
has been recognizing a steadily increasing deferred revenue liability
for fees received prior to the revenue being earned. From FY 2003 through
FY 2006, unearned patent fees increased 55.7 percent, with a 13.3 percent
increase from FY 2005. In FY 2006, for each month patent pendency to first
action increased, deferred revenue increased approximately $28.4 million,
with a corresponding decrease in earned revenue. While unearned trademark
fees increased $26.6 million over the past three years, unearned trademark
fees decreased $11.8 million in FY 2006, a result of the increased staffing
to address the backlog and the decrease in pendency. In addition to the
1,218 patent examiners and 87 trademark examining attorneys hired during
FY 2006, the USPTO plans to continue hiring at least 1,200 new patent
examiners each fiscal year through FY 2012, as well as implementing new
operating practices, to reduce the backlog of unprocessed applications
and reduce pendency.
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