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The Statement of Net Cost presents the USPTO’s
results of operations by Patent and Trademark business areas. The following
table presents the total USPTO’s results of operations for the past
four fiscal years. From fiscal years 2003 through 2005, the USPTO’s
operations resulted in a net cost. However, in FY 2006, the USPTO generated
a net income of $80.2 million due to the increased maintenance fees received
and revenue recognition of previously deferred revenue collected subsequent
to the fee increase on December 8, 2004.
Net (Cost)/Income (Dollars in Millions)
| Earned Revenue |
$ 1,162.3 |
$ 1,239.0 |
$ 1,372.8 |
$ 1,594.4 |
| Program Cost |
(1,206.1)
 |
(1,289.2)
|
(1,424.0)
|
(1,514.2)
|
| Net
(Cost)/Income |
$ (43.8)
 |
$ (50.2)
|
$ (51.2)
|
$ 80.2
|
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The Statement of Net Cost compares fees earned to costs incurred during
a specific period of time. It is not necessarily an indicator of net income
or net cost over the life of a patent or trademark. Net income or net
cost for the fiscal year is dependent upon the groups of work that have
been completed over the various phases of the production life cycle. The
net income calculation is based on fees earned during the fiscal year
being reported, regardless of when those fees were collected. Maintenance
fees also play a large part in whether a total net income or net cost
is recognized. Maintenance fees collected in FY 2006 are a reflection
of patent issue levels 3.5, 7.5, and 11.5 years ago, rather than a reflection
of patents issued in FY 2006. Therefore, maintenance fees can have a significant
impact on matching costs and revenue.
While the backlog for patent applications continues to increase, increasing
deferred revenue and decreasing earned revenue, during FY 2006 the Patent
organization disposed of 11.3 percent more applications than were disposed
of during FY 2005. In addition, the separation of the patent application
fee into a discrete filing fee, search fee, and examination fee during
FY 2005 resulted in an increase of $24.3 million in fees, recognized immediately
as earned revenue during FY 2006.
During FY 2006, while the number of trademark applications increased
9.7 percent over the prior year, the Trademark organization was able to
significantly reduce its backlog and register 31.7 percent more trademarks
over FY 2005. While additional costs were incurred in reducing the backlog,
the Trademark organization was able to recognize a significant increase
in revenue earned.
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