NOTE 14. Commitments and Contingencies

Commitments

In addition to the future lease commitments discussed in Note 8, the USPTO is obligated for the purchase of goods and services that have been ordered, but not yet received. Total undelivered orders for all of the USPTO’s activities were $383,106 thousand and $423,310 thousand as of September 30, 2007 and 2006, respectively. Of these amounts, $376,973 thousand and $418,995 thousand, respectively, were unpaid.

Contingencies

The USPTO is a party to various routine administrative proceedings, legal actions, and claims brought by or against it, including threatened or pending litigation involving labor relations claims, some of which may ultimately result in settlements or decisions against the Federal Government.

As of September 30, 2007, management expects it is reasonably possible that approximately $74,352 thousand may be owed for awards or damages involving labor relations claims. As of September 30, 2006, management expects it is reasonably possible that approximately $67,821 thousand may be owed for awards or damages involving labor relations claims.

The USPTO is subject to suits where adverse outcomes are probable and claims are $652 thousand and $250 thousand as of September 30, 2007 and 2006, respectively.

For the year ended September 30, 2007, there were no payments made on behalf of the USPTO from the Judgment Fund. However, the USPTO was required to make a $5 thousand contribution to the Judgment Fund during FY 2007 based on a recent settlement. For the year ended September 30, 2006, there were no payments made on behalf of the USPTO from the Judgment Fund.

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