Earned Revenue
The USPTO’s earned revenue is derived from the fees collected for patent and trademark products and services. Fee collections are recognized as earned revenue when the activities to complete the work associated with the fee are completed. The following table presents the earned revenue for the past five years.
| FY 2006 | FY 2007 | FY 2008 | FY 2009 | FY 2010 | |
|---|---|---|---|---|---|
| Patent | $1,384.2 | $1,507.0 | $1,625.0 | $1,697.4 | $1,887.6 |
| Percentage Change in Patent Earned Revenue | 15.6% | 8.9% | 7.8% | 4.5% | 11.2% |
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| Trademark | 210.2 | 228.7 | 237.2 | 229.7 | 214.1 |
| Percentage Change in Trademark Earned Revenue | 20.1% | 8.8% | 3.7% | (3.2)% | (6.8)% |
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| Total Earned Revenue | $1,594.4 | $1,735.7 | $1,862.2 | $1,927.1 | $2,101.7 |
| Percentage Change in Earned Revenue | 16.1% | 8.9% | 7.3% | 3.5% | 9.1% |
Earned revenue totaled $2,101.7 million for FY 2010, an increase of $174.6 million, or 9.1 percent, over FY 2009 earned revenue of $1,927.1 million. Of revenue earned during FY 2010, $424.6 million related to fee collections that were deferred for revenue recognition in prior fiscal years, $673.1 million related to maintenance fees collected during FY 2010, which were considered earned immediately, $997.3 million related to work performed for fees collected during FY 2010, and $6.7 million were not fee-related.
For fees collected and earned during FY 2010, there was an increase of $76.6 million over these same fees earned during FY 2009. This increase can primarily be attributed to $10.7 million in earned patent filing fees, $72.7 million in earned patent issue fees, $8.8 million in PCT international fees, $0.3 million in trademark post-registration fees, offset by a decrease of $7.5 million in fees considered earned immediately, $3.2 million in patent appeal fees, $2.2 million in trademark application, and $3.4 million in trademark statement of use.
Patent
Traditionally, the major components of earned revenue derived from patent operations are maintenance fees, initial application fees for filing, search, and examination, and issue fees. These fees account for approximately 84 percent of total patent income. The following chart depicts the relationship among the most significant patent fee types.
Patent maintenance fees are the largest source of earned revenue by fee type. During FY 2010, maintenance fees collected increased $126.4 million, or 23.1 percent, from FY 2009. As they are recognized immediately as earned revenue, any fluctuations in the rates of renewal have a significant impact on the total earned revenue of the USPTO. To some extent, renewals recoup costs incurred during the initial patent process. As shown below, the renewal rates for all three stages of maintenance fees increased this year.
| Patent Renewal Rates1 | FY 2006 | FY 2007 | FY 2008 | FY 2009 | FY 2010 |
|---|---|---|---|---|---|
| First Stage | 93.1% | 90.1% | 83.1% | 80.3% | 99.4% |
| Second Stage | 69.2% | 71.4% | 73.7% | 63.5% | 71.2% |
| Third Stage | 44.4% | 48.5% | 49.2% | 45.4% | 50.0% |
| Note 1: the First Stage refers to the end of the 3rd year after the initial patent is issued; the Second Stage refers to the end of the 7th year after the initial patent is issued; and the Third Stage refers to the end of the 11th year after the initial patent is issued. For example, in FY 2010, 99.4 percent of the patents issued three years ago were renewed, 71.2 percent of the patents issued seven years ago were renewed, and 50.0 percent of the patents issued 11 years ago were renewed. (back to text) | |||||
Application fee revenue earned upon filing decreased slightly from $95.2 million in FY 2009 to $95.0 million in FY 2010 (decrease of 0.2 percent), with the number of applications increasing from 486,499 to 509,367 over the same period (increase of 4.7 percent). The FY 2011 President’s Budget projects a gradual increase in patent applications filed beginning in FY 2012 and extending through FY 2014, which will contribute to a renewed growth in budgetary resources, as well as earned fee revenue.
Earned issue fee revenue increased from $292.7 million in FY 2009 to $364.5 million in FY 2010, with the number of patents issued increasing from 190,121 to 223,127 over the same period, an increase of 24.5 percent and 22.6 percent, respectively. The FY 2011 President’s Budget projects that patents issued will increase an average of 2.2 percent each fiscal year through FY 2015.
Trademark
Trademark fees are comprised of application filing, renewals, services, and Trademark Trial and Appeal Board fees. Additional fees are charged for intent-to-use filed applications, as additional requirements must be met for registration. The following chart depicts the relationship among the most significant trademark fee types.
Earned revenue for trademark applications decreased from $126.0 million in FY 2009 to $112.5 million in FY 2010, with the number of trademarks registered decreasing from 241,637 to 221,090 over the same period, a decrease of 10.7 percent and 8.5 percent, respectively. The FY 2011 President’s Budget projects that trademark applications filed will start to increase, which will contribute to the continued growth in budgetary resources, as well as earned fee revenue.
Trademark registration can be a recurring source of revenue. To some extent, renewal fees recoup costs incurred during the initial examination process. As shown below, the renewal rates for trademarks have remained fairly stable over the last five years, indicating continued earned revenue from this source. Further, in the FY 2011 President’s Budget, earned revenue from trademark renewals is expected to continue in the future.
| Trademark Renewal Rates1 | FY 2006 | FY 2007 | FY 2008 | FY 2009 | FY 20102 |
|---|---|---|---|---|---|
| Renewals | 28.8% | 28.6% | 28.9% | 29.3% | 28.2% |
Note 1: the renewals occur every 10th year for trademarks registered after November 15, 1989. For trademarks issued or renewed before November 15, 1989, renewal will occur after the 20th year and the renewal will be for a ten-year period. For example, in FY 2010, 28.2 percent of the trademarks granted ten and 20 years ago were renewed. (back to text) Note 2: Preliminary data. (back to text) |
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