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 earning process is the same for all collections even through a certain portion of the fees may not be made available to the USPTO for spending. Temporarily unavailable fee collections occur when the USPTO is not appropriated the authority to spend all fees collected during a given year. During FY 2011, the USPTO collected $208.9 million in fee collections that were designated as temporarily unavailable.
Earned revenue totaled $2,236.4 million for FY 2011, an increase of $134.7 million, or 6.4 percent, over FY 2010 earned revenue of $2,101.7 million. Of revenue earned during FY 2011, $375.8 million related to fee collections that were deferred for revenue recognition in prior fiscal years, $819.3 million related to maintenance fees collected during FY 2011, which were considered earned immediately, $1,035.8 million related to work performed for fees collected during FY 2011, and $5.5 million were not fee-related.
For fees collected and earned during FY 2011, there was an increase of $38.5 million over these same fees earned during FY 2010. This increase can primarily be attributed to $33.1 million in earned patent issue fees, $5.9 million in trademark application, $1.9 million in trademark post-registration fees, $4.5 million in trademark statement of use, and $10.9 million in fees considered earned immediately, offset by a decrease of $10.4 million in earned patent filing fees and $6.8 million in patent appeal fees.
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 85 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 2011, maintenance fees collected increased $146.2 million, or 21.7 percent, from FY 2010. A significant portion of this increase was due to early renewals that were paid prior to the implementation of the 15 percent surcharge on September 26, 2011.
|Patent Renewal Rates1||FY 2007||FY 2008||FY 2009||FY 2010||FY 20112|
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 2011, 101.3 percent of the patents issued three years ago were renewed, 80.6 percent of the patents issued seven years ago were renewed, and 60.0 percent of the patents issued 11 years ago were renewed. (back to text)
2: Due to the implementation of the 15 percent fee surcharge on September 26, 2011, the FY 2011 renewal rates include some early renewals that would have otherwise been renewed in FY 2012. (back to text)
Since these fees 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 above, the renewal rates for all three stages of maintenance fees increased this year.
Application fee revenue earned upon filing increased from $95.0 million in FY 2010 to $102.8 million in FY 2011 (increase of 8.2 percent), with the number of applications increasing from 510,060 to 536,604 over the same period (increase of 5.2 percent). The FY 2012 President’s Budget projects a 4.4 percent increase in patent applications filed beginning in FY 2012 and increasing through FY 2016, which will contribute to a renewed growth in budgetary resources, as well as earned fee revenue.
Earned issue fee revenue increased from $364.5 million in FY 2010 to $397.2 million in FY 2011, with the number of patents issued increasing from 223,127 to 244,430 over the same period, an increase of 9.0 percent and 4.8 percent, respectively. These increases are in line with the increases in the patent allowance rate. The FY 2012 President’s Budget projects that patents issued will increase an average of 4.3 percent each fiscal year through FY 2016, which will result in inceases in maintenance fees in future years.
Trademark fees are comprised of application filing, renewals, services, and TTAB 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 increased from $112.5 million in FY 2010 to $125.4 million in FY 2011, with the number of trademarks registered increasing from 221,090 to 237,586 over the same period, increases of 11.5 percent and 7.5 percent, respectively. The FY 2012 President’s Budget projects that trademark applications filed will continue 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 2012 President’s Budget, earned revenue from trademark renewals is expected to continue in the future.
|Trademark Renewal Rates||FY 2007||FY 2008||FY 2009||FY 2010||FY 20111|
Note: 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 2011, 27.9 percent of the trademarks granted ten and 20 years ago were renewed.
1: Preliminary data. (back to text)