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USPTO Submits its Fiscal Year 2017 Congressional Budget Justification
Guest Blog by Chief Financial Officer Tony Scardino
Each year, the USPTO submits a budget justification to Congress in order to obtain authority to spend the patent and trademark fees we collect. I’m pleased to announce that the USPTO has published its fiscal year (FY) 2017 Congressional Budget Justification.
The FY 2017 Congressional Budget Justification, which covers the period from October 1, 2016 through September 30, 2017, provides detailed information on how the USPTO plans to spend fees in the upcoming fiscal year. The FY 2017 budget documents our plans to enhance patent quality and continue reducing patent application pendency and backlog in order to help bring innovations to the marketplace and create jobs for the American people. It also enables us to continue maintaining our high levels of trademark quality and pendency despite increasing numbers of application filings; modernizing our information technology (IT); carrying out the provisions of the America Invents Act (AIA); and providing domestic and global intellectual property leadership.
In FY 2017, the USPTO expects to collect—and has requested an appropriation of—$3.3 billion in fee revenue, which is derived primarily from patent and trademark fee collections. This is approximately $49 million more than our FY 2016 appropriation.
Our estimated fee collections have been modified from the projections included in the FY 2016 President’s Budget to reflect new assumptions about the growth rate in patent application filings—based on our latest assumptions about demand for our services—and to incorporate proposed fee adjustments that were presented to the USPTO’s Public Advisory Committees (PACs) in early FY 2016. Both PACs have held public hearings on the agency’s proposals. We are currently awaiting and analyzing the findings and recommendations reported from our PACs. Once our analyses are completed, we will update our fee collection estimates in the notices of proposed rulemaking that will be published in the coming months.
The USPTO FY 2017 budget tells the story of a dynamic organization that is continually adapting to the ever-changing environment in which we operate. The agency maintains operating reserves to help us effectively manage through these changes. Even as fee collections vary from year to year, the operating reserves allow us to continue to make critical, multi-year investments to improve the USPTO and its operations. In FY 2015, the USPTO established minimum operating reserve levels for FY 2016 and FY 2017—$300 million for the patent operating reserve and $55 million for the trademark operating reserve—to help us mitigate known financial risks. Our goal is to continue to grow these reserves to their optimal levels of three months for patents and four months for trademarks within the five year term reported in the budget.
Throughout FY 2015, patent application filings and fee collections were trending at less than planned levels. We recognized that planned spending in FY 2016 and FY 2017 no longer aligned to our projected resources, and the agency conducted a comprehensive financial planning and resource management review. Based on this review, the USPTO’s FY 2017 budget prioritizes the agency’s spending across multiple years and reduces our budgetary requirements—i.e., what we plan to spend in FY 2016 and FY 2017—from the levels we identified at this time last year.
The budget places high priority on financing fixed operating costs (e.g., paying for on-board staff, production and operating requirements) and carrying forward with targeted investments and improvements. We also recognize that it is prudent to extend some of our information technology (IT) investments over a longer period of time in order to continue the effective implementation of critical systems that are essential to accomplishing our strategic goals.
The spending and revenue adjustments included in the FY 2017 budget allow the USPTO to continue to make responsible investments in the agency’s mission while maintaining our minimum operating reserve levels, and demonstrate the USPTO’s commitment to sound business and financial practices. Looking to the future, we will continue to assess the proper balance between pursuing strategic improvements and mitigating financial risks to the agency’s mission.