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 table on the next page presents the earned revenue for the past four years.

Earned Revenue (Dollars in Millions)   FY 2001 FY 2002 FY 2003 FY 2004 Patent $  859.0 $  910.1 $1,004.5 $1,070.1 Trademark    181.2    151.3    157.8    168.9 Total Earned Revenue $1,040.2 $1,061.4 $1,162.3 $1,239.0 Percentage Change in Earned Revenue     8.8%     2.0%     9.5%     6.6%

Earned revenue totaled $1,239.0 million for fiscal year 2004, an increase of $76.7 million, or 6.6 percent, over fiscal year 2003 earned revenue of $1,162.3 million. Of revenue earned during fiscal year 2004, $312.2 million related to fee collections deferred for fee recognition in prior fiscal years, $384.8 million related to maintenance fees collected during fiscal year 2004, which were considered earned immediately, and $542.0 million related to work performed for fees collected during fiscal year 2004.

Patent

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Traditionally, the major components of earned revenue derived from patent operations are maintenance fees, filing fees, and issue fees. These fees account for over 80 percent of total patent income. The accompanying chart depicts the relationship among the most significant patent fee types.

Patent maintenance fees are the largest source of earned revenue, and as they are recognized immediately, 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 have been increasing modestly over the last four years and there are indications that this growth pattern may continue.

Patent Renewal Rates Patent Renewal Rates 1 FY 2001 FY 2002 FY 2003 FY 2004 First Stage 84.5% 85.1% 86.8% 91.9% Second Stage 59.9% 59.5% 61.1% 65.7% Third Stage 39.1% 38.4% 42.9% 43.8% 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 2004, 91.9 percent of the patents issued three years ago were renewed, 65.7 percent of the patents issued seven years ago were renewed, and 43.8 percent of the patents issued 11 years ago were renewed.(back to text)

Trademark

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Trademark fees are comprised of application filing, allegation of use, renewal 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.

Trademark registration can continue indefinitely if the registration is renewed. 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 four years, indicating continued revenue growth from this source.