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Collage showing images with one-word descriptors from the U S P T O Fiscal Year 2008 Performance and Accountability Report cover that reinforces the reportís tagline of Transforming for the Future Today.
Performance and Accountability Report Fiscal Year 2008
Management's Discussion and Analysis

Table of Contents | Management | Financial | Auditor | IG | Other

Financial Highlights

The following presents the USPTO’s FY 2008 financial highlights for budgetary resources and requirements, along with results of operations. Details behind these highlights are included in the discussion of the USPTO’s financial statements beginning with Financial Statements.

Budgetary Resources and Requirements

The USPTO was provided appropriation authority to spend all planned fee collections in FY 2008. When spending authority is less than fee collections, the additional fee collections are temporarily unavailable. During FY 2007, the USPTO collected an additional $12.2 million in fees that were temporarily unavailable for spending. However, beginning in FY 2008, the USPTO received access to fee collections $100 million above original estimates, which greatly diminishes the chance of fees being temporarily unavailable.

The following table presents the source of funds made available to the USPTO, and the use of such funds.

Source and Status of USPTO Funds (Dollars in millions)
Source and Status of Funds FY 2005 FY 2006 FY 2007 FY 2008

Source of Funds:
       
Unobligated Beginning Balance $    2.3 $    5.7  $    5.7 $   28.0
Recovery of Prior Year Obligations     7.6     9.1      9.9     12.0
Spending Authority from Offsetting Collections  1,504.2   1,665.4   1,791.1  1,885.6
Non-Expenditure Transfer        –      (0.1)        –      (1.0)
Net Increase in Unavailable Fees        –         –      (12.2)        –
single underline
Total Source of Funds $1,514.1  $1,680.1  $1,794.5 $1,924.6
double underline

Status of Funds:
       
Obligations Incurred $1,508.4  $1,674.4  $1,766.5 $1,852.5
Unobligated Balance, Available      2.7       5.7      28.0     64.1
Unobligated Balance, Unavailable      3.0         –         –      8.0
single underline
Total Status of Funds $1,514.1  $1,680.1  $1,794.5 $1,924.6
double underline

During FY 2008, total budgetary resources available for spending is 6.8 percent over the amount available in the preceding year. This increase in budgetary resources available for use is depicted by the graph below.

Graph summarizing annual growth in budgetary resources for the last four fiscal years.D

In FY 2008, the USPTO was provided with use of all of its fee collections. This allowed the USPTO continued flexibility towards meeting the goals of the 2007-2012 Strategic Plan, including transitioning to a fully electronic operating environment, improving the quality of its services and products, addressing patent and trademark pendency, and improving intellectual property protection and enforcement. The additional funding has enabled the USPTO to substantially increase the number of patent examiners to assist in addressing the growing average complexity of patent applications and increasing workloads and to allocate additional resources towards protecting intellectual property in the United States and abroad. As a result, the USPTO was able to meet all key performance goals and continue reforms that assure intellectual property relevancy in a highly competitive, global marketplace.

Results of Operations

The USPTO generated a net cost of $30.4 million for the year ended September 30, 2008, a decrease of $3.5 million over FY 2007 net cost of $33.9 million. This variation is the result of a few factors, explained in more detail in the Statement of Net Cost discussion.

Due to the increase in pendency, the amount of time an application is waiting before a patent is issued or trademark is registered, the USPTO has been recognizing a steadily increasing deferred revenue liability for fees received prior to the revenue being earned. From FY 2005 through FY 2008, unearned patent fees increased 27.1 percent. In FY 2008, for each month patent pendency to first action increased, deferred revenue increased approximately $2.6 million per pendency month, with a corresponding decrease in earned revenue. From FY 2005 through FY 2008, unearned trademark fees decreased 20.2 percent, a result of the increased staffing to address the backlog and the decrease in pendency. In addition to the 1,211 examiners hired during FY 2008, the USPTO plans to continue hiring at least 1,200 new patent examiners each fiscal year through FY 2013, as well as implementing new operating practices, to reduce the backlog of unprocessed applications and reduce pendency.

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