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 below presents the earned revenue for the past four years.

Earned Revenue (Dollars in Millions)   FY 2005 FY 2006 FY 2007 FY 2008 Patent $1,197.8 $1,384.2 $1,507.0 $1,625.0 Percentage Change in Patent Earned Revenue    9.6%    15.6%     8.9%     7.8% Trademark    175.0    210.2    228.7    237.2 Percentage Change in Trademark Earned Revenue    19.5%    20.1%     8.8%     3.7% Total Earned Revenue $1,372.8 $1,594.4 $1,735.7 $1,862.2 Percentage Change in Earned Revenue    10.8%    16.1%     8.9%     7.3%

Earned revenue totaled $1,862.2 million for FY 2008, an increase of $126.5 million, or 7.3 percent, over FY 2007 earned revenue of $1,735.7 million. Of revenue earned during FY 2008, $423.7 million related to fee collections that were deferred for revenue recognition in prior fiscal years, $561.8 million related to maintenance fees collected during FY 2008, which were considered earned immediately, $871.1 million related to work performed for fees collected during FY 2008, and $5.6 million were not fee-related.

For fees collected and earned during FY 2008, there was an increase of $75.6 million over these same fees earned during FY 2007. This increase can primarily be attributed to $27.1 million in fees considered earned immediately, $17.8 million in earned patent filing fees, $12.0 million in earned patent issue fees, $12.4 million in trademark post-registration fees, and $7.7 million in patent petition fees.

Patent

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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 over 82 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 2008, maintenance fees collected increased $17.1 million, or 3.1 percent, over FY 2007. 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 on the next page, the renewal rates for all three stages of maintenance fees have been increasing modestly over the last four years and the trend indicates that this growth pattern will continue.

Patent Renewal Rates Patent Renewal Rates1 FY 2005 FY 2006 FY 2007 FY 2008 First Stage 83.1% 93.1% 90.1% 83.1% Second Stage 65.4% 69.2% 71.4% 73.7% Third Stage 45.0% 44.4% 48.5% 49.2% 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 2008, 83.1 percent of the patents issued three years ago were renewed, 73.7 percent of the patents issued seven years ago were renewed, and 49.2 percent of the patents issued 11 years ago were renewed.. (back to text)

Application fee revenue earned upon filing increased from $98.0 million in FY 2007 to $99.8 million in FY 2008, with the number of applications increasing from 468,330 to 495,095 over the same period, increases of 1.8 percent and 5.7 percent, respectively. The FY 2009 President’s Budget projects an increase of 5.0 percent in patent applications filed beginning in FY 2009 and extending through FY 2013, which will contribute to the continued growth in earned fee revenue.

Earned issue fee revenue increased from $249.9 million in FY 2007 to $262.3 million in FY 2008, with the number of patents issued decreasing from 184,377 to 182,556 over the same period, an incease of 5.0 percent and a decrease of 1.0 percent, respectively. The FY 2009 President’s Budget projects that patents issued will increase an average of 8.7 percent each fiscal year through FY 2013.

Trademark

Trademark fees are comprised of application filing, 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. The following chart depicts the relationship among the most significant trademark fee types.

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Earned revenue for trademark applications decreased from $133.1 million in FY 2007 to $131.3 million in FY 2008, with the number of trademarks registered increasing from 194,327 to 274,250 over the same period, a decrease of 1.4 percent and an increase of 41.1 percent, respectively. The FY 2009 President’s Budget projects that trademark applications filed will continue to increase, which will contribute to the continued growth in 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 four years, indicating continued earned revenue from this source. Further, in the FY 2009 President’s Budget, earned revenue from trademark renewals is expected to continue in the future.

Trademark Renewal Rates Trademark Renewal Rates1 FY 2005 FY 2006 FY 2007 FY 20082 Renewals 28.6% 28.8% 28.6% 27.0% 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 2008, 27.0 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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