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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

Program Costs

 Pie chart summarizing program costs for fiscal year 2008.D

Graph summarizing program costs directly attributable to Patent and Trademark business as well as allocated costs for the last four fiscal years.D
 

Program costs totaled $1,892.6 million for the year ended September 30, 2008, an increase of $123.0 million, or 7.0 percent, over FY 2007 program costs of $1,769.6 million. The USPTO’s most significant program cost is personnel services and benefits, which traditionally comprise over half of USPTO’s total program costs. Any significant change or fluctuation in staffing or pay rate directly impacts the change in total program costs from year-to-year. Total personnel services and benefits costs for the year ended September 30, 2008, were $1,198.7 million, an increase of $139.0 million, or 13.1 percent, over FY 2007 personnel services and benefits costs of $1,059.7 million. This change, 113.0 percent of the total increase in program costs, was a result of a 4.5 percent increase in the Federal pay scale, combined with a net increase of 605 personnel, from 8,913 at the end of FY 2007 to 9,518 at the end of FY 2008.

The USPTO directs maximum resources to the priority functions of patent and trademark examination, as well as IP protection and enforcement domestically and abroad. For FY 2008, costs directly attributable to the Patent, Trademark, and IP protection business areas represent 83.4 percent of total USPTO costs. The remaining costs, representing support costs, are allocated to the business areas using ABC accounting.

Patent

Total costs for the Patent business unit increased $402.6 million, 32.1 percent, from FY 2005 through FY 2008. The following table presents the major components of Patent costs for the past four years.

Patent Costs (Dollars in Millions)
Component FY 2005 FY 2006 FY 2007 FY 2008
Personnel Costs $  646.5 $  714.4 $  867.1 $  993.6
Contractual Services    156.1    181.5    223.6    226.2
Printing and Reproduction     68.9     71.9     70.0     59.4
Rent, Communications, and Utilities     82.6     69.3     71.1     72.6
Depreciation, Amortization, or Loss on Asset Disposition     26.1     24.8     32.3     35.8
Other     25.7
single underline
    23.8
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    21.7
single underline
    22.2
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Direct Costs  1,005.9  1,085.7  1,285.8  1,409.8
Allocated Costs    247.2
single underline
   226.6
single underline
   247.2
single underline
   245.9
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Total Patent Costs $1,253.1
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$1,312.3
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$1,533.0
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$1,655.7
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Percentage Change in Patent Costs     9.4%     4.7%     16.8%      8.0%
 Pie chart summarizing patent costs by product for fiscal year 2008.D
  

The Patent organization’s most significant program costs relate to personnel services, and account for 86.2 percent of the increase in total cost of Patent operations during the past three years. Patent personnel costs for the year ended September 30, 2008 were $993.6 million, an increase of $126.5 million, or 14.6 percent, over FY 2007 personnel costs of $867.1 million. Rent, communications, and utilities, printing and reproduction, and contractual service costs represent 21.7 percent of the Patent program costs for FY 2008. Over the last three years, contractual costs increased in line with the overall increase in total Patent costs due to increases in the number of patents issued and increased spending on indexing and scanning documents for the electronic file wrapper, offset by minor decreases to printing and reproduction. In addition, rental costs decreased 12.1 percent over the past three years, with a decrease in costs of $10.0 million as the move to Alexandria has been completed.

Patent costs were spread over four main patent products: utility patents, design patents, plant patents, and PCT patents. Utility patents were further broken down into the technology of the utility patent. The cost percentages presented below are based on direct and indirect costs allocated to patent operations and are a function of the volume of applications processed in each product area.

Trademark

Total costs for the Trademark business unit increased $21.7 million, 12.7 percent, from FY 2005 through FY 2008. The table below shows the major components of Trademark costs for that period.

Trademark Costs (Dollars in Millions)
Component FY 2005 FY 2006 FY 2007 FY 2008
Personnel Costs $ 80.0 $ 88.8 $ 99.8 $101.7
Contractual Services   23.2   25.1   24.4   19.4
Printing and Reproduction    0.8    0.3    0.8    0.4
Rent, Communications, and Utilities    8.4    7.8    7.8    7.3
Depreciation, Amortization, or Loss on Asset Disposition    6.1    6.0    7.3    5.4
Other    3.7
single underline
   3.1
single underline
   2.7
single underline
   3.0
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Direct Costs  122.2  131.1  142.8  137.2
Allocated Costs   48.7
single underline
  37.7
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  61.7
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  55.4
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Total Trademark Costs $170.9
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$168.8
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$204.5
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$192.6
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Percentage Change in Trademark Costs    19.2%    (1.2)%    21.1%    (5.8)%
 Pie chart summarizing trademark costs by product for fiscal year 2008.D
  

The Trademark organization’s most significant program costs relate to personnel services, and account for 100.0 percent of the increase in total cost of Trademark operations during the past three years. The increase of $21.7 million was offset by other cost increases and decreases. Contractual services have decreased $3.8 million over the past three years, which represents a decrease of 17.5 percent of the total Trademark cost change over the past three years, as a result of being able to rely more on automated tools, rather than contractors.

The Intent to Use cost includes costs related to examining both the application and the additional intent to use disclosures. The overall cost percentages presented below are based on both direct costs and indirect costs allocated to trademark operations and are a function of the volume of applications processed in each product area.

Intellectual Property Protection and Enforcement

The release of the 2007-2012 Strategic Plan resulted in a new responsibility segment for FY 2007. Prior year costs were reclassified to conform to the current year presentation of this new responsibility segment. Total costs for IP Protection increased $11.2 million, 33.8 percent, from FY 2006 through FY 2008. The following table shows the major components of IP Protection costs for that period.

Intellectual Property Protection and Enforcement Costs (Dollars in Millions)
Component FY 2005Read Footnote 11 FY 2006 FY 2007 FY 2008
Personnel Costs - $ 13.6 $ 13.1 $ 17.9
Contractual Services -    6.3    1.9    6.6
Rent, Communications, and Utilities -    2.1    2.2    2.6
Travel -    1.6    3.5    2.8
Depreciation, Amortization, or Loss on Asset Disposition -    0.5    0.4    0.5
Other -    0.9
single underline
   1.0
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   0.9
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Direct Costs -   25.0   22.1   31.3
Allocated Costs -    8.1
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  10.0
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  13.0
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Total IP Protection and Enforcement Costs - $ 33.1
double underline
$ 32.1
double underline
$ 44.3
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Percentage Change in Total IP Protection and Enforcement Costs -      -%     (3.0)%    38.0%

Note 1: Costs prior to FY 2006 are not available. (back to text)

The most significant program costs for IP Protection relate to personnel services, and account for 40.4 percent of the total cost for IP Protection operations during the past year. The next largest cost associated with the protection and enforcement of intellectual property domestically and abroad is contractual services. These costs were incurred in line with the activities discussed in Strategic Goal 3: Improve Intellectual Property Protection and Enforcement Domestically and Abroad.

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