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Collage showing images with one-word descriptors from the U S P T O Fiscal Year 2009 Performance and Accountability Report cover that reinforces the report’s tagline of Today’s Challenges – Tomorrow’s Solutions.
Performance and Accountability Report Fiscal Year 2009
Management's Discussion and Analysis

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

Statement of Net Cost

The Statement of Net Cost presents the USPTO’s results of operations by the following responsibility segments – Patent, Trademark, and Intellectual Property Protection and Enforcement Domestically and Abroad. The below table presents the total USPTO’s results of operations for the past five fiscal years. In FY 2005, the USPTO’s operations resulted in a net cost. In FY 2006, the USPTO generated a net income due to the increased maintenance fees received and revenue recognition of previously deferred revenue collected subsequent to the fee increase on December 8, 2004. During FY 2007, FY 2008, and FY 2009 the USPTO’s operations resulted in a net cost of $33.9 million, $30.4 million, and $54.8 million, respectively.

Net (Cost)/Income (Dollars in Millions)
  FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
Earned Revenue $ 1,372.8  $ 1,594.4  $ 1,735.7  $ 1,862.2  $ 1,927.1 
Program Cost  (1,424.0)
single underline
 (1,514.2)
single underline
 (1,769.6)
single underline
 (1,892.6)
single underline
 (1,981.9)
single underline
Net (Cost)/Income $    (51.2) 
double underline
$    80.2 
double underline
$   (33.9)
double underline
$   (30.4)
double underline
$   (54.8)
double underline

The Statement of Net Cost compares fees earned to costs incurred during a specific period of time. It is not necessarily an indicator of net income or net cost over the life of a patent or trademark. Net income or net cost for the fiscal year is dependent upon work that has been completed over the various phases of the production life cycle. The net income calculation is based on fees earned during the fiscal year being reported, regardless of when those fees were collected. Maintenance fees also play a large part in whether a total net income or net cost is recognized. Maintenance fees collected in FY 2009 are a reflection of patent issue levels 3.5, 7.5, and 11.5 years ago, rather than a reflection of patents issued in FY 2009. Therefore, maintenance fees can have a significant impact on matching costs and revenue.

During FY 2009, with the number of patent filings decreasing by 2.3 percent over the prior year, the backlog for patent applications likewise decreased, decreasing deferred revenue and increasing earned revenue. This was evidenced by the Patent organization disposing of 22.9 percent more applications than were disposed of during FY 2008.

During FY 2009, with the number of trademark applications decreasing by 12.3 percent over the prior year, the Trademark organization was able to continue to address the existing inventory and reduce pendency by 0.3 months from FY 2008. The Trademark organization was able to do this while recognizing a slight decrease in revenue earned.

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