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 Policy, Protection and Enforcement Worldwide. The following table presents the total USPTO’s results of operations for the past five fiscal years. 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. In FY 2010, the USPTO generated a net income of $94.7 million due to the increased maintenance fees received and revenue recognition of previously deferred revenue collected as we work off the backlog.
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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 2010 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 2010. Therefore, maintenance fees can have a significant impact on matching costs and revenue.
During FY 2010, while the number of patent filings increased by 4.7 percent over the prior year, the backlog for patent applications decreased as a result of the process improvements and increased efficiencies, thereby decreasing deferred revenue and increasing earned revenue. This was evidenced by the Patent organization disposing of 13.6 percent more applications than were disposed of during FY 2009.
During FY 2010, with the number of trademark applications increasing by 4.8 percent over the prior year, the Trademark organization was able to continue to address the existing inventory and maintain pendency between 2.5 and 3.5 months during FY 2010. The Trademark organization was able to do this while recognizing a slight increase in deferred revenue and corresponding decrease in revenue earned.