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Collage showing images with one-word descriptors from the U S P T O Fiscal Year 2007 Performance and Accountability Report cover that reinforces the report's tagline of Transforming for the Future Today.
Performance and Accountability Report Fiscal Year 2007
Management's Discussion and Analysis

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

Results of Operations

The USPTO generated a net cost of $33.9 million in FY 2007, compared to net income in FY 2006 of $80.2 million, a decrease of $114.1 million. This significant variation is the result of a few factors, explained in more detail in the Statement of Net Cost discussion. The primary factor was increased costs in FY 2007 — costs for FY 2007 increased significantly from FY 2006 primarily due to increased staffing levels hired in late FY 2006 and throughout FY 2007.

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 2004 through FY 2007, unearned patent fees increased 53.5 percent. In FY 2007, for each month patent pendency to first action increased, deferred revenue increased approximately $30.3 million per pendency month, with a corresponding decrease in earned revenue. From FY 2004 through FY 2007, unearned trademark fees decreased 9.2 percent, a result of the increased staffing to address the backlog and the decrease in pendency. In addition to the 1,215 patent examiners hired during FY 2007, the USPTO plans to continue hiring at least 1,200 new patent examiners each fiscal year through FY 2012, as well as implementing new operating practices, to reduce the backlog of unprocessed applications and reduce pendency.

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