Various sources, including here, have been reporting on budget problems at the USPTO. The patent office, which supports itself by collecting fees to grant and maintain patents, has seen its collections drop from $6.9 million a day in January and February of this year to $6.2 million per day in April and May, said Jay Reich, deputy chief of staff of the Commerce Department. Last week, collections totaled just $5.9 million a day, Reich said.
Even before the financial crisis prompted companies to pare their patent portfolios, which reduced the patent office’s revenue, the department was criticized for its large and growing backlog, which Reich estimated at 770,000 applications. The patent office had already cut $120 million from its budget this year and identified another $20 million in potential savings from reductions like eliminating overtime pay, said Reich. “Everything we can control, we have tried to reduce,” said Reich. “The Draconian move we want to avoid is furloughs.”
The patent office is contacting the congressional committees with authorizing and appropriating power over it to ask for the right to temporarily tap at least part of a $60 million projected surplus held by the trademark side of the office and to put about $10 million earmarked for special projects into the general operating fund. But Reich said the agency’s surveys of patent attorneys and industries found that the budget woes could worsen. “They’re not very bullish in terms of turning the situation around in the near term,” he said.
Yesterday, John Doll, the Acting Director of the USPTO, gave PTO employees an update, saying among other things, that as the economy has worsened, fewer people have applied for patents or paid to maintain the ones they have. Declines in trademark filings continue to be experienced too. Thus, the agency has seen significant reductions in revenue. As a result, a “serious budget situation” has developed.
Right now, according to Doll, the USPTO is operating at a “break even” level. This means, if the current pace of fee collection holds, the USPTO expects to finish FY09 without a budget shortfall.
But, Doll continued, just getting to “break even” in this climate has required sacrifices. In response to the decrease in fee collections, the USPTO has enacted a series of budget cuts and cost-savings measures, which have resulted in the more than $120 million in savings mentioned above. Thus far, the USPTO has instituted a hiring freeze, curtailed non-bargaining unit performance awards, stopped overtime, and significantly reduced contracts, travel, supplies and other non-essential overhead expenses. With the support of Commerce Secretary Locke, the USPTO is also seeking further cost-saving measures, which will save an additional $20 million in FY09. All of this has been done with an eye toward avoiding furloughs.
Doll acknowledged that in the current economy, fee collection could continue to decline. The USPTO and the Department of Commerce are monitoring the situation on a daily basis, and out of an abundance of caution, the USPTO is asking Congress for its help and the patent office is now putting forward a number of different options to bridge any possible gaps, including soliciting ideas from members of Congress.