Serious Budget Situation at the USPTO

by Brian Fletcher on June 24, 2009

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.

{ 1 comment }

robert nevins July 18, 2009 at 9:52 pm

I have waited over two years for an examination. I recently was given old age consideration because of my age, 75. After two months of additional waiting I was notified my patent had 34 rejections and another bunch of objections. The examiner and his superior are without any intelligence. The examiner [name deleted] and his supervisor [name deleted] totally ignored my granted 1981 patent and its content, pat no. 4296834 even though it is listed in his own references, he totally ignored the previous granted patent and content. I can impact the energy problem, I can reduce pollution, and I can create jobs. The U.S.Government turned down my request for funds in 1981, 29 years ago. I recently requested funds from Congressman Hinchey , and I contacted Ma. Congressman Markey NO RESPONSE. Is that any way to treat a retired N.Y. City Firefighter? It will be okay tho I just mortgaged my house. Put all that political hot air in a heat pump water heater and you can solve the energy problem right in Washington. I have already applied for another energy related patent , even tho I may not be around to get it. If I were young I would never again apply for a patent. To wait 3 years for an examination is disgusting, costly, and absolutely frustrating. You have taken the best intellectual properties in this whole world and you have SHELVED THEM. President Obama talks the talk, but can’t walk the walk. You have no idea the loathing I have for people who treat inventors like dog sh*t. Robert L Nevins Ret . New York City Firefighter (inventor)

Previous post:

Next post: