USPTO: Dropping Income, Growing Lines

(MoneyWatch)  Being underwater -- or, at least, standing in line -- seems to be a fact of life for the US Patent and Trademark Office, and things have only been getting worse. With current applications down, so are fees and, therefore, USPTO revenues. The agency has frozen hiring and just cut examiner overtime, meaning that patent applications will only pile up even more. Will a Senate attempt to throw a lifeline help?

Although the trademark side of the USPTO goes fairly smoothly, patent processing has been an operational disaster for years -- only the tolerance for what constitutes bad has changed. Back in 1922, a major patent lawyer complained about the long delays -- upwards of a year -- to get a first consideration of a patent application. By 2008, that figured climbed to an average 32.2 months according to USPTO figures. Blame ever more complex technology, limited resources, and applications that multiple faster than rabbits.

The approach the office has taken to try to slow the growth of the backlog (forget nding it) has included overtime for examiners and more hiring. Only, things are going well on that front. According to the USPTO, the first half of 2009 (the federal fiscal year runs October to September) saw a 2.3 percent drop in application filings, and application fees represent more than a quarter of the self-funded agency's revenue. Because fees are tied to the consumer price index and the economy has been sluggish, there isn't a scheduled fee increase for next year, which means that the end-of-year application rush to lock in at old rates won't happen. That cuts another $30 million.

As a result, the USPTO put into place a hiring freeze on examiners. Given the rate at which they were bringing on new ones to try and keep pace (and the rate at which examiners were leaving), the freeze will hurt. This year will likely be the first since 2001 that the net number of examiners fell. Management had also planned to suspend examiner overtime starting this coming Sunday, which will mean even less time to battle the backlog and a longer wait in queue for patent applications. Yesterday, Senators Patrick Leahy and Jeff Sessions of the Senate Judiciary Committee have introduced a bill which would allow the USPTO to borrow a $60 million to $70 million surplus from the trademark side of the house until September 30, 2011. That may help close a budget gap, but it's probably too late to ramp hiring quickly enough to avoid the personnel drop and certainly won't be enough to reduce the backlog.

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