FY'07 BUDGET ALLOWS USPTO TO KEEP MORE MONEY: One of the biggest misconceptions about the USPTO is that it is taxpayer funded. It's not. Instead, funding for the USPTO is provided by fees charged to applicants and other persons taking advantage of services the USPTO provides (i.e., reexamination requests, protests, etc.). During the patent application process, applicants are required to pay various fees for filing applications, examiner searches, extensions of time, filing RCE's/continuations, issue fees and even have to pay "maintenance fees" 3.5, 7.5 and 11.5 years after a patent has issued to keep it in force. All this money is then (presumably) sunk back into USPTO operations to upgrade and improve operations.

Since the USPTO became fee-funded (back in the early 1980's), the U.S. Congress has made a habit of diverting these funds to general government operations, without any recompense to the USPTO. In theory, the fee-funded system provided the USPTO with enough flexibility to accommodate increases in patent filings by hiring more personnel and expanding operations - as more applications get filed, the USPTO coffers fill up with additional fees.

Unfortunately, when the Federal Government pinches these funds from the USPTO, the Office is left without the means to properly examine waves of patent applications being filed during a particular period of time.

Accordingly, a recent budget proposal submitted by the Bush Administration provides that the USPTO would receive $1.8 billion under the fiscal 2007 budget, which is an increase over the $1.7 billion that the administration requested and lawmakers approved in fiscal 2006.

Also, the administration proposed that PTO be able to keep the fees it collects from patent and trademark applications. Congress approved a two-year increase and retention of PTO fees in fiscal 2004 . In the 2007 budget proposal, this increase was extended another year, and plans are underway to introduce legislation that would make the change permanent (H.R. 2791, S.1020).

Another interesting aspect of this legislation is that electronic filing will be "encouraged" for all applicants by reducing fees on documents that are filed electronically with the USPTO.

Projections have also been made where it is anticipated that the USPTO will receive 444,014 patent applications in fiscal 2007, an increase from the 414,966 applications expected in fiscal 2006. The fiscal 2007 budget also projects that the office will spend $4,196 to approve each application. That number would be slightly less than the $4,279 in fiscal 2006, due to the presumed increase in electronic filing.

See summary here.