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The U.S. Patent and Trademark Office’s fiscal year 2009 annual report indicates declining revenue and patent filings. Notably, there was both a dip in the backlog of patent applications and an increase in the time it takes for the agency to issue a patent. Some lawyers believe the former can be attributed in part to applicants abandoning applications because of the economic downturn. The report, which the agency recently released without fanfare, detailed the agency’s $135.9 million budget shortfall, or 6.8 percent of its $2.01 billion forecasted revenue. Fee collections totaled $1.87 billion. In the report, PTO director David Kappos’ message noted, “the Agency found itself in a financial crisis and was forced to freeze hiring, curtail mission critical programs, and cut back in key efforts relating to the Agency’s mission.” Part of the PTO’s budget troubles can be pegged to the estimated 2.3 percent decline in patent applications filings, to a preliminary count of 485,500 filings from an actual 496,886 filings in fiscal year 2008. Patent filings increased for a number of years, but the fiscal year 2009 dip reflects economic conditions, said David Dykeman, a Boston intellectual property and technology shareholder at Greenberg Traurig. “Companies are devoting less money toward patent filings and filing fewer applications in the current economic downturn,” said Dykeman. Trademark application filings dropped by a more dramatic 12.3 percent. On a more positive note, the backlog dipped by nearly 5 percent to 735,961 applications in the queue, down from 771,529 in fiscal year 2008. The 23 percent surge in the disposal of patent applications during fiscal year 2009, from 396,228 to 487,140 applications, helped trim the backlog. But lawyers say at least some of the backlog cut is unrelated to PTO efficiency. Dykeman observed that some applicants are walking away from pending applications instead of paying fees at the next stage of processing. “The untold story about the increase in disposal rates may be that many more applicants are abandoning applications due to a lack of financial resources in the current economic downturn,” Dykeman said. Applicants who stay committed to their applications are waiting longer for patents to issue — an average of 34.6 months, compared with 32.2 months in fiscal year 2008. “It continues the trend of longer delays at the patent office,” Dykeman said. “That’s been the story for the past few years, where it’s taking longer and longer to get patent applications examined and allowed.” Dykeman and many other intellectual property lawyers are optimistic that Kappos, who was confirmed by the Senate on Aug. 7, will successfully overhaul the agency. Since coming aboard, Kappos has created fast-track programs for green-technology patent applications and for applications from inventors from small organizations. He’s also increased the agency’s work-sharing arrangements with foreign patent offices, particularly the European Patent Office and the Japan Patent Office and tweaked how patent examiners are evaluated. According to Kappos’ message in the report, the PTO’s goal is to cut overall patent processing time to 20 months. “The glimmer of hope is that director Kappos is well aware of this backlog and is implementing programs to address it directly,” Dykeman said.

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