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Law360 (June 11, 2020, 10:51 PM EDT) -- U.S. Patent and Trademark Office Director Andrei Iancu has penned a letter to Congress about how COVID-19 has hurt the agency's budget, saying that more funding may be needed should its internal reserves be depleted as a result of the economic strain.
In a letter Wednesday to the House Judiciary Committee, Iancu reported that trademark and patent revenues from application filings for fiscal year 2020 are lower than anticipated, which he attributed to the state of the U.S. economy amid the current pandemic.
The patent operating reserve will likely be stable enough to cover the loss of revenue for this year, but the "troubling" drop in filings could lead to more losses in 2021 and 2022, Iancu said. The trademark reserve is already being used to supplement fee revenues, as "recent trademark obligations and expenditures have exceeded fee collections this year," he said.
The letter notes that the Coronavirus Aid, Relief and Economy Security Act gives the USPTO the power to extend certain patent and trademark deadlines as relief to intellectual property owners, but this relief has been funded by the agency's reserves.
"As such, additional funds may be needed to supplement the USPTO's internal reserves and support operations," the letter states.
Iancu noted that the USPTO has recently cut down on spending to update its trademark IT systems, which he said may have to be postponed until next year "at the earliest." The agency has also reduced its hiring, which may affect pending applications, according to the letter.
"The USPTO stands ready to work with Congress to continue to mitigate the impact of the current crisis for inventors and entrepreneurs while sustaining USPTO operations," he wrote.
The letter to Congress follows an agency meeting held last month, in which USPTO Chief Financial Officer Jay Hoffman said the office is bracing for a drop in revenue in the coming months as the long-term impact of the economic downturn becomes clearer.
"We are concerned that we could see a 5 to 10% reduction in patent revenues over the next 12 months," he said. "We haven't seen that revenue track yet, but it's a scenario that we're actively playing out."
The office has a reserve fund of $361 million, which it may need to tap into to cover a budget shortfall, Hoffman said. While "we're understandably a little nervous," Hoffman said, the fund should be sufficient to make up any gaps.
"I don't think there's a huge risk we'll run out of money in the reserve, but I look at this every day because these numbers are very volatile," he said.
At the meeting, Iancu said that the USPTO "will continue to focus on our core mission of fostering innovation, competitiveness and economic growth," whatever happens in the months to come.
"This is critically important, especially at this time, because inventors and intellectual property promote the well-being of all Americans," Iancu said. "Even in the midst of a global pandemic, indeed perhaps especially in the midst of a global pandemic, inventors, as they always do, will create new technologies that will help us overcome new and unprecedented challenges."
--Additional reporting by Ryan Davis. Editing by Haylee Pearl.
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