IP Monday Law Blog 

When the federal government shuts down, much of the public—rightly so—worries about disruptions across agencies, services, and legal rules. But the USPTO (United States Patent & Trademark Office) occupies a special niche: because it is funded largely through fees and has built reserves, the now three-week shutdown has meant much less disruption for patent and trademark filers than for many other agencies. Here’s what is happening, and why the impact is expected to remain low, at least for now.

In the wake of the shutdown 

On October 1, 2025, the government entered a shutdown at 12:01 a.m. EDT after Congress failed to pass new appropriations for the 2026 fiscal year. Many federal agencies have been implementing shutdown plans: furloughing non-essential staff, suspending certain programs, and limiting operations to "essential" functions. 

But the USPTO differs from many agencies because it does not depend solely on annual Congressional appropriations for its day-to-day operations.

Why is the USPTO more insulated than most agencies?

Fee-funded agency and operating reserves

• The USPTO is primarily financed by application, maintenance, and registration fees paid by users, rather than through direct appropriations.
• Over time, the USPTO has accumulated operating reserves — funds set aside to carry it through lapses in appropriations.
• Official statements, as of now, note that the USPTO remains “open and fully operational … under operating reserves from the prior year’s fee collections during the shutdown.”

Thus, unlike many agencies that must furlough large portions of staff almost immediately, the USPTO can continue functioning — at least for a time.

What has changed so far?

Even though the USPTO is currently maintaining operations, the shutdown has already triggered a few notable shifts:

1. Layoffs
   • The USPTO announced a “reduction in force” affecting roughly 1% of its workforce (out of more than 14,000). The agency says these are not performance-based cuts but are meant to preserve “mission-critical” operations. A small number of positions in the communications department and other units are impacted. 
2. Consolidation of outreach office
   • The Rocky Mountain Regional Outreach Office in Denver is being permanently closed. The roughly 30 impacted employees are expected to shift to remote work.
3. Staff prioritization and mission-critical exceptions
   • The shutdown plan contemplates that non-essential staff would be furloughed once reserves are depleted. 
   • Some functions — for example, the Trademark Trial and Appeal Board (TTAB) — are slated to maintain minimal staffing to manage ongoing contested cases, issue essential orders, and protect party rights. 
4. Potential exhaustion of reserves
   • While the USPTO is insulated for now, the operating reserves are not infinite. If the shutdown is prolonged further, there is a real risk that reserves will be exhausted. 
   • Different units (patent vs trademark) have separate reserves, meaning that one unit could reach the tipping point earlier than the other.

Why the impact has been modest and is expected to remain so?

Based on what we know so far, here are the main reasons the USPTO is likely to see only mild disruption (for now):

1. Continuity of core-services

The USPTO continues to accept filings, examiners are (for now) working, and trademark and patent prosecution remain in motion. Many clients and observers note that day-to-day operations look and feel fairly normal. Some caution however, as the sustained operations depend on how long the shutdown lasts.

2. Buffer from operating reserves

Because the USPTO has built reserves, it has a cushion to absorb short-to-medium shutdowns without immediate shutdown of operations. 

3. Selective scaling back and prioritization

Even if the shutdown stretches longer, the USPTO has a plan to scale back less critical functions first, while preserving core tasks such as examination, appeals, and basic administration. That gives room for continuity while trimming nonessential costs.

4. Regulatory protections for filings and deadlines

• If the USPTO does close for a day due to lack of funding, the agency treats that day as a federal holiday; deadlines falling on that day are extended to the next business day. The USPTO has invoked this mechanism in past closures. 
• Applicants should, of course, watch official notices to see whether particular dates are designated as closures.

What to watch for?

While the early signs favor minimal disruption, a few risks and warning flags remain:

• Duration matters: If the shutdown drags on, reserves will dwindle and more functions may get curtailed.
• Uneven effects across units: The patent and trademark sides have separate reserves; one might end before the other.
• Small-scale interruptions: Even a mostly functioning USPTO might see delays in internal support, outreach, or non-core services.
• External dependencies: While the USPTO may remain functional, other agencies or courts might be disrupted (e.g. ITC proceedings have already been paused).
• Uncertainty over congressional approval: The USPTO still requires congressional action to formally authorize use of funds. 

Bottom Line

Despite the continued federal shutdown, the USPTO continues to operate in normal fashion thus far, thanks to its fee-funded model and operating reserves. A small percentage of staff reductions and a regional office closure signal that the agency is being prudent. But for most patent and trademark filers, you likely won’t see major disruption in the short term. The USPTO remains open and processing applications, and protective mechanisms are in place for deadlines.

Continue to stay alert. If the shutdown continues for many more weeks, the risk of constraints or delays will grow. Monitoring USPTO announcements and being proactive (for critical filings or responses) is always prudent. Contact a member of our IP law team if you have concerns about USPTO filings during the government shutdown.