UPDATE 1-U.S. patent office shortfall worsens -- official

* Patent office revenue dropping as economy worsens

* Officials working to avoid laying off examiners

(Adds facts and figures to give context)

WASHINGTON, June 23 (Reuters) - The U.S. Patent and Trademark Office is facing a growing shortfall that has forced it to ask Congress for rule changes to help it weather economic hard times, a Commerce Department official told Reuters on Tuesday.

The patent office, which supports itself by collecting fees to grant and maintain patents, has seen its collections drop from $6.9 million a day in January and February of this year to $6.2 million per day in April and May, said Jay Reich, deputy chief of staff of the Commerce Department.

Last week, collections totaled just $5.9 million a day, Reich told Reuters.

Even before the financial crisis prompted companies to pare their patent portfolios, which reduced the patent office’s revenue, the department was criticized for its large and growing backlog, which Reich estimated at 770,000 applications.

The 6,285 patent examiners approve or reject about 450,000 applications each year, according to patent office figures.

The patent office had already cut $120 million from its budget this year and identified another $20 million in potential savings from reductions such as eliminating overtime pay, said Reich.

“Everything we can control, we have tried to reduce,” said Reich. “The Draconian move we want to avoid is furloughs.”

President Barack Obama said last week he had chosen David Kappos to run the patent office. Kappos is currently IBM's IBM.N vice president and assistant general counsel for intellectual property.

The patent office is contacting the congressional committees with authorizing and appropriating power over it to solicit ideas for a fix and ask for the right to temporarily tap at least part of a $60 million projected surplus held by the trademark side of the office and to put about $10 million earmarked for special projects into the general operating fund.

The U.S. Patent and Trademark has an annual budget of about $1.9 billion.

But Reich said the agency’s surveys of patent attorneys and industries found that the budget woes could worsen.

“They’re not very bullish in terms of turning the situation around in the near term,” he added. (Reporting by Diane Bartz; editing by Matthew Lewis)