Micro Entity Provisional Patent Application Fee Reduction

Through the America Invents Act, some applicants and patentees can enjoy a substantial reduction in provisional patent application fees. To take advantage of this benefit, they must first achieve “micro entity status” as defined by USPTO Regulation – 37 CFR 1.29.

At present, there are two ways to qualify for micro entity status: on the basis of gross income or by attending an institution of higher education. Both methods come with certain restrictions.

Small Entity

The United States Patent and Trademark Office (USPTO) offers reduced fees to applicants classified as small entities or micro entities. This initiative is meant to make patenting more accessible for inventors and small companies than larger corporations by helping them afford the costs of obtaining a patent.

A small entity is defined as any individual, business or non-profit organization that is not named on more than four utility patents and has an income below three times the median household income for that year. This allows small companies and independent inventors to apply for patents, which in turn promotes innovation by encouraging larger organizations to file for them.

In order to claim small entity status, an applicant should check the appropriate box on either their new application transmittal form or application data sheet. While this isn’t a requirement, it does provide them with the basis for reduced government fees.

Small entities include universities, nonprofit organizations, individual inventors and small business concerns. The key requirements for being classified as a small entity are that it does not have more than 500 employees combined with any affiliates and did not assign, license or convey rights to another non-small entity without losing its status as a small entity.

Furthermore, a small entity must not assign or license its application or patent to a large entity that is not a small entity. This restriction stems from the fact that permitting the issuance and maintenance of a patent for which an existing large entity owns an interest would be an unnecessary waste of resources.

Additionally, the small entity must be able to establish an adequate connection with the owner of a patent and any applications or patents associated with it. This requires that they have sufficient personal interest in the invention.

In the event an applicant or patentee loses their small entity status, they must notify the USPTO immediately of their loss. Failing to do so could mean losing patent rights.

Furthermore, the PTO cannot impose a higher fee on an applicant or patentee if it is determined they have lost small or micro entity status for paying fees due at 3.5, 7.5, and 11.5 years after a patent issued.

Micro Entity

Micro entity status is a legal designation that grants smaller businesses and individual inventors the ability to file patent applications without having to pay as many fees. This status was introduced in 2012 under the America Invents Act.

According to USPTO regulations, three entity size tiers exist: large entities must pay the full fee schedule while small and micro entities qualify for reduced charges. On December 29th 2022, thanks to “Unleashing American Innovators Act,” discounts were increased from 50 percent to 60 percent for small entities and from 75 percent to 80 percent for micro entities.

To be eligible for micro entity status, applicants must meet several requirements. Firstly, their gross income must not exceed three times the median household income for the prior calendar year. Each inventor in an application and each non-inventor applicant must individually meet this limit in order to be granted this designation.

Another prerequisite for micro entity status is that an applicant’s patent attorney must sign a certification confirming their entitlement to such status, which must then be filed with the USPTO in accordance with SS 1.33(b).

Once an applicant has claimed micro entity status, it remains in effect until its status changes or it loses it in accordance with SS 1.53(k). If a micro entity certificate is lost due to changing an applicant’s entity status or any other reason, notification of loss must be sent along with itemized requirements as specified by 37 CFR 1.29.

If an applicant fails to meet the micro entity qualification requirements, the Office may refuse or reject their filing. Therefore, it is highly recommended that those interested in claiming micro entity status consult a patent attorney prior to making their claim.

An applicant who has previously paid micro entity fees but does not meet the criteria for micro entity status must file a certificate of loss of status with the USPTO within one month to retain their discounted fee. Any resulting deficiency payment due from incorrect payments of micro entity fees must then be settled in full.

Large Entity

A large entity is defined as a business with 500 or more employees, including part-time and foreign workers. Even if your workforce numbers are smaller than 500, you could still be considered part of the large entity category if you licensed your patent pending technology or patent to another business with more than 500 personnel.

Small businesses and independent inventors may qualify for a reduced fee, as can nonprofit organizations and universities. Unfortunately, this discount is only available once for each patent application and excludes fees charged by WIPO or EPO.

It is essential to the U.S. government’s goal of making patenting accessible for individuals and small businesses alike, so the USPTO offers various fee reductions as part of their fee reduction initiatives.

Micro entity applicants qualify for a 50% reduction on filing, drafting and allowance fees. These discounts can be especially advantageous to medical device startups where significant money is invested upfront.

Savings can be substantial and compound as more applications are filed. In some cases, an applicant could save over 900 USD on non-provisional patent applications and over 3,850 USD on issued patent maintenance fees.

In addition to saving on various fees, small entity and micro entity discounts can also save you a substantial amount of money in other ways. For instance, micro entities are eligible for a 50 percent discount on the 11.5 year patent maintenance fee.

If a patent filer qualifies for micro-entity status, they must complete and submit a special form to claim their reduced fees – currently PTO/SB/15A.

To qualify for micro-entity status, an applicant must have a gross income no greater than three times the median household income for the prior year and cannot have been named an inventor on more than four utility patents.

The patent owner must notify the Office of any change in status from small entity to large entity or micro entity, prior to paying any issue or maintenance fees. Failure to do so could result in the revocation of a patent as well as denial of future filings.

Other Filing Statuses

Micro entity status can be especially advantageous to inventors and businesses with tight budgets, as it offers them the chance to reduce patent fees by as much as 50% compared to larger entities. Furthermore, micro entities have the added advantage of being able to apply for patents abroad without paying extra costs.

To qualify as a micro entity, you must meet certain criteria. For instance, you cannot be named inventor on more than four patent applications and your gross income must not exceed three times the median household income for the year prior to filing the application.

Furthermore, if you are a joint inventor, you must meet certain requirements: each joint inventor cannot have been named on more than four patent applications, and your gross income must not exceed three times the median household income as reported by the Bureau of Census in the year before filing your application.

If your business, employer, or institution of higher education is small enough, and has fewer than 500 employees, then micro entity status may apply to you.

To verify your micro entity status in any patent application – including divisional, continuing, continuation-in-part and reissue applications – you must include signatures from each inventor or party included in your patent.

Once you have verified your micro entity status with the USPTO, you can afford all USPTO fees at a reduced rate as a micro entity. However, be sure to confirm your status each time you pay any fee (including issue and maintenance charges), otherwise an additional penalty may apply.

For the first time ever, the USPTO is imposing a penalty for falsely asserting small or micro entity status during filing, prosecution and after patent issuance. Doing so could result in the revocation of your patent.

Clients and attorneys should exercise great diligence in verifying their eligibility for micro or small entity status at all times, from filing to prosecution and even after patent issuance. Failure to do so could result in a fine of up to three times the fees paid incorrectly to the USPTO – an expensive mistake.