When applying for patent protection, an applicant can register as a large entity, small entity, or micro entity. If you’re an individual or small entity applying for patent protection, micro entity status may be available to you.
What is a micro entity?
in US Patent Law, micro entities are defined as small business concerns, institutions of higher education, or individuals whose gross income does not exceed three times the median household income for the preceding year. This classification was created by the America Invents Act (AIA) of 2011 to promote innovation and to provide a more affordable option for individual inventors and small businesses to protect their inventions through the patent system.
Under a micro entity status, an applicant can benefits from an upto 80% reduction on most fees charged by the United States Patent and Trademark Office (USPTO) if they qualify and file the appropriate papers in their application or patent. This can save money on filing and prosecuting patent applications.
How do I qualify for micro entity status?
To become a micro entity, you must meet certain requirements and pay an associated fee as provided under USPTO Regulation – 37 CFR 1.29. These criteria include:
- Qualifying as a Small Entity: This includes individual inventors, small businesses with fewer than 500 employees, and nonprofit organizations. Those eligible to become a small entity must file their applications using either form SB/15A or SB/15B, and include a declaration with their submission that demonstrates they meet the criteria for micro entity status. Additionally, they should check the box titled “Applicant claims small entity status” on the transmittal form. Otherwise, their application will be considered a large entity and they will have to pay full fee rate.
- Meeting Income Requirements: To qualify as a micro entity, the applicant must also meet specific income requirements. Specifically, the applicant must have a gross income that is less than three times the median household income for the previous year.
- Meeting Ownership Requirements: The applicant must also own fewer than five previous patent applications and not have assigned, licensed, or transferred any ownership rights in the application to a non-micro entity.
- Not Being Named as an Inventor on More Than 4 Previously Filed Patent Applications: Additionally, the applicant must not have been named as an inventor on more than four previously filed patent applications.
If your income exceeds the minimum threshold, then you must pay a standard filing fee to file your patent application. Alternatively, you may apply for a provisional patent as well.
Meeting these criteria allows an applicant to qualify for the reduced fees associated with filing a patent application as a micro entity.
What are the advantages of micro entity status?
Filing for micro entity status at the United States Patent and Trademark Office has many advantages. These include:
- Reduced Fees – Micro entity status allows an applicant to receive a 75% discount on certain patent fees. This makes it more affordable for small businesses and individual inventors to protect their inventions using the patent system.
- Competitive Advantage: By reducing fees, micro-entities can invest their money in other areas of their business and gain a competitive edge in the market.
- Access to the Patent System: The micro entity status allows access to the system of patents that was previously too expensive for small inventors or businesses. This enables them to protect their inventions and take their innovations to the market.
- Retaining of ownership: By filing under a micro-entity, the applicant retains ownership of their inventions and can potentially earn revenue by licensing or selling patents.
- Micro Entities may also be eligible for an extended deadline for certain patent examination responses.
The micro entity status is a great advantage for small businesses and inventors who want to save money while protecting their intellectual property. In addition to cutting patent fees, micro entity status can be beneficial when filing R&D tax credits. These credits could significantly boost profits. Furthermore, you may be able to secure new shareholder buy-in or funding that allows your company to expand.
What are the disadvantages of micro entity status?
Micro entities can be an attractive option for certain businesses, but there are some drawbacks that must be taken into consideration.
One major disadvantage is the cost of obtaining micro entity status especially if you do not possess much expertise in this area. Applying for micro entity status requires much effort and requires reassessment every time a fee is paid. This means you may have to pay more fees over time, potentially increasing the cost of your patent application. This is one of the primary reasons applicants hesitate to apply for micro entity status.
Another disadvantage is the complexity of following all regulations and requirements. Though you can apply for micro entity status on your own, the process can be lengthy and complex. For this reason, it’s wise to hire a lawyer experienced in micro entity law to guide you through the procedure.
Another thing to keep in mind is that you can only claim micro entity status once per application or patent. With each application, whether it be a divisional, continuing, continuation-in-part or reissue application, you must submit a certification of your eligibility for micro entity status. Furthermore, when refiling an existing patent under SS 1.53 as either a continuation, divisional, continuation-in-part application or reissue application, a new certification of your eligibility for micro entity status must be submitted and you must pay all applicable fees to the USPTO each time.
USPTO fees often increase, so be aware of the current rate before submitting your application. It is wise to consult a patent attorney if you are uncertain of your eligibility or would like help preparing and filing your application.
The USPTO’s micro entity provisional patent fee offers an impressive discount, saving applicants money – especially if they’re startups or have less than JPY 300m in capital. However, if your business is larger or you need investment or funding to expand, micro entity status may not be the best option for you. Not only is it difficult to acquire, but having less information about your finances available to potential creditors or investors may make it less attractive.
Micro entities may only have minimal disclosure requirements when preparing their statutory accounts, which could put you at a competitive disadvantage as competitors may gain access to your financial details.
It’s essential to remember that falsely claiming micro entity status can invalidate your patent.
Making the decision to file for micro entity status
The decision to file for a micro entity should be based on the advantages it provides. However, this can be challenging to assess as there are various factors that could influence whether or not this option is right for you. In summary, these factors include:
- Eligibility: The applicant must meet certain eligibility requirements to qualify as a micro entity, including income, ownership, and inventorship criteria. It is important to carefully review these requirements to determine if micro entity status is a viable option.
- Cost Savings: Micro entity status can provide a significant cost savings in certain patent fees. An applicant should assess the potential cost savings against the costs associated with obtaining a patent, including legal fees, and determine if the overall cost is still feasible.
- Competitive Advantage: With reduced fees, micro entities may have a competitive advantage in the marketplace, which can be a significant factor in deciding to pursue micro entity status.
- Business Strategy: An applicant should consider their overall business strategy and determine if obtaining a patent is a necessary step for their business goals. A patent can provide protection for their intellectual property and potentially generate revenue through licensing or selling the patent.
- Examination Deadlines: Micro entities may be eligible for extended deadlines for certain patent examination-related responses, which can be beneficial for applicants who need additional time to respond.
- Consultation with Patent Professionals: It is always a good idea to consult with a patent attorney or agent to discuss the advantages and disadvantages of micro entity status, and to determine the best course of action for a specific invention or innovation.
Generally speaking, micro entity status is an advantage that small companies can leverage to make filing patent applications much simpler. Not only will you save money on filing fees, but having this status means more funds in your pocket to invest in growing your business.
If you’re uncertain, speaking to an attorney is recommended. They will help maximize your benefits and guarantee that you meet the criteria for micro entity recognition. Doing so will help avoid making a mistake that invalidates your application and help determine whether or not obtaining micro entity status is worth the extra effort and expense.
