Small Entity Provisional Patent Fee Discount

If your business is small enough, the United States Patent and Trademark Office will waive your provisional patent fee. This can help reduce overall expenses.

However, you must ensure that you claim small entity status accurately. Otherwise, you could find yourself paying much more than necessary.

What is a Small Entity?

A small entity is any person, small business concern or nonprofit organization that meets certain requirements under USPTO’s patent rules. These include having no more than 500 employees and not appearing on more than four utility applications; additionally, their gross income should not exceed three times median household income for the previous year.

In the United States, those qualifying for small entity status can save half on necessary filing and issue fees when applying for a patent. The discount applies to various patent fees such as the basic filing fee, examination fee and search fee.

However, it’s essential to be aware that not all inventors or small businesses will qualify for the small entity discount. Some companies or individuals may not qualify if they have assigned, granted, conveyed, licensed, or given their rights away to a larger entity that doesn’t qualify for this reduction.

If a party has not been properly established as a small entity during the filing process, they may claim such status by making an oral assertion under 37 CFR 1.27. This declaration will grant small entity status for purposes of applications and patents.

The small entity status granted in an initial application or patent does not apply to subsequent ones filed for the same family or class of inventions, and any later claims for small entity status require no new determination or affirmation.

This provision is meant to offer protection for inventors and small businesses that qualify for the small entity discount. Once a good faith determination of status has been made with the USPTO, lower fees remain in effect until either an issue fee or maintenance fee is due.

Furthermore, the USPTO allows a person or business that has previously claimed small entity status to do so again even if they select an incorrect type of small entity basic filing or basic national fee for their application. This can be especially advantageous when the applicant selects an exact small entity basic filing or basic national fee for a design application but the filing actually involves a utility application.

How Do I Qualify as a Small Entity?

As a small entity, you have exclusive access to government contracts that larger businesses cannot bid on. Furthermore, smaller entities enjoy reduced fees such as the provisional patent fee – half what large entities pay – that apply only to them.

To qualify as a small entity, you must meet certain criteria. These include the number of employees and annual receipts. The Small Business Administration (SBA) sets standards for qualifying as a small business based on North American Industry Classification System (NAICS) code of your industry and how much income your business generates annually.

The Small Business Administration (SBA) uses employee numbers and annual revenue generated to determine if your business qualifies as a small entity. Once it surpasses five hundred employees, however, you no longer qualify for this status.

For instance, if you operate an automotive repair shop, your annual revenue cannot exceed $8 million. Furthermore, you must have eight hundred employees plus any affiliates (parent companies, subsidiaries and other affiliated businesses).

However, it is essential to be aware that the SBA does not count part-time employees or those employed by subsidiaries or affiliates. Furthermore, if your business operates in a federally regulated industry, all federal personnel must be included.

If you are uncertain whether your business qualifies as a small entity or need assistance determining its status, contact an attorney. You can also visit the SBA’s website for further guidance.

EPA typically assigns applications to Small Entity Representatives (SERs), who are owners or operators of small businesses, community officials or non-profit organizations. On occasion, EPA may select SERs from trade associations that exclusively or primarily represent potentially regulated small entities on a case by case basis.

The SER must submit a written confirmation as to an applicant’s eligibility for small entity status, signed and clearly identifiable. Without this written declaration, the PTO will not recognize an application as being eligible for small entity status when calculating fees and discounts associated with that status.

How Do I Claim Small Entity Status?

Small entity status is a type of reduced patent fee available to individual inventors, small business concerns, nonprofit organizations formed under section 501(c)(3) and universities. With this reduced fee you could save up to 60% or 75 percent on application costs.

Claiming small entity status can be done in several ways. One way is by filing a written assertion along with your application transmittal letter. This assertion should be signed by either an accredited practitioner, an inventor, partial assignee of the invention, etc. The Office strongly encourages applicants to file this assertion along with payment of either the small entity basic filing fee or basic national fee.

Claim Small Entity Status

Another way to claim this designation is by filing a declaration with your fee that certifies you as an individual, small business concern, or nonprofit organization. If this criteria is fulfilled, the application fee will be reduced in half and you’ll also get an exclusive discount on future filing fees.

Claiming small entity status at the USPTO requires familiarizing yourself with their rules. Failure to qualify as a small entity could mean your patent application being denied or your fee being increased significantly.

Additionally, your business could lose its small entity status if it employs more than 500 personnel at any point during the year. This regulation is complex and it’s best to consult a lawyer before making any decisions related to this matter.

Another example of when small entity status may not apply is when your invention rights have been assigned, granted, conveyed or licensed to a large entity (e.g., government use license). While this situation is often overlooked, it can present serious difficulties.

If your company does not meet the small entity threshold, be mindful who you assign the patent to and how it is licensed. Failure to do so could have serious repercussions, including potential liability for patent infringement.

Verifying your micro entity status each time a fee is paid helps ensure that you do not need to re-assert it if your income increases or the name of your company changes.

What is the Small Entity Discount?

The small entity discount is a reduction in patent fees for inventions created or conceived by individuals, small business concerns, or nonprofit organizations. It applies to patent applications filed in the United States and prosecuted at the USPTO; its purpose is to encourage collaboration and technology transfer between small entities and federal agencies.

This discount is only applied to the nonprovisional patent fee; it does not cover document supply fees, certificate of correction fees or miscellaneous fees and charges.

To take advantage of the micro entity discount, a person must demonstrate eligibility by filling out form SB/15A to claim small entity status on a gross income basis or SB/15B for institutions of higher learning. Both forms can be found on our Patents Forms page.

Although this is an effective way to save money, there are some essential things you should remember. One of them is that if your business starts as a small entity and then grows into a large one, then reassess your status when paying any maintenance or issue fees.

Remember, the micro entity discount does not apply to two surcharges associated with filing nonprovisional utility applications in paper: the small entity non-electronic filing surcharge and the surcharge for filing in a format other than DOCX. You can avoid these fees by filing electronically in DOCX format through Patent Center – USPTO’s automated online solution for patent filing – through their automated online solution.

It is important for applicants to be aware that even if an applicant claims small entity status in their application, there is no guarantee the USPTO will grant such recognition. It is up to the USPTO to determine whether or not an applicant qualifies for small entity status before granting such status, as noted by MPEP.

Additionally, applicants who claim small entity status and later lose it will not be entitled to any refund of fees paid in anticipation of losing that status. This is because 35 U.S.C 123(a)(4) disqualifies an entity from micro entity status if it has assigned or granted a license or other ownership interest in an invention to another entity which exceeded its previous calendar year’s gross income limit.