Large entity, small entity or micro-entity: which type of patent applicant are you?

When applying for a patent application, certain entities are entitled to reduced USPTO filing fees. Applicants who qualify for small entity status can reduce many USPTO fees by 50%. Applicants who are micro entities can reduce certain fees by 75%. An applicant who is neither a small entity nor a micro-entity is considered to be a large entity and must pay standard fees.

The savings resulting from small entity or micro entity status can be substantial.  As of June 1, 2020 the standard combined application, search and examination fee for a new utility patent application was $1,720. However, a small entity only pays $860, and the equivalent micro entity fee is $430. Also, in order to maintain a patent in effect, the owner must pay maintenance fees at the 3.5, 7.5, and 11.5-year anniversaries of the patent’s issuance. These costs can become significant over time. Small entity or micro entity status can help reduce those costs.

Small and micro entities also can take advantage of certain fee waivers and deadline extensions that are currently available to patent applicants who are adversely affected by the COVID-19 crisis. More details about those programs are available in this IP Spotlight post and in the Intellectual Property section of the Fox Rothschild Coronavirus Resource Center.

However, the consequences of mis-declaring entity status can be severe. In cases where courts have found applicants paid the small entity fee without a good faith basis for considering themselves to be small entities, the courts have invalidated the affected patent. Fortunately, entity status can be easily corrected by paying the increased fee amounts and making appropriate certifications about lack of deceptive intent.

A single enterprise may have different status for different patents or applications, so determining the correct status for each case can be tricky.

How can patent applicants determine their entity status? A summary of each status is:

Small entity: an entity that:

  • (i) is a nonprofit organization; OR (ii)  does not, together with all affiliates, have 500 or more employees; AND
  • has not assigned, licensed or otherwise conveyed an interest in the invention to a non-small entity.

NOTE:  Small Business Administration regulations define what is an “employee” and what is an “affiliate.”  If there is any doubt about whether an applicant qualifies for small entity status, the applicant should consider simply filing as a large entity.

Micro entity:  an entity (typically an individual or group of individuals) who:

  • has not been named as an inventor on more than 4 prior patent applications (other than applications assigned to a prior employer);
  • has gross income less than 3 times the amount reported on the U.S. as the median household income for the preceding calendar year (based on 2018 data, this is $189,537, or 3 x $63,179);
  • has not assigned, licensed or otherwise granted an interest in the invention to an entity who has gross income more than the amount listed above (unless the entity is an institution of higher education); and
  • also meets the requirement for small entity status.

NOTE:  If the application involves joint applicants, each applicant must qualify for micro entity status. Also, an applicant claiming micro entity status must submit a certification of entitlement to the status.

Large entity:  any entity that is neither a small entity nor a micro entity.

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