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Overview of Entity Size at USPTO

The entity size of a patent applicant/owner is important for determining the amount of government fees paid to U.S. Patent & Trademark Office (USPTO).  Prior to March 19, 2013, there are only two entity sizes: "Large Entity" and "Small Entity".  After March 19, 2013, a "Micro Entity" size was added.

If a patent applicant is considered a Small Entity as defined in 37 CFR 1.27, then they are entitled to a 50% reduction with most USPTO government patent fees.  If a patent applicant is considered a Micro Entity as defined in 37 C.F.R § 1.29, then they are entitled to a 75% reduction with most USPTO government patent fees.  If an entity does not qualify as a Micro Entity or a Small Entity, then it is a Large Entity that pays 100% of the government patent fees.  Always talk to a patent attorney before filing any patent application to ensure you are paying the appropriate fees.

  

Micro Entity Status (Effective After March 19, 2013)

To qualify for Micro Entity status, a patent Applicant must meet all of the following criteria:

     1.  Small Entity (see next section);
     2.  Not Named on More than 4 Previously Filed Applications*;
 
    3.  Gross Income Does Not Exceed $150,162 (based on 3 times 2011 median household income of; and
     4.  Not Under Obligation to Assign or License to an Entity With Income Exceeding $150,162.

* Applicants are not considered to be named on a previously filed application if he or she has assigned, or is obligated to assign, ownership rights as a result of previous employment. Applications filed in another country, provisional applications, or international applications for which the basic national fee was not paid do not count as previously filed application. The definition also includes applicants who are employed by an institute of higher education and have assigned, or are obligated to assign, ownership to that institute of higher education.
 

The USPTO has a Certification of Micro Entity Status form that specifies the following to qualify as a Micro Entity:

A patent applicant hereby vertifies the following:

(1) SMALL ENTITY REQUIREMENT -The applicant qualifies as a small entity as defined in 37 CFR 1.27.

(2) APPLICATION FILING LIMIT - Neither the applicant nor the inventor nor a joint inventor has been named as the inventor or a joint inventor on more than four previously filed U.S. patent applications, excluding provisional applications and international applications under the Patent Cooperation Treaty (PCT) for which the basic national fee under 37 CFR 1.492(a) was not paid, and also excluding patent applications for which the applicant has assigned all ownership rights or is obligated to assign all ownership rights as a result of the applicant’s previous employment.

(3) GROSS INCOME LIMIT ON APPLICANTS AND INVENTORS - Neither the applicant nor the inventor nor a joint inventor, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding the “Maximum Qualifying Gross Income” reported on the USPTO website at http://www.uspto.gov/patents/law/micro_entity.jsp which is equal to three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census.

(4) GROSS INCOME LIMIT ON PARTIES WITH AN “OWNERSHIP INTEREST” - Neither the applicant nor the inventor nor a joint inventor has assigned, granted, or conveyed, nor is under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding the “Maximum Qualifying Gross Income” reported on the USPTO website at http://www.uspto.gov/patents/law/micro_entity.jsp which is equal to three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census.

If you are not 100% for sure that you qualify for Micro Entity status, then you should pay the Small Entity fee to be safe or talk to a patent attorney.

Small Entity Status

The owner of a patent application or patent is a small entity if they have not assigned, granted, conveyed or licensed (and is under no contractual obligation to do so) any of the patent rights to a large entity and they qualify as one of the following entities:

  • Person.  Any inventor or other individual that owns the patent rights individually or jointly.
  • Small Business Concern.  Any business with 500 or less employees (including affiliated companies as defined in 13 CFR 121.103).
  • Nonprofit Organization.  
    • Any university or other institution of higher education located in any country;
    • Any organization of the type described in section 501(c)(3) of the Internal Revenue Code and exempt from taxation under section 501(a) of the IRC;
    • Any nonprofit scientific or educational organization qualified under a nonprofit organization statute of a state of the United States; or
    • Any nonprofit organization located in a foreign country which would qualify as a nonprofit organization if it were located in this country.

 

Large Entity Status

If your company does not qualify as a Micro Entity or a Small Entity, then you are a Large Entity that has to pay 100% of the USPTO patent fees.

  

Fraudulent Establishment of Small Entity or Micro Entity Status

Any attempt to fraudulently establish small entity or micro entity status at the USPTO is considered fraud practiced or attempted on the USPTO.  Fraud on the USPTO can result in the loss of your patent rights.  It is therefore important to ensure that you have the proper entity status when paying USPTO fees.

Michael Neustel is the founder of the National Inventor Fraud Center, Inc.