Small Entity or Micro Entity Fee Status

Small Entity or Micro Entity Status

The fees you can expect to pay to the USPTO will vary significantly depending on whether you qualify for Small or Micro entity status. Most filing fees are discounted by 50% for patentees and applicants that qualify as “Small Entities” and by 75% for “Micro Entities”. On this page we'll describe exactly what criteria determine whether you qualify as a Small Entity or a Micro Entity. 

 Micro Entity Status

On September 16, 2011, the 2011 America Invents Act was introduced. According to this act, the United States Patent and Trademark Office rules that a “Micro Entity” is any applicant who falls under either of two categories, based either on experience and income, or on Higher Education status. 

(A) Income and Experience Requirements

(1) Small Entity – An applicant qualifies as a Small Entity (see below)

(2) The applicant, nor any joint applicant, holds no more than 4 previous applications. The following are exceptions to this limitation:

• Any applications filed in another country
• Provisional applications
• Any international application for which the National Stage fee was not paid.
• Applications for which the applicant assigned, or was under an obligation by contract or law to assign, all ownership rights in the application as the result of the applicant’s former employment. This does not apply to the applicant's current employer!

(3) Income Test – The applicant's gross income cannot exceed three times the median household income for that preceding calendar year, as defined by the IRS. According to the USPTO FAQ page, it is only the inventor’s own personal income that is used in this comparison, not the total household income.

(4) No grant of rights to a non-Micro Entity – The applicant cannot assign, transfer, grant or convey their rights to another entity which does not itself qualify for Micro Entity status. 

(B) Institution of Higher Education status:

Individuals who are involved in higher education are also eligible for Micro Entity status, independently of the above criteria. “Micro Entities” include applicants who certify that either:

1. Employee of Institution of Higher Education – The applicants are employed by and obtain a majority of their income from an institution of higher education.
   or
2. Rights to be owned by Institution of Higher Education - The applicant has already or is under an obligation to transfer the patent rights from the application to an institution of higher education. 

 

Regulations

To qualify for Micro Entity status, the applicant must also meet the requirements of a Small Entity. This rule is to prevent Large Entities from obtaining Micro Entity status by transferring some patent rights to an institution of higher learning.

A Micro entity discount of 75% applies to filing fees, searching fees, and fees relating to the examination, issuing, maintaining and appealing of the application and issued patent. See our USPTO Patent Fees for a complete list of fees and discounts available.

On December 19, 2012, the United States Patent and Trademark Office published final rules for administering Micro Entity status. These rules were published in the Federal Register at vol 77 page 75019, and went into effect on March 19, 2013.

The USPTO has certification forms that need to be filed to give the applicant “Micro Entity” status. There are separate forms for qualification under Experience and Income status (SB15A) and under the Institute of Higher Education status (SB15B). The certification of micro entity status forms may only be signed by an authorized party as set forth in 37 CFR 1.33(b). An officer of an assignee corporation or organization is not authorized to sign a certification of micro entity status. Only the following entities may sign a certification of Micro Entity Status:

• A registered patent practitioner – a registered attorney or agent who is either of record or acting in a representative capacity under 37 CFR 1.34
• The inventor named as the sole inventor and identified as the applicant
• All of the joint inventors identified as the applicant. Joint inventor applicants should sign separate copies of the relevant micro entity certification forms) if they are qualified for micro entity status.

The applicant’s status needs to be reviewed each time a fee is settled to make sure that the applicant is still a “Micro Entity", though the certification form only needs to be filed once. Any of the following would result in a loss of a Micro Entity status.

• The applicant’s income increased over the published limit for the year due to the large capital gain from the sale of an asset; or,
• The applicant is employed by an Institute of Higher Education has taken another job the income from which exceeds that from their employment with the educational institute.
• The applicant gave a license to a company that is not a Micro Entity.

---

 Small Entity Status

You must make the assertion of Small Entity status when you file the application by the checking the “Applicant claims small entity status” box on the transmittal form or by paying the exact Small Entity Fee. 

This is the only time you can claim the small entity status just by paying the right fee. If your status changes before you pay any later fees (issue fees, maintenance fees, etc) then you must file a written assertion that you are now a Large Entity when you settle the fee. It will not be enough simply to pay the Large Entity fee — that will not alter your recorded status. The same holds if you originally filed as a Large Entity but your status has changed to allow you to qualify later on for Small Entity status. 

Once your Small Entity status has been established, you may pay small entity fees until:

1. Filing a continuing application, continuation, division, or continuation in part (CIP)
2. Filing a reissue application
3. Settle the issue fee
4. Paying any maintenance fee that is due after the patent issues.

You will need to make a new determination of your Small Entity status before taking any of the above actions.

 

Important: Status applies to the owner of the Patent Rights, not the inventors!

The “Small Entity” or “Large Entity” status applies to the owner of the patent rights rather than the inventors. The owner cannot claim Small Entity status if they have granted patent rights to an entity that is not a Small Entity.

To qualify as a Small Entity, the patent holder must be one of the following:

• The owner is a person or individual who has not assigned, granted, conveyed, or licensed, and is under no obligation under contract or law to assign, grant, convey, or license, any rights in the invention to an entity which does not itself qualify as a Small Entity.
• The owner is a "small business concern". A Small business is one which meets the following conditions:

1. The number of employees and affiliates does not exceed 500 individuals
2. Has not assigned, granted, conveyed, or licensed any rights in the invention to any person who could not be classified as an independent inventor, or to any other entity which would not qualify as a small business concern or a non-profit organization.

• The owner is a non-profit organization. A non-profit organization being one which:

 

1. Has not assigned, granted, conveyed, or licensed any of their patent rights in the application to any person or organization which would not meet Small Entity status.
2. Is either:

• A university or other institution of higher education located in any country
• An organization of the type described in section 501(c)(3) of the Internal Revenue Code of 19 86 (26 U.S.C. 501(c)(3)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a))
• Any nonprofit scientific or educational organization qualified under a nonprofit organization statute of a state of this country (35 U.S.C. 201 (i))
• Any nonprofit organization located in a foreign country which would qualify as a nonprofit organization under paragraphs (a)(3)(ii)(B) of this section or (a)(3)(ii)(C) of this section if it were located in this country.

 

Rights Held by Government Agencies

Government agencies are not considered Small Entities. However, there are some exceptions to the rule regarding transferring rights to another entity mentioned above where some licenses to government agencies will not preclude Small Entity treatment for the applicant transferring the rights. Those exceptions deal with compulsory licenses granted the government under Executive Order 10096 and 35 USC 202(c).