Depending on your income, number of employees, and whether you’re innovating on behalf on an educational organization, you might be eligible for lower filing fees for your patents. In the US and for patent filing purposes, there are 3 different patent filing fee categories. The lowest one is the micro entity status and the highest one is the large entity status. In between these two is the small entity status. In general, the small entity status fees are half those of the large entity and the micro entity status are about half those of the small entity status, or a quarter of the large entity filing fees. This is something you need to determine before filing with the USPTO as they make it very painful to get a refund and you don’t want your patent invalidated because you intentionally claimed the wrong entity status.
The United State Patent and Trademark Office (USPTO) tries to help small businesses and inventors by lowering their filing fees relative to those of large companies. On the USPTO filing fee page, you can choose between “Fee” (here discussed as the large entity fee), “Small Entity Status”, or “Micro Entity Status”.
Details below, but here is what you need to know:
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Micro Entity is the lowest filing fee
Micro Entities are entitled to a 75% discount of the large entity fees for most fees. You can qualify for micro-entity status if you either (1) don’t making more than $184,116, the current US household median, or (2) you are an institution of higher education or are inventing on behalf of one.
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Small Entity
Small Entities are entitled to a 50% discount of the large entity status. You can qualify for small entity status if you have 500 or less employees.
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Large Entity
Large Entities are not entitled to any discount on fees at the U.S. Patent Office. A Large Entity status is any firm with more than 500 employees.
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Micro entity or the lowest filing fees
Micro entity is the lowest patent filing fee category. The size of the applicant dictates how much you’ll pay in patent filing fees. For the lowest patent filing fees in the US, there are 2 ways to qualify:
A) Income
For the income base qualification, here is what you need to qualify:
(a) Small Entity: You have to qualify as a small entity status (essentially less than 500 employees – details below),
(b) You were not named on more than 4 previous applications.
The applications listed below do not count for those 4:
- applications filed in another country
- provisional applications
- international applications which did not go past the International Stage ( you filed PCT and have not started filing in other countries individually yet)
- if your other applications were for the benefit of another employer (not the current employer)
(c) Income: If you are currently not making more than $184,116, you qualify for micro entity status. $184,116 is the US household median in 2019 and at the time of writing this article. For the latest Micro-Entity income number, check the USPTO website
This is you individually. So if you’re married, it’s not the entire household income but your income in the marriage. Marital status doesn’t matter even though the term “median household income” is used as a determining factor.
According to the USPTO FAQ page, for the purposes of this comparison, it is only the inventor’s own income which is used in this comparison, not the total income of the household.
Regardless of whether an applicant, inventor, or joint inventor filed a joint tax return rather than a separate tax return in the preceding calendar year, the gross income limit applies to the amount of income the person would have reported as gross income if that person filed a separate tax return, which includes, for example, properly accounting for that person’s portion of interest, dividends, and capital gains from joint bank or brokerage accounts.
(d) You are not giving your rights to a non-micro entity. This includes assignment, grant, conveyance, or license to an entity that wouldn’t qualify for micro entity status.
What if there are multiple inventors?
The rules apply individually to each joint inventor. So, no joint inventor can have been named as an inventor on more than four applications, and no joint inventor can have a gross income of more than $184,116 for the preceding year.
B) Educational basis
The second way to qualify for micro entity is by having a relationship with a U.S. institution of higher education. The applicant’s employer, from which the applicant obtains the majority of the applicant’s income, must be an institution of higher education. Or, the application must be assigned, granted, conveyed, or is under and obligation of contract or law to assign, grant, or convey, a license ownership interest in the particular application to the institution of higher education.
Pursuant to paragraph (d), applicants employed by the university who derive a majority of their income from the university, or an applicant who has assigned or has an obligation to assign to a university can also claim micro-entity status, regardless of income.
To obtain micro-entity status under paragraph (d), the actual inventors, rather than the institution of higher education, must be named as the applicant. Also, since the definition of “institution of higher education” refers to the Higher Education Act of 1965, the institution of higher education referenced in paragraph (d) must be in the United States.
Who can sign a certification of micro entity status?
- A registered patent practitioner, meaning a registered attorney or agent who is either of record or acting in a representative capacity under 37 CFR 1.34;
- An inventor who is named as the sole inventor and identified as the applicant; or
- All of the joint inventors who are identified as the applicant. If qualified for micro entity status, joint inventor applicants should sign separate copies of the relevant micro entity certification form(s).
Considerations:
The certification only needs to be filed once, however, the status should be reevaluated every time a fee is paid to the USPTO.
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Small entity – what’s a small entity in patent law and you claim it
Small entity status applies to the applicant and owner of the patent rights, not the inventor(s). Here is what you need to qualify for small entity status:
- Be a “small business concern” with fewer than 500 employees;
- Be an individual inventor applicants (i.e., “persons”); or
- non-profit organizations regardless of size, including institutions of higher learning (e.g., universities).
If the applicant has to or assigns or gives away any rights in the invention to a large entity, then small entity status cannot be asserted.
How to claim small entity status
Unlike the micro entity status, to claim the small entity status you don’t need to file any additional forms. All you have to do is check the “Applicant claims small entity status” box on the transmittal form, or by paying the small entity fee exactly.
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Large Entity status
Large entity status applies to the applicant and owner of the patent rights, not the inventor(s).
If an entity has 500 or more employees, then it is considered a large entity for USPTO filing purposes. The employee count would include any affiliates under the control of the applicant (see 13 CFR 121.103 on how to determine affiliation).