Small Entities and Micro Entities: What’s the Difference?

A breakdown on the qualifications for small and micro entities.

As of March 19, 2013, inventors paying patent fees at the U.S. Patent and Trademark Office (USPTO), can choose from Column A   (Regular Fee), Column B (Small Entity Status), or Column C (Micro-Entity Status). If the filer qualifies for Small Entity Status, the USPTO offers a half-price discount – for example, instead of paying $260 to file a provisional patent application, a Small Entity would pay $130 and a filer that qualifies as a Micro-Entity would pay $65, (a 75% discount on fees).  The goal of this multi-tiered system is to provide a break for smaller companies and independent inventors, and to encourage innovation.

Qualifying as a Small Entity

If you qualify as a small entity, you need only verify that status by executing a declaration when paying the fee. If, however, you are obligated to license or assign the patent to a bigger entity that doesn’t qualify as a small entity – for example, you license your patent to Microsoft -- then you could not claim small entity status.  Improperly claiming small entity status is considered inequitable conduct and  can result in the loss of patent rights.

To qualify as a small entity you must either be an individual, a small business concern having no more than 500 employees (or affiliates), a university, or a 501(c)(3) nonprofit organization.

Qualifying as a Micro Entity

To qualify as a Micro Entity, the filer must be a Small Entity and must meet the following criteria:

(1) The applicant has not been named as the inventor on a total of more than four utility patents (regular utility patents, not provisional patent applications), design patents or plant patents. This also does not include certain international PCT applications and applications owned by a previous employer. In addition, the applicant had to have had a gross income in the previous year of less than three times the median household income reported by the Bureau of the Census (In 2014, the applicant would had to have earned less than $155,817. Current gross income information is here.) In the event that the patent application has been assigned, the assignee had to have a gross (not net) income of less than three times the U.S. median household income; or

(2) the majority of the patent filer’s employment income is from an Institution of Higher Learning, or the applicant has assigned, or is obliged to assign the patent to an Institution of Higher Learning. An Institution of Higher Learning is a public or non-profit accredited institution that admits post-secondary students for programs of not less than 2 years.

How do you determine micro-entity status for 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 (as defined by the IRS) exceeding three times the median household income for the preceding calendar year. (In recent years, the median has hovered at $50,000 so three times the median is approximately $150,000.)

Finding the Fees

The best method of tracking fee information is at the  USPTO website, and in particular, at the page providing information about  current fee schedules.

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