Do I Qualify as a Small or Micro Entity for Patent Registration?

How small or micro entity status can help to minimize the costs of obtaining a patent.

Obtaining a patent can be valuable for a business or inventor. After all, patents offer a monopoly on an invention for a set period of time. The reality, however, is that obtaining a patent can be both time-consuming and expensive. This is particularly true for small businesses and individuals who may need patent protection but lack the resources of large corporations.

Fortunately, the U.S. Patent and Trademark Office (USPTO) offers ways of minimizing the fees associated with patent applications. Certain applicants are permitted to file as "small" or "micro" entities and thus receive substantial savings.

Standard Costs of Obtaining a U.S. Patent

Interacting with the USPTO is not free. The USPTO has an extensive fee schedule, which charges inventors various fees for virtually any interaction that the applicant might have with the agency.

By way of example, you will see that the "Basic filing fee" for a utility patent is $300 (2018 figure). A provisional patent application is $280. If your patent makes more than three claims, that will cost an extra $480. A utility patent search will cost $660.

The list of applicable fees is lengthy, to say the least. It is possible that a business could end up paying several thousand dollars to the USPTO over the course of a single patent application.

Filing as a Small Entity

Fortunately, there are some discounts for smaller entities. Filers that qualify as "small entities" will receive fee discounts of approximately 50% on most USPTO fees, as reflected on the fee schedule.

What counts as a small entity? The regulations surrounding small entities are found in 37 CFR § 1.27. 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.

If you or your business 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 does not qualify as a small entity, then you could not claim small entity status. A common example of this is when someone licenses a patent to a large company such as Microsoft or Apple. Improperly claiming small entity status would be considered inequitable conduct and could result in the loss of patent rights.

Filing as a Micro Entity

As the name suggests, micro entities are even smaller than small entities. Micro entities will find discounts of 60-75% on most USPTO fees, as shown on the fee schedule. To qualify as a micro entity, the filer must qualify as a small entity (per the above) and must also meet the following criteria:

  1. The filer has not been named as the inventor on a total of more than four utility patents (regular utility patents as opposed to provisional patent applications), design patents, or plant patents. This also does not include certain international applications and applications owned by a previous employer. In addition, the filer had a gross income in the previous year of less than three times the median household income reported by the Bureau of the Census. (See the USPTO website for current income limits). In the event that the patent application has been assigned to another entity, 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. This is a public or nonprofit accredited institution that admits post-secondary students for programs of not less than two years.

While small entity status has long been available, the new micro entity designation was created as part of the America Invents Act, which came into full effect in 2013. Congress's goal in enacting this new status, of course, was to encourage newer inventors and those who were not necessarily established or backed by large corporations.

Legal Costs Beyond USPTO Fees

Unfortunately, USPTO fees are not the only costs associated with patent filings. Many inventors will also hire expensive patent attorneys to assist with their filing. Such attorneys are often highly specialized, sometimes with advanced backgrounds in chemistry, mechanics, or engineering. Consequently, they can be pricey, sometimes charging many hundreds of dollars per hour depending on specialty and region.

Do you need a lawyer to file a patent? The short answer is "not necessarily." To find out more, check out Getting a Patent on Your Own.

The longer answer is that whether you need a lawyer depends on many factors. How complex are the claims of your invention? Is it likely to be challenged by another inventor with competing or overlapping claims? Do you need assistance beyond merely obtaining the patent, such as figuring out how to sell or monetize the intellectual property? Depending on your answers to these questions, you may need to invest in the guidance of a patent attorney, while still reaping the benefits of the reduced USPTO filing fees.

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