Small Entities and Micro Entities: What's the Difference When Paying Patent Fees?

A breakdown on the USPTO qualifications for small and micro entities.

Patent fees are a necessary evil. But the U.S. government seeks to help smaller businesses and inventors to be able to afford the patent process by lowering their fees relative to multinational corporations. 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"), and 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 only $130 (2017 figures). A filer that qualifies as a Micro-Entity would pay $65, a 75% discount.

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 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.

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 also 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, 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 applicant 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, here, for current income limits; the most recent publicly available gross income limit is $169,548). 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 nonprofit accredited institution that admits post-secondary students for programs of not less than two 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 around $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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