US Patent Law Reform: Fee Discounts for Micro Entities

Date: 2011-11-14
Authors: Tracey Hendy & Sarah Hennebry

Changes to US Patent Law

Continuing in our series of snap-shots of changes to US patent law, we now take a closer look at the introduction of a new category of applicant: the micro entity.

The micro-entity: what is it?

Currently, US patent law has two categories of applicants, small and large entity, with small entities receiving a 50% discount on official fees. The new legislation has split the existing small entity category and introduced the micro entity. To qualify as a micro entity, you must already meet the requirements for small entity. A small entity is usually a private inventor, small business or non-profit organisation (such as a university).

To further qualify for micro entity status, an inventor must not have an annual income exceeding US$150,000. In addition, the inventor must not be named on more than four US patent applications. (Note, this does not include patent applications filed outside the US, provisional applications, PCT applications which did not enter national phase in the US, or applications resulting from prior employment, provided the applicant has now assigned all ownership).

What benefits are gained from being a micro entity?

Those falling into this category will qualify for a 75% reduction in most official fees. This includes fees for filing, searching, examining, issuing, appealing and maintaining patent applications and granted patents.

When do the fee reductions come into effect?

While the definition of micro entity has already come into effect, the USPTO will not apply the 75% discount until the micro entity fee for a specific item is set or adjusted. The USPTO has begun planning for resetting fees. In the meantime, you will continue to pay the 50% discounted fee applicable to small entities.

Are there risks?

An improper claim to small entity status could form the basis of an inequitable conduct claim and invalidity of the patent, if the patent is later challenged in court. So it is important to determine if there has been, or if there is an obligation, to assign, grant or license any rights in the invention to any entity which would not also qualify for small entity status. Such actions would result in the loss of the patentee’s entitlement to small entity status.

Similarly, you should be wary of voiding your micro entity status. If an inventor assigns, or licenses to a person or company having an income exceeding US$150,000, they will no longer qualify.

To avoid any risk of patent invalidity, you should keep us informed of any transactions involving your intellectual property rights. We can then determine any change to your entitlement to your small or micro entity status.

What does this mean for you?

Unfortunately, Universities outside the US do not qualify for the micro entity category. However, as noted above, the good news is that as an educational institution, Australian Universities will still qualify as small entities, and consequently benefit from the 50% discount on fees.

However, if you are a private inventor, with an income less than US$150,000 per annum then now is the ideal time to consider filing for protection of your inventions in the US.

This article was written by Tracey Hendy, Special Counsel and Sarah Hennebry, Patent Scientist, Melbourne.