A review of the options, requirements, and key considerations in obtaining fee-reduced statuses for United States patent applications.
The official fees associated with United States patent applications can be a significant component of the cost of securing U.S. patent protection.
For example, between filing and grant a straightforward utility patent application will incur, as of writing, the following fees, all in United States dollars (USD).[1]
- Filing fee of $320
- A search fee of $700
- An Information Disclosure Statement fee of $260
- Issue fee of $1,200
This totals $2,480 USD, or around $4,000 New Zealand or Australian dollars.
Any late-filed forms, multiply dependent claims, or pages numbered over 100 in your application will incur significant further fees, as will extensions of time during prosecution or requests for continued examination.
Reduced-fee statuses
While these are the standard fees, the United States Patent and Trademark Office (USPTO) offers 60% or 80% fee reductions, for applicants who meet specific criteria. The significant reductions are often attractive to applicants, but it is important to understand whether you qualify, and if you do, what the associated risks of applying for discounted fees are.
Small entity status
A “small entity” will qualify for a 60% reduction in the USPTO’s fees. A small entity under U.S. law includes individual (non-corporate) applicants, non-profits, or businesses with less than 500 employees.[2]
Across Australia and New Zealand, this means that many patent filers may be eligible for small entity status and a 60% reduction in fees from the USPTO.
Micro entity status
To qualify for “micro entity” status and an 80% reduction in USPTO fees, all applicants and inventors, and anyone who they are obliged to assign to, must each first qualify as a small entity.
In addition, both of the following must be met.[3]
- Each applicant, and anyone an applicant or inventor is under an obligation to assign or license the invention to, must have a gross annual income under a periodically updated threshold, which as of writing is approximately $350,000 Australian or New Zealand dollars.
- Each inventor and applicant must not have been named as an applicant or inventor on more than four other U.S. patent applications, which includes PCT applications designating the United States.
The effect of these rules is that the micro entity status can only be claimed a maximum of five times by a given inventor or applicant. After this point, any U.S. applications on which they are named as inventor or applicant will not qualify for the micro entity status and 80% fee reduction.
The procedure
Obtaining small entity status may be done with a relatively straightforward assertion that can be signed by either the applicant, inventors, or the U.S. patent practitioner acting on the application.[4]
Once small entity status has been obtained, it will remain effective until the issue fee is due, regardless of any intervening change in the applicant or inventors’ qualifications as small entities.[5] When the issue fee is due, small entity status must be reviewed and re-asserted if the requirements for it are still met.
Obtaining micro entity status meanwhile requires certification by filing a special micro entity form. Where a U.S. patent practitioner is acting on the application, the form must be signed by the practitioner.[6]
Unlike with small entity status, micro entity status must be reevaluated every time a fee is paid.[7] If at any time the application no longer qualifies as a micro entity, the USPTO must be notified.[8] These obligations create additional compliance costs and carry significant potential risks.
The costs & risks
Small entity status may be obtained with relatively low effort and cost. If the small entity status was obtained in good faith, a later discovery that the assessment was made in error will be excused by the repayment of the discounted amounts.[9]
The more stringent requirements for micro entity status, the need for the certification to be signed by your U.S. practitioner, who may want to see evidence that you meet the requirements, and the requirement to reassess the status before every fee payment, often adds an unjustifiable layer of compliance and associated costs.
Obtaining either small or micro entity status fraudulently or improperly with an intent to deceive will be counted as a fraud against the USPTO.[10] At worst, this could lead to your patent application being denied, or your granted patent invalidated.
In addition to the compliance burden and costs, the ongoing obligation to reassess micro entity status entitlement before every fee payment increases the risk of wrongly claiming it. Where micro entity status has been claimed and a patent is later litigated, any mistakes in determining micro entity status are likely to be argued as a ground of invalidity.
These risks lead many U.S. patent practitioners to be hesitant to sign micro entity certifications, and in any case may further reduce the attractiveness of the further 20% fee discount that micro entity status provides.
Conclusions
Individual applicants, non-profits, and businesses with less than 500 employees should consider claiming small entity status, to take advantage of the 60% reduction in official fees.
However, a much greater degree of caution should be exercised when considering claiming micro entity status, due to the significant compliance burdens, the costs that will likely accompany them, and the significant implications for your patent rights of any mistakes along the way.
For more guidance on whether seeking a reduced fee status at the USPTO could be right for you, please contact Scott Pollok.
[1] https://www.uspto.gov/learning-and-resources/fees-and-payment/uspto-fee-schedule
[2] 37 CFR 1.27(a).
[3] 35 U.S.C. 123.
[4] 37 CFR 1.27(c).
[5] 37 CFR 1.27(e).
[6] 37 CFR 1.33(b).
[7] 37 CFR 1.29(g).
[8] 37 CFR 1.29(i).
[9] 37 CFR 1.28(c).
[10] 37 CFR 1.27(h), 37 CFR 1.29(j).
