Introduction

A quick Google search reveals the astronomical costs of obtaining a patent. Some sources may cite to as low as $6,000, but on average, the entire process of conducting a prior patent/prior art search, filing the application, and responding to United States Patent and Trademark Office (USPTO) actions can easily run beyond $15,000. Additionally, any complicated invention will tend to drive up the costs, by virtue of requiring more protection claims than allowed in a standard application. Almost everyone seeking to obtain a patent should generally budget between $15,000 and $30,000 to ensure a smooth filing process. However, such a number for a small company or a sole inventor seems extremely unreasonable, surely there must be a way to reduce these fees… and there is!

 

USPTO Fee Reduction for Small and Micro Entities

The USPTO offers a significant fee reduction program for companies that qualify as either a small or micro entity. Small entity qualification is relatively straightforward, in that, it can easily be determined whether you qualify. Micro entity fee reductions primarily apply to extremely small companies or individual inventors. In any case, the fee reduction program offered by the USPTO can considerably lower patenting costs for a small company. However, one should note that this only reduces USPTO fees, patent attorney/agent fees will likely remain at whatever standard hourly rate is offered.

Small Entity Status

The legal support for a small entity fee reduction can be found in 35 U.S.C. 41(h)(1). To save you the headache of trying to parse out this ridiculously long law, in essence it states that most fees associated with patent filings and maintenance will be reduced by 50% for companies with less than 500 employees, or for any nonprofit organization. The only fees not covered by the small entity fee reduction program are licensing and assignment fees, and any late patent maintenance fees, which are due at 3.5, 7.5, and 11.5 years.

Of additional note is that in order to maintain small entity status, you or your company cannot assign or license the patent or filing to a company that itself does not qualify for small entity status. That is, your company cannot claim small entity status for a patent which it intends to assign to a company with more than 500 employees. If small entity status was originally claimed in good faith, and later a business opportunity arises that requires assignment, you may still do so as long as you notify the office that you are no longer qualified for small entity status. Additionally, any patent assignment or licensing agreement between your company and the Federal Government will not affect your small entity status. I.e., you can freely assign or license to the Federal Government without losing status as a small entity.

 

Micro Entity Status

A micro entity status confers the benefit of a 75% reduction of all filing fees and maintenance fees, including delayed maintenance fees. However, establishing status as a micro entity has additional requirements beyond small entity status. First, in order to be a micro entity, you must ordinarily qualify as a small entity. In addition to this, the inventor named on the patent cannot be named on more than four previously filed differing applications. I.e., the inventor cannot hold more than 4 patents, or be named as a joint inventor on more than 4 patents. Lastly, the filer, whether that be the inventor or the owner (which may be a company) cannot have a gross income or revenue exceeding three times the median household income for the previous calendar year. To illustrate, the gross median income for a household in 2022 was $78,813. Based on this, the individual or company, to claim micro entity status, cannot have made more than $236,439 pre-tax in 2022. Similar to small entities, an individual or company claiming micro entity status cannot assign their patent to any person or company that does not itself qualify as a micro entity, apart from nonprofit universities or other institutions of higher education.

 

I Forgot to Claim Small Entity Status on my Filing… Now What?

If you or your company did not realize that you could claim small entity status you may still be entitled to a refund from the USPTO if you act promptly. The USPTO allows for a refund of 50% and 75% of filing fees where small or micro entity status was not claimed, so as long as the assertion is made within three months of fee payment. To illustrate this, X, a small entity files a patent application without claiming small entity status. 2 months later, X realizes they could have qualified and files a written assertion of small entity status to the USPTO. X would receive a 50% refund on the patent filing. Contrast with Y, another small entity who does the same, but does not file an assertion until 3 months and 1 day after the original patent filing. The USPTO would deny the request, as the three month window passed and therefore small entity status for that particular fee is waived. It should be noted, however, that Y can still benefit from the free reduction for all filings moving forward.

 

Conclusion

With the great complexities and intricacies of patent law, it is always important to retain a licensed patent attorney or agent to help you in your filing endeavors. If you believe or know that you qualify for either the small entity or micro entity status, make sure to discuss it with your attorney or agent for a more complete evaluation and determination.

 

 

 

Sources:

1. https://www.bitlaw.com/guidance/patent/what-does-a-patent-application-cost.html#:~:text=A%20patent%20attorney%20will%20usually,patenting%20process%20for%20your%20invention.&text=Previous%3A%20Why%20should%20you%20file%20a%20patent%20application%3F
2. https://www.upcounsel.com/how-much-does-a-patent-cost
3. https://uslawpros.com/how-much-does-a-patent-cost/
4. https://ocpatentlawyer.com/how-much-does-the-average-patent-cost/
5. MPEP Chapter 500 – Section 509.
6. 35 U.S.C. 41 – Patent fees; patent and trademark search systems.
7. 35 U.S.C. 123 – Micro entity defined.
8. 37 C.F.R. 1.29 – Micro entity status.
9. 37 C.F.R. 1.28 – Refunds when small entity status is later established.
10. USPTO Fee Schedule
11. https://seekingalpha.com/article/4561749-median-household-income-in-october-2022

 

Image Sources:

1. Header Image: https://ocpatentlawyer.com/wp-content/uploads/2011/12/What-is-a-large-entity-small-entity-and-micro-entity.jpg
2. https://www.smlme.com/article/a-way-to-get-a-50-discount-coupon-code.html