Friday, 17th May, 2013

Micro entity status

The America Invents Act (AIA) made several changes to the United States (US) patent system.  One change is the introduction of a so called “micro entity” status for patent applicants.

Micro entity status entitles the applicant to a 75% reduction in fees. This applies to filing, searching, examination, issuance, appeals, and maintenance fees for patent applications and patents. 

When filing an application in the United States, it is important to claim the correct status. Claiming an incorrect status has severe consequences and can include loss of rights.

Micro entity status may be available for small businesses and individuals in New Zealand and Australia.

Large, small or micro entity status

Prior to AIA, patent applicants were either "large" entities or "small" entities.  An applicant pays full fees as a large entity, or qualifies for a 50% reduction in fees as a small entity. 

To qualify as a small entity, the applicant must be:

  • an individual inventor
  • a business having less than 500 employees or
  • a non-profit organisation or university. 

Further, the individual inventor and/or business must not have assigned, granted, or conveyed, or licensed any rights in the application to an entity that does not qualify for small entity status.

It is important not to claim small entity status when you are, in fact, a large entity. Intentionally making such a claim is viewed as being "fraud on the Patent Office" and has severe consequences, such as loss of the patent. 

The new micro entity status

To obtain micro entity status, not only must the applicant qualify as a small entity, the applicant must also:

  • not have been named as an inventor on more than four previously filed US non-provisional patent applications 
  • not have an income of more than 3x the median US household income (~$50k in 2011)
  • not have conveyed or contractually promised to convey rights to an entity that has an income of more than 3x the median US household income.

If an application names more than one applicant, each applicant must qualify as a micro entity for the applicants to obtain a micro entity certification for the application.

Micro entity status for universities

The AIA also granted concessions to US based institutes of higher education (Universities). Unfortunately, these concessions do not extend to non-US based institutes of higher education.

United States universities and their employees automatically qualify as micro entities, provided the university (or any other entity named as applicant) has not assigned, granted, or conveyed, or licensed any rights in the application to an entity that would result in loss of the status, i.e. licensing to an entity that has more than 500 employees. 

The AIA also stipulates that an applicant will qualify as a micro entity where "the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular applications to such an institution of higher education". Essentially, micro entity status is restricted to those applicants that are employees of the US-based Universities. 

Therefore, although New Zealand and Australian universities or Crown Research Institutions may be able to take advantage of small entity status in some cases, they will not be entitled to micro entity status. We will monitor this situation and report should the situation change.

Micro entity status is lost when the requirements for obtaining micro entity or small entity status are lost for any of the applicants for the application. The penalties for intentionally claiming micro entity status when not being eligible to do so are severe.

Applying for micro entity status

An applicant must file a certification of entitlement for micro entity status with the USPTO.  We can help you with this.

To qualify as a micro entity, not only must the applicant qualify as a small entity, the applicant must also meet the following criteria:

  • not have been named as an inventor on more than four US non-provisional patent applications
  • not have an income of more than 3x the median US household income and
  • not have conveyed or contractually promised to convey rights to an entity that has an income of more than 3x the median US household income.

It is likely some small businesses and individuals in New Zealand and Australia will be able to take advantage of the micro entity status.