Senator Coons (D-Del) has introduced patent reform legislation that is similar to but different from the Goodlatte Innovation Act pending in the House. One section of S. 632 that does not have a parallel in H.R. 9 relates to micro entity status, and would fix the problem with 35 USC § 123 that left universities out of the definition of micro entities.

Micro Entity Status

The America Invents Act (AIA) created a new class of applicants–micro entities–who can pay certain patent fees at a 75% reduced rate. The new statute, 35 USC § 123, created three independent ways to qualify for micro entity status:

  • (i) based on the income of each applicant
  • (ii) based on each applicant’s employer being an “institution of higher education” and
  • (iii) based on each applicant having assigned or licensed the application to an “institution of higher education” (or being obligated to do so)

Notably, the statute as created by the AIA does not provide for micro entity status where the “institution of higher education” itself is named as the applicant. Thus, in order to take advantage of micro entity status, universities have to file their patent applications naming the inventors or (possibly) a university technology transfer entity as the applicant(s).

The Support Technology & Research for Our Nation’s Growth Patents Act of 2015

Section 110 of Senator Coons’ bill, the STRONG Patents Act, would fix the gap in the micro entity statute by revising § 123(d) to include institutions of higher education and certain university technology transfer entities in the list of applicants who can qualify for small entity status:

(d) INSTITUTIONS OF HIGHER EDUCATION.—For purposes of this section, a micro entity shall include an applicant who certifies that—

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(3) the applicant is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or

(4) the applicant is an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code that holds title to patents and patent applications on behalf of such an institution of higher education for the purpose of facilitating commercialization of the technologies of the patents and patent applications.

The Future Of Patent Reform?

It is hard to know whether the introduction of the STRONG Patents Act is a sign of strong momentum for patent reform, or reveals competing goals that may slow the patent reform process while differences are resolved and compromises are negotiated. Thus, even though fixing the micro entity gap should be non-controversial, it could be some time before universities can fully benefit from the micro entity statute.