Intellectual Property - AIA Series

The United States Patent and Trademark Office (USPTO) has established rules and a fee schedule providing a 75% "micro entity" discount for many fees to be paid in patents and patent applications. The new rules and fee schedule implement a provision of the America Invents Act (AIA) establishing micro-entity status.

There are two ways in which to establish micro-entity status. Both require, as a threshold matter, that the case qualify for the existing small-entity status. That is, if a case does not qualify for small-entity status, there is no way to seek micro-entity status.

The first way, under paragraph (a) of the new rule, is that all of the following conditions must be satisfied individually for each applicant, inventor, and joint inventor:

  • Neither the applicant nor the inventor nor a joint inventor has been named as the inventor or a joint inventor on more than four previously filed patent applications, with certain exclusions. Provisional applications, patent applications filed in a foreign country, PCT international applications for which the basic US national feel was not paid, and applications that a party has assigned or is under an obligation to assign as a result of previous employment do not count.
  • Neither the applicant nor the inventor nor a joint inventor, in the calendar year preceding the calendar year in which the fee is paid, had a gross income exceeding three times the median household income. For fees paid in calendar year 2013, the gross income must not exceed $150,162. For parties not paid in US dollars, the average currency exchange rate during the previous calendar year applies.
  • Neither the applicant nor the inventor nor a joint inventor has assigned, or is under an obligation to assign, a license or other ownership interest to any entity that does not meet the gross-income requirement noted above.

The second way, under paragraph (d) of the new rule, is by relation to a U.S. institution of higher education. Either the applicant’s employer, from which the applicant obtains the majority of the applicant’s ­income, must be an institution of higher education, or the application must be assigned, granted, conveyed, or is under and obligation of contract or law to assign, grant, or convey, a license ownership interest in the particular application to the institution of higher education.

The wording of the rule and of the statute on which it is based creates pitfalls for the unwary. To obtain micro-entity status under paragraph (d), the actual inventors, rather than the institution of higher education, must be named as the applicant. Also, since the definition of "institution of higher education" refers to the Higher Education Act of 1965, micro-entity status under paragraph (d) requires that the institution of higher education be in the United States. For the purpose of micro-entity status, that is the only distinction between US and non-US entities.

The procedure for claiming micro-entity status includes the following pitfalls:

  • A certification of micro-entity status, which may be signed by a patent attorney, the assignee, or all applicants, must be filed with or before any payment of fees at the micro-entity rate. That is, if micro-entity status is mistakenly not sought, the difference in fees will not be refunded.
  • Whenever micro-entity status is no longer appropriate, a notification of loss of entitlement must be filed; simply paying the fee at a different rate does not suffice.
  • The certification needs to be filed only once in each application. However, each related application, including each continuing, divisional, continuation-in-part, or reissue application, must have its own certification.

If micro-entity status is established in good faith but in error, the error will be excused upon payment of the fee deficiency and certain other formalities. Since the applicable rule specifies "will" rather than "may," the remedy is by right rather than at the discretion of the USPTO once the requirements are met. The remedy does not apply to fraudulent attempts to establish micro-entity status.