Signed into law by President Barack Obama on September 16, 2011, the Leahy-Smith America Invents Act (the Act) is the most comprehensive modification of the United States patent system in decades. Among the rules drafted to spur innovation in the US is one that creates a new category of Applicants, i.e., a micro entity. Members of this category are entitled to a 75 percent reduction in many fees associated with the filing and prosecution of patent applications in the United States Patent and Trademark Office (USPTO).

According to Section 10(g) of the Act, the first way an Applicant may qualify as a micro entity is by certifying that the Applicant satisfies each of the following four criteria:

  • the Applicant qualifies as a small entity;
  • the Applicant is not named as an inventor on more than four previously filed patent applications;
  • in the preceding calendar year, the Applicant must not have had a gross income exceeding three times the median household income (e.g., 3 x $49,445) in that year;
  • the Applicant must not be under an obligation to assign or license the invention to an entity that, in the preceding calendar year, had a gross income exceeding three times the median household income for the preceding calendar year.  

According to Section 10(g) of the Act, the second way that an Applicant may qualify for micro entity status is by association with or by being an institution of higher education. Specifically, the Applicant must make a certification that the majority of the Applicant’s income is obtained from the institution of higher education or that the Applicant has or is under an obligation to assign, grant, or convey a license or other ownership interest in the particular application to such an institution of higher education.

Pursuant to 20 U.S.C. § 1001(a), the definition of “institution of higher education” is an educational institution in any State that satisfies each of the following five canons:

  • the educational institution must admit “as regular students only persons having a certificate of graduation from a school providing secondary education…;”
  • the educational institution must be legally authorized to provide a program of education beyond secondary education;
  • the educational institution must “[provide] an educational program for which the institution awards a bachelor’s degree or [provide] not less than a 2-year program that is acceptable for full credit toward such a degree, or [award] a degree that is acceptable for admission to a graduate or professional degree program…;”
  • the educational institution must be a public or other nonprofit institution;
  • the educational institution must be “accredited by a nationally recognized accrediting agency or association…”

Implementation of the micro entity status occurred on the date of the enactment of the Act, i.e., September 16, 2011. However, according to a Senior Legal Advisor in the Office of Patent Legal Administration at the USPTO, Applicants will not be afforded the opportunity to avail themselves of the 75 percent reduction in fees until September of 2012 or early in 2013 (depending upon the completion of fee setting and rule making by the USPTO under this Act).