Regulations of the United States Patent and Trademark Office (PTO) authorize the payment of reduced fees by those who come within the definition of a "small entity".
To be a small entity, you must be an independent inventor, or one of a number of joint inventors who have not assigned, granted, conveyed, or licensed any rights in the invention to any person who could not likewise be classified as an independent inventor if that person had made the invention, or to any concern which would not qualify as a small business concern or a nonprofit organization.
If the inventor(s) have assigned, granted, conveyed, or licensed any rights in the invention or application, or are under any obligation to assign, grant, convey, or license any rights to another in the invention or application, each and every such person or entity must be an individual, small business concern, or nonprofit organization, and must confirm that status to the PTO.
A license to a Federal Agency (which term includes any executive agency defined in 5 U.S.C. 105 and the military departments defined in 5 U.S.C. 102) resulting from a funding agreement (except where the Federal Agency has elected to retain title to any invention made, conceived, or first actually reduced to practice in the performance of work under a funding agreement) does not constitute a license coming within the terms of these small entity provisions.
A small business concern, as used in the proceeding paragraph, is any business concern (1) whose number of employees, including those of its affiliates, does not exceed 500 persons and (2) which has not assigned, granted, conveyed, or licensed, and is under no obligation under contract or law to assign, grant, convey, or license, any rights in the invention to any person who could not be classified as an independent inventor if that person had made the invention, or to any concern which would not qualify as a small business concern or a nonprofit organization under this definition. For the purpose of this definition concerns are affiliates of each other when either, directly or indirectly, one concern controls or has the power to control the other or a third party or parties controls or has the power to control both. The number of employees of the business concern is the average of the persons employed during each of the pay periods for the preceding completed twelve calendar months. Employees are those person employed on a full-time, part-time, or temporary basis during the preceding completed twelve calendar months of the concern.
A nonprofit organization, as used in the preceding paragraphs, means: (1) a university or other institution of higher education located in any country; (2) an organization of the type described in section 501(c)(3) of the Internal Revenue Code [26 U.S.C. 501(a)]; (3) any nonprofit scientific or educational organization qualified under a nonprofit organization statute of a state of this country [35 U.S.C. 201(i)]; or (4) any nonprofit organization located in a foreign country which would qualify as a nonprofit organization under parts (a)(3)(ii)B) or (a)(3)(ii)(C) of this section if it were located in this country.
Any change in such small entity status that would result in a loss of entitlement to reduced fees must be reported to the PTO prior to paying any fee due after such loss of entitlement.
