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  • Writer's pictureCassandra L. Wilkinson

Does Size Matter? When It Comes To Paying Fees, Size Can Make A Big Difference

The size of an entity can mean a lot! It can mean the difference between staying afloat to grow stronger or succumbing to the pressures and uncertainty of today’s economy. When applying for a patent, however, the smaller in size you are, the bigger the rewards!
So how does the size of an entity make a difference with the U.S. Patent and Trademark Office (USPTO)? When it comes to paying fees for patent applications and related documents, the amount of money you have to spend is determined by how you classify yourself and your entity size.
A large entity status requires that the entity has more than 500 employees and will pay standard fees.
A small entity status requires that the entity has 500 or less employees and will pay fees reduced by 50% of what a large entity is required to pay.
A micro entity status, which is usually an individual or small group of individuals, requires that the entity has not been named on more than four prior patent applications, has a gross income less than three times the amount reported in the U.S. as the median household income for the preceding year (currently, $149,331, or 3x$49,777), has not assigned, licensed, or granted an interest in the invention, and also meets the small entity status requirement. The fees associated with this status will be reduced by 75%. An applicant that claims the micro entity status is also required to provide a certification of entitlement to the status.
In May of 2011, the USPTO proposed a new rule that would make changes to the America Invents Act and would create a new micro-entity designation and that could save an inventor a considerable amount of money when obtaining and maintaining a patent. If the rule is made final, the new micro entity status could save the inventor 75% of the cost of the fees set for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents. This new rule could make the process and cost of obtaining a patent much more affordable for inventors without the backing and resources of larger entities.
However, you must be careful to claim the correct entity size when filing your patent! Just because the fees are less, does not mean you should “play your odds” and risk filing under the incorrect entity size. In the past, the USPTO has ruled the patent in question to be invalid when it was found that entity size was purposefully incorrectly declared. The effort to save a few dollars could instead cost the inventor much more than it was ever worth.
What happens if the entity’s status changes? Not a problem for the USPTO. If the entity’s or inventor’s status changes, the applicant can notify the USPTO of the status change can arrange to pay the difference in the fee amounts related to the patent.
Does the new micro entity status provide for any other benefits? Unfortunately, Congress did not apply the micro entity 75% discount into any of the other fees associated with any patent post granting procedures. However, this new status and reduced fees may make the patent application and granting processes more attractive and much less of a financial burden on an inventor. We may just see a rise in patent applications due to the now more affordable cost of protecting your intellectual property.
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