Micro Entity Update

Effective March 19, 2013

The micro entity provisions of 35 U.S.C. 123 are currently in effect (see current fee schedule: http://www.uspto.gov/web/offices/ac/qs/ope/fee031913.htm).

To qualify as a micro entity, an applicant must meet either of two sets of conditions. As a first option, an applicant can establish a limited income (“gross income”) and limited experience with the patent application filings. See 37 C.F.R. 1.29(a). As a second option, an applicant can establish employment by, or an assignment or obligation to assign to, an institution of higher education. Under either option, an application also must satisfy the requirements for small entity status. See 37 C.F.R. 1.29(d).

Gross Income Basis

For purposes of qualifying for micro entity status on the “gross income” basis, an applicant, inventor, or joint inventor cannot have a gross income during the calendar year when a fee is paid exceeding three times the median household income for the preceding calendar year, as reported on the USPTO website. What constitutes “gross income” for this context is defined by section 61(a) of the Internal Revenue Code of 1986. See 26 U.S.C. 61(a).

Notably, the gross income limit may change each calendar year. Therefore, if the prosecution of an application extends across multiple calendar years, an applicant, inventor, and joint inventor must verify that the gross income limit for the requisite calendar year is met to maintain eligibility for the micro entity discount. If the gross income limit is not met, then a notification of loss of entitlement to micro entity status must be filed in the application to remove micro entity status.

The USPTO will post the gross income limit on the USPTO website. The gross income limit will be referred to as the “maximum qualifying gross income,” which was set for calendar year 2012 at $150,162. An applicant for micro entity status under the gross income basis set forth in 37 C.F.R. 1.29(a) must satisfy four requirements. First, the applicant must certify that he/she/it qualifies as a small entity under 37 CFR 1.27. Second, the applicant must certify that neither the applicant nor the inventor nor a joint inventor has been named as an inventor on more than four previously filed patent applications. Third, the applicant must certify that neither the applicant nor the inventor nor a joint inventor had a gross income exceeding three times the median household income for the preceding calendar year, as most recently reported by the Bureau of the Census. Lastly, the applicant must certify that neither the applicant nor the inventor nor a joint inventor has assigned, granted, or conveyed a license or other ownership interest (and is not obligated to do so) in the subject application to an entity that had a gross income in the preceding calendar year in excess of the gross income limit.

For purposes of establishing micro entity status under the “gross income” basis, the application filing limit includes: (i) U.S. nonprovisional applications (e.g., utility, design, continuation, and divisional applications), (ii) U.S. reissue applications, and (iii) U.S. national stage applications under the Patent Cooperation Treaty (PCT). It does not matter whether the applications are pending, patented, or abandoned; they are still included when counting to determine whether the application filing limit has been reached.

The application filing limit does not include: (i) foreign applications; (ii) international (PCT) applications for which the basic U.S. national stage filing fee was not paid; and (iii) provisional applications. In addition, the application filing limit does not include applications where an applicant, inventor, or joint inventor has assigned, or is under an obligation by contract or law to assign, all ownership rights in the application as the result of the applicant’s, inventor’s, or joint inventor’s previous employment.

Institution of Higher Education Basis

An applicant for micro entity status under the “institution of higher education” basis set forth in 37 C.F.R. 1.29(d) must satisfy two requirements. First, the applicant must certify that he/she/it qualifies as a small entity under 37 C.F.R. 1.27. Second, the applicant must certify that either (i) the applicant’s employer, from which he/she obtains the majority of his/her income, is an institution of higher education; or (ii) the applicant has assigned, granted, or conveyed a license or other ownership interest in the subject application (or is obligated to do so) to such an institution of higher education.

Section 101(a) of the Higher Education Act of 1965 defines what is meant by “institution of higher education” in the context of 37 C.F.R. 1.29(d). See 20 U.S.C. 1001. Section 101(a) of the Higher Education Act states that the term “institution of higher education” means:

An educational institution in any State that—

  1. admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate, or persons who meet the requirements of section 1091(d)(3) of this title;
  2. is legally authorized within such State to provide a program of education beyond secondary education;
  3. provides an educational program for which the institution awards a bachelor’s degree or provides not less than a 2-year program that is acceptable for full credit toward such a degree, or awards a degree that is acceptable for admission to a graduate or professional degree program, subject to review and approval by the Secretary;
  4. is a public or other nonprofit institution; and
  5. is accredited by a nationally recognized accrediting agency or association, or if not so accredited, is an institution that has been granted pre-accreditation status by such an agency or association that has been recognized by the Secretary for the granting of pre-accreditation status, and the Secretary has determined that there is satisfactory assurance that the institution will meet the accreditation standards of such an agency or association within a reasonable time.’

Additionally, section 103 of the Higher Education Act of 1965 provides that the term “State” means the 50 States of the United States as well as “the Commonwealth of Puerto Rico, the District of Columbia, Guam, American Samoa, the United States Virgin Islands, the Commonwealth of the Northern Mariana Islands, and the Freely Associated States’’ and that the Freely Associated States means the ‘‘Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau.’’ See 20 U.S.C. 1003.

Based upon these definitions, public or non-profit institutions located in one of the 50 States or U.S. territories offering certain undergraduate educational programs credited toward a bachelor’s degree or educational programs awarding “a degree that is acceptable for admission to a graduate or professional degree program” are eligible as an “institution of higher education” for purposes of establishing micro entity status under 37 CFR 1.29(d).

The requirements for micro entity status under the “institution of higher education” basis ordinarily would not be met by a university that is itself an assignee-applicant. Under the “institution of higher education” basis, assignee-applicant must certify small entity status as well as that (i) the applicant’s employer, from which he/she obtains the majority of his/her income, is an institution of higher education; or (ii) the applicant has assigned, granted, or conveyed a license or other ownership interest in the subject application (or is obligated to do so) to such an institution of higher education. A university generally will be unable to make either certifications (i) or (ii). That is, a university is unlikely to be the “employee” of certification (i), and the university may be the assignee, but is not likely to be the assignor of the “ownership rights” of certification (ii). Accordingly, identifying the university as the applicant, rather than the inventor (e.g., university researcher), normally would preclude eligibility for the micro entity discount under the “institution of higher education” basis.

An institution such as a non-profit research foundation, technology transfer organization, or Federal Government research laboratory does not qualify as an “institution of higher education” under the definition of “institution of higher education” set forth in the Higher Education Act of 1965 for purposes of establishing micro entity status.

More Than One Inventor

If there is more than one inventor named in a patent application as the applicant, each inventor must qualify for micro entity status to pay fees in the micro entity amount. The inventors may qualify for micro entity status individually under either the “gross income” basis or the “institution of higher education” basis.

Under the “gross income” basis, the inventor and the assignee must certify that each meets the gross income limit. Additionally, the inventor must certify that he/she meets the application filing limit, and if the assignee is a natural person, then the assignee also must certify that he/she meets the application filing limit.

Under the “institution of higher education” basis, a natural person assignee must certify that he/she qualifies as a small entity and either obtains the majority of his/her income from an institution of higher education; or has assigned, granted, or conveyed a license or other ownership interest in the subject application (or is obligated to do so) to an institution of higher education. A juristic entity assignee is unlikely to qualify for micro entity status under the “institution of higher education” basis.

If an inventor assigns his ownership rights in an invention to an assignee and if the assignee files a patent application as the applicant, what qualifications do the inventor and/or the assignee have to meet to secure the micro entity discount?

Under the “gross income” basis, the inventor and the assignee must certify that each meets the gross income limit. Additionally, the inventor must certify that he/she meets the application filing limit, and if the assignee is a natural person, then the assignee also must certify that he/she meets the application filing limit.

Under the “institution of higher education” basis, a natural person assignee must certify that he/she qualifies as a small entity and either obtains the majority of his/her income from an institution of higher education; or has assigned, granted, or conveyed a license or other ownership interest in the subject application (or is obligated to do so) to an institution of higher education. A juristic entity assignee is unlikely to qualify for micro entity status under the “institution of higher education” basis.

 

Certification

The procedures for claiming micro entity status require the filing of a certification of entitlement to micro entity status. The Office relies upon the applicant’s certification of micro entity status (except where it conflicts with the information contained in the Office’s records, such as where Office records indicate that the applicant is named as an inventor on more than four previously filed and unassigned nonprovisional patent applications) and will not require any additional documents from the applicant concerning the applicant’s entitlement to claim micro entity status. This practice is similar to small entity practice where the Office generally does not question a claim of entitlement to small entity status. See 37 CFR 1.27(f); see also Manual of Patent Examining Procedure § 509.03 (8th ed. 2001) (Rev. 9, Aug. 2012) (MPEP).

The USPTO has two micro entity certification forms available on the USPTO forms webpage at www.uspto.gov/forms. One form is available for micro entity certification under the “gross income” basis set forth in 37 C.F.R 1.29(a), and the other form is available for micro entity certification under the “institution of higher education” basis set forth in 37 C.F.R. 1.29(d).

A micro entity certification must certify that all of the requirements for micro entity status as they appear in 37 C.F.R. 1.29(a) or (d), as applicable; a simple statement alleging entitlement to micro entity status is not sufficient. Applicants are encouraged to use the USPTO micro entity certification forms available on the USPTO forms webpage at www.uspto.gov/forms.

A certification of micro entity status can be signed only by an authorized party as set forth in 37 C.F.R. 1.33(b), which includes:

(1) a registered patent practitioner, meaning a registered attorney or agent who is either of record or acting in a representative capacity under 37 C.F.R. 1.34;

(2) an inventor who is named as the sole inventor and identified as the applicant; or

(3) all of the joint inventors who are identified as the applicant.

For joint inventor applicants, each joint inventor should sign a separate copy of the relevant micro entity certification form. However, if one joint inventor is appointed to prosecute the application on behalf of all the other joint inventors, then only that one joint inventor need sign the micro entity certification form. See USPTO form number AIA/81 titled Power Of Attorney To One Or More Of The Joint Inventors And Change Of Correspondence Address available on the USPTO forms webpage at http://www.uspto.gov/forms.

Additionally, if any applicant is an assignee or other party under 37 C.F.R. 1.46, and the assignee or other party is a corporation or organization rather than a person, a registered practitioner must sign the certification of micro entity status. An officer of the assignee corporation, for example, is not authorized to sign a certification of micro entity status.

An applicant is not required to provide a certification of micro entity status with each fee payment once micro entity status has been established in an application. The applicant nevertheless must make a determination whether the requirements for micro entity status exist at the time each fee payment is made. If any requirement for micro entity status is no longer met, then the applicant must notify the Office of loss of micro entity status and pay the required fee in the small or undiscounted amount, as appropriate.

An applicant can make a simple statement that he/she/it is no longer eligible for micro entity status without identifying the particular reason(s) for loss of entitlement to micro entity status. An applicant who loses entitlement to micro entity status cannot pay a fee in the small or undiscounted amount without first or simultaneously notifying the Office in writing of loss of micro entity status.

For more visit: http://www.uspto.gov/aia_implementation/faqs_fees.jsp#heading-4