What’s the cost difference for a USPTO Patent Filing?
How can you take advantage of the small-entity filing fee? There are some companies out there (established manufacturers, tech giants, and growing start-ups) that file for dozens of patents every year. But of course, these are not the only entities inventing products, designs, or ideas. Small business owners, individual inventors, and other associations of people contribute to the pool of intellectual property inventions every year. The USPTO (United States Patent Office) makes this distinction too in one of their mandatory fees – the Patent Filing Fee. Small Entities can usually pay 60% less in their filing fees as opposed to large entities. Micro Entities pay 80% less.
One of the first questions we ask our clients looking at patenting their invention is the size of their business. Now, even this question is not enough to really know how a patent should be filed, we’ll get to why in a minute. Regardless of if the company or individual are working at the national stage or on a more local level, the USPTO makes clear rules on how patent filing fees work.
What does the USPTO consider a Small Entity?
Small entity status for filing fees is applicable to
- A “Small Business Concern” with fewer than 500 employees
- An individual inventor
- A non profit organization
- An institution of higher learning, like a university
Notice however that the USPTO does not extend the status of ‘small entity’ to any small business. Even a traditionally small business (under 500 employees) might not be eligible for this reduced fee. Why? If the patent is legally bound to be licensed to a large entity, then the USPTO does not qualify it as a ‘small business concern.’
Non-Profit Organizations under USPTO Rules
A university, both foreign and domestic, can qualify for small entity status. However, other types of foreign entities would need to be considered non-profit institutions under either federal – like a 5021(c)(3) entity – or state law.
What is a Large Entity?
Large entity status is attributed to an applicant with 500 or more employees. The employee count would include any affiliates (see 13 CFR 121.103 on how to determine affiliation). The employees of an affiliate or affiliated company may need to be counted if such a company falls within the principles of affiliation under Section 121.103 (e.g., when one controls the other or has the power to control the other).
Micro Entity Status:
Most fees at the USPTO are reduced by 80% for micro entities. To qualify as a micro entity, generally, the applicant and inventors must each earn less than triple the median household income of the previous year. Furthermore, the inventor cannot have been a named inventor on more than 4 prior filed patent applications. Additionally, employees of higher education institutions might be eligible for micro entity status. If you think you might qualify and are interested in exploring this option, feel free to reach out to us for further guidance.
What are the risks of choosing the wrong entity size?
Paying the correct fee for your patent is super important. If you accidentally pay less than you should, because you think you qualify for a small entity rate when you don’t, it could lead to big problems. Your patent might even become invalid. Sometimes, people who originally could pay less (because they were a small entity) end up not qualifying later on. This could happen if they license their patent, hire more people, or if a bigger company buys them. The tricky part is, you might not realize you don’t qualify anymore and continue paying less by mistake. But, don’t worry, there are ways to make sure this doesn’t happen.
