509.04 Micro Entity Status — Definitions
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Section Frequency Chart
(a) IN GENERAL.—For purposes of this title, the term "micro entity" means an applicant who makes a certification that the applicant—
(1) qualifies as a small entity, as defined in regulations issued by the Director;
(2) has not been named as an inventor on more than 4 previously filed patent applications, other than applications filed in another country, provisional applications under section 111(b), or international applications filed under the treaty defined in section 351(a) for which the basic national fee under section 41(a) was not paid;
(3) did not, in the calendar year preceding the calendar year in which the applicable fee is being paid, have a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding 3 times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census; and
(4) has not assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding 3 times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census.
(b) APPLICATIONS RESULTING FROM PRIOR EMPLOYMENT.—An applicant is not considered to be named on a previously filed application for purposes of subsection (a)(2) if the applicant 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 previous employment.
(c) FOREIGN CURRENCY EXCHANGE RATE.—If an applicant’s or entity’s gross income in the preceding calendar year is not in United States dollars, the average currency exchange rate, as reported by the Internal Revenue Service, during that calendar year shall be used to determine whether the applicant’s or entity’s gross income exceeds the threshold specified in paragraphs (3) or (4) of subsection (a).
(d) INSTITUTIONS OF HIGHER EDUCATION.—For purposes of this section, a micro entity shall include an applicant who certifies that—
(1) the applicant’s employer, from which the applicant obtains the majority of the applicant’s income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or
(2) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular applications to such an institution of higher education.
(e) DIRECTOR’S AUTHORITY.—In addition to the limits imposed by this section, the Director may, in the Director’s discretion, impose income limits, annual filing limits, or other limits on who may qualify as a micro entity pursuant to this section if the Director determines that such additional limits are reasonably necessary to avoid an undue impact on other patent applicants or owners or are otherwise reasonably necessary and appropriate. At least 3 months before any limits proposed to be imposed pursuant to this subsection take effect, the Director shall inform the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate of any such proposed limits.
March 19, 2013 is the date that the 75% micro entity discount first became available.
- January 1, 2014 is the rulemaking’s effective date for the micro entity discount as it applies to certain “filing, searching [and] examining” fees for international applications under the PCT.
The fees which are reduced by 75% for micro entities include filing fees (nonprovisional and provisional), search fees, examination fees, issue fees, and appeal fees for utility, design, plant, and reissue patent applications. Also included are patent maintenance fees including the maintenance fee grace period surcharges as well as the surcharge for a petition to accept a delayed maintenance fee payment in order to reinstate an expired patent.
Included within the ambit of filing fees subject to the micro entity discount are excess claims fees, application size fees, and the surcharge required by 37 CFR 1.16(f) if either the basic filing fee or the oath or declaration for a nonprovisional application was not present on the filing date, fees for requesting prioritized examination under 37 CFR 1.102(e), ex parte reexamination (only if the request is filed by the patent owner), and supplemental examination and fees for filing notice of appeal, forwarding an appeal to the PTAB, and requesting an oral hearing.
I. REQUIREMENT FOR A CERTIFICATION
35 U.S.C. 123 requires a certification as a condition for an applicant to be considered a micro entity.
- The certification must be in writing and must be filed prior to or at the time a fee is first paid in the micro entity amount in an application or patent
II. BASES FOR ESTABLISHING MICRO ENTITY STATUS
There are two separate bases for establishing micro entity status referred to as the "gross income basis" and the "institution of higher education basis".
509.04(a) Gross Income Basis for Micro Entity Status
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35 U.S.C. 123(a) provides that the term ''micro entity'' means an applicant who makes a certification that the applicant:
- qualifies as a small entity;
- has not been named as an inventor on more than four previously filed patent applications, other than applications filed in another country, provisional applications under 35 U.S.C. 111(b), or international applications for which the basic national fee was not paid;
- did not, in the calendar year preceding the calendar year in which the applicable fee is being paid, have a gross income exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census; and
- has not assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census.
- Each inventor and each non-inventor applicant (e.g., an assignee-applicant) must individually meet the gross income limit.
- The gross income limit applies to the assignee (if any) regardless of whether the assignee is identified as the applicant.
I. SECTION 1.29(a) – Gross Income Basis Requirements
(a) To establish micro entity status under this paragraph, the applicant must certify that:
(1) The applicant qualifies as a small entity as defined in § 1.27;
(2) Neither the applicant nor the inventor nor a joint inventor has been named as the inventor or a joint inventor on more than four previously filed patent applications, other than applications filed in another country, provisional applications under 35 U.S.C. 111(b), or international applications for which the basic national fee under 35 U.S.C. 41(a) was not paid;
(3) Neither the applicant nor the inventor nor a joint inventor, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census; and
(4) Neither the applicant nor the inventor nor a joint inventor has assigned, granted, or conveyed, nor is under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census.
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If an application names more than one inventor, each inventor must meet the requirements.
- If the applicant is other than the inventor(s) (e.g., an assignee-applicant), then each such non-inventor applicant as well as each inventor must meet the requirements.
If there is any assignee or licensee that received “ownership rights” from any inventor or non-inventor applicant, then the party(ies) with the “ownership interest” must also meet the gross income limit requirement.
A. SMALL ENTITY REQUIREMENT
In order to meet the small entity requirement, every party holding rights in the application must qualify as a small entity.
If any rights in the application are assigned, granted, conveyed, or licensed to a party that does not qualify as a small entity, the applicant cannot qualify for any patent fee discount.
B. APPLICATION FILING LIMIT
For purposes of establishing micro entity status under the “gross income” basis, the application filing limit includes:
- previously filed U.S. nonprovisional applications (e.g., utility, design, plant, continuation, and divisional applications),
- previously filed U.S. reissue applications, and
- previously filed U.S. national stage applications under the Patent Cooperation Treaty (PCT).
A non-inventor applicant under 37 CFR 1.46 who is a person that could also have been named as the inventor or a joint inventor in previously filed patent applications.
- Accordingly, any non-inventor applicant(s) who is a person rather than a corporation or other type of juristic entity, must also meet the application filing limit.
All such applications naming the inventor or a joint inventor are counted toward the application filing limit, whether the applications were filed before, on, or after March 19, 2013.
- Further, it does not matter whether the previously filed 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:
- foreign applications;
- international (PCT) applications for which the basic U.S. national stage filing fee was not paid; and
- provisional applications.
In addition, 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 the applicant, inventor or joint inventor is not considered to be named on the prior filed application for purposes of determining micro entity status.
Because the four application limit is a limit on previously filed U.S. nonprovisional applications, reissues applications, and national stage applications, the maximum number of applications in which fees can be paid at the micro entity discount rate can vary from 0 to 5 for any given inventor. For example, consider a person named as a sole inventor in five previously filed U.S. nonprovisional patent applications in which all ownership rights have remained with the sole inventor (i.e., no assignment or licensing of patent rights ever occurred). This person was not named as an inventor in any other application. Because all five applications count against the application filing limit, this person cannot be named as an inventor in any future-filed application entitled to micro entity status on the “gross income” basis under 37 CFR 1.29(a). (However, the filing of a future sixth application will not jeopardize entitlement to micro entity status in any of the five applications already filed.) If the first two of the inventor’s five applications went abandoned prior to March 19, 2013, then the inventor would not have had the opportunity to pay fees at the micro entity discount rate in those two applications. (The micro entity discount became available for the first time on March 19, 2013.) However if the third-filed application issued as a patent, then for purposes of paying maintenance fees, the applicant-turned-patentee (the sole inventor in this example) may establish entitlement to micro entity status on the “gross income” basis if all 4 requirements under 37 CFR 1.29(a) are met. If the fourth and fifth filed applications are still pending, then similarly, the inventor may establish entitlement to micro entity status on the “gross income” basis if the four requirements under 37 CFR 1.29(a) are met.
C. GROSS INCOME LIMIT ON APPLICANTS AND INVENTORS
For purposes of qualifying for micro-entity status under 37 CFR 1.29(a) and paying fees at the micro entity discount, it is required that no inventor had a gross income exceeding the gross income limit in the calendar year preceding the time of fee payment.
At the time any fee is to be paid in the micro entity amount, it is required that no inventor and no non-inventor applicant (if any) have a preceding calendar year's gross income exceeding the "maximum qualifying gross income" posted on the USPTO Web site.
Adjusted gross income is defined as gross income minus adjustments to income.
- For purposes of micro entity status it is "gross income" - not "adjusted gross income" that matters.
On the other hand, it is possible a small entity applicant not meeting the gross income limits in the calendar year in which the application was filed could meet the gross income limits in the calendar year in which the issue fee is paid, for example, due to a reduction in income.
If the reported "maximum qualifying gross income" increases, then parties that met the gross income limit earlier that calendar year will continue to meet the gross income limit for the rest of the calendar year.
For inventors who file tax returns jointly with their spouse, for example, determining the inventor's gross income may not be readily apparent from the preceding calendar year's joint tax return.
For filings on behalf of deceased inventors, gross income from the deceased inventor's estate or trust does not count toward the gross income limit because the trust or decedent's estate is considered a separate legal entity.
D. GROSS INCOME LIMIT ON PARTIES WITH AN “OWNERSHIP INTEREST”
Accordingly, for each inventor, applicant, and party with an "ownership interest," gross income in the calendar year preceding the time of fee payment must not exceed the "maximum qualifying gross income."
- The gross income limit applies to the assignee regardless of whether the assignee is identified as the applicant.
An applicant is disqualified from micro entity status on the gross income basis if an inventor or an assignee-applicant transfers, or is obligated to transfer, any ownership interest in the patent application to an entity that exceeds the gross income limit.
II. SECTION 1.29(b) – Previously Filed Patent Application Exclusion
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(b) An applicant, inventor, or joint inventor is not considered to be named on a previously filed application for purposes of paragraph (a)(2) of this section if the 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.
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An applicant, inventor, or joint inventor is not considered to be named on a previously filed application if the 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.
- In order for 37 CFR 1.29(b) to apply, the assignment of all ownership rights or the existing obligation by contract or law to assign all ownership rights must have resulted from employment with a previous employer.
III. SECTION 1.29(c) – Gross Income Determined by Currency Exchange Rate
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(c) If an applicant’s, inventor’s, joint inventor’s, or entity’s gross income in the preceding calendar year is not in United States dollars, the average currency exchange rate, as reported by the Internal Revenue Service, during that calendar year shall be used to determine whether the applicant’s, inventor’s, joint inventor’s, or entity’s gross income exceeds the threshold specified in paragraph (a)(3) or (4) of this section.
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If an applicant’s, inventor’s, joint inventor’s, or entity’s gross income in the preceding calendar year is not in United States dollars, the average currency exchange rate, as reported by the Internal Revenue Service, during that calendar year shall be used.
509.04(b) Institution of Higher Education Basis for Micro Entity Status
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(d) To establish micro entity status under this paragraph, the applicant must certify that:
(1) The applicant qualifies as a small entity as defined in § 1.27; and
(2)(i) The applicant’s employer, from which the applicant obtains the majority of the applicant’s income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or
(ii) The applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular application to such an institution of higher education.
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A micro entity shall also include an applicant who certifies that:
- The applicant’s employer, from which the applicant obtains the majority of the applicant’s income, is an institution of higher education as defined in section 101(a) of the Higher Education Act; or
- The applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular application to such an institution of higher education.
I. REQUIREMENTS
There are two requirements:
- First, the applicant must certify that the applicant qualifies as a small entity.
- Second, the applicant must certify that either:
- (i) the applicant’s employer, from which the applicant obtains the majority of the applicant’s income, is an institution of higher education as defined the Higher Education Act of 1965; or
- (ii) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular application to such an institution of higher education.
A. Small Entity Requirement
In order to meet the small entity requirement, every party holding rights in the application must qualify as a small entity.
B. Section 1.29(d)(2) Requirement
The applicant must certify that the applicant’s employer, from which the applicant obtains the majority of the applicant’s income, is an institution of higher education.
II. Meaning of “Institution of Higher Education”
The term “institution of higher education” means an educational institution in any State that—
- 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;
- is legally authorized within such State to provide a program of education beyond secondary education;
- 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;
- is a public or other nonprofit institution; and
- 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.
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.
A. Universities and Colleges that Do Not Qualify as Institutions of Higher Education
For-profit universities, foreign universities, and colleges do not qualify as an “institution of higher education” for purposes of establishing micro entity status.
509.04(c) Parties Who Can Sign the Micro Entity Certification
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A certification of micro entity status, on either the gross income basis or the institution of higher education basis, can be signed only by an authorized party as set forth in 37 CFR 1.33(b), which includes:
- A patent practitioner of record;
- A patent practitioner not of record who acts in a representative capacity; or
- The applicant. Unless otherwise specified, all papers submitted on behalf of a juristic entity must be signed by a patent practitioner.
For joint inventor applicants, each joint inventor should sign a separate copy of the relevant micro entity certification form.
- Additionally, if any applicant is an assignee or other party, 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.
509.04(d) Continued Obligation to Determine Micro Entity Qualification
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(g) A certification of entitlement to micro entity status need only be filed once in an application or patent. Micro entity status, once established, remains in effect until changed pursuant to paragraph (i) of this section. However, a fee may be paid in the micro entity amount only if status as a micro entity as defined in paragraph (a) or (d) of this section is appropriate on the date the fee is being paid. Where an assignment of rights or an obligation to assign rights to other parties who are micro entities occurs subsequent to the filing of a certification of entitlement to micro entity status, a second certification of entitlement to micro entity status is not required.
(h) Prior to submitting a certification of entitlement to micro entity status in an application, including a related, continuing, or reissue application, a determination of such entitlement should be made pursuant to the requirements of this section. It should be determined that each applicant qualifies for micro entity status under paragraph (a) or (d) of this section, and that any other party holding rights in the invention qualifies for small entity status under 37 CFR 1.27. The Office will generally not question certification of entitlement to micro entity status that is made in accordance with the requirements of this section.
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509.04(e) Notification of Loss of Entitlement to Micro Entity Status
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(i) Notification of a loss of entitlement to micro entity status must be filed in the application or patent prior to paying, or at the time of paying, any fee after the date on which status as a micro entity as defined in paragraph (a) or (d) of this section is no longer appropriate. The notification that micro entity status is no longer appropriate must be signed by a party identified in § 1.33(b). Payment of a fee in other than the micro entity amount is not sufficient notification that micro entity status is no longer appropriate. A notification that micro entity status is no longer appropriate will not be treated as a notification that small entity status is also no longer appropriate unless it also contains a notification of loss of entitlement to small entity status under § 1.27(f)(2). Once a notification of a loss of entitlement to micro entity status is filed in the application or patent, a new certification of entitlement to micro entity status is required to again obtain micro entity status.
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For applications under micro entity status, regular unreduced fee status will result from:
- a notification of loss of entitlement to micro entity status accompanied by regular unreduced fees or some other indication of loss of entitlement to small entity status; or
- a notification of loss of entitlement to small entity status by itself.
509.04(f) Correcting Errors in Micro Entity Status
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(k) If status as a micro entity is established in good faith in an application or patent, and fees as a micro entity are paid in good faith in the application or patent, and it is later discovered that such micro entity status either was established in error, or that the Office was not notified of a loss of entitlement to micro entity status as required by paragraph (i) of this section through error, the error will be excused upon compliance with the separate submission and itemization requirements of paragraph (k)(1) of this section and the deficiency payment requirement of paragraph (k)(2) of this section.
(l) Any paper submitted under this paragraph must be limited to the deficiency payment (all fees paid in error) required for a single application or patent. Where more than one application or patent is involved, separate submissions of deficiency payments are required for each application or patent (see § 1.4(b)). The paper must contain an itemization of the total deficiency payment for the single application or patent and include the following information:
(i) Each particular type of fee that was erroneously paid as a micro entity, (e.g., basic statutory filing fee, two-month extension of time fee) along with the current fee amount for a small or nonsmall entity, as applicable;
(ii) The micro entity fee actually paid, and the date on which it was paid;
(iii) The deficiency owed amount (for each fee erroneously paid); and
(iv) The total deficiency payment owed, which is the sum or total of the individual deficiency owed amounts as set forth in paragraph (k)(2) of this section.
(2) The deficiency owed, resulting from the previous erroneous payment of micro entity fees, must be paid. The deficiency owed for each previous fee erroneously paid as a micro entity is the difference between the current fee amount for a small entity or non-small entity, as applicable, on the date the deficiency is paid in full and the amount of the previous erroneous micro entity fee payment. The total deficiency payment owed is the sum of the individual deficiency owed amounts for each fee amount previously and erroneously paid as a micro entity.
(3) If the requirements of paragraphs (k)(1) and (2) of this section are not complied with, such failure will either be treated at the option of the Office as an authorization for the Office to process the deficiency payment and charge the processing fee set forth in § 1.17(i), or result in a requirement for compliance within a one-month time period that is not extendable under § 1.136(a) to avoid the return of the fee deficiency payment.
(4) Any deficiency payment (based on a previous erroneous payment of a micro entity fee) submitted under this paragraph will be treated as a notification of a loss of entitlement to micro entity status under paragraph (i) of this section.
37 CFR 1.29(k) provides that if:
- an applicant or patentee establishes micro entity status in an application or patent in good faith;
- the applicant or patentee pays fees as a micro entity in the application or patent in good faith; and
- applicant or patentee later discovers that such micro entity status either was established in error, or that the Office was not notified of a loss of entitlement to micro entity status as required by 37 CFR 1.29(i) through error, the error will be excused upon compliance with the separate submission and itemization requirements of 37 CFR 1.29(k)(1) and the deficiency payment requirement of 37 CFR 1.29(k)(2).
Any paper submitted under 37 CFR 1.29(k) must be limited to the deficiency payment (all fees paid in error) required for a single application or patent.
The deficiency owed, resulting from the previous erroneous payment of micro entity fees, must be paid.
If the requirements of 37 CFR 1.29(k)(1) and (k)(2) are not complied with, such failure will either be treated at the option of the Office as an authorization for the Office to process the deficiency payment and charge the processing fee, or result in a requirement for compliance within a one-month nonextendable time period to avoid the return of the fee deficiency payment.
Any deficiency payment (based on a previous erroneous payment of a micro entity fee) submitted under 37 CFR 1.29(k) will be treated as a notification of a loss of entitlement to micro entity status
