Qualifying for Reduced Patent Fees as a Micro Entity

Implications for Universities and Technology Transfer Offices

One of the changes in patent law that went into effect in March of 2013 is the establishment of micro entity status for patent applicants. Under the America Invents Act (AIA), the United States Patent and Trademark Office fees for micro entities are reduced by 75% as compared to large entity fees. The micro entity rules set forth three independent bases for university-related patent applications to qualify for micro entity status: 

  1. Based on the source of income of each applicant
  2. Based one each applicant’s employer being an “institution of higher education”
  3. Based on each applicant having assigned or licensed the application to an “institution of higher education”

Qualifying for micro entity status can offer a cost savings of at least $750 per application, and at least $3,000 over the life of a patent. For many universities, the cost savings may justify an internal review of the university’s patent filing practices and administrative processes to determine whether it is possible to take advantage of this opportunity.

Below we identify four main scenarios in which micro entity status may be properly claimed for a university related patent application base on the provisions of 35 USC §123.

Scenario #1: University Employed Inventor-Applicants

If an application names an inventor that is employed by a university, the application may qualify for micro entity status if:

  • The university qualifies as an “institution of higher education” as defined by law
  • The inventor obtains the majority of his or her income from the university
  • The inventor is actually named as the “applicant”
  • The application is not assigned or license to any entity that odes not qualify for small entity status

Under this section of the rules (i.e., 35 USC §123(d)(1)), it is important to note that the application does not have to be assigned or licensed to an “institution of higher education.” In other words, the application can be assigned to a TTE (that qualifies as a small entity) without sacrificing micro entity status, as long as the inventor-applicants are employed by the university.

Scenario #2: University Inventor-Applicants with Other Income

If an application names an inventor that is employed by a university, and if the inventor does not obtain the majority of his or her income from the university, the application may still qualify for micro entity status if:

  • The inventor has assigned or is obligated to assign a license or ownership interest in the application to the university
  • The university qualifies as an “institution of higher education” as defined by law
  • The inventor is actually named as the “applicant”
  • The application is not assigned or license to any entity that odes not qualify for small entity status

Under this section of the rules (i.e., 35 USC §123(d)(2)), it is important to note that obtaining micro entity status may depend on the sources of income of the inventor (or each of joint inventors) and whether the inventor has assigned or is obligated to assign the right to the invention to the university. Further, the assignee must be the university. Depending on the organization of the TTE as related to the university, assignment to the TTE may negate qualification for micro entity fees.

Scenario #3: Non-University Inventor-Applicants

If an application names and inventor that is not employed by a university, the application may qualify for micro entity status if:

  • The inventor who is not employed by the university has assigned or is obligated to assign a license or ownership interest in the application to the university
  • The university qualifies as an “institution of higher education” as defined by law
  • The inventor is actually named as the “applicant”
  • The application is not assigned or license to any entity that odes not qualify for small entity status

Under this section of the rules (i.e., 35 USC §123(d)(2)), it is important to note that an inventor who not employed by the university, must assign or license an ownership interest in the invention to the university in order to obtain micro entity status. Importantly, the assignment or license should not be made to the TTE if it is a legally separate entity from the university, as this would likely preclude obtaining micro entity status because the TTE is not an “institution of higher education” (see below). Although less clear, it does appear that the rules would allow the university to subsequently assign or license the rights to the invention to the TTE (that qualifies for small entity status) without sacrificing micro entity status.

Scenario #4 University Technology Transfer Entities

If an application names a TTE as the applicant, the application may qualify for micro entity status if: 

  • The TTE has assigned or is obligated to assign the license or ownership interest in the application to the university
  • The university qualifies as an “institution of higher education” as defined by law
  • The application is not assigned or license to any entity that odes not qualify for small entity status

Under this section of the rules (i.e., 35 USC §123(d)(2)), it is important to note that if an inventor(s) is obligated to assign the rights to the invention to a TTE, the application could still potentially qualify for micro entity status if the TTE has assigned or is obligated to assign or license an ownership interest in the invention to the university.

Other Considerations

  • Under any scenario, the university cannot be named as the applicant and still qualify for micro entity status.
  • Micro entity status must be appropriate every time a fee is paid.

Links:

www.uspto.gov/aia_implementation/fees.jsp#heading-2

www.law.cornell.edu/uscode/text/35/123

 

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