How are small entity and micro entity qualifications determined in U.S. patent applications?

Small and micro entity applicants in the United States can enjoy a 60%-80% reduction in application fees, search fees, examination fees, authorization fees, appeal fees and annual fees.

• Large Entity
• Small entities: 60% reduction in application fees, search fees, examination fees, grant fees, appeal fees and annual fees, including:
  • Small business: The applicant, each inventor, and any other party with a proprietary interest in the invention (such as assignees, licensees, and obligated assignees or licensees), including affiliates, with fewer than 500 employees
  • Non-profit organization: university or research institute
  • Individual: Natural person
• Micro-entity: The applicant or patentee shall submit a micro-entity certificate in the application or patent for which the applicant or patentee wishes to obtain micro-entity status. To establish micro-entity status based on gross income, the applicant or patentee shall submit Form SB/15A. To establish micro-entity status based on a higher education institution, the applicant or patentee shall submit Form SB/15B. 80% reduction in application fees, search fees, examination fees, grant fees, appeal fees and annual fees is available.
  • Once micro-entity status is established, it will remain in effect until changed. However, each time an applicant or patentee pays fees to the USPTO, they must reassess whether they still qualify as a micro-entity. If the applicant/patentee believes that they still qualify as a micro-entity, they may pay fees in the amount of a micro-entity. There is no need to resubmit the micro-entity declaration and form each time you pay fees.
  • If an applicant/patentee no longer meets the conditions for micro-entity status, such as no longer meeting the income limitations for the gross receipts basis, then the applicant or patentee must file a "Notice of Loss of Micro-Entity Status" form (SB/460) to notify the USPTO of the loss of micro-entity status and pay the small entity fee or the full fee.
  • If an applicant/patentee establishes micro-entity status in good faith and pays micro-entity fees in good faith, but later discovers that the micro-entity is incorrect or fails to inform the USPTO that the micro-entity rights were lost due to the error, the applicant/patentee must pay the difference.
  • Micro Entity Eligibility:
    • Each applicant, each inventor, and any other party with an ownership interest in an application or patent (such as assignees, licensees, and obligated assignees or licensees) is a small entity
    • Total income limits for applicants and inventors: The total income of an applicant, inventor, or co-inventor in the previous year must not exceed the "maximum qualified total income" limit, which is three times the U.S. median household income. The 2024 standard is: $241,830.00
    • Application filing limit: The applicant, inventor, or co-inventor must not be named as an inventor more than four times in previously filed applications
    • The previously filed applications, including
      • (i) Previously filed U.S. patent applications, such as utility, design, plant variety, continuation, and divisional applications
      • (ii) Previously filed U.S. reissue applications
      • (iii) Application for entry into the U.S. national phase of a previously filed PCT application
      • (iv) International design applications previously filed under the Hague Agreement designating the United States
    • Regardless of how long ago the previous applications were filed and whether they are pending applications, patent applications, or abandoned applications, these applications should be included in calculating whether the number of application filings has been met.
    • Gross income limitations for parties with "ownership interests": Neither the applicant, inventor, or co-inventor has assigned, granted, or transferred a license or other ownership interest to, or is under any obligation to assign, grant, or transfer a license or other ownership interest to, another entity that does not meet the same "maximum qualified gross income" limitations, i.e., if the applicant is affiliated with an organization, that organization must meet the specified nonprofit standards.