Micro Entity Status: Who is Filing for Micro Entity Status?

By Dennis Crouch

The name “micro entity” suggests something quite small. In the patent law world, this generally means that the inventor / applicant income level over the past several years is less than around $150,000 and that the inventor is not a frequent applicant. A patent applicant who qualifies will receive a 75% discount on patent office fees. That discount is designed to make it easier for small entities to access the patent system and thus encourage innovation amongst this group of potentially highly-innovative but not yet financially successful individuals. The micro entity rules include a major loophole as well – university owned patent applicants can also qualify for the fee-reduction. My alma-mater (Princeton University) has an $18 billion endowment and is far from being micro in any non-astronomic sense of the word. Still, under the rules, Princeton-owned applications would qualify for micro entity status. See also, Dennis Crouch, Micro Entity Early Stats, Patently-O (2014).

I looked through the records of 60 recently issued patents that claim micro entity status. The results are interesting: 17% are assigned to Universities; 1% to Companies; and the remaining 82% have no assignee or are assigned to an individual. (Note, the one patent in the group assigned to an individual involves a co-invented patent that is assigned to one of the co-inventors.) I had expected a higher percentage of university-owned patents in this group.

The process for seeking Micro Entity status is quite simply and appears to merely involve signing a one-page form. (SB-15A and SB-15B). Some caution should be applied since there is some precedent for finding patents unenforceable based upon improperly paying a small-entity fee when a large-entity fee was actually due.

I should note here that all of the patents in my sample were filed prior to the March 2013 institution of micro-entity fees. Thus, these patents began paying small-entity fees and then converted over to micro-entity status prior to issuance.

26 thoughts on “Micro Entity Status: Who is Filing for Micro Entity Status?

  1. Hey Dennis,

    How do you respond to this on the USPTO Website:

    Question FEE4415: Can a university identified as the applicant in a patent application qualify for micro entity status under the “institution of higher education” basis set forth in 37 C.F.R. 1.29(d)?

    No, 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.

    Wouldn’t that make it so Universities would not be able to take advantage of the provision? At our University, we were advised by counsel not to take advantage of the micro-entity provisions, and instead, use small entity.

  2. Do you guys think that you can still claim to be a micro entity if you have given Company A an exclusive license to use your software in a particular market and your patent applications cover the software?

    Is that, in effect, obligating you to grant a non-exclusive license to Company A for any patents that cover the software? So, the question is: are you tied to the entity size of any company that you license your software to for any patent application that covers your software.

  3. Promote the progress:

    link to swampland.time.com

    There are thousands, maybe tens of thousands, of people with clever ideas for starting businesses who are trapped in their current jobs because of the need to provide health insurance for their families. These are the potential Wright brothers, the middle managers who see a better, more efficient way to process a product, the tinkerers who come up with a new valve, the designers who come up with a snazzzy new pattern.

    The ad hoc employer-based American health care system has been an impediment to such people, especially for those who have family members with pre-existing conditions.

    I know many people who have been given the freedom referred to above thanks to the ACA. More, please.

  4. OT, but interesting:

    link to fool.com

    On average, Monsanto has filed a lawsuit every three weeks for 16 straight years.

    I didn’t know that there were that many over-70 destitute farmers out there…. ;-)

  5. Dennis,

    One glaring issue with micro entity status for the universities that Warren Woessner astutely pointed out is that many of those universities also have non-profit research foundations associated with them. Work done by researchers at those non-profit research foundations normally won’t qualify for micro entity status.

    1. Can you provide more EG?

      Why would the work done by researchers at those non-profit research foundations not normally qualify for micro entity status?

      1. anon,

        To qualify for micro entity status, the prospective assignee has to be “an institution of higher learning [as defined by 20 USC 1001(a)] or a technology transfer
        organization whose primary purpose is to facilitate the
        commercialization of technologies developed by one or more
        such institutions of higher education.” Warren Woessner has raised doubts as to whether non-profit research foundation affiliated with the university qualify under the latter category.

        1. BJA,

          I did, see my comment in response to anon’s query. It might be possible to have university assigned inventions licensed to it’s non-profit research foundation, but unless the prospective assignee organization qualifies as “an institute of higher learning,” it’s not entitled to micro entity status.

        2. anon,

          Excuse me, I was looking at the Prior User Right (PUR) exception, but the one for micro entity is even more restrictive in requiring that the prospective assignee be an “institution of higher learning.” See new sections 123(a) (Micro Entity Defined) and 123(d)(Institutions of Higher Education) of the AIA.

          1. Ned,

            I guess it will come down to the assignee agreements (if any) in place between the non-profit and the related institution of higher education.

            Sometimes (famously as in Stanford) those institutions bungle those agreements.

            As for the new sections – thanks – I am well familiar with them (as you might notice from my other comments here).

    2. You should check the statute again. If properly formed, that research arm should be able to claim micro entity status under the new law.

  6. Universities claiming micro status are obscene. These ivory towers rolling in government largess and exploiting government subsidies should be ashamed to put themselves on the same footing as independent inventors making les than $150K per year and having no government support.

    1. These ivory towers rolling in government largess and exploiting government subsidies

      Education and research are pretty important to those of us who are interested in promoting progress. And by “progress”, I mean real scientific progress, not some new method for shoving an ad in your face that Johnny Garage, Esq. dreamed up.

      independent inventors making les than $150K per year and having no government support

      $149K/yr is more than 90% of people in the US earn per year, and yet you will still get a huge break on fees when you go to gamble at the Patent Casino.

      1. It’s 153051, not 149k. Your schtick is old, as is your incompetence. Please go away and quit polluting this board with your filler that adds no intelligent direction to the conversation.

    2. Tourbillion,

      Sorry but I cannot see eye to eye with you on this topic.

      Would you settle for a compromise? Let’s have any University that supports anti-patent rhetoric automatically loose their micro-entity (and PUR shield) rights and have them pay double the normal fees. You know, as a sign that they back the anti-patent rhetoric (at least a little).

      Of course the truly put-your-money-where-your-mouth-is approach would be to return those billions of dollars earned in University patent portfolios back ‘to the people,’ right? Not seeing too many volunteers for that.

  7. We often do not encourage our university clients to file as micro-entity, though we do so for them if requested and it is available for the case at hand. This is because scrutiny of the micro-entity status occurs with every payment of fees (not just at issue fee and maintenance fees), and can be lost mid-prosecution because of some licensing event that the university may fail to inform us about unless we continue following up with a detailed list of questions. Once attained, small entity status sticks until that issue fee or maintenance fee even if the application would not technically be entitled to small entity at some point in time between attaining it and paying the issue fee or maintenance fee. Thus, small entity status never presented anywhere near the number of headaches. Then, weighed against the possibility of invalidity or unenforceability should due diligence not run flawlessly, as for micro-entity we often advise not to bother, particularly if the case is one expected to have high value.

    1. Rick,

      I am puzzled by the suggestion that the loss of small entity status and the loss of micro entity status are occasioned differently.

      That is not my understanding at all. The license issue affects a loss of small status the same as affecting a loss of micro status, no? Can you point to why you think the loss occurs differently (and/or has different effects)?

      1. Hey Rick,

        Question for you. A lot of Universities grant NERF licenses as part of consortium or they offer limited exclusive options to a bunch of companies (or offer an option in a sponsored project agreement). Do these events trigger large entity at filing?

  8. I had expected a higher percentage of university-owned patents in this group.

    Same here. Thanks for looking into that.

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