Micro Entities Rising Popularity

The patent statute now provides for three categories of patent applicants: Large entities, Small Entities, and Micro Entities. As their names suggest, the groupings are largely defined by entity size with the exception that University-owned patents can qualify for micro-entity status despite billion dollar endowments. Entity status determines patent office fees. With a few exceptions, large entities pay full-freight, small entities receive a 50% reduction in fees, and micro entities receive a 75% reduction. I should mention also that the micro entity status became available only in 2013 as part of the America Invents Act (AIA) implementation.

The chart above groups provisional patent application filings into the various entity-sizes and includes two date-groupings: Applications filed in FY2011-2012 and those filed in FY2014-2015 (through August 4, 2015). As is apparent, a substantial percentage of provisional applications are now being filed under the micro-entity status. The pre-AIA information suggests that the rise in micro-entity status should largely be associated with a drop in small-entity status.

About 45% of provisional applications are abandoned without any further non-provisional or PCT application claiming priority.

6 thoughts on “Micro Entities Rising Popularity

  1. 3

    We have been advised by external counsel (multiple firms) that universities should not actually take advantage of micro entity status; that this is a drafting error in the AIA. Anyone else have thoughts on this?

    link to uspto.gov

    See the below from 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.

  2. 2

    Thanks Dennis,

    Since the greatly reduced fee payment status of qualifying parties for provisionals normally remains the same for all their subsequent PTO fees, it amounts to a large total subsidy [increased payments] by large entities. [Except for the substantial number of individual inventors that do NOT file regular applications based on their provisionals.]

    Thus, it would be of interest to know what % of parties claiming Micro Entity subsidy status are universities versus genuine micro entities, if your data for this study can provide that information?

    1. 2.1

      BTW, the main advantage of using provisional application filings for large entities is the additional year of patent term that it can provide. But outside of pharma or biotech a most large entities do not seem to normally expect their patents to still be of value 21 years [rather than 20] after the provisional filing date. Other than some universities, they may also have a more realistic concern for the 112 priority claim adequacy of provisionals that lack the plural variable scope claims and adequate specification support of a formal patent application.
      However, far more significantly for the above statistics, more than half of large entity filings are foreign patent application origin applications that cannot add provisional filing to their foreign priority benefit. That makes all other large entities look like they do far less provisional filings than they actually do.

  3. 1

    Pardon my saying so, but this story is nonexistent (at best).

    First, who taught you how to display data? Your blue to orange paints a backward (as in misleading, not as in reverse chronological) looking time progression.

    Second, all that has happened is that the sum total of what was Small Entity has actually dropped slightly and has been naturally divided into Small and Micro. Micro was not available before, and there is NO justification for a title that states (let alone implies) a trend increasing in popularity.

    1. 1.1

      I would say starting at 0 before AIA and going to any number gives at least single reference for a trend.

      While the conclusions you draw are correct (small splits into small and micro), Denis already made that conclusion (2nd paragraph, last sentence).

      While not the best way to display the data, I don’t think it is terrible either. It forces the frame onto what type of entity instead of the time periods. It also enables a comparison over time within one group (you clearly see the difference in height for small entity for each time period), whereas if the abscissa was split between pre and post AIA, the height differences may be harder to tell. I admit, maybe not much more difficult in this case with so few data points and limited categories, but with a few more categories or data points it could get messy. I would call it a toss up.

      Lastly, time series, while usually left to right, is not important for a pre-post graph because ALL you want to do is compare the pre versus the post. If someone is careless to not read the legend, even on such a simple graphic, then I’m not sure what to tell you. Another toss up, or as copyright would say “minimal creativity.”

      1. 1.1.1

        Portrayal of data in a false and misleading way should be avoided.

        The portrayal here – coupled with the title of the post – is C R P.

        The “micro” crowd did not happen overnight or because of the AIA. Burying the reference and dis-associating that reference with the choice of presentation is just not defensible, and your attempt only draws – and should draw – additional scorn.

        This is an attempt to create news that is not there.

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