USPTO Implements Penalty System for False Small/Micro Entity Status Claims

by Dennis Crouch

The USPTO has begun implementing a comprehensive enforcement system for false assertions of small entity and micro entity fee status. This is continuation of a process began under Director Vidal and implementation of statutory changes in 2023.  See Statutory Penalties for False Assertions or Certifications of Small and Micro Entity Status (June 2025).  The memo explains a notice-and-order process that removes applications from examination pending resolution and can result in significant financial penalties, examination delays, and patent term adjustment reductions for applicants who improperly claim small or micro entity status.

2023 legislation added a penalty provisions to 35 U.S.C. § 41(j) for small entity violations and § 123(f) for micro entity violations. A subsequent December 2024 amendment added explicit good faith exceptions to both penalty provisions.  The statute provides for a penalty of "not less than 3 times the amount that the entity failed to pay as a result of the false certification" and does not provide a timeline for enforcement - noting that the fine applies "whether the Director discovers the false certification before or after the date on which a patent has been issued."