USPTO Cost Differences Between a Small and Large Entity
At the outset, one of the first questions we ask a corporate patent applicant is the size of their company. Whenever we are about to file a patent application on behalf of a company, we ask whether the company is a small or large entity. Whether it be a national stage or direct priority or standalone, we must know this upfront since USPTO patent filing fees are dictated by the size of the applicant. Filing fees for a small entity are 50% 40% of those for a large entity.
It is up to the applicant and their US patent attorney to make this determination upfront and pay the proper fees. The USPTO will not ask.
Are you paying the correct USPTO patent fees or jeopardizing your patent? Call US patent attorney Vic Lin at 949-223-9623 or email vlin@icaplaw.com to explore how we can help you file your patents with the proper government fees.
What is a Large Entity?
Large entity status is attributed to an applicant with 500 or more employees. The employee count would include any affiliates (see 13 CFR 121.103 on how to determine affiliation). The employees of an affiliate or affiliated company may need to be counted if such a company falls within the principles of affiliation under Section 121.103 (e.g., when one controls the other or has the power to control the other).
What is a Small Entity?
To qualify for small entity status, the applicant may be:
- a “small business concern” with fewer than 500 employees, including the employees of any affiliates;
- an individual inventor applicant (i.e., “persons”); or
- a non-profit organization regardless of size, including institutions of higher learning (e.g., universities).
Be careful though. What initially appears as a small business concern might actually constitute a large entity due to affiliates or other circumstances. For example, a small entity applicant must not have any obligation under contract or law to assign, grant, convey or license any rights in the invention to a large entity.
Who is an affiliate?
Suppose a company with less than 500 employees is a subsidiary of a parent corporation. Is the parent company an affiliate of the subsidiary?
According to 13 CFR 121.103, entities are affiliates of each other when one controls or has the power to control the other. Therefore, it would be prudent to count the employees of any company that controls or has the power to control the applicant.
Case-by-case determination: Can the same applicant be both small and large entity?
The small or large status is determined on a case-by-case basis with respect to each particular patent application. For an applicant that starts off small, the question is whether this applicant has assigned, granted, conveyed or licensed the invention to a large entity, or is under an obligation to do so [see MPEP 509].
For example, it is entirely possible for an entity to be small in a first patent application, and yet be large in a second patent application that is licensed to a company with more than 500 employees.
What about a nonprofit organization?
A US nonprofit organization may qualify as a small entity if it falls under one of the following categories [see 37 CFR 1.27(a)]:
a) a university or other institution of higher education located in any country;
b) a 501(c)(3) corporation;
c) a nonprofit scientific or educational organization qualified under a nonprofit organization statue of a state of the US.
A foreign university or other institution of higher learning would automatically qualify as a small entity. All other foreign entities must qualify as a nonprofit under US federal law as a 501(c)(3) corporation or under US state law as a nonprofit scientific or educational organization.
How to request a refund for overpayment of USPTO fees
If large entity fees were mistakenly paid for an applicant that was in fact a small entity, a request for the refund must be filed within three months of the date of the full fee payment [see 37 CFR 1.28]. This three-month period for requesting a refund is not extendable.
What if the applicant is actually a large entity and you paid incorrect small entity USPTO fees?
Incorrect small entity fees can be corrected if the error occurred in good faith. The issue here is good faith. If the erroneous payment(s) were in good faith, the patent owner may attempt to cure the prior deficient payments by submitting the balance due.
To correct the deficiency, the large entity applicant must file a separate submission for each patent application or granted patent that:
- Calculates the deficiency owned for all previous erroneous fees paid as a small entity;
- Provides an itemization including:
- each type of fee (e.g., 2-month extension of time) that was erroneously paid and the current large entity amount;
- amount of each small entity fee actually paid and when;
- deficiency owed amount for each prior fee paid;
- total deficiency owed.
See MPEP 509.03(b).
If the erroneous payments were not made in good faith, the result may be an unenforceable patent due to inequitable conduct. A false declaration of small entity status with strong evidence of a high level of intent to deceive may lead to a finding of inequitable conduct.
Need help with your patent application?
Email patent attorney Vic Lin at vlin@icaplaw.com or call (949) 223-9623 to discuss how we can help you file your patent application.
