Filing a patent application and other documents throughout patent prosecution requires the payment of several fees. The cost of many of these fees depends on your entity status.

The United States Patent and Trademark Office (USPTO) defines three types of entity status which determines the fees for patent matters filed with the USPTO. These three types are:

• Large Entity,
• Small Entity, and
• Micro Entity.

A Large Entity is defined as a business with over 500 employees. Large Entities do not qualify for reduced patent fees.

A Small Entity is generally defined as a person, a small business with no more than 500 employees, or a nonprofit organization. Small Entities qualify for a 60% reduction on most patent fees.

To be more precise, all applicants, inventors, or joint inventors seeking Small Entity status must be one of the following:

• A person who has not assigned, licensed, or otherwise conveyed an interest in the invention to a non-small entity; or
• A business that has not assigned, licensed, or otherwise conveyed an interest in the invention to a non-small entity, and together with all affiliates, has 500 or less employees; or
• A non-profit organization that has not assigned, licensed, or otherwise conveyed an interest in the invention to a non-small entity and is either:
  • A university or other institution of higher education located in any country;
  • An organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C. 501(c)(3)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a));
  • Any nonprofit scientific or educational organization qualified under a nonprofit organization statute of a state of United States (35 U.S.C. 201(i)); or
  • Any nonprofit organization located in a foreign country which would qualify as a nonprofit organization under paragraphs (a)(3)(ii)(B) of this section or (a)(3)(ii)(C) of this section if it were located in this country.

A Micro Entity is an entity that qualifies as a Small Entity and also either (a) qualifies as a Micro Entity based on gross income or (b) qualifies as a Micro Entity under the institution of higher education basis. Micro Entities qualify for an 80% reduction on most patent fees.

Gross Income Basis
To qualify for Micro Entity status based on gross income, all applicants, inventors, or joint inventors must meet the following criteria:

• Neither the applicant nor the inventor nor a joint inventor has been named as an inventor on more than four previously filed U.S. patent applications; **
• Neither applicant nor the inventor nor a joint inventor had a gross income in the previous year from when the fee(s) is paid of more than the "Maximum Qualifying Gross Income," which is $241,830 for the year 2023 (relating to patent fees paid in 2024); and
  • Note: The Maximum Qualifying Gross Income changes annually, usually in September. The income stated here is the maximum qualifying gross income as of September 10, 2024.
• Neither the applicant nor the inventor nor a joint inventor has assigned, granted, or conveyed, nor is under an obligation to assign, grant, or convey, a license or other ownership interest to another entity that does not meet the same "Maximum Qualifying Gross Income" limit.

** The Micro Entity definition states that applicants are not considered to be named on a previously filed application if he or she has assigned, or is obligated to assign, all ownership rights as a result of previous employment. Applications filed in another country, provisional applications, or international applications for which the basic national fee was not paid do not count as previously filed applications.

Institution of Higher Education Basis
To qualify for Micro Entity status under the institution of higher education basis, the following is required:

• The Applicant obtains the majority of their income from a United States institution of higher education as defined in section 101(a) of the Higher Education Act (20 U.S.C. 1001(a)); or
• The Applicant has assigned, granted, or conveyed, or is under an obligation by contract or law to assign, grant, or convey an ownership interest in the application to such a United States institution of higher education.

How Gallium Law Can Help
Obtaining a patent for your invention can be expensive, but based on your entity status, you may be able to save tremendously on USPTO fees. Therefore, it is crucial to correctly determine your entity status and ensure that the proper documentation is filed. We are experienced in working with large, small, and micro entities and would be happy to answer any questions you have about the patent filing process. If you have any questions about entity status, please call us at 651-256-9480, fill out this Contact Form to schedule a meeting, or visit this page on our website. 

*The information provided in this article is not legal advice, and should not be relied on as such. The content of this article is for informational purposes only, and is meant as a starting point on your search for answers to your legal questions.