It’s easy to root for the little guy.  Whether we are rooting for Rudy Ruettiger to take the field in Rudy, or for inventor Robert Kearns when he takes on Big Auto in the movie Flash of Genius (the Rudy equivalent for patent attorneys), we root for success stories.  A truly American success story is an invention that allows the smallest inventor to compete with the largest corporation.  Unfortunately, while individual inventors dream about inventing the next big thing, the costs and fees involved in filing a patent application often make these dreams prohibitively expensive.  According to the United States Patent and Trademark Office (“USPTO”), less than 20% of the patents granted in 2011 were awarded to so-called small entities, individuals or businesses with less than 500 employees.  How is the little guy supposed to compete?  The USPTO and the American Invents Act (“AIA”) have offered a few avenues to make it a bit easier for Rudy to get into the game.

Micro-Entity 

Beginning in March 2013, a new class of entities, micro-entities, will be entitled to a 75% reduction of certain fees.  A micro-entity can now file a patent application for $400 in filing fees compared to $1,260 for a large entity.

A micro-entity has strict requirements.  A micro-entity must:  1) qualify as a small entity, discussed below,  2) not have been named as an inventor in more than four previously filed patent applications excluding applications filed during the course of employment and which were assigned to the employer, 3) not have a gross income exceeding 3 times the median household income or about $150,000 based on 2011 figures, and 4) not have assigned or conveyed the interest to a person or entity having an income exceeding 3 times the median household income.  Thus, if your gross income is less than about $150,000 and if you have not been named as an inventor in four previously filed applications, you may qualify as a micro-entity.  Additionally, regardless of income level, if you obtain a majority of your income from an institution of higher education or if you have assigned or are under an obligation to assign the interest in the application to an institute of higher learning, you may qualify as a micro-entity.

Each applicant and each party holding an interest in the application must independently qualify for the micro-entity status.  Once established, the micro-entity status remains in effect until it is changed by the Applicant, so the Applicant should verify their status on a yearly basis.

Small Entity

Even if you don’t qualify as a micro entity, you may qualify as a small entity.  A small entity includes individuals, non-profits, and businesses with less than 500 employees.  Small entities are entitled to a 50% reduction in certain filing fees.  As an example, the filing fees for a patent application of a large entity are currently $1,260, whereas the filing fees for a patent application of a small entity are currently $533.  While there is a financial incentive to try to qualify as a micro entity or small entity, you should be very candid with your patent attorney to make sure you pay the correct filing fees.  Penalties for fraudulently qualifying for a micro-entity or small entity discount can include termination of the patent.

Extended Missing Parts Pilot Program

The Extended Missing Parts Pilot Program allows inventors the opportunity to delay payment of certain filing fees for up to one year.  Sometimes inventors determine early on after filing that they are going to abandon the endeavor and do not want to proceed with the patent application.  This program allows the inventor to “test the waters” before paying the filing fees in full.  Without the pilot program, a small entity, discussed above, pays filing fees totalling $533 upon filing a patent application.  With the pilot program, an inventor claiming priority to a provisional application is required to pay only $98 upon filing, and is allowed one year to pay the remainder.  Because the initial fees and costs are often prohibitive, reducing the upfront costs will allow more individual inventors and small businesses to protect their ideas.  The pilot program expires December 31, 2013.

The USPTO and AIA are providing avenues to ensure the dreams of small businesses and individual inventors remain a reality.  If you believe any of the above may apply to you, please contact your patent attorney.

Bobby Braxton is an intellectual property attorney at Carstens & Cahoon. He prosecutes patents and trademarks and litigates intellectual property disputes.  

This blog is maintained by Carstens, Allen & Gourley, LLP to inform readers of recent developments in intellectual property. Solely informational in nature, this blog is not intended to create an attorney-client relationship or to be used as a substitute for legal advice or opinions. For more information, please visit www.caglaw.com.

by Bobby W. Braxton