Does my company qualify for small entity status for reduced USPTO fees?

You may qualify for small entity status. Once you establish small entity , a 60% discount on most USPTO fees is available to you.

What is a Small Entity?

To qualify for a small entity status, the applicant may be:

• a "small business concern" having no more than 500 employees, including employees of any affiliates;

• a person (for example, an inventor applicant); or

• a non-profit organization regardless of size, including institutions of higher education (for example, universities).

Further note that in order to maintian the qualification for small entity status, 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 qualifies as an affiliate?

According to 13 CFR 121.103, entities are affiliates of each other when one controls or has the power to control the other, or a third pary or parties controls or has the power to control both. Factors such as ownership, management, previous relationships with or ties to another concern, and contractural relationships are used in determining the existence of affiliation. For a startup applicant, it is prudent to count the employees of any company that controls or has the power to control the applicant.

What about nonprofit organization?

A nonprofit organization can qualify for small entity status if it meets the following:

1. a university or other institution of higher education located in any country;

2. a corporation under 501(c)(3) of the Internal Revenue Code of 1986;

3. a nonprofit scientific or educational organization qualified under a nonprofit organization statue of a state of US; or

4. a nonprofit organization located in a foreign country which would qualify as a nonprofit organization under (2) or (3) if it were located in US (see 37 CFR 1.27).

Can the entity status change from small to large?

Yes. The entity status is determined on a case-by-case basis with respect to each particular patent application. An applicant can start off small, but become a large entity if the applicant assigns, grants, conveys, or licenses the invention to a large entity, or is under an obligation to do so.

Occasionally, a small entity applicant may become a large entity applicant during the prosecution of a patent application. In such case, teh applicant must notify the USPTO before paying the issue fee or any maintenance fee (see MPEP509).

What if I mistakenly paid large entity fees as a small entity?

If an applicant paid large entity fees but later finds out that the applicant is indeed a small entity status, a request for the refund must be filed within three months of the date of the payment of the full fee. The three-month time period is not extendable (see 37 CFR 1.28).

What if I mistakenly paid small entity fees as a large entity?

The key for this issue is whether the error was made with good faith. If status as a small entity is established in good faith, and fees as a small entity are paid in good faith, the applicant may cure the prior deficient payments by submitting the balance due.

To have the error be excused, the applicant must file a separate submission for each patent application or granted patent and following the following:

1. calculates the deficiency owned for all previous erroneous fees paid as a small entity;

2. itemizes the deficiency payment, including the following information:

   a. each particular type of fee that was erroneously paid as a small entity;

   b. the small entity fee actually paid, and when;

   c. the deficiency owed amount for each fee erroneously paid; and

   d. the total deficiency payment owed (see 37 CFR 1.28).

If the mistake was not made in good faith, it would be considered fraud practiced or attempted on the USPTO, which may result in the ultimate unenforceability of the patent. Therefore, it is crucial to continuously monitor the entity status of the company and timely notify the USPTO of any changes.

Some small entity applicants may qualify for micro entity status if additional requirements are meet. Read this post about micro entity status.