The EPO will officially implement the small entity fee reduction measures from April 1, 2024

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Fee reductions for small entities will be implemented at the EPO from 1 April 2024

From April 1, 2024, small entity status will be officially implemented at the EPO. This is the first time for European patent applications.

The small entity system for European patent applications will apply to applicants of any nationality or residence, including:

  1. Micro-enterprises;
  2. natural person;
  3. Not-for-profit organization, university or public research institution.

If there are more than two applicants in a patent application, each applicant must meet the small entity conditions. If the patent application is transferred to an applicant who is not a small entity, the patent application will no longer be eligible for the small entity exemption conditions.

According to the EU's definition of European microenterprises on May 6, 2003, microenterprises are companies that employ fewer than 10 people and whose annual turnover does not exceed 2 million euros.

The applicant must meet the small entity qualification on the payment date. If the applicant has submitted less than 5 patent applications in the past 5 years, he/she can enjoy a 30% reduction in the application fee, search fee, examination fee, designation fee, authorization fee and annual fee. The applicant is required to submit a relevant small entity declaration when submitting a patent application.

1. Micro-enterprises:
According to the European Commission opinion of 6 May 2003, if an enterprise is considered to be any entity engaged in any economic activity, including a family business or self-employed person engaged in a craft or any other activity, as well as a partnership or association regularly carrying out an activity, regardless of its legal form, a microenterprise is defined as:
1) Enterprises with fewer than 10 employees;
2) Companies whose annual turnover (income for a specific period) or balance sheet (a statement of a company's assets and liabilities) does not exceed EUR 2 million

it's here,
(1) The number of employees is the number of employees in a company corresponding to the number of annual work units (AWU), that is, the number of people who work full-time in the enterprise concerned or on behalf of the enterprise during the entire reference year under consideration. Part-year employees, part-time employees, regardless of the length of their working hours, and seasonal employees are part of the non-labor value and are calculated as a fraction of the AWU. Among them, employees are:

  • a) Employees;
  • b) persons affiliated to the enterprise who work for the enterprise and are considered employees under national law;
  • c) owner or manager;
  • d) A partner who carries out regular activities in the enterprise and derives benefits from the enterprise.

(2) The data applicable to the number of employees and financial amounts refer to the data relating to the most recent accounting period, calculated on a fiscal year basis. Turnover amounts exclude value added tax (VAT) and other indirect taxes. If, on the date of payment of the contribution, the enterprise discovers that it has exceeded the headcount limit or the financial limit, it will not lose its status as a microenterprise unless it has exceeded the limit for two consecutive fiscal years.

(3) If an enterprise has partner enterprises and/or associated enterprises, “partner enterprises” shall mean all enterprises in which one enterprise (the upstream enterprise) alone or together with one or more associated enterprises holds 25% or more of the capital or voting rights of another enterprise (the downstream enterprise). However, an enterprise may be classified as an autonomous enterprise and thus be deemed to have no partner enterprises even if the following investors reach or exceed this 25% threshold, provided that these investors have no individual or joint connection with the enterprise:

  • Public investment companies, venture capital companies, individuals or groups of individuals who regularly carry out venture capital investment activities and invest equity capital in unlisted companies (“business angels”), provided that the total investment of these business angels in the same company is less than EUR 1.25 million;
  • A university or non-profit research institution;
  • institutional investors, including regional development funds;
  • Local governments with annual budgets of less than €10 million and less than €5000.

(4) Affiliated enterprises refer to enterprises that have any of the following relationships:

  • One company has a majority of the voting rights of shareholders or members in another company;
  • An enterprise has the right to appoint and dismiss the majority of the executive management team;
  • The management and supervisory bodies of enterprises;
  • An enterprise is entitled to exercise a dominant influence over another enterprise by virtue of a contract between it and the other enterprise or by virtue of the provisions of its memorandum or articles of association;
  • An enterprise that is a shareholder or member of another enterprise may, by agreement with the other shareholders or members of that enterprise, alone control the voting rights of the majority of the shareholders or members of that enterprise.

2. “Non-profit making organisation” means an organisation which, by reason of its legal form or charter, is not permitted under the relevant legislation to be a source of income, profit or other financial gain for its owners, or which, although permitted to make a profit, is legally or statutoryally obliged to reinvest its profits in the interests of its owners.

3. “University” means a university in the traditional sense, i.e. an institution of higher education and research as defined in relevant legislation. Certain similar institutions, such as secondary or higher education institutions, may also be considered universities.

4. "Public research organization" means an entity such as a university or a research institute organized under public law, regardless of the method of its financing, whose main objective is to carry out basic, industrial or experimental research.

V. Possible consequences if the applicant makes an incorrect declaration

The applicant must inform the European Patent Office of any change in status affecting entitlement to a fee reduction at the latest when the relevant fees are paid. The European Patent Office may request evidence if there are justifiable doubts as to the veracity of a submitted declaration or as to the applicant's subsequent entitlement to a fee reduction.

If an incorrect declaration is submitted, or the EPO has not been notified of the change in the applicant's substantive status and the applicant has benefited from a fee reduction, the fees paid will be deemed not to have been paid and the patent application will be considered withdrawn. The applicant may request "further processing" under Articles 121 and 135 EPC as a remedy.

VI. Upper limit of eligible applications

If the same small entity files five or more European patent applications or EURO-PCT applications within five years of the filing date of the European patent application or the entry into the European national phase of the PCT international application, no fee reduction will be available. The EPO will systematically check the eligible application limit for each applicant when a patent application is received. If the applicant has paid the reduced fee, but the number of cases filed exceeds the limit, the applicant will be required to pay the reduced amount within two months from the date of issuance.

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