Small Entity Compliance Guide for U.S. Patent Applications

Recently, Yezhima has received many inquiries from customers regarding the regulations of small entities in various countries around the world. Previously, Yezhima has made detailed descriptions of the relevant regulations of small entities in Europe, Canada, Mexico and other countries in the industry information column on the official website. Considering the increasing demand of customers, starting from this issue, Yezhima will gradually summarize the relevant regulations of small entities in various countries applicable to Chinese applicants. This issue mainly publishes the regulations of USPTO on small entities and micro entities.

Small entity definition:
Under the Leahy-Smith America Invents Act (AIA), the definition of a small entity is set out in 37 CFR 1.27:

• 1. Any person or company that meets the criteria for a small or medium-sized business under 13 CFR 121.801 to 121.805, including individuals, small businesses (including affiliates, with 500 or fewer employees), or nonprofit organizations worldwide
• 2. Non-profit organizations
• 3. Independent Inventor

Based on the above criteria, small entities can enjoy a 60% reduction in patent fees. However, small entities may not assign or license inventions to anyone who does not qualify as a small entity. As of December 29, 2022, the following fees are reduced by 60% for small entities:

• Patent application filing fees, including application fee, search fee, examination fee, application size fee, and claims fee (37 CFR 1.16)
• Extension fees, reinstatement fees, certain request fees, and fees for filing an Information Disclosure Statement (IDS) within a certain time frame (37 CFR 1.17)
• Grant Fees (37 CFR 1.18)
• Annual and reexamination fees (37 CFR 1.20)
• Appeal Fees (37 CFR 41.20)

Increased discounts on search fees and supplementary search fees for PCT international applications for small entities apply to applications with a receipt date on or after April 1, 2023 (37 CFR 1.445(a)(2) and (a)(3)). In addition, increased discounts on late sequence listing fees for small entities (37 CFR 1.445(a)(5)), international preliminary examination fees, and further processing fees for PCT international applications (37 CFR 1.482(a)) also take effect on April 1, 2023. In addition, increases in small entity discounted fees for international design applications under the Hague Agreement apply to applications with an international registration date on or after May 1, 2023 (37 CFR 1.18(b)(1)).

Fees that did not decrease include the document production fee (37 CFR 1.19), the correction clerical fee (37 CFR 1.20(a)), and most miscellaneous fees (37 CFR 1.21). Long-listing fees pursuant to 37 CFR 1.21(o) were reduced, with only one fee that provided a small entity discount prior to March 19, 2013, which is no longer eligible for the small entity discount.

Micro Entity Definition:

The definition of a microentity is derived from Section 10(g) of the AIA and 35 USC 123, based on the following conditions:

• 1. The applicant’s income does not exceed a certain threshold, i.e., the pre-tax profit in the previous year does not exceed US$160,000
• 2. The applicant has previously submitted a limited number of patent applications, i.e., the applicant has no more than 4 U.S. patent applications or patents as an inventor or applicant
• 3. The patent is owned by a qualified higher education institution with no more than 500 employees

The micro-entity fee reduction is 80% of the large entity fee. Eligible applicants must meet specific requirements in the Act and related rules.

The filing fee reduction for non-provisional invention patent applications filed by micro-entities that comply with the USPTO's patent electronic filing system on or after December 29, 2022 is 80%, but does not apply to designs, new plant varieties, reissue patents, or provisional applications.

Once microentity status is established in a patent application, that status remains in effect until a change or amendment occurs. An applicant or patentee must reassess whether the application or patent still qualifies as a microentity each time a fee is paid to the USPTO. This is particularly important if the application or patent qualifies based on gross income criteria because (1) the income limits change each year (usually in September or October) and (2) the gross income of any applicant, inventor, or other person with an interest in the patent or application is likely to change from year to year.

If an applicant requested micro-entity status when filing a patent application and paid official fees for micro-entity status, and it is later discovered that the micro-entity status was either incorrect or that the applicant inadvertently failed to notify the USPTO that it had lost micro-entity status, the error will be overcome upon payment of the required fees in accordance with 37 CFR 1.29(k)(1) and 37 CFR 1.29(k)(2).

The "Notice of Loss of Micro Entity STATUS " form is Form SB/460. Applicants can pay the missing fees according to the list of items notified in the notice.

Fee Adjustment Overview

Under the final rule, the USPTO adjusted 296 patent fees, including:

• New fees: Five new fees are being introduced, including a non-DOCX format surcharge.
• Fee Elimination: Four existing fees are eliminated.
• Small and micro-entity fee changes: 86 small entity fees and 84 micro-entity fees were adjusted, respectively, with the vast majority of fees increasing.

New construction and reconstruction costs

1. Non-DOCX format surcharge

• New additional fees for patent applications filed in a format other than DOCX (e.g. PDF or not filed electronically):
  • Large entity: $400
  • Small Entity: $200
  • Micro Entity: $100
• This fee is effective January 1, 2022.

2. Pro Hac Vice Special License Fee

• A $250 application fee has been introduced for non-registered agents under the AIA pilot program. This fee is not eligible for small or micro entity discounts.

Adjustment of major expenses for small and micro entities

1. Annual fee late payment fees: Annual fee late payment fees have been significantly increased, with fees for all stages increasing by 213%. For example:

• Small entity: From $80 to $250
• Micro Entity: From $40 to $125

2. Fees for expedited examination of design applications

• Small entities: From $450 to $800
• Micro-entities: From $225 to $400

3. First annual fee

• Small entities: From $800 to $1,000
• Micro-entities: From $400 to $500