Getting a patent can allow an inventor to make substantial profits from an invention. However, the process of applying for a patent comes with significant costs that may pose challenges for individuals and small companies. The standard fees are provided by the fee schedule of the U.S. Patent and Trademark Office. These include filing fees as well as fees for provisional patent applications, extra fees for patents that make more than three claims, and fees for patent searches. Fees can eventually amount to thousands of dollars. To encourage people and businesses with limited resources to file for patent protection, the USPTO provides greatly reduced fees if the applicant meets certain requirements.
Requirements for a Small Entity
A small entity as defined by the USPTO is an individual, a company with no more than 500 employees, a non-profit formed under Section 501(c)(3), or a university. If you fit into one of these categories, the USPTO will essentially cut your fees in half. An applicant will need to provide a declaration with their fee that establishes their status in one of the categories. You do not qualify as a small entity if you have licensed or assigned the patent to an entity that does not qualify.
Applicants that falsely claim small entity status can face serious penalties. They may even be denied a patent for an otherwise eligible invention.
Requirements for a Micro Entity
These entities are the smallest types of entities. The America Invents Act added this status in 2013 to allow new inventors to protect their rights. They may be eligible for a reduction in fees as large as 60 percent or 75 percent.
The same criteria apply as for a small entity, in addition to further criteria. An applicant for a patent must show that they are not the named inventor on more than four patents, including design patents, utility patents, and plant patents. Provisional patent applications do not count toward the total, nor do some types of international patents and patents that are owned by an inventor’s previous employer. The applicant also must show that their gross income was less than three times the median household income (as reported by the Bureau of the Census) in the year before filing the application. If they have assigned the application, the same gross income requirement applies to the assignee.
Alternatively, the applicant can meet the micro entity requirements if they receive the majority of their income from an institution of higher learning, or if they are assigning the patent to such an institution. The USPTO defines an institution of higher learning as a public or non-profit accredited institution that offers programs of two years or more to post-secondary students.
Many patent applicants seek guidance or representation from a patent attorney during the application process. This is often essential or advisable if an invention is complex or similar to an existing or competing invention. Inventors who are inexperienced also may find the assistance of an attorney helpful in exploring how to profit from their invention. Patent attorneys tend to be very expensive, though, since they are specifically trained in a technical area. In some cases, an inventor may be able to file an application without an attorney and cut significant costs. (Read more here about filing without an attorney.)