We are all accustomed to “large entity” and “small entity” USPTO fees. A small entity gets to pay half price for most USPTO fees, as compared with what a large entity would have to pay.
Micro entity status has been available since the AIA happened in about 2012. A micro entity gets to pay half price for most USPTO fees, as compared with what a small entity would have to pay. That amounts to one-fourth of what a large entity would have to pay.
In the three or so years that have passed, our firm has never even once made use of “micro entity” status for a patent applicant in the USPTO. Why?
I should mention that there are actually three kinds of “micro entity” status.
A first way to be a micro entity is to arrange for the applicant to be a small entity, and to arrange for the applicant to be someone (or something) other than an institution of higher education, and to arrange for the applicant to assign or promise to assign the invention to an institution of higher education.
A second way to be a micro entity is to arrange for the applicant to be a small entity, and to arrange for the applicant to be someone other than an institution of higher education, and to arrange for the applicant to be an employee of an institution of higher education, and to further arrange for the applicant to obtain the majority of his or her income from that institution.
A third way to be a micro entity is to arrange for the applicant to be a small entity, and to arrange for the applicant to not have been named on more than four previously filed patent applications, and to not have a gross income more than three times the median household income in the previous year from when the fee was paid, and not to have assigned, or licensed, or promised to assign, or promised to license, the invention to a non-micro entity.
(Each of these three kinds of micro entity is actually much more complicated — I have merely summarized the requirements and simplified the description.)
What I am commenting upon here is mostly the second and third kinds of micro entity status.
Imagine all of the work that has to be carried out at the time of filing a patent application, to work out whether or not the client counts as “micro”. Check the client’s tax returns to see what the applicant’s income was. Oh, the client is married but separated? Check the tax returns of the estranged spouse too. Click around the Internet to find out what the median household income was last year, and multiply that number by three.
Count the client’s previous patent applications. Be sure to include the previous patent applications which were filed by some co-inventor who never told the client that his or she was named as a co-inventor. Subtract off the previous patent applications that were provisionals, or that were filed by a previous employer.
Check to see how many employees the client has. Is the number 500 or more?
If path two is being followed, check to see if the client had a lucrative summer job, or a lot of income from a MacArthur fellowship, or a lot of dividend income, so as to flunk the test of getting a majority of his or her income from the institution of higher education.
Okay, having done all this work, let’s imagine the client somehow seems to count as a micro entity. What did all of that work cost? Did the practitioner charge $250 for this work? $500?
Then what? What happens next is that during the next few years this work has to be done all over again. Under the micro entity rules, the question of whether the applicant continues to count as a micro entity has to be investigated all over again every time another micro entity fee is paid to the USPTO. So the time comes to respond to an Office Action and to pay for a twenty-first claim. Shall we pay $20 (the micro entity fee) or $40 (the small entity fee)? Well, the problem is that a year has gone by and the dollar amount of median household income is different than it was the previous year. And in the year that has gone by, the client has filed another tax return showing a different amount of income than the previous year. The estranged spouse may have scratched off a lottery ticket and won a lot of money and may not have mentioned this to the client. The client has by now had another summer vacation to make a lot of money consulting for industry, perhaps no longer getting a majority of his or her income from the institution of higher education.
So maybe another $250 or $500 of professional fees need to be spent, to carry out a detailed investigation so as to permit a confident conclusion as to whether the correct fee to pay is $20 or $40.
The same question comes up again when the time comes to file an IDS ($45 or $90?) or to purchase a one-month extension of time ($50 or $100?). Again the practitioner needs to round up a copy of the most recent tax return of the client, check on the latest developments in the life of the estranged spouse, and see whether the client did some lucrative consulting last semester.
But more subtly, from the practitioner’s point of view the problem is that the practitioner who has taken on a “micro” client obligation is required to remember to do this investigation over and over again. This is so very different from the situation with a mere “small” entity. With a mere “small” entity you only need to evaluate “smallness” twice — once when the patent application is filed and again when the issue fee is paid. On the other hand with a micro entity the practitioner has to remember to re-evaluate “micro-ness” maybe half a dozen times during the pendency of a patent application.
You can see where this is going. Our feeling is that in many and perhaps most real-life client situations, the professional fees that we would have to charge to cover our time on the many and repeated “micro-ness” evaluations would dwarf the fee savings to be obtained by being “micro” instead of merely “small”.
In fairness to the discussion I will mention that I have spoken with several patent practitioners who report that they always make use of micro entity status for the clients whenever it is possible to do so. These practitioners say that they feel it is encumbent upon them to carry out the “micro-ness” investigations at no charge to the clients.
What do you think? Please post a comment.