For many small businesses, filing for a patent is extremely expensive. While patent applications are often a necessary investment, the attorneys’ fees and filing fees can all pile up really quickly.

Small Entity Status

Luckily, the United States Patent and Trademark Office have decided to give small to medium-sized businesses, independent inventors, and also nonprofit organizations a break by allowing what is called a “small entity status.” Small businesses can file a patent application and maintain an issued patent for a 50% reduced fee. To get small entity status, the applicant merely has to file a verified written statement prior to paying the first small entity fee.

Under 13 CFR 121.802(a), an entity qualifies to have “small entity status” if its number of employees, including affiliates, does not exceed 500 people. In addition, the entity cannot have assigned, granted, conveyed, or licensed any rights in the invention to a non-small entity.

Micro Entity Status

If this wasn’t enough, the 2011 Patent Reform Act (America Invents Act of 2011) gives small businesses an even greater buffer. The Act creates what is called a “micro entity status.” These micro entities are eligible for a whopping 75% reduction in fees. Micro entity status requires: 1) a qualification for small entity status, 2) gross income of micro entity must be below the designated level (i.e. less than 3 times the median household income, or roughly less than ~$150,000), 3) the inventor cannot have more than four previously filed patent applications, 4) the inventor cannot have more than four previously filed patent applications, and 5) no assignments, grants, conveyances, or licensing of any rights in the invention to an entity that has a gross income above the designated level.

Just a few thoughts on this. It is obviously a boon to super small businesses and individual inventors, and only helps them for the first four patent applications. If one receives a patent and maintains it, the savings can total to be over $7,000. If an inventor or small business takes full advantage and files four applications that are ultimately issued and maintained, they can save up to $25,000. These costs don’t allow you to avoid costs of attorneys’ fees, but still can add up to be a lot over time.