| Fees and Payment of Money |
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(148) DEPARTMENT OF COMMERCE
Patent and Trademark Office
37 CFR Part 1
[Docket No.: PTO-P-2011-0016]
RIN 0651-AC78
Changes to Implement Micro Entity
Status for Paying Patent Fees
AGENCY: United States Patent and Trademark Office, Commerce.
ACTION: Final rule.
SUMMARY: The United States Patent and Trademark Office (Office) is
revising the rules of practice in patent cases to implement the micro
entity provision of the Leahy-Smith America Invents Act (AIA). Certain
patent fees set or adjusted under the fee setting authority in the AIA
will be reduced by seventy-five percent for micro entities. The Office
is revising the rules of practice to set out the procedures pertaining to
claiming micro entity status, paying patent fees as a micro entity,
notification of loss of micro entity status, and correction of payments
of patent fees paid erroneously in the micro entity amount. In a
separate rulemaking, the Office is in the process of proposing to set
or adjust patent fees under the Leahy-Smith America Invents Act,
including setting fees for micro entities with a seventy-five percent
reduction. The Office has sought to address the concerns of its
stakeholders as expressed in the public comment, and plans to seek
additional public comment on the micro entity provisions after the
Office and the public have gained experience with the micro entity
procedures in operation. The Office will pursue further improvements to
the micro entity procedures in light of the public comment and its
experience with the micro entity procedures.
DATES: Effective March 19, 2013.
FOR FURTHER INFORMATION CONTACT: James Engel, Senior Legal Advisor
((571) 272-7725), Office of Patent Legal Administration, Office of the
Deputy Commissioner for Patent Examination Policy.
SUPPLEMENTARY INFORMATION:
Executive Summary: Purpose: The AIA provides that: (1) The Office
may set or adjust any patent fee, provided that the aggregate revenue
generated by patent fees recovers only the aggregate estimated costs to
the Office for processing, activities, services, and materials relating
to patents (including administrative costs); and (2) most fees set or
adjusted under this authority are reduced by fifty percent for small
entities and by seventy-five percent for micro entities. The AIA also
adds a new section to Title 35 of the United States Code that defines a
"micro entity." The rules of practice currently have provisions
pertaining to small entity status, as the patent laws provided a small
entity discount prior to the Leahy-Smith America Invents Act. This
final rule revises the rules of practice to implement the "micro
entity" provisions added by the Leahy-Smith America Invents Act.
Summary of Major Provisions: The Office is adding a provision to
the rules of practice pertaining to micro entity status. The provision
sets out the requirements to qualify as a micro entity tracking the
statutory requirements for a micro entity set forth in section 10 of
the Leahy-Smith America Invents Act. The provision also sets out
procedures relating to micro entity status that largely track the
regulatory requirements and procedures in 37 CFR 1.27 for small entity
status. These new procedures pertain to claiming micro entity status,
paying patent fees as a micro entity, notifying the Office of loss of
micro entity status, and correcting payments of patent fees paid
erroneously in the micro entity amount. The procedures for claiming
micro entity status require the filing of a certification of
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entitlement to micro entity status. The Office is developing forms
(paper and electronic) for use by members of the public to provide a
certification of micro entity status. The procedures for paying fees as
a micro entity provide that a micro entity certification need only be
filed once in an application or patent, but that a fee may be paid in
the micro entity amount only if the applicant or patentee is still
entitled to micro entity status on the date the fee is paid. The
procedures pertaining to notifying the Office of loss of micro entity
status and correcting payments of patent fees paid erroneously in the
micro entity amount track the corresponding small entity provisions for
notifying the Office of loss of small entity status and correcting
payments of patent fees paid erroneously in the small entity amount.
Costs and Benefits: This rulemaking is not economically significant
as that term is defined in Executive Order 12866 (Sept. 30, 1993).
Background: The AIA was enacted into law on September 16, 2011. See
Public Law 112-29, 125 Stat. 283 (2011). Section 10(a) of the AIA
provides that the Office may set or adjust by rule any patent fee
established, authorized, or charged under title 35, United States Code,
provided that aggregate patent fees recover only the aggregate
estimated costs to the Office for processing, activities, services, and
materials relating to patents (including administrative costs). See 125
Stat. at 316. Section 10(b) of the AIA provides that "the fees set or
adjusted under [section 10(a)] for filing, searching, examining,
issuing, appealing, and maintaining patent applications and patents
shall be reduced by 50 percent with respect to the application of such
fees to any small entity that qualifies for reduced fees under [35
U.S.C.] 41(h)(1) * * *, and shall be reduced by 75 percent with respect
to the application of such fees to any micro entity as defined in [35
U.S.C.] 123." See 125 Stat. at 316-17. The patent laws provided in 35
U.S.C. 41(h) for small entities prior to the Leahy-Smith America
Invents Act. Section 10(g) of the AIA adds a new 35 U.S.C. 123 to
define a "micro entity." See 125 Stat. at 318-19.
35 U.S.C. 123(a) provides one basis under which an applicant may
establish micro entity status. 35 U.S.C. 123(d) provides another basis
under which an applicant may establish micro entity status. Each will
be discussed in turn.
35 U.S.C. 123(a) provides that the term "micro entity" means an
applicant who makes a certification that the applicant: (1) Qualifies
as a small entity as defined in 37 CFR 1.27; (2) has not been named as
an inventor on more than four previously filed patent applications,
other than applications filed in another country, provisional
applications under 35 U.S.C. 111(b), or international applications for
which the basic national fee under 35 U.S.C. 41(a) was not paid; (3)
did not, in the calendar year preceding the calendar year in which the
applicable fee is being paid, have a gross income, as defined in
section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)),
exceeding three times the median household income for that preceding
calendar year, as most recently reported by the Bureau of the Census;
and (4) has not assigned, granted, or conveyed, and is not under an
obligation by contract or law to assign, grant, or convey, a license or
other ownership interest in the application concerned to an entity
that, in the calendar year preceding the calendar year in which the
applicable fee is being paid, had a gross income, as defined in section
61(a) of the Internal Revenue Code of 1986, exceeding three times the
median household income for that preceding calendar year, as most
recently reported by the Bureau of the Census. See 125 Stat. at 318. 35
U.S.C. 123(a) provides one basis under which an applicant may establish
micro entity status.
The Office will indicate the income level that is three times the
median household income for the calendar year most recently reported by
the Bureau of the Census (the income threshold set forth in 35 U.S.C.
123(a)(3) and (a)(4)) on its Internet Web site, with its Independent
Inventor resource information, and on the Office's certification of
micro entity status (gross income basis) form (Form PTO/SB/15A). The
Office will also make available resources to micro entities to help
navigate the new micro entity procedures.
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35 U.S.C. 123(b) provides that an applicant is not considered to be
named on a previously filed application for purposes of 35 U.S.C.
123(a)(2) if the applicant has assigned, or is under an obligation by
contract or law to assign, all ownership rights in the application as
the result of the applicant's previous employment. See id.
35 U.S.C. 123(c) provides that if an applicant's or entity's gross
income in the preceding calendar year is not in United States dollars,
the average currency exchange rate, as reported by the Internal Revenue
Service, during that calendar year shall be used to determine whether
the applicant's or entity's gross income exceeds the threshold
specified in 35 U.S.C. 123(a)(3) or (4). See 125 Stat. at 319.
35 U.S.C. 123(d) provides that a micro entity shall also include an
applicant who certifies that: (1) The applicant's employer, from which
the applicant obtains the majority of the applicant's income, is an
institution of higher education as defined in section 101(a) of the
Higher Education Act of 1965 (20 U.S.C. 1001(a)); or (2) the applicant
has assigned, granted, conveyed, or is under an obligation by contract
or law, to assign, grant, or convey, a license or other ownership
interest in the particular application to such an institution of higher
education. See id. As explained earlier, 35 U.S.C. 123(a) provides one
basis under which an applicant may establish micro entity status, and
35 U.S.C. 123(d) provides another basis under which an applicant may
establish micro entity status.
35 U.S.C. 123(e) provides that in addition to the limits imposed by
this section, the Director has the discretion to impose income limits,
annual filing limits, or other limits on who may qualify as a micro
entity pursuant to this section if the Director determines that such
additional limits are reasonably necessary to avoid an undue impact on
other patent applicants or owners or are otherwise reasonably necessary
and appropriate. 35 U.S.C. 123(e) also provides that at least three
months before any limits proposed to be implemented pursuant to 35
U.S.C. 123(e) take effect, the Director shall inform the Committee on
the Judiciary of the House of Representatives and the Committee on the
Judiciary of the Senate of any such proposed limits. See id.
The micro entity provisions of 35 U.S.C. 123 are currently in
effect. However, no patent fee is currently eligible for the seventy-
five percent micro entity reduction as no patent fee has yet been set
or adjusted under section 10 of the Leahy-Smith America Invents Act.
The Office is in the process of proposing to set or adjust patent fees
under section 10 of the AIA in a separate rulemaking. See Setting and
Adjusting Patent Fees, 77 FR 55028 (Sept. 6, 2012). The fees set or
adjusted by the Office under section 10 of the AIA for filing,
searching, examining, issuing, appealing, and maintaining a patent
application and patent will be reduced by: (1) Fifty percent for an
applicant or patentee who establishes small (but not micro) entity
status in the patent application or patent; and (2) seventy-five
percent for an applicant or patentee who establishes micro entity
status in the patent application or patent.
The Office plans to rely upon the applicant's certification of
micro entity status (except where it conflicts with the information
contained in the Office's records, such as where Office records
indicate that the applicant is named as an inventor on more than four
previously filed and unassigned nonprovisional patent applications) and
will not require any additional documents from the applicant concerning
the applicant's entitlement to claim micro entity status. This practice
is similar to small entity practice where the Office generally does not
question a claim of entitlement to small entity status. See 37 CFR
1.27(f); see also Manual of Patent Examining Procedure § 509.03
(8th ed. 2001) (Rev. 9, Aug. 2012) (MPEP).
The Office does not plan to provide advisory opinions on whether a
particular entity is entitled to claim micro entity status. See MPEP
§ 509.03. The Office, however, is providing the following
information concerning procedures for micro entity status under 35
U.S.C. 123:
35 U.S.C. 123 uses the term "applicant" throughout, which was
virtually synonymous with "inventor" on September 16, 2011 (the date
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of enactment of the AIA as well as the effective date of 35 U.S.C.
123). 35 U.S.C. 118, however, as amended effective on September 16,
2012, by Section 4 of the AIA, now permits an application to be made by
a person to whom the inventor has assigned or is under an obligation to
assign the invention. In addition, a person who otherwise shows
sufficient proprietary interest in the matter may make an application
for patent on behalf of and as agent for the inventor. Thus, 35 U.S.C.
118 now allows a person other than the inventor to file an application
as the applicant if the inventor has assigned or is under an obligation
to assign the invention to the person or if the person shows sufficient
proprietary interest in the matter. Note also that as of March 16,
2013, 35 U.S.C. 100 will be amended to provide new and specific
definitions of the terms "inventor," "joint inventor," and
"coinventor."
35 U.S.C. 123 does not explicitly preclude an assignee-applicant
under 35 U.S.C. 118 from claiming micro entity status under 35 U.S.C.
123(a) or (d), although some provisions of 35 U.S.C. 123(a) and (d)
refer to an applicant who is a natural person inventor rather than a
juristic entity. See 35 U.S.C. 123(a)(2) (provides that a micro entity
applicant under 35 U.S.C. 123(a) must not have "been named as an
inventor on more than 4 previously filed patent applications") and
123(d)(1) (provides that the term micro entity includes an applicant
who certifies that "the applicant's employer, from which the applicant
obtains the majority of the applicant's income, is an institution of
higher education" as defined by section 101(a) of the Higher Education
Act of 1965). In addition, 35 U.S.C. 123(a), (b) and (d) specifically
refer to a situation in which the applicant has assigned rights in the
invention to an assignee. See 35 U.S.C. 123(a)(4) (provides that a
micro entity applicant under 35 U.S.C. 123(a) must not have "assigned,
granted, or conveyed, and is not under an obligation by contract or law
to assign, grant, or convey, a license or other ownership interest in
the application concerned to an entity" exceeding a specified gross
income); 35 U.S.C. 123(b) (provides that an applicant is not considered
to be named on a previously filed application for purposes of 35 U.S.C.
123(a)(2) if "the applicant has assigned, or is under an obligation by
contract or law to assign, all ownership rights in the application as
the result of the applicant's previous employment"); and 35 U.S.C.
123(d)(2) (provides that the term micro entity includes an "applicant
[who] has assigned, granted, conveyed, or is under an obligation by
contract or law, to assign, grant, or convey, a license or other
ownership interest in the particular applications" to an institution
of higher education as defined by section 101(a) of the Higher
Education Act of 1965). Finally, the legislative history of 35 U.S.C.
123 includes a reference to micro entities as inventors and not the
assignees of inventors. See H.R. Rep 112-98 at 50 (2011) (describing
micro entities as "a group of inventors" and "truly independent
inventors"). Nevertheless, 35 U.S.C. 123 does not explicitly preclude
an assignee-applicant under 35 U.S.C. 118 from claiming micro entity
status for an application under 35 U.S.C. 123(a) or 123(d), provided
there is compliance with the applicable micro entity criteria. Each
applicant must qualify for micro entity status, and any other party
holding rights in the application must qualify for small entity status.
See 37 CFR 1.29 (h). Note that a party who qualifies for micro entity
status necessarily qualifies for small entity status, as under 37 CFR
1.29 a micro entity must first qualify as a small entity under 37 CFR 1.27.
An "institution of higher education,"as that term is used in 35
U.S.C. 123(d), is defined in the Higher Education Act of 1965 (20
U.S.C. 1001(a)). Section 101(a) of the Higher Education Act of 1965 (20
U.S.C. 1001) provides that: "For purposes of this chapter, other than
subchapter IV, the term `institution of higher education' means an
educational institution in any State that-(1) Admits as regular
students only persons having a certificate of graduation from a school
providing secondary education, or the recognized equivalent of such a
certificate, or persons who meet the requirements of section 1091(d)(3)
of this title; (2) is legally authorized within such State to provide a
program of education beyond secondary education; (3) provides an
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educational program for which the institution awards a bachelor's
degree or provides not less than a 2-year program that is acceptable
for full credit toward such a degree, or awards a degree that is
acceptable for admission to a graduate or professional degree program,
subject to review and approval by the Secretary; (4) is a public or
other nonprofit institution; and (5) is accredited by a nationally
recognized accrediting agency or association, or if not so accredited,
is an institution that has been granted pre-accreditation status by
such an agency or association that has been recognized by the Secretary
for the granting of pre-accreditation status, and the Secretary has
determined that there is satisfactory assurance that the institution
will meet the accreditation standards of such an agency or association
within a reasonable time." Section 103 of the Higher Education Act of
1965 (20 U.S.C. 1003) provides "the term `State' includes, in addition
to the several States of the United States, the Commonwealth of Puerto
Rico, the District of Columbia, Guam, American Samoa, the United States
Virgin Islands, the Commonwealth of the Northern Mariana Islands, and
the Freely Associated States" and that the Freely Associated States
means the "Republic of the Marshall Islands, the Federated States of
Micronesia, and the Republic of Palau."
The Office is setting out in the rules of practice the requirements
for micro entity status and procedures for claiming micro entity
status, paying patent fees as a micro entity, notifying the Office of
loss of micro entity status, and correcting payments of patent fees
paid erroneously in the micro entity amount. The Office is also
developing forms for use by members of the public to provide a
certification of micro entity status. The procedures track the
corresponding provisions in 37 CFR 1.27 and 1.28 for small entities,
except where the small entity procedure is not appropriate for micro
entity status under the provisions of 35 U.S.C. 123. For example, 35
U.S.C. 123 requires a certification as a condition for an applicant to
be considered a micro entity. Thus, the process in 37 CFR 1.27(c)(3)
for establishing small entity status by payment of certain fees in the
small entity amount cannot be made applicable to establishing micro
entity status, and the process in 37 CFR 1.28(a) for a refund based
upon subsequent establishment of small entity status is not applicable
where there is subsequent establishment of micro entity status. In
addition, 35 U.S.C. 123(a)(3) and (a)(4) require that the income level
be met for the calendar year preceding the calendar year in which the
applicable fee is paid. Thus, the provision in 37 CFR 1.27(g)(1) that
the applicant need only determine continued eligibility for small
entity status for issue and maintenance fee payments, but can pay
intervening fees at small entity rate without determining whether still
entitled to small entity status, cannot be made applicable to payment
of patent fees as a micro entity.
Discussion of Specific Rules
The following is a discussion of the amendments to Title 37 of the
Code of Federal Regulations, Part 1.
Section 1.29: Section 1.29 is added to implement procedures for
claiming micro entity status.
Since 35 U.S.C. 123(a) through (d) specify the requirements to
qualify as a micro entity, the provisions in §§ 1.29(a) through
(d) generally track the provisions of 35 U.S.C. 123(a) through (d).
Section 1.29(a) implements the provisions of 35 U.S.C. 123(a), and
includes reference to inventors or joint inventors where appropriate.
Section 1.29(a) provides that an applicant claiming micro entity status
under 35 U.S.C. 123(a) must certify that: (1) The applicant qualifies
as a small entity as defined in § 1.27; (2) neither the applicant
nor the inventor nor a joint inventor has been named as the inventor or
a joint inventor (see 35 U.S.C. 100) on more than four previously filed
patent applications, other than applications filed in another country,
provisional applications under 35 U.S.C. 111(b), or international
applications for which the basic national fee under 35 U.S.C. 41(a) was
not paid; (3) neither the applicant nor the inventor nor a joint
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inventor, in the calendar year preceding the calendar year in which the
applicable fee is being paid, had a gross income, as defined in section
61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding
three times the median household income for that preceding calendar
year, as most recently reported by the Bureau of the Census; and (4)
neither the applicant nor the inventor nor a joint inventor has
assigned, granted, or conveyed, nor is under an obligation by contract
or law to assign, grant, or convey, a license or other ownership
interest in the application concerned to an entity that, in the
calendar year preceding the calendar year in which the applicable fee
is being paid, had a gross income, as defined in section 61(a) of the
Internal Revenue Code of 1986, exceeding three times the median
household income for that preceding calendar year, as most recently
reported by the Bureau of the Census. See also § 1.29(h) (each
applicant must qualify for micro entity status, and each other party
holding rights in the invention must qualify for small entity status).
Section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C.
61(a)) provides that: "[e]xcept as otherwise provided in this
subtitle, gross income means all income from whatever source derived,
including (but not limited to) the following items: (1) Compensation
for services, including fees, commissions, fringe benefits, and similar
items; (2) Gross income derived from business; (3) Gains derived from
dealings in property; (4) Interest; (5) Rents; (6) Royalties; (7)
Dividends; (8) Alimony and separate maintenance payments; (9)
Annuities; (10) Income from life insurance and endowment contracts;
(11) Pensions; (12) Income from discharge of indebtedness; (13)
Distributive share of partnership gross income; (14) Income in respect
of a decedent; and (15) Income from an interest in an estate or
trust." The median household income for calendar year 2011 (the year
most recently reported by the Bureau of the Census) was $50,054. See
Income, Poverty, and Health Insurance Coverage in the United States in
2011 at pages 5 and 31 (Table A-1) (Sept. 2012). Thus, the income level
specified in §§ 1.29(a)(3) and (a)(4) (three times the median
household income) is $150,162 for calendar year 2011 (the year most
recently reported by the Bureau of the Census).
If an application names more than one applicant or inventor, each
applicant and each inventor must meet the requirements of § 1.29(a)
for the applicants to file a micro entity certification under
§ 1.29(a) in the application. It would not be appropriate to file a micro
entity certification under § 1.29(a) for the application if there were
more than one applicant or inventor and not all of the applicants and
inventors qualified as micro entities under 35 U.S.C. 123(a): e.g., (1) an
applicant or inventor exceeded the gross income levels; (2) an applicant or
inventor had more than four other nonprovisional applications; or (3) an
applicant or inventor had assigned, granted, or conveyed the application or
was under an obligation to do so, to an entity that exceeds the gross
income levels. Additionally, the income level requirement in 35 U.S.C.
123(a)(3) applies to each applicant's and inventor's income separately
(i.e., the combined gross income of all of the applicants and inventors
need not be below the income level in 35 U.S.C. 123(a)(3)). Further, the
assignment requirement in § 1.29(a)(4) applies to each applicant
and inventor (i.e., if an applicant or inventor assigns or is obligated
to assign the invention to more than one assignee (e.g., half interest
in the invention to two assignees), each of the assignees must meet the
income limit specified in § 1.29(a)(4)). Note also that in this
context an inventor ordinarily should qualify as a small entity under
§§ 1.29(a)(1) and 1.27(a)(1). Under § 1.27(a)(1), an inventor generally is
a small entity and retains such status even if the inventor assigns some
rights to another small entity. Similarly, to obtain micro entity status,
§ 1.29(h) requires that any non-applicant assignee be a small entity.
Section 1.29(b) implements the provisions of 35 U.S.C. 123(b).
Section 1.29(b) provides that an applicant, inventor, or joint inventor
is not considered to be named on a previously filed application for
purposes of § 1.29(a)(2) if the applicant, inventor, or joint
inventor has assigned, or is under an obligation by contract or law to
assign, all ownership rights in the application as the result of the
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applicant's, inventor's, or joint inventors previous employment.
Section 1.29(c) implements the provisions of 35 U.S.C. 123(c).
Section 1.29(c) provides that if an applicant's, inventor's, joint
inventor's, or entity's gross income in the preceding calendar year is
not in United States dollars, the average currency exchange rate, as
reported by the Internal Revenue Service, during that calendar year
shall be used to determine whether the applicant's, inventor's, joint
inventor's, or entity's gross income exceeds the threshold specified in
§ 1.29(a)(3) or (a)(4). The Internal Revenue Service reports the
average currency exchange rate (Yearly Average Currency Exchange Rates)
on its Internet Web site (http://www.irs.gov/businesses/small/
international/article/0,,id=206089,00.html).
Section 1.29(d) implements the provisions of 35 U.S.C. 123(d).
Section 1.29(d) provides that an applicant claiming micro entity status
under 35 U.S.C. 123(d) must certify that: (1) The applicant qualifies
as a small entity as defined in § 1.27; and (2)(i) the applicant's
employer, from which the applicant obtains the majority of the
applicant's income, is an institution of higher education as defined in
section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a));
or (ii) the applicant has assigned, granted, conveyed, or is under an
obligation by contract or law, to assign, grant, or convey, a license
or other ownership interest in the particular application to such an
institution of higher education. To the extent that 35 U.S.C. 123(d)
(unlike 35 U.S.C. 123(a)) does not expressly require that an applicant
qualify as a small entity under § 1.27, the Office is invoking its
authority under 35 U.S.C. 123(e) to expressly require that a party
claiming micro entity status via 35 U.S.C. 123(d) qualify as a small
entity under § 1.27. The legislative history of 35 U.S.C. 123
refers to micro entities as a subset of small entities, namely, "truly
independent inventors." See H.R. Rep 112-98 at 50 ("W[t]he Committee
was made aware, however, that there is likely a benefit to describing--
and then accommodating--a group of inventors who are even smaller [than
small entities], in order to ensure that the USPTO can tailor its
requirements, and its assistance, to the people with very little
capital, and just a few inventions, as they are starting out. This
section of the Act defines this even smaller group--the micro-entity--
that includes only truly independent inventors"). Thus, permitting an
applicant who does not qualify as a small entity to take advantage of
the benefits of micro entity status via 35 U.S.C. 123(d) would be
inconsistent with the purposes of micro entity provisions of 35 U.S.C.
123. The statute and its legislative history do not, for example,
contemplate a for-profit, large entity applicant becoming a "micro
entity" (and thus obtaining a 75 percent discount) merely by licensing
or assigning some interest (even merely a nominal or miniscule
interest) to an institution of higher education. Accordingly, the
Office has determined that requiring all micro entities to qualify as
small entities is reasonably necessary and appropriate to ensure that
applicants who do not qualify as a small entity do not inappropriately
attempt to take advantage of micro entity status. See also § 1.29(h)
(each applicant must qualify for micro entity status, and each
other party holding rights in the invention must qualify for small
entity status).
Section 1.29(e) provides that micro entity status must be
established in an application in by filing a certification in writing
that complies with either § 1.29(a) or § 1.29(d) and that is
signed in compliance with § 1.33(b). Section 1.29(e) also contains
provisions for a micro entity that correspond to the provisions of
§ 1.27(c)(4) for a small entity. Section 1.29(e) provides that: (1)
Status as a micro entity must be specifically established by an
assertion in each related, continuing, and reissue application in which
status is appropriate and desired; (2) status as a small or micro
entity in one application or patent does not affect the status of any
other application or patent, regardless of the relationship of the
applications or patents; and (3) the refiling of an application under
§ 1.53 as a continuation, divisional, or continuation-in-part
application (including a continued prosecution application under
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§ 1.53(d)), or the filing of a reissue application, requires a new
certification of entitlement to micro entity status for the continuing
or reissue application.
Section 1.29(f) contains provisions for a micro entity that
correspond to the provisions of § 1.27(d) for a small entity.
Section 1.29(f) provides that a fee may be paid in the micro entity
amount only if it is submitted with, or subsequent to, the submission
of a certification of entitlement to micro entity status.
Section 1.29(g) contains provisions for a micro entity that
correspond to the provisions of § 1.27(e) for a small entity.
Section 1.29(g) provides that a certification of entitlement to micro
entity status need only be filed once in an application or patent, and
that micro entity status, once established, remains in effect until
changed pursuant to § 1.29(i). However, a fee may be paid in the
micro entity amount only if status as a micro entity as defined in
§ 1.29(a) or (d) is appropriate (which requires that status as a
small entity is also appropriate) on the date the fee is being paid.
Thus, while an applicant is not required to provide a certification of
entitlement to micro entity status with each fee payment once micro
entity status has been established in an application, the applicant
must still be entitled to micro entity status to pay a fee in the micro
entity amount at the time of all payments of fees in the micro entity
amount.
For micro entity status under 35 U.S.C. 123(a), the applicant must
determine that the applicant and each inventor or joint inventor still
meet the applicable conditions of 35 U.S.C. 123(a) and § 1.29(a) to
claim micro entity status. For example, the applicant must determine
that neither the applicant nor inventor nor joint inventor has had a
change in gross income that exceeds the gross income threshold in 35
U.S.C. 123(a)(3) (a new determination must be made each year because
gross income may change from year to year, and micro entity status is
based upon gross income in the calendar year preceding the calendar
year in which the applicable fee is being paid). In addition, the
applicant must determine that neither the applicant nor inventor nor
joint inventor has made, or is obligated by contract or law to make, an
assignment, grant, or conveyance to an entity not meeting the gross
income threshold in 35 U.S.C. 123(a)(4), and that no new inventor or
joint inventor has been named in the application who does not meet the
conditions specified in 35 U.S.C. 123(a) and § 1.29(a)). For micro
entity status under 35 U.S.C. 123(d), the applicant must determine that
each applicant and inventor still complies with 35 U.S.C. 123(d) and
§ 1.29(d) (e.g., still obtains the majority of his or her income
from an institution of higher education as defined in section 101(a) of
the Higher Education Act of 1965 (20 U.S.C. 1001(a)). Section 1.29(g)
also provides that where an assignment of rights or an obligation to
assign rights to other parties who are micro entities occurs subsequent
to the filing of a certification of entitlement to micro entity status,
a second certification of entitlement to micro entity status is not
required.
Section 1.29(h) contains provisions for a micro entity that
correspond to the provisions of § 1.27(f) for a small entity.
Section 1.29(h) provides that prior to submitting a certification of
entitlement to micro entity status in an application, including a
related, continuing, or reissue application, a determination of such
entitlement should be made pursuant to the requirements of §
1.29(a) or 1.29(d). Section 1.29(h) also indicates that each applicant
must qualify for micro entity status under § 1.29(a) or 1.29(d),
and that any other party holding rights in the application must qualify
for small entity status under § 1.27. As discussed previously, a
party who qualifies for micro entity status necessarily qualifies for
small entity status, as under § 1.29(a)(1) and (d)(1) a micro
entity must first qualify as a small entity under § 1.27. Section
1.29(h) also indicates that the Office will generally not question
certification of entitlement to micro entity status that is made in
accordance with the requirements of § 1.29.
Section 1.29(i) contains provisions for a micro entity that
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correspond to the provisions of § 1.27(g)(2) for a small entity.
Section 1.29(i) provides that notification of a loss of entitlement to
micro entity status must be filed in the application or patent prior to
paying, or at the time of paying, any fee after the date on which
status as a micro entity as defined in § 1.29(a) or 1.29(d) is no
longer appropriate. The notification that micro entity status is no
longer appropriate must be signed by a party identified in § 1.33(b).
Payment of a fee in other than the micro entity amount is not
sufficient notification that micro entity status is no longer
appropriate.
Section 1.29(i) further provides that a notification that micro
entity status is no longer appropriate will not be treated as a
notification that small entity status is also no longer appropriate
unless it also contains a notification of loss of entitlement to small
entity status under § 1.27(f)(2). Thus, an applicant or patentee
who files a notification that micro entity status is no longer
appropriate will be treated as a small entity by default unless the
notification also contains a notification of loss of entitlement to
small entity status under § 1.27(f)(2).
Section 1.29 finally provides that once a notification of a loss of
entitlement to micro entity status is filed in the application or
patent, a new certification of entitlement to micro entity status is
required to again obtain micro entity status.
Section 1.29(j) contains provisions for a micro entity that
correspond to the provisions of § 1.27(h) for a small entity.
Section 1.29(j) provides that any attempt to fraudulently establish
status as a micro entity, or pay fees as a micro entity, shall be
considered as a fraud practiced or attempted on the Office, and that
establishing status as a micro entity, or paying fees as a micro
entity, improperly, and with intent to deceive, shall be considered as
a fraud practiced or attempted on the Office.
Section 1.29(k) contains provisions for a micro entity that
correspond to the provisions of § 1.28(c) for a small entity.
Section 1.28(c) permits an applicant or patentee to correct the
erroneous payment of a patent fee in the small entity amount if status
as a small entity was established in good faith, and fees as a small
entity were paid in good faith. See DH Tech. Inc. v. Synergystex Int'l
Inc., 154 F.3d 1333 (Fed. Cir. 1998).
Section 1.29(k) provides that if: (i) An applicant or patentee
establishes micro entity status in an application or patent in good faith;
(ii) the applicant or patentee pays fees as a micro entity in the
application or patent in good faith; and (iii) applicant or patentee later
discovers that such micro entity status either was established in error, or
that the Office was not notified of a loss of entitlement to micro entity
status as required by § 1.29(i) through error, the error will be excused
upon compliance with the separate submission and itemization requirements
of § 1.29(k)(1) and the deficiency payment requirement of § 1.29(k)(2).
Section 1.29(k)(1) provides that any paper submitted under § 1.29(k)
must be limited to the deficiency payment (all fees paid in
error) required for a single application or patent. Section 1.29(k)(1)
provides that where more than one application or patent is involved,
separate submissions of deficiency payments (e.g., checks) and
itemizations are required for each application or patent. Section
1.29(k)(1) also provides that the paper must contain an itemization of
the total deficiency payment and include the following information: (1)
Each particular type of fee that was erroneously paid as a micro
entity, (e.g., basic statutory filing fee, two-month extension of time
fee) along with the current fee amount for a small or non-small entity;
(2) the micro entity fee actually paid, and the date on which it was
paid; (3) the deficiency owed amount (for each fee erroneously paid);
and (4) the total deficiency payment owed, which is the sum or total of
the individual deficiency owed amounts as set forth in § 1.29(k)(2).
Section 1.29(k)(2) provides that the deficiency owed, resulting
from the previous erroneous payment of micro entity fees, must be paid.
The deficiency owed for each previous fee erroneously paid as a micro
entity is the difference between the current fee amount for a small
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entity or non-small entity, as applicable, on the date the deficiency
is paid in full and the amount of the previous erroneous micro entity
fee payment. The total deficiency payment owed is the sum of the
individual deficiency owed amounts for each fee amount previously and
erroneously paid as a micro entity. This corresponds to the procedure
for fee deficiency payments based upon the previous erroneous payment
of patent fees in the small entity amount. See § 1.28(c)(2)(i)
("[t]he deficiency owed for each previous fee erroneously paid as a
small entity is the difference between the current full fee amount (for
non-small entity) on the date the deficiency is paid in full and the
amount of the previous erroneous (small entity) fee payment").
Section 1.29(k)(3) provides that if the requirements of §§
1.29(k)(1) and (k)(2) are not complied with, such failure will either
be treated at the option of the Office as an authorization for the
Office to process the deficiency payment and charge the processing fee
set forth in § 1.17(i), or result in a requirement for compliance
within a one-month non-extendable time period under § 1.136(a) to
avoid the return of the fee deficiency payment.
Section 1.29(k)(4) provides that any deficiency payment (based on a
previous erroneous payment of a micro entity fee) submitted under
§ 1.29(k) will be treated as a notification of a loss of entitlement to
micro entity status under § 1.29(i).
Comments and Responses to Comments: The Office published a notice
on May 30, 2012, proposing to change the rules of practice to implement
the micro entity provisions of the AIA. See Changes to Implement Micro
Entity Status for Paying Patent Fees, 77 FR 31806 (May 30, 2012). The
Office received twenty-seven written comments (from intellectual
property organizations, industry, law firms, individual patent
practitioners, and the general public) in response to this notice.
There were some comments received that related to practice before the
agency but not related to the proposed changes to the rules of practice
to implement the micro entity provisions of the AIA, and these comments
have been forwarded to the Office of Innovation Development for further
consideration. The Office is always interested to hear feedback from
the public concerning ways in which it can assist small and independent
inventors. The comments germane to the proposed changes to the rules of
practice to implement the micro entity provisions of the AIA and the
Office's responses to the comments follow:
Comment 1: One comment stated that there are several instances in
35 U.S.C. 123 and proposed § 1.29 where the term "applicant" is
inapplicable to an organization and must really be referring to the
inventor(s) (e.g., a certification that "applicant" has not been
named as an "inventor" in more than four previously filed
applications, references to applicant's previous employment or
employer). One comment indicated that the term "applicant" should be
used in an interchangeable manner so as to mean either the inventor(s)
or a company to which the patent application is assigned (i.e., the
rules should refer to "applicant or inventor") in view of the AIA's
change to 35 U.S.C. 118. That comment further indicated, however, that
the ability to vary from the statute "may be limited." One comment
similarly indicated that the final rules should replace all instances
of "applicant" and "applicant's" with "inventor" and
"inventor's" in § 1.29(a) (second instance), (b), (c), (d)(1),
(d)(2)(i), and (d)(2)(ii) in view of the AIA's change to 35 U.S.C. 118.
One comment stated that in the case of university inventions, the
university typically is the applicant and this creates anomalies in
proposed § 1.29(d), since the institution (university) logically
cannot make the certifications required under § 1.29(d)(2)(i) and
(d)(2)(ii) (that the employer from which the university obtains the
majority of its income is an institution of higher education as defined
by section 101(a) of the Higher Education Act of 1965, or that the
university itself has assigned, granted, conveyed, or is under an
obligation by contract or law, to assign, grant, or convey, a license
or other ownership interest in the particular application).
Response: The Office specifically invited public comment in the
notice of proposed rulemaking on the issue of whether the term
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"inventor" should be used in place of "applicant" at any instance
in the proposed micro entity rules. See Changes to Implement Micro
Entity Status for Paying Patent Fees, 77 FR at 31808. The Office agrees
that some, though not all, provisions of 35 U.S.C. 123 refer to a
situation where an inventor is the applicant. The micro entity
provisions of 35 U.S.C. 123 were enacted as part of the AIA, which also
revised the patent laws to provide a specific definition of the term
"inventor" and to change who may be the applicant for a patent. See
125 Stat. at 285 (defining "inventor") and 293-97 (changing the
patent laws to distinguish between who may apply for a patent as the
applicant and who must be named as the inventor); see also 35 U.S.C.
100; 35 U.S.C. 118. The Office does not consider it appropriate either
to amend the language of 35 U.S.C. 123 as incorporated into the
corresponding provisions of § 1.29 or to somehow view the terms
"applicant" and "inventor" as interchangeable in all instances
under 35 U.S.C. 123. See Brown v. Gardner, 513 U.S. 115, 118 (1994)
(presumption that a given term is used to mean the same thing
throughout a statute). As discussed previously, while some of the
provisions in 35 U.S.C. 123(a) and (d) refer to an inventor-applicant,
35 U.S.C. 123 does not explicitly preclude an assignee-applicant under
35 U.S.C. 118 from claiming micro entity status under 35 U.S.C. 123(a)
or (d), provided there is compliance with the applicable micro entity
criteria by each applicant. However, each applicant must qualify for
micro entity status, and any other party holding rights in the
application must qualify for small entity status. See 37 CFR 1.29(h).
Comment 2: One comment stated that it is possible that the
legislative intent of 35 U.S.C. 123(a)(2) was that an applicant should
satisfy this criterion so long as the applicant has fewer than four
previously filed applications in which micro entity fees were paid. One
comment stated that the four application limit under 35 U.S.C.
123(a)(2) should apply only to applications filed within the past
twenty years or so. One comment stated that it would make sense for the
term "inventor" in § 1.29(a)(2) to refer to an applicant who has
had the opportunity to claim micro entity status in four previously
filed patent applications. One comment indicated that § 1.29(a)(2)
should be amended to provide that if an application is entitled to
micro entity status, then continuation and divisional applications of
that parent application should normally be entitled to micro entity
status without counting the parent application or any parallel filed
continuing or divisional patent applications in the same patent family
toward the four application limit.
Response: Section 1.29(a)(2) tracks the provisions of 35 U.S.C.
123(a)(2) with the clarification to reference non-applicant inventors
and joint inventors. 35 U.S.C. 123(a)(2) provides a certification that
the applicant, inter alia, "has not been named as an inventor on more
than 4 previously filed patent applications, other than applications
filed in another country, provisional applications under 35 U.S.C.
111(b), or international applications * * * for which the basic
national fee under 35 U.S.C. 41(a) was not paid." This provision
refers to when an inventor-applicant has been named as an inventor in a
previous application, including as one in a group of joint inventors.
See 35 U.S.C. 100. An applicant that is not an inventor would plainly
not violate this criteria. Moreover, this provision has been clarified
to refer to an inventor or joint inventor who is not the applicant. 35
U.S.C. 123(a)(2) by its express terms does not, however, provide for
exceptions to this four-application limit suggested by the comments. In
addition, while 35 U.S.C. 123(e) authorizes the Office to place
additional limits on who may qualify as a micro entity under 35 U.S.C.
123, it does not authorize the Office to remove limitations contained in
35 U.S.C. 123.
Comment 3: One comment suggested expanding the scope of the § 1.29(b)
exception to applications counted toward the four application
limit in § 1.29(a)(2) by including applications assigned to the
inventor's current employer when the invention is outside the current
employer's scope of employment with the inventor.
Response: Section 1.29(b) tracks the provisions of 35 U.S.C. 123(b)
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with the clarification to reference non-applicant inventors and joint
inventors. 35 U.S.C. 123(b) provides that an applicant is not
considered to be named on a previously filed application for purposes
of 35 U.S.C. 123(a)(2) if the applicant has assigned, or is under an
obligation by contract or law to assign, all ownership rights in the
application "as the result of applicant's previous employment." Thus,
the exception in 35 U.S.C. 123(b) by its express terms does not apply
to applications assigned to a current employer. In addition, as
discussed previously, while 35 U.S.C. 123(e) authorizes the Office to
place additional limits on who may qualify as a micro entity under 35
U.S.C. 123, it does not authorize the Office to remove limitations
contained in 35 U.S.C. 123.
Comment 4: One comment noted that the Office has indicated that it
will publish the income level that is three times the median household
income for the calendar year most recently reported by the Bureau of
the Census, but that 35 U.S.C. 123(a) (and § 1.29(a)) require that
applicants use the median household income data for "the calendar year
preceding the calendar year in which the applicable fee is being
paid." The comment expressed concern that median household income data
for a given year is not reported by the Bureau of the Census until the
succeeding year. One comment suggested that § 1.29(a)(3) be amended
to provide that an applicant may rely on his or her most recently filed
income tax return regardless of whether the most recently filed tax
return accounted for the previous calendar year's gross income.
Response: Section 1.29(a)(3) tracks the provisions of 35 U.S.C.
123(a)(3) with the clarification to reference non-applicant inventors
and joint inventors. 35 U.S.C. 123(a)(3) provides that each inventor's
gross income "in the calendar year preceding the calendar year in
which the applicable fee is being paid" must not exceed "three times
the median household income for that preceding calendar year as most
recently reported by the Bureau of the Census." 35 U.S.C. 123(a)(3)
does not provide for an applicant to simply rely on his or her most
recently filed income tax return if the most recently filed tax return
does not pertain to the calendar year preceding the calendar year in
which the applicable fee is being paid. The Office will post on its
Internet Web site the U.S. dollar amount that equals three times the
median household income as most recently reported by the Bureau of the
Census. Thus, the Office's Internet Web site will contain the U.S.
dollar amount that equals three times the median household income as
most recently reported by the Bureau of the Census as provided for in
§ 1.29(a)(3) and 35 U.S.C. 123(a)(3).
Comment 5: One comment requested guidance as to what effect marital
status has on "gross income" in terms of § 1.29(a)(3), and
whether the inventor's tax return is filed jointly or separately
changes the amount of "gross income" for purposes of meeting the
requirement of proposed § 1.29(a)(3). The comment also indicated
that in community property states, the law may be construed such that
the inventor/applicant has assigned his or her rights in part to the
spouse, as a matter of law. Another comment stated that marital status
of an individual applicant may have an impact on the assignment or
ownership rights in an invention and the gross income of the applicant,
and that it may require an opinion from an accountant or tax attorney
with respect to the applicant's income.
Response: The Office reads the "gross income" requirement
contained in 35 U.S.C. 123(a)(3) and § 1.29(a)(3) with respect to a
married person as applying to the amount of income the person would
have reported as gross income if that person were filing a separate tax
return (which includes properly accounting for that person's portion of
interest, dividends, and capital gains from joint bank or brokerage
accounts), regardless of whether the person actually filed a joint
return or a separate return for the relevant calendar year.
Additionally, the Office does not consider a spouse's ownership
interest in a patent application or patent arising by operation of
residence in a community property state as falling within the ambit of
35 U.S.C. 123(a)(4) and § 1.29(a)(4) because the spouse's ownership
interest arises by operation of state law, rather than an assignment,
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grant, conveyance, or obligation to assign, grant, or convey.
Comment 6: One comment questioned the situation where the
applicant's income is not in U.S. dollars and the applicable currency
exchange rate is applied to determine the applicant's gross income in
U.S. dollars in accordance with § 1.29(c), whether the applicant's
gross income in terms of U.S. dollars should be compared to three times
the median household income for the preceding calendar year in the
United States, or should be compared to the median household income for
the preceding calendar year in the country in which the applicant
obtained income.
Response: In all cases, the inventor's gross income in the previous
calendar year must be compared to the U.S. dollar amount equaling three
times the median household income as most recently reported by the
Bureau of the Census (which will be posted on the Office's Internet Web
site) at the time the applicable fee is being paid in order to meet the
gross income requirement of § 1.29(a)(3).
Comment 7: One comment suggested that the language "that calendar
year" in proposed § 1.29(c) should be changed to "the preceding
calendar year" to clarify that applicants whose income is not in U.S.
dollars must apply the currency exchange rate from the preceding
calendar year when calculating income in U.S. dollars in order to
determine whether the proposed § 1.29(a)(3) "gross income" requirement
is met.
Response: Section 1.29(c) tracks the provisions of 35 U.S.C. 123(c)
with the clarification to reference non-applicant inventors and joint
inventors. The phrase "that calendar year" in 35 U.S.C. 123(c) and
§ 1.29(c) means "the preceding calendar year" as previously recited in 35
U.S.C. 123(c) and § 1.29(c).
Comment 8: One comment indicated that foreign applicants should be
directed to make a "good faith attempt" to estimate their gross
income in terms of U.S. tax law.
Response: 35 U.S.C. 123(c) provides that if an applicant's or
entity's gross income in the preceding calendar year is not in United
States dollars, the average currency exchange rate, as reported by the
Internal Revenue Service, during that calendar year shall be used to
determine whether the applicant's or entity's gross income exceeds the
threshold specified in 35 U.S.C. 123(a)(3) or (4). 35 U.S.C. 123 does
not provide any alternative basis, such as a good faith estimation as
suggested by the comment, for determining whether an applicant or
entity meets the gross income requirement of 35 U.S.C. 123(a)(3). For
an applicant or entity whose previous calendar year's gross income was
received partially in U.S. dollars and partially in non-United States
currency, the gross income amount in non-United States currency must be
converted into U.S. dollars in accordance with § 1.29(c) and then
added to the gross income amount in U.S. dollars to determine whether the
applicant or entity meets the gross income requirement of § 1.29(a)(3).
Comment 9: One comment suggested that the definition of micro
entity status should be broadened to benefit even more small inventors
than those who meet the requirements of 35 U.S.C. 123(a).
Response: The legislative history includes a statement that
Congress developed the micro entity provision to benefit truly
independent inventors, people with very little capital and just a few
inventions, who are just starting out. See H.R. Rep 112-98 at 50. Small
entity inventors who do not meet the micro entity requirements of 35
U.S.C. 123 may still claim small entity status and receive the fifty
percent small entity fee reduction. In any event, as discussed
previously, while 35 U.S.C. 123(e) authorizes the Office to place
additional limits on who may qualify as a micro entity under 35 U.S.C.
123, it does not authorize the Office to remove limitations contained
in 35 U.S.C. 123 or expand the scope of 35 U.S.C. 123 to include more
small entities.
Comment 10: Several comments objected to the requirement under
§ 1.29(d)(1) that in order to qualify for micro entity status under
§ 1.29(d), the applicant must qualify as a small entity as defined
in § 1.27 in addition to meeting one of the requirements under
§ 1.29(d)(2)(i) or (d)(2)(ii).
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Response: 35 U.S.C. 123(e) provides that in addition to the limits
imposed by 35 U.S.C. 123, the Director may, in the Director's
discretion, impose income limits, annual filing limits, or other limits
on who may qualify as a micro entity pursuant to this section if the
Director determines that such additional limits are reasonably
necessary to avoid an undue impact on other patent applicants or owners
or are otherwise reasonably necessary and appropriate. The Office has
determined that requiring all micro entities to qualify as small
entities (§ 1.29(d)(1)) is reasonably necessary and appropriate to
ensure that applicants who do not qualify as a small entity do not
inappropriately attempt to take advantage of micro entity status. As
discussed in the notice of proposed rulemaking, the legislative history
of 35 U.S.C. 123 includes a statement that micro entity status is
directed to a subset of small entities, namely, "truly independent
inventors." See H.R. Rep 112-98 at 50.
Comment 11: Several comments indicated that § 1.29(d)(2)(ii)
should provide that the rights transferred or owed to an institution of
higher education should be substantial. The comments indicated that
institutions of higher education are generally non-practicing entities
or that applicants could engage in sham transfers of a de minimus
interest to an institution of higher education, and suggested the
Office use its authority under 35 U.S.C. 123(e) to ensure the transfer
of rights is for a substantial purpose. One comment indicated that
micro entity status by a grant of rights to an institution of higher
education under § 1.29(d)(2)(ii) should not be available to an
institution of higher education and that without such a limitation,
institutions of higher education could simply grant rights to each
other and thereby qualify their patent for micro entity status.
Response: As discussed previously, the Office is requiring that all
micro entities qualify as small entities (§ 1.29(d)(1)) to ensure
that applicants who do not qualify as a small entity do not
inappropriately attempt to take advantage of micro entity status. This
requires that any person or entity claiming micro entity status not
have assigned, granted, conveyed, or licensed, and be under no
obligation under contract or law to assign, grant, convey, or license,
any rights in the invention to any person, concern, or organization
which would not qualify for small entity status as a person, small
business concern, or nonprofit organization. See § 1.27(a). The
Office plans to closely monitor the percentage of applicants claiming
small entity status under 35 U.S.C. 123(d) and will propose additional
limits under the authority provided in 35 U.S.C. 123(e) if it appears
that a substantial number of applicants are engaging in sham
transactions with institutions of higher education to obtain micro
entity status.
Comment 12: One comment indicated that 35 U.S.C. 123(d) is unclear
as to whether it was intended to cover a separate non-profit
corporation, research foundation, or other institution that is legally
separate from an institution of higher education but whose stated
mission is to represent that institution of higher education, to act on
its behalf, and/or commercialize the intellectual property of that
institution of higher education. The comment suggested that a research
foundation should be treated as a qualifying institution of higher
education for purposes of micro entity status if the research
foundation is acting on behalf of a university which is an institution
of higher education as defined in section 101(a) of the Higher
Education Act of 1965. Another comment suggested that the Office
consider expanding the scope of § 1.29(d) to include technology
transfer organizations whose primary purpose is to facilitate the
commercialization of technologies developed by one or more institutions
of higher education as defined by section 101(a) of the Higher
Education Act of 1965. Another comment suggested that micro entity
status be made available to applicants whose inventions are co-owned
with Federal Government research laboratories and that patent
applications on inventions made solely or jointly by Federal laboratory
personnel should be considered in the same manner as applications made
solely by personnel at academic research laboratories. Another comment
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suggested amending § 1.29(d) to extend the definition of
"institution of higher education" to include certain nonprofit
scientific or educational organizations that are not institutions of
higher education "as defined in section 101(a) of the Higher Education
Act of 1965 (20 U.S.C. 1001(a))" as required by 35 U.S.C. 123(d).
Another comment suggested that the Office interpret "institution of
higher education as defined in section 101(a) of the Higher Education
Act of 1965 (20 U.S.C. 1001(a))" as it appears in 35 U.S.C. 123(d) to
include institutions of higher education set forth in subsection (b) of
20 U.S.C. 1001, thus making micro entity status available to
institutions that grant only graduate degrees if they otherwise qualify
as institutions of higher education under 20 U.S.C. 1001(a).
Response: 35 U.S.C. 123(d) provides that a micro entity shall also
include an applicant who certifies that: (1) The applicant's employer,
from which the applicant obtains the majority of the applicant's
income, is an institution of higher education as defined in section
101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or (2)
the applicant has assigned, granted, conveyed, or is under an
obligation by contract or law, to assign, grant, or convey, a license
or other ownership interest in the particular applications to such an
institution of higher education. Consistent with the discussion above
and in the notice of proposed rulemaking about the statutory terms
"applicant" and "inventor," note that the statutory criteria in 35
U.S.C. 123(d) ordinarily would not be met by an institution of higher
education that is itself an assignee-applicant. Also, while 35 U.S.C.
123(e) authorizes the Office to place additional limits on who may
qualify as a micro entity under 35 U.S.C. 123, it does not authorize
the Office to remove limitations contained in 35 U.S.C. 123 such as to
expand the scope of 35 U.S.C. 123(d) to include a separate, non-profit
corporation, research foundation, technology transfer organization, Federal
Government research laboratory, other non-profit scientific or educational
organization, institution of higher education as defined in section 101(b)
of the Higher Education Act of 1965, or other institution that is legally
separate from an institution of higher education as defined in section
101(a) of the Higher Education Act of 1965 as suggested by the comments. An
entity or institution must meet the definition of an institution of higher
education as defined in section 101(a) of the Higher Education Act of
1965 for an applicant employed by, or who has assigned or is under an
obligation to assignee to, the entity or institution, to be eligible
for micro entity status under 35 U.S.C. 123(d).
Comment 13: Several comments indicated that the proposed rules show
a bias in favor of institutions of higher education and against
independent inventors because an independent inventor has to meet
certain criteria to be entitled to micro entity status.
Response: Both independent inventors under 35 U.S.C. 123(a) and
those employed by or under a legal or contractual obligation to assign,
grant, or convey an interest in an application to an institution of
higher education as defined in section 101(a) of the Higher Education
Act of 1965 under 35 U.S.C. 123(d), must meet certain criteria to be
eligible for micro entity status. Specifically, the applicant must
qualify as a small entity as defined in § 1.27. In addition, as to
35 U.S.C. 123(d) either the applicant's employer, from which the
applicant obtains the majority of the applicant's income, must be an
institution of higher education as defined in section 101(a) of the
Higher Education Act of 1965 (20 U.S.C. 1001(a)), or the applicant must
have assigned, granted, conveyed, or be under an obligation by contract
or law, to assign, grant, or convey, a license or other ownership
interest in the particular application to such an institution of higher
education. The income and application filing criteria specified in
§ 1.29(a) tracks the criteria in 35 U.S.C. 123(a).
Comment 14: One comment questioned whether micro entity status will
be available to foreign applicants.
Response: Micro entity status is available to any applicant
(foreign or domestic alike) who meets the requirements of 35 U.S.C. 123
and § 1.29. Notably, 35 U.S.C. 123(d) provides that an institution
must meet the definition of an institution of higher education as
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defined in section 101(a) of the Higher Education Act of 1965 for micro
entity status to be obtained based upon the applicant's employment at
or the applicant's assignment or obligation to the institution. One
criteria of the definition of "institution of higher education" set
forth in section 101(a) of the Higher Education Act of 1965 is that the
institution must be located in a "State." Section 103 of the Higher
Education Act of 1965 provides that the term "State" as used in
section 101(a) "includes the several States of the United States, the
Commonwealth of Puerto Rico, the District of Columbia, Guam, American
Samoa, the United States Virgin Islands, and the Freely Associated
States" and that the Freely Associated States means the "Republic of
the Marshall Islands, the Federated States of Micronesia, and the
Republic of Palau."
Comment 15: Several comments urged deletion of the requirement in
§ 1.29(e) that micro entity status be specifically established by a
new certification in each related continuing and reissue application.
One comment indicated that unless the Office removes the provision in
proposed § 1.29(g) that a fee may be paid in the micro entity
amount only if status as a micro entity is appropriate on the date the
fee is paid, the Office should remove the requirement in proposed
§ 1.29(e) that status as a micro entity must be specifically established
in each related, continuing and reissue application in which status is
appropriate and desired. One comment stated that § 1.29(e) contains
an error in that contrary to its language, status as a micro entity in
one application does affect the status of other applications. The
commenter, however, suggests retaining language in § 1.29(e)
stating that micro entity status must be specifically established in
each continuing and divisional application in which status is
appropriate and desired.
Response: The Office shares the concerns of the comments that the
small entity and micro entity regulations and procedures be as simple
as possible. For this reason, the Office is making the micro entity
provisions as consistent with the small entity provisions as possible,
including the provisions pertaining to claiming small entity status in
related continuing and reissue applications. See § 1.27(c)(4). In
addition, 35 U.S.C. 123 requires that the applicant make a
certification under 35 U.S.C. 123(a) or (d) to qualify for micro entity
status. An applicant's ability to meet the requirements in 35 U.S.C.
123(a) or (d) may change over time. For example, from a first
application to a related continuing or reissue application, an
applicant's gross income (35 U.S.C. 123(a)(3)) and employment (35
U.S.C. 123(d)(1)) may change, and the number of applications naming the
applicant as an inventor (35 U.S.C. 123(a)(2)) will change with the
filing of a related continuing or reissue application. Therefore, the
Office is concerned about permitting micro entity status to
automatically carry over into a related continuing or reissue
application without the certification required by 35 U.S.C. 123(a) or
(d). Finally, while being named as an inventor in other applications
may affect an applicant's ability to claim micro entity status in an
application, status as a micro entity in one application does not
affect the status of other applications. Finally, as discussed
previously, the Office plans to seek additional public comment on the
micro entity provisions after the Office and the public have gained
experience with the micro entity procedures in operation, and will
pursue further improvements to the micro entity procedures in light of
the public comment and its experience with the micro entity procedures.
Comment 16: One comment stated that § 1.29 is unclear as to who
must sign the micro entity certification in applications with more than
one applicant. The comment suggested that § 1.29 be amended to make
clear that each applicant must meet the requirements of 35 U.S.C.
123(a) or (d) for the applicants to file a micro entity certification
in the application. Further, the comment suggested that §§ 1.29(a)
and (d) be revised to state that "each applicant so establishing such
status must certify that that applicant" meets all the requirements in
order to establish micro entity status. One basis given for this
suggestion is that joint applicants will generally not be privy to each
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other's private financial information, and should not be required to
submit a certification as to the qualification of their joint applicants.
Response: Section 1.29(e) provides that a micro entity status
certification must be signed in compliance with § 1.33(b). Section
1.33(b) requires that amendments and other papers filed in the
application be signed by: (1) A patent practitioner of record; (2) a
patent practitioner not of record who acts in a representative capacity
under the provisions of § 1.34; or (3) the applicant (§ 1.42).
Section 1.33(b) further provides that all papers submitted on behalf of
a juristic entity must be signed by a patent practitioner unless
otherwise specified. If the application names more than one inventor
and the joint inventors are the applicant under § 1.42(a), a micro
entity status certification must be signed by: (1) A patent
practitioner of record; (2) a patent practitioner not of record who acts
in a representative capacity under the provisions of § 1.34; or (3)
all of the inventors.
Comment 17: One comment suggested amending § 1.29(f) to include
language permitting the micro entity certification to be filed in
response to a notice of fee deficiency mailed by the Office.
Response: Certification of micro entity status can be made at any
stage of prosecution, or at any time before or with payment of a
maintenance fee after the patent issues. However, a fee may be paid in
the micro entity amount only if it is submitted with, or subsequent to,
the submission of a certification of entitlement to micro entity
status.
Comment 18: Several comments argued that there should be no need to
recertify small entity status if micro entity status is lost, because
the applicant had to certify small entity status to qualify as a micro
entity and the applicant should continue to qualify for small entity
status after losing micro entity status.
Response: Section 1.29(i) as adopted in this final rule provides
that a notification that micro entity status is no longer appropriate
will not be treated as a notification that small entity status is also
no longer appropriate unless it also contains a notification of loss of
entitlement to small entity status under § 1.27(f)(2). An applicant
or patentee who files a notification that micro entity status is no
longer appropriate will be treated as a small entity by default unless
the notification also contains a notification of loss of entitlement to
small entity status under § 1.27(f)(2), thus minimizing burdens on
small entity applicants and patentees. An applicant or patentee who is
no longer a micro entity or a small entity must provide both a
notification under § 1.29(i) of loss of entitlement to micro entity
status and a notification under of § 1.27(f)(2) of loss of
entitlement to small entity status.
Comment 19: A number of comments indicated that the proposed
requirement in § 1.29(g) to determine continued qualification for
micro entity status each time a fee is paid was overly burdensome. One
comment indicated that this proposed requirement would inevitably lead
to additional cost to applicants in prosecuting applications before the
Office. Several comments suggested that § 1.29(g) be revised to be
similar to small entity practice such that once micro entity status is
acquired, fees can continue to be paid in the micro entity amount until
the issue fee or any maintenance fee is due, or that micro entity
status be permitted to be maintained throughout the calendar year in
which micro entity status was established without regard to continued
qualification. The comments indicated that an entity that licenses
multiple patent applications will need to confirm that each licensee
does not have a gross income that exceeds three times the median
household income for the preceding calendar year, and that an entity
with a patent application naming multiple inventors will need to
confirm that each inventor for each application does not have a gross
income that exceeds three times the median household income for the
preceding calendar year. One comment alternatively suggested that micro
entity status be maintained by applicants through the end of a calendar
year, even if there has been a change in income status during the
calendar year that disqualifies the applicant from a continued claim to
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micro entity status.
Response: 35 U.S.C. 123(a) does not allow for a provision similar
to small entity practice under which once micro entity status is
acquired, fees can continue to be paid in the micro entity amount until
the issue fee or any maintenance fee is due or that micro entity status
be maintained throughout the calendar year in which micro entity status
was established without regard to continued qualification. 35 U.S.C.
123(a) requires that a micro entity "not [have] been named as an
inventor on more than 4 previously filed patent applications, other
than applications filed in another country, provisional applications
under 35 U.S.C. 111(b), or international applications for which the
basic national fee under 35 U.S.C. 41(a) was not paid" and "not, in
the calendar year preceding the calendar year in which the applicable
fee is being paid, have a gross income, as defined in section 61(a) of
the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding three
times the median household income for that preceding calendar year."
35 U.S.C. 123(a)(2) and (a)(3). Finally, while applicants with complex
licensing arrangements may consider confirming the status of each
licensee challenging, this is more a function of the complexity of the
licensing arrangement than any complexity in the requirement that a fee
may be paid in the micro entity amount only if status as a micro entity
as defined in § 1.29(a) or § 1.29(d) is appropriate on the date
the fee is being paid.
Comment 20: Several comments objected to the statement in proposed
§ 1.29(h) that "[i]t should be determined that all parties holding
rights in the invention qualify for micro entity status." One comment
stated that proposed § 1.29(h) appears to require an opinion that
all parties holding rights in the invention qualify for micro entity
status. One comment indicated that because "parties" could include an
applicant under 35 U.S.C. 118 not qualifying as a micro entity but
filing an application on behalf of an inventor qualifying as a micro
entity, the statement should be deleted. Another comment indicated that
the sentence cited from § 1.29(h) is redundant and/or inconsistent
with the statute as 35 U.S.C. 123(a)(4) expressly includes such a
limitation whereas 35 U.S.C. 123(d) does not. The comment also
indicated that the sentence cited from § 1.29(h) is inconsistent
with § 1.29(d) which would otherwise allow any entity that
qualifies for small entity status to obtain the benefits of micro
entity status by assigning, granting, or conveying, a license or other
ownership interest to a qualified institution of higher education. The
comment suggested amending the sentence cited from § 1.29(h) by
replacing "qualify for micro entity status" with "qualify for small
entity status," or alternatively, replacing the phrase "all parties
holding rights to the invention" with "all applicants." One comment
indicated that "invention" is not the equivalent of "application,"
and thus the word "invention" in the phrase "all parties holding
rights to the invention" should be changed to "application," or the
Office should provide guidance on the meaning of the expression
"rights in the invention."
Response: The Office is revising this provision to indicate that
each applicant must qualify for micro entity status under § 1.29(a)
or § 1.29(d), and that each other party holding rights in the
application must qualify for small entity status under § 1.27. Note
that § 1.27(a)(3) provides for small entity status with respect to
nonprofit organizations and is applicable to universities or other
institutions of higher education. See § 1.27(a)(3)(ii)(A). 35
U.S.C. 123(e) provides that in addition to the limits imposed by 35
U.S.C. 123, the Director may, in the Director's discretion, impose
income limits, annual filing limits, or other limits on who may qualify
as a micro entity pursuant to this section if the Director determines
that such additional limits are reasonably necessary to avoid an undue
impact on other patent applicants or owners or are otherwise reasonably
necessary and appropriate. As discussed previously, the Office has
determined that requiring all micro entities to qualify as small
entities and that all other parties holding rights in the invention qualify
for small entity status is reasonably necessary and appropriate to ensure
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that applicants who do not qualify as a small entity do not inappropriately
attempt to take advantage of micro entity status.
Comment 21: One comment indicated that § 1.29(h) is an advisory
opinion, and not a statement of any requirement, and thus should be
deleted.
Response: Section 1.29(h) requires that each applicant qualify for
micro entity status under § 1.29(a) or § 1.29(d), and that each
other party holding rights in the application qualify for small entity
status under § 1.27, in order for the applicant to make a
certification of entitlement to micro entity status. With respect to
the small entity status requirement, § 1.27(a) requires that any
person or entity claiming small entity status not have assigned,
granted, conveyed, or licensed, and is under no obligation under
contract or law to assign, grant, convey, or license, any rights in the
invention to any person, concern, or organization which would not
qualify for small entity status as a person, small business concern, or
nonprofit organization.
Comment 22: Several comments indicated that proposed § 1.29(i)
is overly burdensome. One comment indicated that proposed § 1.29(i)
would require that possible loss of entitlement to micro entity status
be evaluated each time a fee is to be paid. One comment stated that the
cost of compliance defeats the Congressional purpose of providing for
micro entity status and thus proposed § 1.29(i) should be stricken.
Response: Section 1.29(i) requires only that a notification of a
loss of entitlement to micro entity status must be filed in the
application or patent prior to paying, or at the time of paying, any
fee after the date on which status as a micro entity as defined in
§ 1.29(a) or § 1.29(d) is no longer appropriate. As discussed
previously, § 1.29(g) provides that a fee may be paid in the micro
entity amount only if status as a micro entity as defined in § 1.29(a)
or § 1.29(d) is appropriate on the date the fee is being
paid. Section 1.29(i) provides a necessary step for documentation of
the cessation of micro entity status.
Comment 23: One comment suggested that § 1.29(i) be amended to
permit payments for entity status other than micro entity as sufficient
notification of loss of entitlement to micro entity status, without
additional correspondence to the Office.
Response: Office experience with small entity payments is that some
small entities will occasionally pay patent fees in the full (non-small
entity) amounts inadvertently. If mere payment of fees in the full or
small entity amount is treated as a notification of loss of entitlement
to micro entity status, a micro entity who inadvertently paid a patent
fee in the full or small entity amount will thereafter no longer be
treated as a micro entity. This could result in increased costs for
entities that are entitled to claim micro entity status, and there
would be a lack of clear documentation on whether micro entity status
has ceased.
Comment 24: Several comments indicated that proposed § 1.29(j)
is vague because the proposed rule does not define what constitutes
fraud. The comments indicated that the Office should amend the rule to
make clear what would constitute fraud. One comment stated that fraud
is a legal conclusion including proof of mental state. One comment
stated that some small entities not qualifying for micro entity status
under § 1.29(a) may be tempted to marginally align with a
university in order to take benefit under § 1.29(d), and requested
that the Office clarify whether such a strategy would be considered a
fraud, even if the letter of the rules is met. One comment requested
guidance on what penalties the Office anticipates enforcing in the
event that a fraudulent certification is made.
Response: Section 1.29(j) provides that "[a]ny attempt to
fraudulently establish status as a micro entity, or pay fees as a micro
entity, shall be considered as a fraud practiced or attempted on the
Office," and that "[i]mproperly, and with intent to deceive,
establishing status as a micro entity, or paying fees as a micro
entity, shall be considered as a fraud practiced or attempted on the
Office." The language in § 1.29(j) parallels the corresponding
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small entity provision in § 1.27(h), and thus terms
"fraudulently" and "fraud" in § 1.29(j) have the same meaning
as the terms "fraudulently" and "fraud" in § 1.27(h). The
definition of common law fraud is based on the definition discussed by
the U.S. Court of Appeals for the Federal Circuit (Federal Circuit).
See Unitherm Food Systems, Inc. v. Swift-Ekrich, Inc., 375 F.3d 1341,
1358 (Fed. Cir. 2004); In re Spalding Sports Worldwide, Inc., 203 F.3d
800, 807 (Fed. Cir. 2000). Applicants questioning how to resolve close
situations or what penalties may result from a fraudulent certification
should consider that: (1) The Federal Circuit has noted that an
applicant would be "foolish" to claim small entity status if there is
the slightest doubt about an applicant's entitlement to claim small
entity (DH Tech., 154 F.3d at 1343); (2) depending on future
developments in the case law, it is possible that a patent could be
held unenforceable as a consequence of a fraud or inequitable conduct
relating to a micro entity or small entity certification (this was
clearly possible for small entity certifications prior to the Federal
Circuit's decision in Therasense, Inc. v. Becton, Dickinson and Co.,
649 F.3d 1276 (Fed. Cir. 2011) (see, e.g., Nilssen v. Osram Sylvania,
Inc., 504 F.3d 1223 (2007), and Ulead Systems, Inc. v. Lex Computer
Management Corp., 351 F.3d 1120 (Fed. Cir. 2003)), but the Federal
Circuit has not yet decided the question of whether a false declaration
of small entity status could constitute inequitable conduct under the
Therasense standard (see Outside the Box Innovations, LLC v. Travel
Caddy, Inc., 695 F.3d 1285, 1294 (Fed. Cir. 2012); see also Therasense,
649 F.3d at 1299, n.6 (O'Malley, J., concurring in part and dissenting
in part)); and (3) there can be further significant penalties for fraud
(e.g., 35 U.S.C. 257(e) (provides that the matter shall be referred to
the Attorney General if the Director becomes aware that a material
fraud on the Office may have been committed in connection with a patent
that is the subject of a supplemental examination).
Comment 25: One comment stated that with respect to the provisions
relating to fraudulent certification (§§ 1.29(g) through (k)),
it would be beneficial to clarify the depth of inquiry which is
considered acceptable (e.g., good faith attempt) for a representative
of an applicant to obtain in order to sign a certification. The comment
indicated that it would be too burdensome on a practitioner to expect
more than obtaining verbal affirmation from an applicant that the
applicant meets the guidelines for obtaining micro entity status.
Response: The depth of inquiry required for any paper presented to
the Office, including a micro entity status certification, is specified
in § 11.18. Specifically, § 11.18(b) provides that by
presenting to the Office or hearing officer in a disciplinary
proceeding (whether by signing, filing, submitting, or later
advocating) any paper, the party presenting such paper, whether a
practitioner or non-practitioner, is making two certifications. The
first certification is that all statements made therein of the party's
own knowledge are true, all statements made therein on information and
belief are believed to be true, and all statements made therein are
made with the knowledge that whoever, in any matter within the
jurisdiction of the Office, knowingly and willfully falsifies, conceals,
or covers up by any trick, scheme, or device a material fact, or knowingly
and willfully makes any false, fictitious, or fraudulent statements or
representations, or knowingly and willfully makes or uses any false writing
or document knowing the same to contain any false, fictitious, or
fraudulent statement or entry, shall be subject to the penalties set forth
under 18 U.S.C. 1001 and any other applicable criminal statute, and further
that violations of the provisions of this section may jeopardize the
probative value of the paper. See § 11.18(b)(1). The second certification
is that to the best of the party's knowledge, information and belief,
formed after an inquiry reasonable under the circumstances: (1) The paper
is not being presented for any improper purpose, such as to harass someone
or to cause unnecessary delay or needless increase in the cost of any
proceeding before the Office; (2) the other legal contentions therein
are warranted by existing law or by a nonfrivolous argument for the
extension, modification, or reversal of existing law or the
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establishment of new law; (3) the allegations and other factual
contentions have evidentiary support or, if specifically so identified,
are likely to have evidentiary support after a reasonable opportunity
for further investigation or discovery; and (4) the denials of factual
contentions are warranted on the evidence, or if specifically so
identified, are reasonably based on a lack of information or belief.
See § 11.18(b)(2).
Comment 26: Several comments suggested eliminating the requirement
under proposed § 1.29(k) that any deficiency payment include an
itemization and an accounting of the total deficiency payment. One
comment indicated that proposed § 1.29(k) should be revised to
parallel the rule that applies to an error in paying a small entity fee
when the large entity fee should have been paid. The comment
alternatively proposed that the rules could be amended to require: (1)
One base fee for rectifying the failure to correct micro entity status,
and (2) an accounting of when the change of status occurred.
Response: The fee deficiency payment provisions of § 1.29(k)
track the small entity fee deficiency payment provisions of § 1.28(c).
The Office needs the itemization to properly apply the fee
deficiency payment so that the Office's records for the application or
patent will properly show which fees have been paid for the application
or patent and in what amount.
Comment 27: One comment suggested the Office establish a database
of the various certification types and permit annual updating of
applicant status, rather than individual application status. Another
comment suggested that § 1.29 be amended to provide for micro
entity status certifications contained in patent application
assignments recorded under part 3 of 37 CFR.
Response: The suggestions are not currently feasible as inventor or
assignee names are not always stated consistently from application to
application (either in application papers or in assignment cover
sheets). The suggestions will be considered if the Office moves to
adopt a system under which there are unique inventor and applicant-
assignee designations.
Comment 28: One comment indicated that many practitioners who have
participated in the LegalCORPS Inventor Assistance Program (a pilot
patent law pro bono program developed with the support of the Office)
have seen first-hand that many inventors qualifying for free legal
assistance through the program will not be able to file applications
electronically, due in part to being unable to make electronic payments
via deposit account or credit card. The comment suggested that the
final rule could address this issue by providing for electronic filing
of documents along with a written certification by the applicant that
any fees associated with that filing are being submitted by check
deposited in the U.S. mail on the date of application filing.
Response: Electronic filing remains a viable filing option for
micro entities, even if the applicant does not have a deposit account
at the Office and even if the applicant does not have sufficient access
to credit to enable payment by credit card. Fees may be paid by
electronic funds transfer (EFT), which requires nothing more than a
checking account. However, before making any payments by EFT, an EFT
profile must be created at the Office "Office of Finance On-Line
Shopping Page" at https://ramps.uspto.gov/eram/. To begin, click the
link titled "Create or Modify an EFT Profile" on the "Office of
Finance On-Line Shopping Page." It is important that micro entities
and other applicants file their applications electronically via EFS-Web
in order to avoid the non-electronic filing fee under § 1.10, which
is $400 (and $200 for small and micro entities). Additionally, a small
or micro entity that files an application in paper (versus
electronically via EFS-Web) will not receive the discount (currently
$97.00) available only to small entities that file a patent application
electronically.
Rulemaking Considerations
A. Regulatory Flexibility Act: For the reasons set forth herein,
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the Deputy General Counsel for General Law of the United States Patent
and Trademark Office has certified to the Chief Counsel for Advocacy of
the Small Business Administration that changes in this final rule will
not have a significant economic impact on a substantial number of small
entities. See 5 U.S.C. 605(b). The Office did not receive public
comments on this certification.
This final rule revises the rules of practice to allow a subset of
small entities -i.e., micro entities- to pay further reduced fees,
namely, a seventy-five percent discount. This final rule sets out
procedures pertaining to claiming micro entity status, paying patent
fees as a micro entity, notification of loss of micro entity status,
and correction of payments of patent fees paid erroneously in the micro
entity amount. This final rule maintains the criteria in 35 U.S.C.
123(a) and (d) for entitlement to file a certification of micro entity
status (note also the requirement in 37 CFR 1.29(d)(1) that an
applicant claim small entity status in compliance with 37 CFR 1.27 in
order to claim micro entity status; see also 37 CFR 1.29(h), 35 U.S.C.
123(e)). This rule also includes clarifications under 37 CFR 1.29(a) to
refer to non-applicant inventors and joint inventors. The micro entity
procedures in this final rule track to the extent feasible the
corresponding small entity procedures under 37 CFR 1.27. Thus, the
burden to all entities, including small entities, imposed by this final
rule is no greater than those imposed by the pre-existing regulations
pertaining to claiming small entity status: paying patent fees as a
small entity, notification of loss of small entity status, and
correction of payments of patent fees paid erroneously in the small
entity amount.
Requiring that an applicant claim small entity status in compliance
with 37 CFR 1.27 in order to claim micro entity status under 37 CFR
1.29(d)(1) will not have a significant economic impact on a substantial
number of small entities. The Office uses the Small Business
Administration business size standard for the purpose of paying reduced
patent fees in 13 CFR 121.802 as the size standard when conducting an
analysis or making a certification under the Regulatory Flexibility Act
for patent-related regulations. See Business Size Standard for Purposes
of United States Patent and Trademark Office Regulatory Flexibility
Analysis for Patent-Related Regulations, 71 FR 67109, 67109 (Nov. 20,
2006). A small entity for purposes of the Regulatory Flexibility Act
analysis is a small entity for purposes of paying reduced patent fees.
Therefore, requiring in 37 CFR 1.29(d)(1) that an entity claim small
entity status in compliance with 37 CFR 1.27 in order to claim micro entity
status will preclude only an applicant or patentee who is a large entity
(i.e., not a small entity) from claiming micro entity status.
The Office estimates that a minority percentage of small entity
applications will be filed by paying micro entity fees under this final
rule. Based upon the data in the Office's Patent Application Locating
and Monitoring (PALM) system, of the approximately 2,498,000
nonprovisional patent applications (utility, plant, design, and
reissue) and requests for continued examination filed in total over the
last five fiscal years, small entity fees were paid in approximately
669,000 (26.8 percent). Thus, an average of approximately 500,000
nonprovisional patent applications and requests for continued
examination have been filed each year for the last five fiscal years,
with small entity fees being paid in approximately 134,000 of the
nonprovisional patent applications and requests for continued
examination filed each year.
As indicated above, this rule provides a procedure for small
entities to attain a 75 percent reduction in fees as a micro entity, as
provided by statute. The procedures for micro entity status track the
existing procedures for small entity status. While the rule impacts the
entire universe of small entity applications and patents, the rule is
necessary for implementing a further reduction in fees, which is
entirely beneficial, and no other provision has an economic impact on
the affected small entities.
B. Executive Order 12866 (Regulatory Planning and Review): This
rulemaking has been determined to be not significant for purposes of
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Executive Order 12866 (Sept. 30, 1993).
C. Executive Order 13563 (Improving Regulation and Regulatory
Review): The Office has complied with Executive Order 13563.
Specifically, the Office has, to the extent feasible and applicable:
(1) Made a reasoned determination that the benefits justify the costs
of the rule; (2) tailored the rule to impose the least burden on
society consistent with obtaining the regulatory objectives; (3)
selected a regulatory approach that maximizes net benefits; (4)
specified performance objectives; (5) identified and assessed available
alternatives; (6) involved the public in an open exchange of
information and perspectives among experts in relevant disciplines,
affected stakeholders in the private sector, and the public as a whole,
and provided on-line access to the rulemaking docket; (7) attempted to
promote coordination, simplification, and harmonization across
government agencies and identified goals designed to promote
innovation; (8) considered approaches that reduce burdens and maintain
flexibility and freedom of choice for the public; and (9) ensured the
objectivity of scientific and technological information and processes.
One comment argued that the rulemaking fails to comply with
Executive Order 13563 on the grounds that: (1) The Office did not
conduct a burden/benefit analysis which includes realistic professional
services fees for patent practitioners, the time involved in
understanding and complying with the rule, and the sanctions imposed by
rule; (2) proposed 37 CFR 1.29 fails to consider the value to society
of university inventions, for which 35 U.S.C. 123(d) seeks to provide
specific benefits, and which imposes no limits on how a university
might seek to exploit its rights; and (3) proposed 37 CFR 1.29 imposes
significant burdens for the affected applicants, and is thus not
tailored to impose the least burden on society consistent with
obtaining the regulatory objectives.
The Office considered costs and benefits to applicants claiming
micro entity status (including universities), as well as to all other
applicants and the Office in this rulemaking. Executive Order 13563
reaffirms Executive Order 12866. This rulemaking was deemed by OMB as
not economically significant as that term is defined in Executive Order
12866 (Sept. 30, 1993). Therefore, the regulatory analysis provided in
section 6(a)(3)(C) of Executive Order 12866 and OMB Circular A-4 is
inapplicable to this rulemaking. The Office, however, did conduct the
regulatory analysis provided in section 6(a)(3)(C) and OMB Circular A-4
for the related rulemaking to set and adjust patent fees under section
10 of the Leahy-Smith America Invents Act. 37 CFR 1.29 does impose the
least burden on society consistent with obtaining the regulatory
objectives by permitting an applicant to self-certify entitlement to
micro entity status, and does not require any further information or
certification from the applicant provided that the applicant remains
entitled to micro entity status. In addition, having micro entity
procedures which track the pre-existing small entity procedures to the
extent practicable is less burdensome than fashioning new micro entity
procedures. Finally, while having no requirements would arguably impose
the least burden on an entity seeking the benefit of micro (or small)
entity status, it would not impose the least burden on society overall
and would not obtain the regulatory objectives of creating the
beneficial option of micro entity status with a seventy-five percent
fee reduction as provided by statute.
Revising the regulations as suggested by the comment would expand
the scope of micro entity status beyond what the statute allows. It
also would not meet the regulatory objectives of ensuring that a for-
profit, large entity applicant not become a "micro entity" (and thus
obtaining a seventy-five percent discount) merely by licensing or
assigning some interest (nominal or otherwise) to an institution of
higher education. The Office received comments (including in response
to the section 10 rulemaking) in support of the Office imposing
additional requirements under 35 U.S.C. 123(e) to avoid sham licensing
agreements for the purpose of improperly claiming micro entity status
(as improper micro entity claims would result in higher fees for other
applicants). Thus, the narrow requirements imposed by the Office under
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35 U.S.C. 123(e) are necessary to avoid abuses of micro entity status,
and simply eliminating them in the name of reducing burden would not
impose the least burden on society overall and would not obtain the
regulatory objectives.
D. Executive Order 13132 (Federalism): This rulemaking does not
contain policies with federalism implications sufficient to warrant
preparation of a Federalism Assessment under Executive Order 13132
(Aug. 4, 1999).
E. Executive Order 13175 (Tribal Consultation): This rulemaking
will not: (1) Have substantial direct effects on one or more Indian
tribes; (2) impose substantial direct compliance costs on Indian tribal
governments; or (3) preempt tribal law. Therefore, a tribal summary
impact statement is not required under Executive Order 13175 (Nov. 6,
2000).
F. Executive Order 13211 (Energy Effects): This rulemaking is not a
significant energy action under Executive Order 13211 because this
rulemaking is not likely to have a significant adverse effect on the
supply, distribution, or use of energy. Therefore, a Statement of
Energy Effects is not required under Executive Order 13211 (May 18,
2001).
G. Executive Order 12988 (Civil Justice Reform): This rulemaking
meets applicable standards to minimize litigation, eliminate ambiguity,
and reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive
Order 12988 (Feb. 5, 1996).
H. Executive Order 13045 (Protection of Children): This rulemaking
does not concern an environmental risk to health or safety that may
disproportionately affect children under Executive Order 13045 (Apr.
21, 1997).
I. Executive Order 12630 (Taking of Private Property): This
rulemaking will not effect a taking of private property or otherwise
have taking implications under Executive Order 12630 (Mar. 15, 1988).
J. Congressional Review Act: Under the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.), the United States Patent and Trademark
Office will submit a report containing this final rule and other
required information to the United States Senate, the United States
House of Representatives, and the Comptroller General of the Government
Accountability Office. In addition, the United States Patent and
Trademark Office will inform the Committee on the Judiciary of the
House of Representatives and the Committee on the Judiciary of the
Senate of any proposed limits under 35 U.S.C. 123(e) at least three
months before any limits proposed to be implemented pursuant to 35
U.S.C. 123(e) take effect.
The changes in this final rule are not expected to result in an
annual effect on the economy of 100 million dollars or more, a major
increase in costs or prices, or significant adverse effects on
competition, employment, investment, productivity, innovation, or the
ability of United States-based enterprises to compete with foreign-
based enterprises in domestic and export markets. Therefore, this final
rule is not a "major rule" as defined in 5 U.S.C. 804(2).
K. Unfunded Mandates Reform Act of 1995: The changes set forth in
this rulemaking do not involve a Federal intergovernmental mandate that
will result in the expenditure by State, local, and tribal governments,
in the aggregate, of 100 million dollars (as adjusted) or more in any
one year, or a Federal private sector mandate that will result in the
expenditure by the private sector of 100 million dollars (as adjusted)
or more in any one year, and will not significantly or uniquely affect
small governments. Therefore, no actions are necessary under the
provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C.
1501 et seq.
L. National Environmental Policy Act: This rulemaking will not have
any effect on the quality of the environment and is thus categorically
excluded from review under the National Environmental Policy Act of
1969. See 42 U.S.C. 4321 et seq.
M. National Technology Transfer and Advancement Act: The
requirements of section 12(d) of the National Technology Transfer and
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Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because
this rulemaking does not contain provisions which involve the use of
technical standards.
N. Paperwork Reduction Act: The Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.) requires that the USPTO consider the impact of
paperwork and other information collection burdens imposed on the
public. This final rule makes changes to the rules of practice that
would impose new information collection requirements involving fee
deficiency statements which are subject to review by the Office of
Management and Budget (OMB) under the Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3549). Accordingly, the Office submitted a proposed
information collection to OMB for its review and approval when the
notice of proposed rulemaking was published. The Office also published
the title, description, and respondent description of the information
collection, with an estimate of the annual reporting burdens, in the
notice of proposed rulemaking (See Changes to Implement Micro Entity
Status for Paying Patent Fees, 77 FR 31812-13).
The Office received one comment on the proposed information
collection indicating that the estimate of 3,000 respondents per year
was a significant underestimate as every inventor employed outside of
large entities will likely be confronted with the various
certifications, and that there may be tens of thousands of university
professors or university students on work-study who qualify under 35
U.S.C. 123(d).
The information collection requirements discussed in the notice of
proposed rulemaking, however, narrowly pertain to the information
required for fee deficiency payments based upon the previous erroneous
payment of patent fees in the micro entity amount (See Changes to
Implement Micro Entity Status for Paying Patent Fees, 77 FR 31812).
Based upon the number of applicants and patentees who make fee
deficiency payments under existing 37 CFR 1.28(c) (about 2,250 per
year), the Office believes that 3,000 respondents per year is a
reasonable and conservative estimate of the number of applicants and
patentees who make fee deficiency payments under 37 CFR 1.28(c) or
1.29(k).
As discussed in the notice of proposed rulemaking, OMB has
determined under 5 CFR 1320.3(h) that the certification of micro entity
status (e.g., Form PTO/SB/15A (gross income basis) or Form PTO/SB/15B
(institution of higher education basis) does not collect
"information" within the meaning of the Paperwork Reduction Act of
1995 (See Changes to Implement Micro Entity Status for Paying Patent
Fees, 77 FR 31812). The changes adopted in this final rule do not
require any further change to the proposed information collection.
Accordingly, the Office has resubmitted the proposed information
collection to OMB. The proposed information collection is available at
the OMB's Information Collection Review Web site
(www.reginfo.gov/public/do/PRAMain).
Notwithstanding any other provision of law, no person is required
to respond to, nor shall a person be subject to a penalty for failure
to comply with, a collection of information subject to the requirements
of the Paperwork Reduction Act, unless that collection of information
displays a currently valid OMB control number.
List of Subjects in 37 CFR Part 1
Administrative practice and procedure, Courts, Freedom of
information, Inventions and patents, Reporting and recordkeeping
requirements, Small businesses.
For the reasons set forth in the preamble, 37 CFR part 1 is amended
as follows:
PART 1-RULES OF PRACTICE IN PATENT CASES
. 1. The authority citation for 37 CFR part 1 continues to read as
follows:
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Authority: 35 U.S.C. 2(b)(2).
. 2. Section 1.29 is added to read as follows:
§ 1.29 Micro entity status.
(a) To establish micro entity status under this paragraph, the
applicant must certify that:
(1) The applicant qualifies as a small entity as defined in § 1.27;
(2) Neither the applicant nor the inventor nor a joint inventor has
been named as the inventor or a joint inventor on more than four
previously filed patent applications, other than applications filed in
another country, provisional applications under 35 U.S.C. 111(b), or
international applications for which the basic national fee under 35 U.S.C.
41(a) was not paid;
(3) Neither the applicant nor the inventor nor a joint inventor, in
the calendar year preceding the calendar year in which the applicable
fee is being paid, had a gross income, as defined in section 61(a) of
the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding three
times the median household income for that preceding calendar year, as
most recently reported by the Bureau of the Census; and
(4) Neither the applicant nor the inventor nor a joint inventor has
assigned, granted, or conveyed, nor is under an obligation by contract
or law to assign, grant, or convey, a license or other ownership
interest in the application concerned to an entity that, in the
calendar year preceding the calendar year in which the applicable fee
is being paid, had a gross income, as defined in section 61(a) of the
Internal Revenue Code of 1986, exceeding three times the median
household income for that preceding calendar year, as most recently
reported by the Bureau of the Census.
(b) An applicant, inventor, or joint inventor is not considered to
be named on a previously filed application for purposes of paragraph
(a)(2) of this section if the applicant, inventor, or joint inventor
has assigned, or is under an obligation by contract or law to assign,
all ownership rights in the application as the result of the
applicant's, inventor's, or joint inventor's previous employment.
(c) If an applicant's, inventor's, joint inventor's, or entity's
gross income in the preceding calendar year is not in United States
dollars, the average currency exchange rate, as reported by the
Internal Revenue Service, during that calendar year shall be used to
determine whether the applicant's, inventor's, joint inventor's, or
entity's gross income exceeds the threshold specified in paragraph
(a)(3) or (4) of this section.
(d) To establish micro entity status under this paragraph, the
applicant must certify that:
(1) The applicant qualifies as a small entity as defined in § 1.27; and
(2)(i) The applicant's employer, from which the applicant obtains
the majority of the applicant's income, is an institution of higher
education as defined in section 101(a) of the Higher Education Act of
1965 (20 U.S.C. 1001(a)); or
(ii) The applicant has assigned, granted, conveyed, or is under an
obligation by contract or law, to assign, grant, or convey, a license
or other ownership interest in the particular application to such an
institution of higher education.
(e) Micro entity status is established in an application by filing
a micro entity certification in writing complying with the requirements
of either paragraph (a) or paragraph (d) of this section and signed in
compliance with § 1.33(b). Status as a micro entity must be
specifically established in each related, continuing and reissue
application in which status is appropriate and desired. Status as a
micro entity in one application or patent does not affect the status of
any other application or patent, regardless of the relationship of the
applications or patents. The refiling of an application under § 1.53
as a continuation, divisional, or continuation-in-part application
(including a continued prosecution application under § 1.53(d)), or
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the filing of a reissue application, requires a new certification of
entitlement to micro entity status for the continuing or reissue
application.
(f) A fee may be paid in the micro entity amount only if it is
submitted with, or subsequent to, the submission of a certification of
entitlement to micro entity status.
(g) A certification of entitlement to micro entity status need only
be filed once in an application or patent. Micro entity status, once
established, remains in effect until changed pursuant to paragraph (i)
of this section. However, a fee may be paid in the micro entity amount
only if status as a micro entity as defined in paragraph (a) or (d) of
this section is appropriate on the date the fee is being paid. Where an
assignment of rights or an obligation to assign rights to other parties
who are micro entities occurs subsequent to the filing of a
certification of entitlement to micro entity status, a second
certification of entitlement to micro entity status is not required.
(h) Prior to submitting a certification of entitlement to micro
entity status in an application, including a related, continuing, or
reissue application, a determination of such entitlement should be made
pursuant to the requirements of this section. It should be determined
that each applicant qualifies for micro entity status under paragraph
(a) or (d) of this section, and that any other party holding rights in
the invention qualifies for small entity status under § 1.27. The
Office will generally not question certification of entitlement to
micro entity status that is made in accordance with the requirements of
this section.
(i) Notification of a loss of entitlement to micro entity status
must be filed in the application or patent prior to paying, or at the
time of paying, any fee after the date on which status as a micro
entity as defined in paragraph (a) or (d) of this section is no longer
appropriate. The notification that micro entity status is no longer
appropriate must be signed by a party identified in § 1.33(b).
Payment of a fee in other than the micro entity amount is not
sufficient notification that micro entity status is no longer
appropriate. A notification that micro entity status is no longer
appropriate will not be treated as a notification that small entity
status is also no longer appropriate unless it also contains a
notification of loss of entitlement to small entity status under
§ 1.27(f)(2). Once a notification of a loss of entitlement to micro
entity status is filed in the application or patent, a new
certification of entitlement to micro entity status is required to
again obtain micro entity status.
(j) Any attempt to fraudulently establish status as a micro entity,
or pay fees as a micro entity, shall be considered as a fraud practiced
or attempted on the Office. Improperly, and with intent to deceive,
establishing status as a micro entity, or paying fees as a micro
entity, shall be considered as a fraud practiced or attempted on the
Office.
(k) If status as a micro entity is established in good faith in an
application or patent, and fees as a micro entity are paid in good
faith in the application or patent, and it is later discovered that
such micro entity status either was established in error, or that the
Office was not notified of a loss of entitlement to micro entity status
as required by paragraph (i) of this section through error, the error
will be excused upon compliance with the separate submission and
itemization requirements of paragraph (k)(1) of this section and the
deficiency payment requirement of paragraph (k)(2) of this section.
(l) Any paper submitted under this paragraph must be limited to the
deficiency payment (all fees paid in error) required for a single
application or patent. Where more than one application or patent is
involved, separate submissions of deficiency payments are required for
each application or patent (see § 1.4(b)). The paper must contain
an itemization of the total deficiency payment for the single
application or patent and include the following information:
(i) Each particular type of fee that was erroneously paid as a
micro entity, (e.g., basic statutory filing fee, two-month extension of
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time fee) along with the current fee amount for a small or non-small
entity, as applicable;
(ii) The micro entity fee actually paid, and the date on which it
was paid;
(iii) The deficiency owed amount (for each fee erroneously paid);
and
(iv) The total deficiency payment owed, which is the sum or total
of the individual deficiency owed amounts as set forth in paragraph
(k)(2) of this section.
(2) The deficiency owed, resulting from the previous erroneous
payment of micro entity fees, must be paid. The deficiency owed for
each previous fee erroneously paid as a micro entity is the difference
between the current fee amount for a small entity or non-small entity,
as applicable, on the date the deficiency is paid in full and the
amount of the previous erroneous micro entity fee payment. The total
deficiency payment owed is the sum of the individual deficiency owed
amounts for each fee amount previously and erroneously paid as a micro
entity.
(3) If the requirements of paragraphs (k)(1) and (2) of this
section are not complied with, such failure will either be treated at
the option of the Office as an authorization for the Office to process
the deficiency payment and charge the processing fee set forth in
§ 1.17(i), or result in a requirement for compliance within a one-month
time period that is not extendable under § 1.136(a) to avoid the
return of the fee deficiency payment.
(4) Any deficiency payment (based on a previous erroneous payment
of a micro entity fee) submitted under this paragraph will be treated
as a notification of a loss of entitlement to micro entity status under
paragraph (i) of this section, but payment of a deficiency based upon
the difference between the current fee amount for a small entity and
the amount of the previous erroneous micro entity fee payment will not
be treated as an assertion of small entity status under § 1.27(c).
Once a deficiency payment is submitted under this paragraph, a written
assertion of small entity status under § 1.27(c)(1) is required to
obtain small entity status.
December 14, 2012 DAVID J. KAPPOS
Under Secretary of Commerce for Intellectual Property and
Director of the United States Patent and Trademark Office
[1386 OG 203]