Multi-billion-dollar companies with huge research and development and legal budgets certainly have an advantage over smaller entities when it comes to patents.
According to Statista, the top-10 companies with the most US patents granted to them in 2020 were (from most to least):
- IBM (with a whopping 9,130 patents)
- Qualcomm (2,276 patents)
To start with, there’s the cost of R&D. According to a senior Apple executive, as the New York Times reported, Apple spent over $150 million to create the original iPhone.
In 2020, Moderna received $483 million from the US government to develop a COVID-19 vaccine, as the Times also reported.
With major investments like that, the cost of filing a patent application to protect an invention is a relatively tiny part of the budget.
The costs of filing a patent generally include filing fees, legal fees, and fees paid for the patent drawings.
Filing a US patent application can cost less than $1000 for a do-it-yourself version, or more than $16,000 for a complex application (such as for software or a complex machine) drafted by a patent lawyer.
The US Patent and Trademark Office (USPTO) makes things a little easier for small businesses by providing discounts to those who qualify for small or micro entity status.
For example, the basic filing fee for a utility patent application is $320. It’s $160 for a small entity and $80 for a micro entity.
Under 37 CFR § 1.27, a small entity can be an individual, a small business, or a nonprofit organization such as a university.
A “small business” isn’t defined in the patent statute, but the Small Business Administration (SBA) defines a “small business concern” as one that:
- is independently owned and operated
- is not dominant in its field, and
- meets any applicable criteria for a particular industry concerning a number of employees (usually less than 500) or annual receipts (usually less than $7 million) or annual profits (usually less than $2 million).
All workers employed on a full-time, part-time, or other basis are counted in determining the number of employees under 13 C.F.R. § 121.106(a). This includes temporary employees obtained from an agency or employee leasing company. When the number of employees fluctuates over the course of a year, the average over the previous 12 months is used.
A more detailed explanation of the eligibility requirements is here.
The “micro-entity” status category was introduced in 2011 as part of the America Invents Act. For a business to qualify for micro entity status, the following criteria must be met:
- The applicant qualifies as a USPTO-defined small entity;
- Neither the applicant nor the inventor nor a joint inventor has been named as an inventor on more than four previously filed applications;
- Neither applicant nor the inventor nor a joint inventor had a gross income in the previous year from when the fee(s) is paid off more than the “Maximum Qualifying Gross Income,” which is three times the median household income; and
- Neither the applicant nor the inventor nor a joint inventor has assigned, granted, or conveyed, nor is under an obligation to assign, grant, or convey, a license or other ownership interest to another entity that does not meet the same “Maximum Qualifying Gross Income” limit.
The “Maximum Qualifying Gross Income” is currently $202,563.
Falsely claiming to be a small or micro entity in order to save a few dollars on patent applications can have serious repercussions, including civil and criminal penalties and making the patent unenforceable due to inequitable conduct before the Patent Office.
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