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Qualifying for micro-entity status: Implications for universities and TTOs

By Paul C. Onderick, OD
Patterson Thuente IP
Minneapolis, MN

This article appeared in the July 2013 issue of Technology Transfer Tactics. Click here for a free sample issue or click here to subscribe.

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If your TTO doesn’t yet have a full understanding of the micro-entity rules under the America Invents Act, the significant potential cost savings — at least $750 per application and at least $3,000 over the life of a patent — make undertaking a full review well worth the time and effort. This brief article provides a concise look at the rules as they apply to university-related patent applications.

The micro-entity rules set forth three independent bases for university-related patent applications to qualify:

  1. The source of income of each applicant;
  2. Each applicant’s employer being an “institution of higher education”;
  3. Each applicant having assigned or licensed the application to an “institution of higher education.”

To put these rules into a real-world perspective, we identified the following four main scenarios in which micro-entity status may be properly claimed for a university-related patent application based on the provisions of 35 U.S.C. §123.

Scenario #1: University-Employed Inventor Applicants. If an application names an inventor who is employed by a university, the application may qualify for micro-entity status if:

  • The university qualifies as an “institution of higher education” as defined by law;
  • The inventor obtains the majority of his or her income from the university;
  • The inventor is actually named as the “applicant”;
  • The application is not assigned or licensed to any entity that does not qualify for small entity status.

Under this section of the rules, it is important to note that the application does not have to be assigned or licensed to an “institution of higher education.” In other words, the application can be assigned to a technology transfer office (TTO) that qualifies as a small entity without sacrificing micro-entity status, as long as the inventor-applicants are employed by the university.

Scenario #2: University Inventor Applicants with Other Income. If an application names an inventor that is employed by a university, and if the inventor does not obtain the majority of his or her income from the university, the application may still qualify for micro-entity status if:

  • The inventor has assigned or is obligated to assign a license or ownership interest in
  • the application to the university;
  • The university qualifies as an “institution of higher education” as defined by law;
  • The inventor is actually named as the “applicant”;
  • The application is not assigned or licensed to any entity that does not qualify for small entity status.

Under this section of the rules (i.e., 35 U.S.C. §123(d)(2)), it is important to note that obtaining micro-entity status may depend on the sources of income of the inventor (or each of joint inventors) and whether the inventor has assigned or is obligated to assign rights to the invention to the university. Further, the assignee must be the university. Depending on the organization of the tech transfer office as related to the university, assignment to the TTO may in this instance negate qualification for micro-entity fees.

Scenario #3: Non-University Inventor Applicants. If an application names an inventor who is not employed by a university, the application may qualify for micro-entity status if:

  • The inventor who is not employed by the university has assigned or is obligated to
  • assign a license or ownership interest in the application to the university;
  • The university qualifies as an “institution of higher education” as defined by law;
  • The inventor is actually named as the “applicant”;
  • The application is not assigned or licensed to any entity that does not qualify for small entity status.

It is important to note that an inventor who is not employed by the university must assign or license an ownership interest in the invention to the university in order to obtain micro-entity status. The assignment or license should not be made to the TTO if it is a legally separate entity from the university, as this would likely preclude obtaining micro-entity status because the TTO is not an “institution of higher education.”

Although less clear, it does appear that the rules would allow the university to subsequently assign or license the rights to the invention to the TTO (that qualifies for small entity status) without sacrificing micro-entity status.

Scenario #4: University Technology Transfer Offices. If an application names a TTO as the applicant, the application may qualify for micro entity status if:

  • The TTO has assigned or is obligated to assign a license or ownership interest in the application to the university;
  • The university qualifies as an “institution of higher education”;
  • The application is not assigned or licensed to any entity that does not qualify for small entity status.

If an inventor(s) is obligated to assign the rights to the invention to a TTO, the application could still potentially qualify for micro-entity status if the TTO has assigned or is obligated to assign or license an ownership interest in the invention to the university.

Other Considerations: Under any scenario, the university cannot be named as the applicant and still qualify for micro-entity status. In addition, at the point of each fee payment micro-entity status must still be appropriate to retain the lower fee schedule.

Paul Onderick is an intellectual property attorney with Minneapolis, MN-based Patterson Thuente IP. He can be reached at 612-349-5740 or onderick@ptslaw.com.


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