37 CFR § 1.27 — Definition of small entities and (MPEP Coverage Index) – BlueIron IP
37 CFR § 1.27 Definition of small entities and
Source: Patent Rule (37 CFR)BlueIron Update:
This page consolidates MPEP guidance interpreting 37 CFR § 1.27, including 225 rules from the Manual of Patent Examining Procedure. It is provided as guidance, with links to the ground truth sources. This is information only, it is not legal advice.
Summary
37 CFR 1.27 defines small entity status as a regulatory framework that provides fee reduction for qualifying patent applicants based on specific organizational and economic criteria.
What this section covers
- Comprehensive criteria for defining small entities in patent applications
- Legal basis for small entity status and fee reduction eligibility
Key obligations
- Accurately self-certify small entity status at the time of filing
- Immediately correct small entity status if no longer valid
- Comply with regulatory definitions of small entity qualification
Conditions and exceptions
- Understand circumstances that may disqualify an entity from small entity status
Practice notes
- Carefully review entity status before and during patent prosecution
- Be aware of potential penalties for fraudulent small entity claims
Official MPEP § 1.27 — Definition of small entities and
Source: USPTOLast Modified: 10/30/2024 08:50:22
1.27 Definition of small entities and establishing status as a small entity to permit payment of small entity fees; when a determination of entitlement to small entity status and notification of loss of entitlement to small entity status are required; fraud on the Office.
[Editor Note: Para. (c)(2) below include(s) changes applicable only to patent applications filed under 35 U.S.C. 111(a) or 363 on or after September 16, 2012*]
- (a)
Definition of small entities. A small entity as
used in this chapter means any party (person, small business
concern, or nonprofit organization) under paragraphs (a)(1) through
(a)(3) of this section.
- (1) Person. A person, as used in paragraph (c) of this section, means any inventor or other individual ( e.g., an individual to whom an inventor has transferred some rights in the invention) who has not 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. An inventor or other individual who has transferred some rights in the invention to one or more parties, or is under an obligation to transfer some rights in the invention to one or more parties, can also qualify for small entity status if all the parties who have had rights in the invention transferred to them also qualify for small entity status either as a person, small business concern, or nonprofit organization under this section.
- (2)
Small business concern. A small business
concern, as used in paragraph (c) of this section, means any
business concern that:
- (i) Has not 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; and
- (ii) Meets the size standards set forth in 13 CFR 121.801 through 121.805 to be eligible for reduced patent fees. Questions related to standards for a small business concern may be directed to: Small Business Administration, Size Standards Staff, 409 Third Street, SW., Washington, DC 20416.
- (3)
Nonprofit Organization. A nonprofit
organization, as used in paragraph (c) of this section, means
any nonprofit organization that:
- (i) Has not 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 as a person, small business concern, or a nonprofit organization; and
- (ii) Is either:
- (A) A university or other institution of higher education located in any country;
- (B) An organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C. 501(c)(3)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a));
- (C) Any nonprofit scientific or educational organization qualified under a nonprofit organization statute of a state of this country ( 35 U.S.C. 201(i) ); or
- (D) Any nonprofit organization located in a foreign country which would qualify as a nonprofit organization under paragraphs (a)(3)(ii)(B) of this section or (a)(3)(ii)(C) of this section if it were located in this country.
- (4)
Federal Government Use License Exceptions.
In a patent application filed, prosecuted, and if patented,
maintained at no expense to the Government, with the
exception of any expense taken to deliver the application and
fees to the Office on behalf of the applicant:
- (i) For persons under paragraph
(a)(1) of this section, claiming small entity status is
not prohibited by:
- (A) A use license to the Government resulting from a rights determination under Executive Order 10096 made in accordance with § 501.6 of this title;
- (B) A use license to the Government resulting from Federal agency action pursuant to 15 U.S.C. 3710d(a) allowing the Federal employee-inventor to obtain or retain title to the invention; or
- (C) A use license to a Federal agency resulting from retention of rights under 35 U.S.C. 202(d) by an inventor employed by a small business concern or nonprofit organization contractor, provided the license is equivalent to the license under 35 U.S.C. 202(c)(4) the Federal agency would have received had the contractor elected to retain title, and all the conditions applicable under § 401.9 of this title to an employee/inventor are met.
- (ii) For small business concerns
and nonprofit organizations under paragraphs (a)(2) and
(3) of this section, a use license to a Federal agency
resulting from a funding agreement with that agency
pursuant to
35 U.S.C.
202(c)(4)
does not preclude
claiming small entity status, provided that:
- (A) The subject invention was made solely by employees of the small business concern or nonprofit organization; or
- (B) In the case of a Federal employee co-inventor, the Federal agency employing such co-inventor took action pursuant to 35 U.S.C. 202(e)(1) to exclusively license or assign whatever rights currently held or that it may acquire in the subject invention to the small business concern or nonprofit organization, subject to the license under 35 U.S.C. 202(c)(4) .
- (iii) For small business concerns and
nonprofit organizations under paragraphs (a)(2) and (3)
of this section that have collaborated with a Federal
agency laboratory pursuant to a cooperative research
and development agreement (CRADA) under 15 U.S.C.
3710a(a)(1), claiming small entity status is not
prohibited by a use license to the Government pursuant
to:
- (A) 15 U.S.C. 3710a(b)(2) that results from retaining title to an invention made solely by the employee of the small business concern or nonprofit organization; or
- (B) 15 U.S.C. 3710a(b)(3)(D), provided the laboratory has waived in whole any right of ownership the Government may have to the subject invention made by the small business concern or nonprofit organization, or has exclusively licensed whatever ownership rights the Government may acquire in the subject invention to the small business concern or nonprofit organization.
- (iv) Regardless of whether an exception under this paragraph (a)(4) applies, no refund under § 1.28(a) is available for any patent fee paid by the Government.
- (i) For persons under paragraph
(a)(1) of this section, claiming small entity status is
not prohibited by:
- (5) Security Interest. A security interest does not involve an obligation to transfer rights in the invention for the purposes of paragraphs (a)(1) through (a)(3) of this section unless the security interest is defaulted upon.
- (b)
Establishment of small entity status permits payment of
reduced fees.
- (1) A small entity, as defined in paragraph (a) of this section, who has properly asserted entitlement to small entity status pursuant to paragraph (c) of this section will be accorded small entity status by the Office in the particular application or patent in which entitlement to small entity status was asserted. Establishment of small entity status allows the payment of certain reduced patent fees pursuant to 35 U.S.C. 41(h)(1) .
- (2) Submission of an original utility application in compliance with the USPTO patent electronic filing system by an applicant who has properly asserted entitlement to small entity status pursuant to paragraph (c) of this section in that application allows the payment of a reduced filing fee pursuant to 35 U.S.C. 41(h)(3) .
- (c)
Assertion of small entity status. Any party
(person, small business concern or nonprofit organization) should
make a determination, pursuant to paragraph (f) of this section, of
entitlement to be accorded small entity status based on the
definitions set forth in paragraph (a) of this section, and must,
in order to establish small entity status for the purpose of paying
small entity fees, actually make an assertion of entitlement to
small entity status, in the manner set forth in paragraphs (c)(1)
or (c)(3) of this section, in the application or patent in which
such small entity fees are to be paid.
- (1)
Assertion by writing. Small entity status
may be established by a written assertion of entitlement to
small entity status. A written assertion must:
- (i) Be clearly identifiable;
- (ii) Be signed (see paragraph (c)(2) of this section); and
- (iii) Convey the concept of entitlement to small entity status, such as by stating that applicant is a small entity, or that small entity status is entitled to be asserted for the application or patent. While no specific words or wording are required to assert small entity status, the intent to assert small entity status must be clearly indicated in order to comply with the assertion requirement.
- (2) Parties who can sign the written assertion. The written assertion can be signed by:
- (3)
Assertion by payment of the small entity basic
filing, basic transmittal, basic national fee,
international search fee, or individual designation fee in
an international design application.
The
payment, by any party, of the exact amount of one of the
small entity basic filing fees set forth in §
1.16(a)
,
(b)
,
(c)
,
(d)
, or
(e)
, the
small entity transmittal fee set forth in §
1.445(a)(1)
or §
1.1031(a)
, the small entity
international search fee set forth in §
1.445(a)(2)
to a Receiving Office
other than the United States Receiving Office in the exact
amount established for that Receiving Office pursuant to
PCT Rule
16
, or the small entity basic national
fee set forth in §
1.492(a)
,
will be treated as a written assertion of entitlement to
small entity status even if the type of basic filing, basic
transmittal, or basic national fee is inadvertently selected
in error. The payment, by any party, of the small entity
first part of the individual designation fee for the United
States to the International Bureau (§
1.1031
) will be treated as a written
assertion of entitlement to small entity status.
- (i) If the Office accords small entity status based on payment of a small entity basic filing or basic national fee under paragraph (c)(3) of this section that is not applicable to that application, any balance of the small entity fee that is applicable to that application will be due along with the appropriate surcharge set forth in § 1.16(f) , or § 1.16(g).
- (ii) The payment of any small entity fee other than those set forth in paragraph (c)(3) of this section (whether in the exact fee amount or not) will not be treated as a written assertion of entitlement to small entity status and will not be sufficient to establish small entity status in an application or a patent.
- (4) Assertion required in related, continuing, and reissue applications. Status as a small entity must be specifically established by an assertion in each related, continuing and reissue application in which status is appropriate and desired. Status as a small 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 the filing of a reissue application, requires a new assertion as to continued entitlement to small entity status for the continuing or reissue application.
- (1)
Assertion by writing. Small entity status
may be established by a written assertion of entitlement to
small entity status. A written assertion must:
- (d) When small entity fees can be paid. Any fee, other than the small entity basic filing fees and the small entity national fees of paragraph (c)(3) of this section, can be paid in the small entity amount only if it is submitted with, or subsequent to, the submission of a written assertion of entitlement to small entity status, except when refunds are permitted by § 1.28(a).
- (e)
Only one assertion required.
- (1) An assertion of small entity status need only be filed once in an application or patent. Small entity status, once established, remains in effect until changed pursuant to paragraph (g)(1) of this section. Where an assignment of rights or an obligation to assign rights to other parties who are small entities occurs subsequent to an assertion of small entity status, a second assertion is not required.
- (2) Once small entity status is withdrawn pursuant to paragraph (g)(2) of this section, a new written assertion is required to again obtain small entity status.
- (f) Assertion requires a determination of entitlement to pay small entity fees. Prior to submitting an assertion of entitlement to small 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 paragraph (a) of this section. It should be determined that all parties holding rights in the invention qualify for small entity status. The Office will generally not question any assertion of small entity status that is made in accordance with the requirements of this section, but note paragraph (h) of this section.
- (g)
- (1) New determination of entitlement to small entity status is needed when issue and maintenance fees are due. Once status as a small entity has been established in an application or patent, fees as a small entity may thereafter be paid in that application or patent without regard to a change in status until the issue fee is due or any maintenance fee is due.
- (2) Notification of loss of entitlement to small entity status is required when issue and maintenance fees are due. Notification of a loss of entitlement to small entity status must be filed in the application or patent prior to paying, or at the time of paying, the earliest of the issue fee or any maintenance fee due after the date on which status as a small entity as defined in paragraph (a) of this section is no longer appropriate. The notification that small 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 small entity amount is not sufficient notification that small entity status is no longer appropriate.
- (h)
Fraud attempted or practiced on the Office.
- (1) Any attempt to fraudulently establish status as a small entity, or pay fees as a small entity, shall be considered as a fraud practiced or attempted on the Office.
- (2) Improperly, and with intent to deceive, establishing status as a small entity, or paying fees as a small entity, shall be considered as a fraud practiced or attempted on the Office.
[47 FR 40139, Sept. 10, 1982, added effective Oct. 1, 1982; para. (c) added, 47 FR 43276, Sept. 30, 1982; paras. (b), (c), and (d), 49 FR 553, Jan. 4, 1984, effective Apr. 1, 1984; revised, 62 FR 53132, Oct. 10, 1997, effective Dec.1, 1997; revised, 65 FR 54604, Sept. 8, 2000, effective Sept. 8, 2000; para. (a) revised, 69 FR 56481, Sept. 21, 2004, effective Sept. 21, 2004; paras. (b) and (c)(3) revised, 70 FR 3880, Jan. 27, 2005, effective Dec. 8, 2004; para. (c)(2) revised, 77 FR 48776, Aug. 14, 2012, effective Sept. 16, 2012; para. (c)(3) introductory text revised, 78 FR 4212, Jan. 18, 2013, effective Mar. 19, 2013; para. (c)(3) revised, 80 FR 17918, Apr. 2, 2015, effective May 13, 2015; para. (c)(3) introductory text revised, 85 FR 46932, Aug. 3, 2020, effective Oct. 2, 2020; para. (a)(4) revised, 85 FR 82917, Dec. 21, 2020, effective Jan. 20, 2021, corrected to effective Jan. 21, 2021, 86 FR 2542, Jan. 13, 2021, correction withdrawn 86 FR 3815, Jan. 15, 2021; para. (b)(2) revised, 87 FR 68900, Nov. 17, 2022, effective Dec. 19, 2022]
[*The changes to para. (c)(2) effective Sept. 16, 2012 are applicable only to patent applications filed under 35 U.S.C. 111(a) or 363 on or after Sept. 16, 2012. See § 1.27 (pre‑AIA) for para. (c)(2) otherwise in effect.]
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