Small and Micro Entity Status: Who Qualifies for USPTO Fee Discounts

How USPTO small entity and micro entity fee discounts work, who qualifies, and what to check before claiming status, including licensing and assignment obligations.

By , registered patent attorney. Published . 4 min read.

General information about patent law and practice, not legal advice about your situation. How these rules apply depends on the facts.

The USPTO offers reduced fees to applicants who qualify as small entities or micro entities. Since late 2022, small entities receive a 60 percent reduction on many patent fees and micro entities receive an 80 percent reduction. For a startup or individual inventor, the savings across filing, examination, issue, and maintenance fees can be significant. Status is not automatic, though. It depends on facts about the applicant and anyone with rights in the invention, and claiming it incorrectly can have serious consequences.

Small entity status

Under 35 U.S.C. 41(h) and the USPTO’s rules at 37 CFR 1.27, small entity status is generally available to:

  • individual inventors;
  • businesses that, together with their affiliates, have no more than 500 employees; and
  • nonprofit organizations, including universities.

There is an important condition. The applicant cannot have assigned, granted, or conveyed, and cannot be under an obligation to assign, grant, or convey, rights in the invention to an entity that would not itself qualify. A license to a large company, or an agreement obligating you to assign to one, can remove small entity status even if your own company is small.

Micro entity status

Micro entity status under 35 U.S.C. 123 offers the larger discount and has stricter requirements. There are two main routes.

Gross income basis. The applicant, and each inventor and joint inventor, generally need to:

  • qualify as a small entity;
  • not have been named as an inventor on more than four previously filed patent applications. Provisional applications, foreign applications, international applications for which the basic national fee was not paid, and applications assigned or subject to an obligation to assign because of the inventor’s previous employment do not count toward the four;
  • not have had gross income in the preceding calendar year above three times the U.S. median household income. The USPTO publishes the limit and updates it each year; for fees paid on or after September 15, 2026, it is $262,380 (USPTO micro entity page); and
  • not have assigned, granted, or conveyed, and not be obligated to assign, grant, or convey, a license or other ownership interest in the application to an entity whose gross income in the preceding year exceeded that limit.

Institution of higher education basis. An applicant may qualify if its employer is a U.S. institution of higher education that is the applicant’s main source of income, or if the applicant has assigned, or is obligated to assign, ownership of the application to such an institution.

Micro entity status is claimed by filing a written certification, on the USPTO’s forms or an equivalent, and it is not available for every fee. The certification is a factual statement made to the USPTO, which is one reason the inquiry behind it matters.

Status can change

Status is evaluated at the time each fee is paid. If a small company grows past 500 employees, licenses the patent to a larger company, or is acquired, it may lose small entity status for future fees. The USPTO requires applicants to notify it of a loss of entitlement before or when paying the next fee at the new rate. A change does not generally affect fees already paid correctly.

The cost of getting it wrong

The USPTO has made clear that it treats entity status seriously. By statute, an entity found to have falsely certified or paid fees as a small or micro entity is subject to a fine of at least three times the amount underpaid, in addition to other penalties (35 U.S.C. 41(j) and 123(f)), and an improper claim made with an intent to deceive can also put a patent’s enforceability at risk. Errors made in good faith can generally be corrected by notifying the USPTO and paying the deficiency.

Anyone who signs a paper asserting entity status, including a practitioner, certifies that the statement is supported after an inquiry reasonable under the circumstances. In practice, that means asking the right questions, getting answers from the people who know, and keeping a record of what was relied on. A few questions to ask:

  • How many employees do we have, counting affiliates?
  • Have we licensed, or agreed to license or assign, rights in this invention to anyone? To whom?
  • Does any investor, customer, or development partner have rights in the invention under an agreement?
  • For micro entity status, what was each inventor’s and the applicant’s gross income last year, and how many prior applications names each inventor?

Other ways fees come down

Entity status is one lever. Others include keeping claim counts within the base limits, planning the size of the application, and timing filings so that work done for a provisional carries forward into the non-provisional.

A practical takeaway

Before your first filing, confirm entity status with your patent attorney or agent and keep a dated record of the facts relied on, such as headcount, income, prior applications, and any licenses or assignment obligations. Revisit it before paying each later fee, including issue and maintenance fees, and especially after financing rounds, licensing deals, or an acquisition.