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Universities Beware: Perils of Government Patent O


By
Smith & Hopen PA

Institutions of higher education pay a fraction of government patent fees under their “micro-entity” status.  These fee savings can be substantial when compared with “large entity” fees paid by 3M, Google, and DuPont.  For example, simply to keep a patent application alive for its (typically) 20-year life the following “maintenance fees” must be paid:

  Large Entity Small Entity Micro-Entity
Fee at 3.5 Years $,1600 $800 $400
Fee at 7.5 Years $3,600 $1,800 $900
Fee at 11.5 Years $7,400 $3,700 $1,850
TOTAL $12,600 $6,300 $3,150

Much of the research that results in this patent is federally funded and in there lies the great irony….if the federal government is a full or joint assignee (owner) of a patent then the institution may be forced to pay large entity fees.  That results in a minimum $9,450 additional fees per patent just to maintain it.

License to Federal Government May Preserve Micro-Entity Status

Although the Federal government agencies do not qualify as nonprofit organizations for paying reduced fees under the rules, a license to a Federal agency resulting from a funding agreement with the agency pursuant to 35 U.S.C. 202(c)(4) will not preclude the proper claiming of small entity status.   Therefore, if a Federal agency licensee (e.g., US Army) is treated as a small entity for fee payment purposes, then the institution of higher education, as a micro-entity, should not lose its status by its compulsory license to the funding agency.   A micro entity may maintain its fee status provided it only licenses to another micro entity or small entity.  By the logic of MPEP 509.02 (VI), universities should be able to preserve their micro entity status.

Conclusion

Where at all possible, universities collaborating with federal agencies should be aware that a license will at least preserve small entity status if not micro-entity status.  However, joint or sole patent ownership by a federal agency will incur substantial large entity fees.  Factor at least a $10,000 premium when losing micro-entity status in these circumstances. 






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