Changes To Implement Micro Entity Status for Paying Patent Fees, 75019-75035 [2012-30674]

Agencies

• DEPARTMENT OF COMMERCE
• Patent and Trademark Office

[Federal Register Volume 77, Number 244 (Wednesday, December 19, 2012)]
[Rules and Regulations]
[Pages 75019-75035]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-30674]


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DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Part 1

[Docket No.: PTO-P-2011-0016]
RIN 0651-AC78


Changes To Implement Micro Entity Status for Paying Patent Fees

AGENCY: United States Patent and Trademark Office, Commerce.

ACTION: Final rule.

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SUMMARY: The United States Patent and Trademark Office (Office) is 
revising the rules of practice in patent cases to implement the micro 
entity provision of the Leahy-Smith America Invents Act (AIA). Certain 
patent fees set or adjusted under the fee setting authority in the AIA 
will be reduced by seventy-five percent for micro entities. The Office 
is

[[Page 75020]]

revising the rules of practice to set out the procedures pertaining to 
claiming micro entity status, paying patent fees as a micro entity, 
notification of loss of micro entity status, and correction of payments 
of patent fees paid erroneously in the micro entity amount. In a 
separate rulemaking, the Office is in the process of proposing to set 
or adjust patent fees under the Leahy-Smith America Invents Act, 
including setting fees for micro entities with a seventy-five percent 
reduction. The Office has sought to address the concerns of its 
stakeholders as expressed in the public comment, and plans to seek 
additional public comment on the micro entity provisions after the 
Office and the public have gained experience with the micro entity 
procedures in operation. The Office will pursue further improvements to 
the micro entity procedures in light of the public comment and its 
experience with the micro entity procedures.

DATES: Effective March 19, 2013.

FOR FURTHER INFORMATION CONTACT: James Engel, Senior Legal Advisor 
((571) 272-7725), Office of Patent Legal Administration, Office of the 
Deputy Commissioner for Patent Examination Policy.

SUPPLEMENTARY INFORMATION:
    Executive Summary: Purpose: The AIA provides that: (1) The Office 
may set or adjust any patent fee, provided that the aggregate revenue 
generated by patent fees recovers only the aggregate estimated costs to 
the Office for processing, activities, services, and materials relating 
to patents (including administrative costs); and (2) most fees set or 
adjusted under this authority are reduced by fifty percent for small 
entities and by seventy-five percent for micro entities. The AIA also 
adds a new section to Title 35 of the United States Code that defines a 
``micro entity.'' The rules of practice currently have provisions 
pertaining to small entity status, as the patent laws provided a small 
entity discount prior to the Leahy-Smith America Invents Act. This 
final rule revises the rules of practice to implement the ``micro 
entity'' provisions added by the Leahy-Smith America Invents Act.
    Summary of Major Provisions: The Office is adding a provision to 
the rules of practice pertaining to micro entity status. The provision 
sets out the requirements to qualify as a micro entity tracking the 
statutory requirements for a micro entity set forth in section 10 of 
the Leahy-Smith America Invents Act. The provision also sets out 
procedures relating to micro entity status that largely track the 
regulatory requirements and procedures in 37 CFR 1.27 for small entity 
status. These new procedures pertain to claiming micro entity status, 
paying patent fees as a micro entity, notifying the Office of loss of 
micro entity status, and correcting payments of patent fees paid 
erroneously in the micro entity amount. The procedures for claiming 
micro entity status require the filing of a certification of 
entitlement to micro entity status. The Office is developing forms 
(paper and electronic) for use by members of the public to provide a 
certification of micro entity status. The procedures for paying fees as 
a micro entity provide that a micro entity certification need only be 
filed once in an application or patent, but that a fee may be paid in 
the micro entity amount only if the applicant or patentee is still 
entitled to micro entity status on the date the fee is paid. The 
procedures pertaining to notifying the Office of loss of micro entity 
status and correcting payments of patent fees paid erroneously in the 
micro entity amount track the corresponding small entity provisions for 
notifying the Office of loss of small entity status and correcting 
payments of patent fees paid erroneously in the small entity amount.
    Costs and Benefits: This rulemaking is not economically significant 
as that term is defined in Executive Order 12866 (Sept. 30, 1993).
    Background: The AIA was enacted into law on September 16, 2011. See 
Public Law 112-29, 125 Stat. 283 (2011). Section 10(a) of the AIA 
provides that the Office may set or adjust by rule any patent fee 
established, authorized, or charged under title 35, United States Code, 
provided that aggregate patent fees recover only the aggregate 
estimated costs to the Office for processing, activities, services, and 
materials relating to patents (including administrative costs). See 125 
Stat. at 316. Section 10(b) of the AIA provides that ``the fees set or 
adjusted under [section 10(a)] for filing, searching, examining, 
issuing, appealing, and maintaining patent applications and patents 
shall be reduced by 50 percent with respect to the application of such 
fees to any small entity that qualifies for reduced fees under [35 
U.S.C.] 41(h)(1) * * *, and shall be reduced by 75 percent with respect 
to the application of such fees to any micro entity as defined in [35 
U.S.C.] 123.'' See 125 Stat. at 316-17. The patent laws provided in 35 
U.S.C. 41(h) for small entities prior to the Leahy-Smith America 
Invents Act. Section 10(g) of the AIA adds a new 35 U.S.C. 123 to 
define a ``micro entity.'' See 125 Stat. at 318-19.
    35 U.S.C. 123(a) provides one basis under which an applicant may 
establish micro entity status. 35 U.S.C. 123(d) provides another basis 
under which an applicant may establish micro entity status. Each will 
be discussed in turn.
    35 U.S.C. 123(a) provides that the term ``micro entity'' means an 
applicant who makes a certification that the applicant: (1) Qualifies 
as a small entity as defined in 37 CFR 1.27; (2) has not been named as 
an inventor on more than four previously filed patent applications, 
other than applications filed in another country, provisional 
applications under 35 U.S.C. 111(b), or international applications for 
which the basic national fee under 35 U.S.C. 41(a) was not paid; (3) 
did not, in the calendar year preceding the calendar year in which the 
applicable fee is being paid, have a gross income, as defined in 
section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), 
exceeding three times the median household income for that preceding 
calendar year, as most recently reported by the Bureau of the Census; 
and (4) has not assigned, granted, or conveyed, and is not under an 
obligation by contract or law to assign, grant, or convey, a license or 
other ownership interest in the application concerned to an entity 
that, in the calendar year preceding the calendar year in which the 
applicable fee is being paid, had a gross income, as defined in section 
61(a) of the Internal Revenue Code of 1986, exceeding three times the 
median household income for that preceding calendar year, as most 
recently reported by the Bureau of the Census. See 125 Stat. at 318. 35 
U.S.C. 123(a) provides one basis under which an applicant may establish 
micro entity status.
    The Office will indicate the income level that is three times the 
median household income for the calendar year most recently reported by 
the Bureau of the Census (the income threshold set forth in 35 U.S.C. 
123(a)(3) and (a)(4)) on its Internet Web site, with its Independent 
Inventor resource information, and on the Office's certification of 
micro entity status (gross income basis) form (Form PTO/SB/15A). The 
Office will also make available resources to micro entities to help 
navigate the new micro entity procedures.
    35 U.S.C. 123(b) provides that an applicant is not considered to be 
named on a previously filed application for purposes of 35 U.S.C. 
123(a)(2) if the applicant has assigned, or is under an obligation by 
contract or law to assign, all ownership rights in the application as 
the result of the applicant's previous employment. See id.

[[Page 75021]]

    35 U.S.C. 123(c) provides that if an applicant's or entity's gross 
income in the preceding calendar year is not in United States dollars, 
the average currency exchange rate, as reported by the Internal Revenue 
Service, during that calendar year shall be used to determine whether 
the applicant's or entity's gross income exceeds the threshold 
specified in 35 U.S.C. 123(a)(3) or (4). See 125 Stat. at 319.
    35 U.S.C. 123(d) provides that a micro entity shall also include an 
applicant who certifies that: (1) The applicant's employer, from which 
the applicant obtains the majority of the applicant's income, is an 
institution of higher education as defined in section 101(a) of the 
Higher Education Act of 1965 (20 U.S.C. 1001(a)); or (2) the applicant 
has assigned, granted, conveyed, or is under an obligation by contract 
or law, to assign, grant, or convey, a license or other ownership 
interest in the particular application to such an institution of higher 
education. See id. As explained earlier, 35 U.S.C. 123(a) provides one 
basis under which an applicant may establish micro entity status, and 
35 U.S.C. 123(d) provides another basis under which an applicant may 
establish micro entity status.
    35 U.S.C. 123(e) provides that in addition to the limits imposed by 
this section, the Director has the discretion to impose income limits, 
annual filing limits, or other limits on who may qualify as a micro 
entity pursuant to this section if the Director determines that such 
additional limits are reasonably necessary to avoid an undue impact on 
other patent applicants or owners or are otherwise reasonably necessary 
and appropriate. 35 U.S.C. 123(e) also provides that at least three 
months before any limits proposed to be implemented pursuant to 35 
U.S.C. 123(e) take effect, the Director shall inform the Committee on 
the Judiciary of the House of Representatives and the Committee on the 
Judiciary of the Senate of any such proposed limits. See id.
    The micro entity provisions of 35 U.S.C. 123 are currently in 
effect. However, no patent fee is currently eligible for the seventy-
five percent micro entity reduction as no patent fee has yet been set 
or adjusted under section 10 of the Leahy-Smith America Invents Act. 
The Office is in the process of proposing to set or adjust patent fees 
under section 10 of the AIA in a separate rulemaking. See Setting and 
Adjusting Patent Fees, 77 FR 55028 (Sept. 6, 2012). The fees set or 
adjusted by the Office under section 10 of the AIA for filing, 
searching, examining, issuing, appealing, and maintaining a patent 
application and patent will be reduced by: (1) Fifty percent for an 
applicant or patentee who establishes small (but not micro) entity 
status in the patent application or patent; and (2) seventy-five 
percent for an applicant or patentee who establishes micro entity 
status in the patent application or patent.
    The Office plans to rely upon the applicant's certification of 
micro entity status (except where it conflicts with the information 
contained in the Office's records, such as where Office records 
indicate that the applicant is named as an inventor on more than four 
previously filed and unassigned nonprovisional patent applications) and 
will not require any additional documents from the applicant concerning 
the applicant's entitlement to claim micro entity status. This practice 
is similar to small entity practice where the Office generally does not 
question a claim of entitlement to small entity status. See 37 CFR 
1.27(f); see also Manual of Patent Examining Procedure Sec.  509.03 
(8th ed. 2001) (Rev. 9, Aug. 2012) (MPEP).
    The Office does not plan to provide advisory opinions on whether a 
particular entity is entitled to claim micro entity status. See MPEP 
Sec.  509.03. The Office, however, is providing the following 
information concerning procedures for micro entity status under 35 
U.S.C. 123:
    35 U.S.C. 123 uses the term ``applicant'' throughout, which was 
virtually synonymous with ``inventor'' on September 16, 2011 (the date 
of enactment of the AIA as well as the effective date of 35 U.S.C. 
123). 35 U.S.C. 118, however, as amended effective on September 16, 
2012, by Section 4 of the AIA, now permits an application to be made by 
a person to whom the inventor has assigned or is under an obligation to 
assign the invention. In addition, a person who otherwise shows 
sufficient proprietary interest in the matter may make an application 
for patent on behalf of and as agent for the inventor. Thus, 35 U.S.C. 
118 now allows a person other than the inventor to file an application 
as the applicant if the inventor has assigned or is under an obligation 
to assign the invention to the person or if the person shows sufficient 
proprietary interest in the matter. Note also that as of March 16, 
2013, 35 U.S.C. 100 will be amended to provide new and specific 
definitions of the terms ``inventor,'' ``joint inventor,'' and 
``coinventor.''
    35 U.S.C. 123 does not explicitly preclude an assignee-applicant 
under 35 U.S.C. 118 from claiming micro entity status under 35 U.S.C. 
123(a) or (d), although some provisions of 35 U.S.C. 123(a) and (d) 
refer to an applicant who is a natural person inventor rather than a 
juristic entity. See 35 U.S.C. 123(a)(2) (provides that a micro entity 
applicant under 35 U.S.C. 123(a) must not have ``been named as an 
inventor on more than 4 previously filed patent applications'') and 
123(d)(1) (provides that the term micro entity includes an applicant 
who certifies that ``the applicant's employer, from which the applicant 
obtains the majority of the applicant's income, is an institution of 
higher education'' as defined by section 101(a) of the Higher Education 
Act of 1965). In addition, 35 U.S.C. 123(a), (b) and (d) specifically 
refer to a situation in which the applicant has assigned rights in the 
invention to an assignee. See 35 U.S.C. 123(a)(4) (provides that a 
micro entity applicant under 35 U.S.C. 123(a) must not have ``assigned, 
granted, or conveyed, and is not under an obligation by contract or law 
to assign, grant, or convey, a license or other ownership interest in 
the application concerned to an entity'' exceeding a specified gross 
income); 35 U.S.C. 123(b) (provides that an applicant is not considered 
to be named on a previously filed application for purposes of 35 U.S.C. 
123(a)(2) if ``the applicant has assigned, or is under an obligation by 
contract or law to assign, all ownership rights in the application as 
the result of the applicant's previous employment''); and 35 U.S.C. 
123(d)(2) (provides that the term micro entity includes an ``applicant 
[who] has assigned, granted, conveyed, or is under an obligation by 
contract or law, to assign, grant, or convey, a license or other 
ownership interest in the particular applications'' to an institution 
of higher education as defined by section 101(a) of the Higher 
Education Act of 1965). Finally, the legislative history of 35 U.S.C. 
123 includes a reference to micro entities as inventors and not the 
assignees of inventors. See H.R. Rep 112-98 at 50 (2011) (describing 
micro entities as ``a group of inventors'' and ``truly independent 
inventors''). Nevertheless, 35 U.S.C. 123 does not explicitly preclude 
an assignee-applicant under 35 U.S.C. 118 from claiming micro entity 
status for an application under 35 U.S.C. 123(a) or 123(d), provided 
there is compliance with the applicable micro entity criteria. Each 
applicant must qualify for micro entity status, and any other party 
holding rights in the application must qualify for small entity status. 
See 37 CFR 1.29 (h). Note that a party who qualifies for micro entity 
status necessarily qualifies for small entity status, as under 37 CFR 
1.29 a

[[Page 75022]]

micro entity must first qualify as a small entity under 37 CFR 1.27.
    An ``institution of higher education,'' as that term is used in 35 
U.S.C. 123(d), is defined in the Higher Education Act of 1965 (20 
U.S.C. 1001(a)). Section 101(a) of the Higher Education Act of 1965 (20 
U.S.C. 1001) provides that: ``For purposes of this chapter, other than 
subchapter IV, the term `institution of higher education' means an 
educational institution in any State that--(1) Admits as regular 
students only persons having a certificate of graduation from a school 
providing secondary education, or the recognized equivalent of such a 
certificate, or persons who meet the requirements of section 1091(d)(3) 
of this title; (2) is legally authorized within such State to provide a 
program of education beyond secondary education; (3) provides an 
educational program for which the institution awards a bachelor's 
degree or provides not less than a 2-year program that is acceptable 
for full credit toward such a degree, or awards a degree that is 
acceptable for admission to a graduate or professional degree program, 
subject to review and approval by the Secretary; (4) is a public or 
other nonprofit institution; and (5) is accredited by a nationally 
recognized accrediting agency or association, or if not so accredited, 
is an institution that has been granted pre-accreditation status by 
such an agency or association that has been recognized by the Secretary 
for the granting of pre-accreditation status, and the Secretary has 
determined that there is satisfactory assurance that the institution 
will meet the accreditation standards of such an agency or association 
within a reasonable time.'' Section 103 of the Higher Education Act of 
1965 (20 U.S.C. 1003) provides ``the term `State' includes, in addition 
to the several States of the United States, the Commonwealth of Puerto 
Rico, the District of Columbia, Guam, American Samoa, the United States 
Virgin Islands, the Commonwealth of the Northern Mariana Islands, and 
the Freely Associated States'' and that the Freely Associated States 
means the ``Republic of the Marshall Islands, the Federated States of 
Micronesia, and the Republic of Palau.''
    The Office is setting out in the rules of practice the requirements 
for micro entity status and procedures for claiming micro entity 
status, paying patent fees as a micro entity, notifying the Office of 
loss of micro entity status, and correcting payments of patent fees 
paid erroneously in the micro entity amount. The Office is also 
developing forms for use by members of the public to provide a 
certification of micro entity status. The procedures track the 
corresponding provisions in 37 CFR 1.27 and 1.28 for small entities, 
except where the small entity procedure is not appropriate for micro 
entity status under the provisions of 35 U.S.C. 123. For example, 35 
U.S.C. 123 requires a certification as a condition for an applicant to 
be considered a micro entity. Thus, the process in 37 CFR 1.27(c)(3) 
for establishing small entity status by payment of certain fees in the 
small entity amount cannot be made applicable to establishing micro 
entity status, and the process in 37 CFR 1.28(a) for a refund based 
upon subsequent establishment of small entity status is not applicable 
where there is subsequent establishment of micro entity status. In 
addition, 35 U.S.C. 123(a)(3) and (a)(4) require that the income level 
be met for the calendar year preceding the calendar year in which the 
applicable fee is paid. Thus, the provision in 37 CFR 1.27(g)(1) that 
the applicant need only determine continued eligibility for small 
entity status for issue and maintenance fee payments, but can pay 
intervening fees at small entity rate without determining whether still 
entitled to small entity status, cannot be made applicable to payment 
of patent fees as a micro entity.

Discussion of Specific Rules

    The following is a discussion of the amendments to Title 37 of the 
Code of Federal Regulations, Part 1.
    Section 1.29: Section 1.29 is added to implement procedures for 
claiming micro entity status.
    Since 35 U.S.C. 123(a) through (d) specify the requirements to 
qualify as a micro entity, the provisions in Sec. Sec.  1.29(a) through 
(d) generally track the provisions of 35 U.S.C. 123(a) through (d).
    Section 1.29(a) implements the provisions of 35 U.S.C. 123(a), and 
includes reference to inventors or joint inventors where appropriate. 
Section 1.29(a) provides that an applicant claiming micro entity status 
under 35 U.S.C. 123(a) must certify that: (1) The applicant qualifies 
as a small entity as defined in Sec.  1.27; (2) neither the applicant 
nor the inventor nor a joint inventor has been named as the inventor or 
a joint inventor (see 35 U.S.C. 100) on more than four previously filed 
patent applications, other than applications filed in another country, 
provisional applications under 35 U.S.C. 111(b), or international 
applications for which the basic national fee under 35 U.S.C. 41(a) was 
not paid; (3) neither the applicant nor the inventor nor a joint 
inventor, in the calendar year preceding the calendar year in which the 
applicable fee is being paid, had a gross income, as defined in section 
61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding 
three times the median household income for that preceding calendar 
year, as most recently reported by the Bureau of the Census; and (4) 
neither the applicant nor the inventor nor a joint inventor has 
assigned, granted, or conveyed, nor is under an obligation by contract 
or law to assign, grant, or convey, a license or other ownership 
interest in the application concerned to an entity that, in the 
calendar year preceding the calendar year in which the applicable fee 
is being paid, had a gross income, as defined in section 61(a) of the 
Internal Revenue Code of 1986, exceeding three times the median 
household income for that preceding calendar year, as most recently 
reported by the Bureau of the Census. See also Sec.  1.29(h) (each 
applicant must qualify for micro entity status, and each other party 
holding rights in the invention must qualify for small entity status).
    Section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 
61(a)) provides that: ``[e]xcept as otherwise provided in this 
subtitle, gross income means all income from whatever source derived, 
including (but not limited to) the following items: (1) Compensation 
for services, including fees, commissions, fringe benefits, and similar 
items; (2) Gross income derived from business; (3) Gains derived from 
dealings in property; (4) Interest; (5) Rents; (6) Royalties; (7) 
Dividends; (8) Alimony and separate maintenance payments; (9) 
Annuities; (10) Income from life insurance and endowment contracts; 
(11) Pensions; (12) Income from discharge of indebtedness; (13) 
Distributive share of partnership gross income; (14) Income in respect 
of a decedent; and (15) Income from an interest in an estate or 
trust.'' The median household income for calendar year 2011 (the year 
most recently reported by the Bureau of the Census) was $50,054. See 
Income, Poverty, and Health Insurance Coverage in the United States in 
2011 at pages 5 and 31 (Table A-1) (Sept. 2012). Thus, the income level 
specified in Sec. Sec.  1.29(a)(3) and (a)(4) (three times the median 
household income) is $150,162 for calendar year 2011 (the year most 
recently reported by the Bureau of the Census).
    If an application names more than one applicant or inventor, each 
applicant and each inventor must meet the requirements of Sec.  1.29(a) 
for the applicants to file a micro entity certification under Sec.  
1.29(a) in the application. It would not be appropriate

[[Page 75023]]

to file a micro entity certification under Sec.  1.29(a) for the 
application if there were more than one applicant or inventor and not 
all of the applicants and inventors qualified as micro entities under 
35 U.S.C. 123(a): e.g., (1) an applicant or inventor exceeded the gross 
income levels; (2) an applicant or inventor had more than four other 
nonprovisional applications; or (3) an applicant or inventor had 
assigned, granted, or conveyed the application or was under an 
obligation to do so, to an entity that exceeds the gross income levels. 
Additionally, the income level requirement in 35 U.S.C. 123(a)(3) 
applies to each applicant's and inventor's income separately (i.e., the 
combined gross income of all of the applicants and inventors need not 
be below the income level in 35 U.S.C. 123(a)(3)). Further, the 
assignment requirement in Sec.  1.29(a)(4) applies to each applicant 
and inventor (i.e., if an applicant or inventor assigns or is obligated 
to assign the invention to more than one assignee (e.g., half interest 
in the invention to two assignees), each of the assignees must meet the 
income limit specified in Sec.  1.29(a)(4)). Note also that in this 
context an inventor ordinarily should qualify as a small entity under 
Sec. Sec.  1.29(a)(1) and 1.27(a)(1). Under Sec.  1.27(a)(1), an 
inventor generally is a small entity and retains such status even if 
the inventor assigns some rights to another small entity. Similarly, to 
obtain micro entity status, Sec.  1.29(h) requires that any non-
applicant assignee be a small entity.
    Section 1.29(b) implements the provisions of 35 U.S.C. 123(b). 
Section 1.29(b) provides that an applicant, inventor, or joint inventor 
is not considered to be named on a previously filed application for 
purposes of Sec.  1.29(a)(2) if the applicant, inventor, or joint 
inventor has assigned, or is under an obligation by contract or law to 
assign, all ownership rights in the application as the result of the 
applicant's, inventor's, or joint inventors previous employment.
    Section 1.29(c) implements the provisions of 35 U.S.C. 123(c). 
Section 1.29(c) provides that if an applicant's, inventor's, joint 
inventor's, or entity's gross income in the preceding calendar year is 
not in United States dollars, the average currency exchange rate, as 
reported by the Internal Revenue Service, during that calendar year 
shall be used to determine whether the applicant's, inventor's, joint 
inventor's, or entity's gross income exceeds the threshold specified in 
Sec.  1.29(a)(3) or (a)(4). The Internal Revenue Service reports the 
average currency exchange rate (Yearly Average Currency Exchange Rates) 
on its Internet Web site (https://www.irs.gov/businesses/small/international/article/0,,id=206089,00.html).
    Section 1.29(d) implements the provisions of 35 U.S.C. 123(d). 
Section 1.29(d) provides that an applicant claiming micro entity status 
under 35 U.S.C. 123(d) must certify that: (1) The applicant qualifies 
as a small entity as defined in Sec.  1.27; and (2)(i) the applicant's 
employer, from which the applicant obtains the majority of the 
applicant's income, is an institution of higher education as defined in 
section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); 
or (ii) the applicant has assigned, granted, conveyed, or is under an 
obligation by contract or law, to assign, grant, or convey, a license 
or other ownership interest in the particular application to such an 
institution of higher education. To the extent that 35 U.S.C. 123(d) 
(unlike 35 U.S.C. 123(a)) does not expressly require that an applicant 
qualify as a small entity under Sec.  1.27, the Office is invoking its 
authority under 35 U.S.C. 123(e) to expressly require that a party 
claiming micro entity status via 35 U.S.C. 123(d) qualify as a small 
entity under Sec.  1.27. The legislative history of 35 U.S.C. 123 
refers to micro entities as a subset of small entities, namely, ``truly 
independent inventors.'' See H.R. Rep 112-98 at 50 (``[t]he Committee 
was made aware, however, that there is likely a benefit to describing--
and then accommodating--a group of inventors who are even smaller [than 
small entities], in order to ensure that the USPTO can tailor its 
requirements, and its assistance, to the people with very little 
capital, and just a few inventions, as they are starting out. This 
section of the Act defines this even smaller group--the micro-entity--
that includes only truly independent inventors''). Thus, permitting an 
applicant who does not qualify as a small entity to take advantage of 
the benefits of micro entity status via 35 U.S.C. 123(d) would be 
inconsistent with the purposes of micro entity provisions of 35 U.S.C. 
123. The statute and its legislative history do not, for example, 
contemplate a for-profit, large entity applicant becoming a ``micro 
entity'' (and thus obtaining a 75 percent discount) merely by licensing 
or assigning some interest (even merely a nominal or miniscule 
interest) to an institution of higher education. Accordingly, the 
Office has determined that requiring all micro entities to qualify as 
small entities is reasonably necessary and appropriate to ensure that 
applicants who do not qualify as a small entity do not inappropriately 
attempt to take advantage of micro entity status. See also Sec.  
1.29(h) (each applicant must qualify for micro entity status, and each 
other party holding rights in the invention must qualify for small 
entity status).
    Section 1.29(e) provides that micro entity status must be 
established in an application in by filing a certification in writing 
that complies with either Sec.  1.29(a) or Sec.  1.29(d) and that is 
signed in compliance with Sec.  1.33(b). Section 1.29(e) also contains 
provisions for a micro entity that correspond to the provisions of 
Sec.  1.27(c)(4) for a small entity. Section 1.29(e) provides that: (1) 
Status as a micro entity must be specifically established by an 
assertion in each related, continuing, and reissue application in which 
status is appropriate and desired; (2) status as a small or micro 
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; and (3) the refiling of an application under 
Sec.  1.53 as a continuation, divisional, or continuation-in-part 
application (including a continued prosecution application under Sec.  
1.53(d)), or the filing of a reissue application, requires a new 
certification of entitlement to micro entity status for the continuing 
or reissue application.
    Section 1.29(f) contains provisions for a micro entity that 
correspond to the provisions of Sec.  1.27(d) for a small entity. 
Section 1.29(f) provides that a fee may be paid in the micro entity 
amount only if it is submitted with, or subsequent to, the submission 
of a certification of entitlement to micro entity status.
    Section 1.29(g) contains provisions for a micro entity that 
correspond to the provisions of Sec.  1.27(e) for a small entity. 
Section 1.29(g) provides that a certification of entitlement to micro 
entity status need only be filed once in an application or patent, and 
that micro entity status, once established, remains in effect until 
changed pursuant to Sec.  1.29(i). However, a fee may be paid in the 
micro entity amount only if status as a micro entity as defined in 
Sec.  1.29(a) or (d) is appropriate (which requires that status as a 
small entity is also appropriate) on the date the fee is being paid. 
Thus, while an applicant is not required to provide a certification of 
entitlement to micro entity status with each fee payment once micro 
entity status has been established in an application, the applicant 
must still be entitled to micro entity status to pay a fee in the micro 
entity amount at the

[[Page 75024]]

time of all payments of fees in the micro entity amount.
    For micro entity status under 35 U.S.C. 123(a), the applicant must 
determine that the applicant and each inventor or joint inventor still 
meet the applicable conditions of 35 U.S.C. 123(a) and Sec.  1.29(a) to 
claim micro entity status. For example, the applicant must determine 
that neither the applicant nor inventor nor joint inventor has had a 
change in gross income that exceeds the gross income threshold in 35 
U.S.C. 123(a)(3) (a new determination must be made each year because 
gross income may change from year to year, and micro entity status is 
based upon gross income in the calendar year preceding the calendar 
year in which the applicable fee is being paid). In addition, the 
applicant must determine that neither the applicant nor inventor nor 
joint inventor has made, or is obligated by contract or law to make, an 
assignment, grant, or conveyance to an entity not meeting the gross 
income threshold in 35 U.S.C. 123(a)(4), and that no new inventor or 
joint inventor has been named in the application who does not meet the 
conditions specified in 35 U.S.C. 123(a) and Sec.  1.29(a)). For micro 
entity status under 35 U.S.C. 123(d), the applicant must determine that 
each applicant and inventor still complies with 35 U.S.C. 123(d) and 
Sec.  1.29(d) (e.g., still obtains the majority of his or her income 
from an institution of higher education as defined in section 101(a) of 
the Higher Education Act of 1965 (20 U.S.C. 1001(a)). Section 1.29(g) 
also provides that where an assignment of rights or an obligation to 
assign rights to other parties who are micro entities occurs subsequent 
to the filing of a certification of entitlement to micro entity status, 
a second certification of entitlement to micro entity status is not 
required.
    Section 1.29(h) contains provisions for a micro entity that 
correspond to the provisions of Sec.  1.27(f) for a small entity. 
Section 1.29(h) provides that prior to submitting a certification of 
entitlement to micro 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 Sec.  
1.29(a) or 1.29(d). Section 1.29(h) also indicates that each applicant 
must qualify for micro entity status under Sec.  1.29(a) or 1.29(d), 
and that any other party holding rights in the application must qualify 
for small entity status under Sec.  1.27. As discussed previously, a 
party who qualifies for micro entity status necessarily qualifies for 
small entity status, as under Sec.  1.29(a)(1) and (d)(1) a micro 
entity must first qualify as a small entity under Sec.  1.27. Section 
1.29(h) also indicates that the Office will generally not question 
certification of entitlement to micro entity status that is made in 
accordance with the requirements of Sec.  1.29.
    Section 1.29(i) contains provisions for a micro entity that 
correspond to the provisions of Sec.  1.27(g)(2) for a small entity. 
Section 1.29(i) provides that notification of a loss of entitlement to 
micro entity status must be filed in the application or patent prior to 
paying, or at the time of paying, any fee after the date on which 
status as a micro entity as defined in Sec.  1.29(a) or 1.29(d) is no 
longer appropriate. The notification that micro entity status is no 
longer appropriate must be signed by a party identified in Sec.  
1.33(b). Payment of a fee in other than the micro entity amount is not 
sufficient notification that micro entity status is no longer 
appropriate.
    Section 1.29(i) further provides that a notification that micro 
entity status is no longer appropriate will not be treated as a 
notification that small entity status is also no longer appropriate 
unless it also contains a notification of loss of entitlement to small 
entity status under Sec.  1.27(f)(2). Thus, an applicant or patentee 
who files a notification that micro entity status is no longer 
appropriate will be treated as a small entity by default unless the 
notification also contains a notification of loss of entitlement to 
small entity status under Sec.  1.27(f)(2).
    Section 1.29 finally provides that once a notification of a loss of 
entitlement to micro entity status is filed in the application or 
patent, a new certification of entitlement to micro entity status is 
required to again obtain micro entity status.
    Section 1.29(j) contains provisions for a micro entity that 
correspond to the provisions of Sec.  1.27(h) for a small entity. 
Section 1.29(j) provides that any attempt to fraudulently establish 
status as a micro entity, or pay fees as a micro entity, shall be 
considered as a fraud practiced or attempted on the Office, and that 
establishing status as a micro entity, or paying fees as a micro 
entity, improperly, and with intent to deceive, shall be considered as 
a fraud practiced or attempted on the Office.
    Section 1.29(k) contains provisions for a micro entity that 
correspond to the provisions of Sec.  1.28(c) for a small entity. 
Section 1.28(c) permits an applicant or patentee to correct the 
erroneous payment of a patent fee in the small entity amount if status 
as a small entity was established in good faith, and fees as a small 
entity were paid in good faith. See DH Tech. Inc. v. Synergystex Int'l 
Inc., 154 F.3d 1333 (Fed. Cir. 1998). Section 1.29(k) provides that if: 
(i) An applicant or patentee establishes micro entity status in an 
application or patent in good faith; (ii) the applicant or patentee 
pays fees as a micro entity in the application or patent in good faith; 
and (iii) applicant or patentee later discovers that such micro entity 
status either was established in error, or that the Office was not 
notified of a loss of entitlement to micro entity status as required by 
Sec.  1.29(i) through error, the error will be excused upon compliance 
with the separate submission and itemization requirements of Sec.  
1.29(k)(1) and the deficiency payment requirement of Sec.  1.29(k)(2).
    Section 1.29(k)(1) provides that any paper submitted under Sec.  
1.29(k) must be limited to the deficiency payment (all fees paid in 
error) required for a single application or patent. Section 1.29(k)(1) 
provides that where more than one application or patent is involved, 
separate submissions of deficiency payments (e.g., checks) and 
itemizations are required for each application or patent. Section 
1.29(k)(1) also provides that the paper must contain an itemization of 
the total deficiency payment and include the following information: (1) 
Each particular type of fee that was erroneously paid as a micro 
entity, (e.g., basic statutory filing fee, two-month extension of time 
fee) along with the current fee amount for a small or non-small entity; 
(2) the micro entity fee actually paid, and the date on which it was 
paid; (3) the deficiency owed amount (for each fee erroneously paid); 
and (4) the total deficiency payment owed, which is the sum or total of 
the individual deficiency owed amounts as set forth in Sec.  
1.29(k)(2).
    Section 1.29(k)(2) provides that the deficiency owed, resulting 
from the previous erroneous payment of micro entity fees, must be paid. 
The deficiency owed for each previous fee erroneously paid as a micro 
entity is the difference between the current fee amount for a small 
entity or non-small entity, as applicable, on the date the deficiency 
is paid in full and the amount of the previous erroneous micro entity 
fee payment. The total deficiency payment owed is the sum of the 
individual deficiency owed amounts for each fee amount previously and 
erroneously paid as a micro entity. This corresponds to the procedure 
for fee deficiency payments based upon the previous erroneous payment 
of patent fees in the small entity amount. See Sec.  1.28(c)(2)(i) 
(``[t]he deficiency owed for each previous fee erroneously paid as a 
small entity is the difference between the current full fee amount (for 
non-small entity) on the date the deficiency is paid

[[Page 75025]]

in full and the amount of the previous erroneous (small entity) fee 
payment'').
    Section 1.29(k)(3) provides that if the requirements of Sec. Sec.  
1.29(k)(1) and (k)(2) are not complied with, such failure will either 
be treated at the option of the Office as an authorization for the 
Office to process the deficiency payment and charge the processing fee 
set forth in Sec.  1.17(i), or result in a requirement for compliance 
within a one-month non-extendable time period under Sec.  1.136(a) to 
avoid the return of the fee deficiency payment.
    Section 1.29(k)(4) provides that any deficiency payment (based on a 
previous erroneous payment of a micro entity fee) submitted under Sec.  
1.29(k) will be treated as a notification of a loss of entitlement to 
micro entity status under Sec.  1.29(i).
    Comments and Responses to Comments: The Office published a notice 
on May 30, 2012, proposing to change the rules of practice to implement 
the micro entity provisions of the AIA. See Changes to Implement Micro 
Entity Status for Paying Patent Fees, 77 FR 31806 (May 30, 2012). The 
Office received twenty-seven written comments (from intellectual 
property organizations, industry, law firms, individual patent 
practitioners, and the general public) in response to this notice. 
There were some comments received that related to practice before the 
agency but not related to the proposed changes to the rules of practice 
to implement the micro entity provisions of the AIA, and these comments 
have been forwarded to the Office of Innovation Development for further 
consideration. The Office is always interested to hear feedback from 
the public concerning ways in which it can assist small and independent 
inventors. The comments germane to the proposed changes to the rules of 
practice to implement the micro entity provisions of the AIA and the 
Office's responses to the comments follow:
    Comment 1: One comment stated that there are several instances in 
35 U.S.C. 123 and proposed Sec.  1.29 where the term ``applicant'' is 
inapplicable to an organization and must really be referring to the 
inventor(s) (e.g., a certification that ``applicant'' has not been 
named as an ``inventor'' in more than four previously filed 
applications, references to applicant's previous employment or 
employer). One comment indicated that the term ``applicant'' should be 
used in an interchangeable manner so as to mean either the inventor(s) 
or a company to which the patent application is assigned (i.e., the 
rules should refer to ``applicant or inventor'') in view of the AIA's 
change to 35 U.S.C. 118. That comment further indicated, however, that 
the ability to vary from the statute ``may be limited.'' One comment 
similarly indicated that the final rules should replace all instances 
of ``applicant'' and ``applicant's'' with ``inventor'' and 
``inventor's'' in Sec.  1.29(a) (second instance), (b), (c), (d)(1), 
(d)(2)(i), and (d)(2)(ii) in view of the AIA's change to 35 U.S.C. 118. 
One comment stated that in the case of university inventions, the 
university typically is the applicant and this creates anomalies in 
proposed Sec.  1.29(d), since the institution (university) logically 
cannot make the certifications required under Sec.  1.29(d)(2)(i) and 
(d)(2)(ii) (that the employer from which the university obtains the 
majority of its income is an institution of higher education as defined 
by section 101(a) of the Higher Education Act of 1965, or that the 
university itself has assigned, granted, conveyed, or is under an 
obligation by contract or law, to assign, grant, or convey, a license 
or other ownership interest in the particular application).
    Response: The Office specifically invited public comment in the 
notice of proposed rulemaking on the issue of whether the term 
``inventor'' should be used in place of ``applicant'' at any instance 
in the proposed micro entity rules. See Changes to Implement Micro 
Entity Status for Paying Patent Fees, 77 FR at 31808. The Office agrees 
that some, though not all, provisions of 35 U.S.C. 123 refer to a 
situation where an inventor is the applicant. The micro entity 
provisions of 35 U.S.C. 123 were enacted as part of the AIA, which also 
revised the patent laws to provide a specific definition of the term 
``inventor'' and to change who may be the applicant for a patent. See 
125 Stat. at 285 (defining ``inventor'') and 293-97 (changing the 
patent laws to distinguish between who may apply for a patent as the 
applicant and who must be named as the inventor); see also 35 U.S.C. 
100; 35 U.S.C. 118. The Office does not consider it appropriate either 
to amend the language of 35 U.S.C. 123 as incorporated into the 
corresponding provisions of Sec.  1.29 or to somehow view the terms 
``applicant'' and ``inventor'' as interchangeable in all instances 
under 35 U.S.C. 123. See Brown v. Gardner, 513 U.S. 115, 118 (1994) 
(presumption that a given term is used to mean the same thing 
throughout a statute). As discussed previously, while some of the 
provisions in 35 U.S.C. 123(a) and (d) refer to an inventor-applicant, 
35 U.S.C. 123 does not explicitly preclude an assignee-applicant under 
35 U.S.C. 118 from claiming micro entity status under 35 U.S.C. 123(a) 
or (d), provided there is compliance with the applicable micro entity 
criteria by each applicant. However, each applicant must qualify for 
micro entity status, and any other party holding rights in the 
application must qualify for small entity status. See 37 CFR 1.29(h).
    Comment 2: One comment stated that it is possible that the 
legislative intent of 35 U.S.C. 123(a)(2) was that an applicant should 
satisfy this criterion so long as the applicant has fewer than four 
previously filed applications in which micro entity fees were paid. One 
comment stated that the four application limit under 35 U.S.C. 
123(a)(2) should apply only to applications filed within the past 
twenty years or so. One comment stated that it would make sense for the 
term ``inventor'' in Sec.  1.29(a)(2) to refer to an applicant who has 
had the opportunity to claim micro entity status in four previously 
filed patent applications. One comment indicated that Sec.  1.29(a)(2) 
should be amended to provide that if an application is entitled to 
micro entity status, then continuation and divisional applications of 
that parent application should normally be entitled to micro entity 
status without counting the parent application or any parallel filed 
continuing or divisional patent applications in the same patent family 
toward the four application limit.
    Response: Section 1.29(a)(2) tracks the provisions of 35 U.S.C. 
123(a)(2) with the clarification to reference non-applicant inventors 
and joint inventors. 35 U.S.C. 123(a)(2) provides a certification that 
the applicant, inter alia, ``has not been named as an inventor on more 
than 4 previously filed patent applications, other than applications 
filed in another country, provisional applications under 35 U.S.C. 
111(b), or international applications * * * for which the basic 
national fee under 35 U.S.C. 41(a) was not paid.'' This provision 
refers to when an inventor-applicant has been named as an inventor in a 
previous application, including as one in a group of joint inventors. 
See 35 U.S.C. 100. An applicant that is not an inventor would plainly 
not violate this criteria. Moreover, this provision has been clarified 
to refer to an inventor or joint inventor who is not the applicant. 35 
U.S.C. 123(a)(2) by its express terms does not, however, provide for 
exceptions to this four-application limit suggested by the comments. In 
addition, while 35 U.S.C. 123(e) authorizes the Office to place 
additional limits on who may qualify as a micro entity under 35 U.S.C. 
123, it does not authorize the

[[Page 75026]]

Office to remove limitations contained in 35 U.S.C. 123.
    Comment 3: One comment suggested expanding the scope of the Sec.  
1.29(b) exception to applications counted toward the four application 
limit in Sec.  1.29(a)(2) by including applications assigned to the 
inventor's current employer when the invention is outside the current 
employer's scope of employment with the inventor.
    Response: Section 1.29(b) tracks the provisions of 35 U.S.C. 123(b) 
with the clarification to reference non-applicant inventors and joint 
inventors. 35 U.S.C. 123(b) provides that an applicant is not 
considered to be named on a previously filed application for purposes 
of 35 U.S.C. 123(a)(2) if the applicant has assigned, or is under an 
obligation by contract or law to assign, all ownership rights in the 
application ``as the result of applicant's previous employment.'' Thus, 
the exception in 35 U.S.C. 123(b) by its express terms does not apply 
to applications assigned to a current employer. In addition, as 
discussed previously, while 35 U.S.C. 123(e) authorizes the Office to 
place additional limits on who may qualify as a micro entity under 35 
U.S.C. 123, it does not authorize the Office to remove limitations 
contained in 35 U.S.C. 123.
    Comment 4: One comment noted that the Office has indicated that it 
will publish the income level that is three times the median household 
income for the calendar year most recently reported by the Bureau of 
the Census, but that 35 U.S.C. 123(a) (and Sec.  1.29(a)) require that 
applicants use the median household income data for ``the calendar year 
preceding the calendar year in which the applicable fee is being 
paid.'' The comment expressed concern that median household income data 
for a given year is not reported by the Bureau of the Census until the 
succeeding year. One comment suggested that Sec.  1.29(a)(3) be amended 
to provide that an applicant may rely on his or her most recently filed 
income tax return regardless of whether the most recently filed tax 
return accounted for the previous calendar year's gross income.
    Response: Section 1.29(a)(3) tracks the provisions of 35 U.S.C. 
123(a)(3) with the clarification to reference non-applicant inventors 
and joint inventors. 35 U.S.C. 123(a)(3) provides that each inventor's 
gross income ``in the calendar year preceding the calendar year in 
which the applicable fee is being paid'' must not exceed ``three times 
the median household income for that preceding calendar year as most 
recently reported by the Bureau of the Census.'' 35 U.S.C. 123(a)(3) 
does not provide for an applicant to simply rely on his or her most 
recently filed income tax return if the most recently filed tax return 
does not pertain to the calendar year preceding the calendar year in 
which the applicable fee is being paid. The Office will post on its 
Internet Web site the U.S. dollar amount that equals three times the 
median household income as most recently reported by the Bureau of the 
Census. Thus, the Office's Internet Web site will contain the U.S. 
dollar amount that equals three times the median household income as 
most recently reported by the Bureau of the Census as provided for in 
Sec.  1.29(a)(3) and 35 U.S.C. 123(a)(3).
    Comment 5: One comment requested guidance as to what effect marital 
status has on ``gross income'' in terms of Sec.  1.29(a)(3), and 
whether the inventor's tax return is filed jointly or separately 
changes the amount of ``gross income'' for purposes of meeting the 
requirement of proposed Sec.  1.29(a)(3). The comment also indicated 
that in community property states, the law may be construed such that 
the inventor/applicant has assigned his or her rights in part to the 
spouse, as a matter of law. Another comment stated that marital status 
of an individual applicant may have an impact on the assignment or 
ownership rights in an invention and the gross income of the applicant, 
and that it may require an opinion from an accountant or tax attorney 
with respect to the applicant's income.
    Response: The Office reads the ``gross income'' requirement 
contained in 35 U.S.C. 123(a)(3) and Sec.  1.29(a)(3) with respect to a 
married person as applying to the amount of income the person would 
have reported as gross income if that person were filing a separate tax 
return (which includes properly accounting for that person's portion of 
interest, dividends, and capital gains from joint bank or brokerage 
accounts), regardless of whether the person actually filed a joint 
return or a separate return for the relevant calendar year. 
Additionally, the Office does not consider a spouse's ownership 
interest in a patent application or patent arising by operation of 
residence in a community property state as falling within the ambit of 
35 U.S.C. 123(a)(4) and Sec.  1.29(a)(4) because the spouse's ownership 
interest arises by operation of state law, rather than an assignment, 
grant, conveyance, or obligation to assign, grant, or convey.
    Comment 6: One comment questioned the situation where the 
applicant's income is not in U.S. dollars and the applicable currency 
exchange rate is applied to determine the applicant's gross income in 
U.S. dollars in accordance with Sec.  1.29(c), whether the applicant's 
gross income in terms of U.S. dollars should be compared to three times 
the median household income for the preceding calendar year in the 
United States, or should be compared to the median household income for 
the preceding calendar year in the country in which the applicant 
obtained income.
    Response: In all cases, the inventor's gross income in the previous 
calendar year must be compared to the U.S. dollar amount equaling three 
times the median household income as most recently reported by the 
Bureau of the Census (which will be posted on the Office's Internet Web 
site) at the time the applicable fee is being paid in order to meet the 
gross income requirement of Sec.  1.29(a)(3).
    Comment 7: One comment suggested that the language ``that calendar 
year'' in proposed Sec.  1.29(c) should be changed to ``the preceding 
calendar year'' to clarify that applicants whose income is not in U.S. 
dollars must apply the currency exchange rate from the preceding 
calendar year when calculating income in U.S. dollars in order to 
determine whether the proposed Sec.  1.29(a)(3) ``gross income'' 
requirement is met.
    Response: Section 1.29(c) tracks the provisions of 35 U.S.C. 123(c) 
with the clarification to reference non-applicant inventors and joint 
inventors. The phrase ``that calendar year'' in 35 U.S.C. 123(c) and 
Sec.  1.29(c) means ``the preceding calendar year'' as previously 
recited in 35 U.S.C. 123(c) and Sec.  1.29(c).
    Comment 8: One comment indicated that foreign applicants should be 
directed to make a ``good faith attempt'' to estimate their gross 
income in terms of U.S. tax law.
    Response: 35 U.S.C. 123(c) provides that if an applicant's or 
entity's gross income in the preceding calendar year is not in United 
States dollars, the average currency exchange rate, as reported by the 
Internal Revenue Service, during that calendar year shall be used to 
determine whether the applicant's or entity's gross income exceeds the 
threshold specified in 35 U.S.C. 123(a)(3) or (4). 35 U.S.C. 123 does 
not provide any alternative basis, such as a good faith estimation as 
suggested by the comment, for determining whether an applicant or 
entity meets the gross income requirement of 35 U.S.C. 123(a)(3). For 
an applicant or entity whose previous calendar year's gross income was 
received partially in U.S. dollars and partially in non-United States 
currency, the gross income amount in non-United States currency must be 
converted into U.S. dollars in accordance with Sec.  1.29(c) and then 
added to the gross income

[[Page 75027]]

amount in U.S. dollars to determine whether the applicant or entity 
meets the gross income requirement of Sec.  1.29(a)(3).
    Comment 9: One comment suggested that the definition of micro 
entity status should be broadened to benefit even more small inventors 
than those who meet the requirements of 35 U.S.C. 123(a).
    Response: The legislative history includes a statement that 
Congress developed the micro entity provision to benefit truly 
independent inventors, people with very little capital and just a few 
inventions, who are just starting out. See H.R. Rep 112-98 at 50. Small 
entity inventors who do not meet the micro entity requirements of 35 
U.S.C. 123 may still claim small entity status and receive the fifty 
percent small entity fee reduction. In any event, as discussed 
previously, while 35 U.S.C. 123(e) authorizes the Office to place 
additional limits on who may qualify as a micro entity under 35 U.S.C. 
123, it does not authorize the Office to remove limitations contained 
in 35 U.S.C. 123 or expand the scope of 35 U.S.C. 123 to include more 
small entities.
    Comment 10: Several comments objected to the requirement under 
Sec.  1.29(d)(1) that in order to qualify for micro entity status under 
Sec.  1.29(d), the applicant must qualify as a small entity as defined 
in Sec.  1.27 in addition to meeting one of the requirements under 
Sec.  1.29(d)(2)(i) or (d)(2)(ii).
    Response: 35 U.S.C. 123(e) provides that in addition to the limits 
imposed by 35 U.S.C. 123, the Director may, in the Director's 
discretion, impose income limits, annual filing limits, or other limits 
on who may qualify as a micro entity pursuant to this section if the 
Director determines that such additional limits are reasonably 
necessary to avoid an undue impact on other patent applicants or owners 
or are otherwise reasonably necessary and appropriate. The Office has 
determined that requiring all micro entities to qualify as small 
entities (Sec.  1.29(d)(1)) is reasonably necessary and appropriate to 
ensure that applicants who do not qualify as a small entity do not 
inappropriately attempt to take advantage of micro entity status. As 
discussed in the notice of proposed rulemaking, the legislative history 
of 35 U.S.C. 123 includes a statement that micro entity status is 
directed to a subset of small entities, namely, ``truly independent 
inventors.'' See H.R. Rep 112-98 at 50.
    Comment 11: Several comments indicated that Sec.  1.29(d)(2)(ii) 
should provide that the rights transferred or owed to an institution of 
higher education should be substantial. The comments indicated that 
institutions of higher education are generally non-practicing entities 
or that applicants could engage in sham transfers of a de minimus 
interest to an institution of higher education, and suggested the 
Office use its authority under 35 U.S.C. 123(e) to ensure the transfer 
of rights is for a substantial purpose. One comment indicated that 
micro entity status by a grant of rights to an institution of higher 
education under Sec.  1.29(d)(2)(ii) should not be available to an 
institution of higher education and that without such a limitation, 
institutions of higher education could simply grant rights to each 
other and thereby qualify their patent for micro entity status.
    Response: As discussed previously, the Office is requiring that all 
micro entities qualify as small entities (Sec.  1.29(d)(1)) to ensure 
that applicants who do not qualify as a small entity do not 
inappropriately attempt to take advantage of micro entity status. This 
requires that any person or entity claiming micro entity status not 
have assigned, granted, conveyed, or licensed, and be 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. See Sec.  1.27(a). The 
Office plans to closely monitor the percentage of applicants claiming 
small entity status under 35 U.S.C. 123(d) and will propose additional 
limits under the authority provided in 35 U.S.C. 123(e) if it appears 
that a substantial number of applicants are engaging in sham 
transactions with institutions of higher education to obtain micro 
entity status.
    Comment 12: One comment indicated that 35 U.S.C. 123(d) is unclear 
as to whether it was intended to cover a separate non-profit 
corporation, research foundation, or other institution that is legally 
separate from an institution of higher education but whose stated 
mission is to represent that institution of higher education, to act on 
its behalf, and/or commercialize the intellectual property of that 
institution of higher education. The comment suggested that a research 
foundation should be treated as a qualifying institution of higher 
education for purposes of micro entity status if the research 
foundation is acting on behalf of a university which is an institution 
of higher education as defined in section 101(a) of the Higher 
Education Act of 1965. Another comment suggested that the Office 
consider expanding the scope of Sec.  1.29(d) to include technology 
transfer organizations whose primary purpose is to facilitate the 
commercialization of technologies developed by one or more institutions 
of higher education as defined by section 101(a) of the Higher 
Education Act of 1965. Another comment suggested that micro entity 
status be made available to applicants whose inventions are co-owned 
with Federal Government research laboratories and that patent 
applications on inventions made solely or jointly by Federal laboratory 
personnel should be considered in the same manner as applications made 
solely by personnel at academic research laboratories. Another comment 
suggested amending Sec.  1.29(d) to extend the definition of 
``institution of higher education'' to include certain nonprofit 
scientific or educational organizations that are not institutions of 
higher education ``as defined in section 101(a) of the Higher Education 
Act of 1965 (20 U.S.C. 1001(a))'' as required by 35 U.S.C. 123(d). 
Another comment suggested that the Office interpret ``institution of 
higher education as defined in section 101(a) of the Higher Education 
Act of 1965 (20 U.S.C. 1001(a))'' as it appears in 35 U.S.C. 123(d) to 
include institutions of higher education set forth in subsection (b) of 
20 U.S.C. 1001, thus making micro entity status available to 
institutions that grant only graduate degrees if they otherwise qualify 
as institutions of higher education under 20 U.S.C. 1001(a).
    Response: 35 U.S.C. 123(d) provides that a micro entity shall also 
include an applicant who certifies that: (1) The applicant's employer, 
from which the applicant obtains the majority of the applicant's 
income, is an institution of higher education as defined in section 
101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or (2) 
the applicant has assigned, granted, conveyed, or is under an 
obligation by contract or law, to assign, grant, or convey, a license 
or other ownership interest in the particular applications to such an 
institution of higher education. Consistent with the discussion above 
and in the notice of proposed rulemaking about the statutory terms 
``applicant'' and ``inventor,'' note that the statutory criteria in 35 
U.S.C. 123(d) ordinarily would not be met by an institution of higher 
education that is itself an assignee-applicant. Also, while 35 U.S.C. 
123(e) authorizes the Office to place additional limits on who may 
qualify as a micro entity under 35 U.S.C. 123, it does not authorize 
the Office to remove limitations contained in 35 U.S.C. 123 such as to 
expand the scope of 35 U.S.C. 123(d) to include a

[[Page 75028]]

separate, non-profit corporation, research foundation, technology 
transfer organization, Federal Government research laboratory, other 
non-profit scientific or educational organization, institution of 
higher education as defined in section 101(b) of the Higher Education 
Act of 1965, or other institution that is legally separate from an 
institution of higher education as defined in section 101(a) of the 
Higher Education Act of 1965 as suggested by the comments. An entity or 
institution must meet the definition of an institution of higher 
education as defined in section 101(a) of the Higher Education Act of 
1965 for an applicant employed by, or who has assigned or is under an 
obligation to assignee to, the entity or institution, to be eligible 
for micro entity status under 35 U.S.C. 123(d).
    Comment 13: Several comments indicated that the proposed rules show 
a bias in favor of institutions of higher education and against 
independent inventors because an independent inventor has to meet 
certain criteria to be entitled to micro entity status.
    Response: Both independent inventors under 35 U.S.C. 123(a) and 
those employed by or under a legal or contractual obligation to assign, 
grant, or convey an interest in an application to an institution of 
higher education as defined in section 101(a) of the Higher Education 
Act of 1965 under 35 U.S.C. 123(d), must meet certain criteria to be 
eligible for micro entity status. Specifically, the applicant must 
qualify as a small entity as defined in Sec.  1.27. In addition, as to 
35 U.S.C. 123(d) either the applicant's employer, from which the 
applicant obtains the majority of the applicant's income, must be an 
institution of higher education as defined in section 101(a) of the 
Higher Education Act of 1965 (20 U.S.C. 1001(a)), or the applicant must 
have assigned, granted, conveyed, or be under an obligation by contract 
or law, to assign, grant, or convey, a license or other ownership 
interest in the particular application to such an institution of higher 
education. The income and application filing criteria specified in 
Sec.  1.29(a) tracks the criteria in 35 U.S.C. 123(a).
    Comment 14: One comment questioned whether micro entity status will 
be available to foreign applicants.
    Response: Micro entity status is available to any applicant 
(foreign or domestic alike) who meets the requirements of 35 U.S.C. 123 
and Sec.  1.29. Notably, 35 U.S.C. 123(d) provides that an institution 
must meet the definition of an institution of higher education as 
defined in section 101(a) of the Higher Education Act of 1965 for micro 
entity status to be obtained based upon the applicant's employment at 
or the applicant's assignment or obligation to the institution. One 
criteria of the definition of ``institution of higher education'' set 
forth in section 101(a) of the Higher Education Act of 1965 is that the 
institution must be located in a ``State.'' Section 103 of the Higher 
Education Act of 1965 provides that the term ``State'' as used in 
section 101(a) ``includes the several States of the United States, the 
Commonwealth of Puerto Rico, the District of Columbia, Guam, American 
Samoa, the United States Virgin Islands, and the Freely Associated 
States'' and that the Freely Associated States means the ``Republic of 
the Marshall Islands, the Federated States of Micronesia, and the 
Republic of Palau.''
    Comment 15: Several comments urged deletion of the requirement in 
Sec.  1.29(e) that micro entity status be specifically established by a 
new certification in each related continuing and reissue application. 
One comment indicated that unless the Office removes the provision in 
proposed Sec.  1.29(g) that a fee may be paid in the micro entity 
amount only if status as a micro entity is appropriate on the date the 
fee is paid, the Office should remove the requirement in proposed Sec.  
1.29(e) that status as a micro entity must be specifically established 
in each related, continuing and reissue application in which status is 
appropriate and desired. One comment stated that Sec.  1.29(e) contains 
an error in that contrary to its language, status as a micro entity in 
one application does affect the status of other applications. The 
commenter, however, suggests retaining language in Sec.  1.29(e) 
stating that micro entity status must be specifically established in 
each continuing and divisional application in which status is 
appropriate and desired.
    Response: The Office shares the concerns of the comments that the 
small entity and micro entity regulations and procedures be as simple 
as possible. For this reason, the Office is making the micro entity 
provisions as consistent with the small entity provisions as possible, 
including the provisions pertaining to claiming small entity status in 
related continuing and reissue applications. See Sec.  1.27(c)(4). In 
addition, 35 U.S.C. 123 requires that the applicant make a 
certification under 35 U.S.C. 123(a) or (d) to qualify for micro entity 
status. An applicant's ability to meet the requirements in 35 U.S.C. 
123(a) or (d) may change over time. For example, from a first 
application to a related continuing or reissue application, an 
applicant's gross income (35 U.S.C. 123(a)(3)) and employment (35 
U.S.C. 123(d)(1)) may change, and the number of applications naming the 
applicant as an inventor (35 U.S.C. 123(a)(2)) will change with the 
filing of a related continuing or reissue application. Therefore, the 
Office is concerned about permitting micro entity status to 
automatically carry over into a related continuing or reissue 
application without the certification required by 35 U.S.C. 123(a) or 
(d). Finally, while being named as an inventor in other applications 
may affect an applicant's ability to claim micro entity status in an 
application, status as a micro entity in one application does not 
affect the status of other applications. Finally, as discussed 
previously, the Office plans to seek additional public comment on the 
micro entity provisions after the Office and the public have gained 
experience with the micro entity procedures in operation, and will 
pursue further improvements to the micro entity procedures in light of 
the public comment and its experience with the micro entity procedures.
    Comment 16: One comment stated that Sec.  1.29 is unclear as to who 
must sign the micro entity certification in applications with more than 
one applicant. The comment suggested that Sec.  1.29 be amended to make 
clear that each applicant must meet the requirements of 35 U.S.C. 
123(a) or (d) for the applicants to file a micro entity certification 
in the application. Further, the comment suggested that Sec. Sec.  
1.29(a) and (d) be revised to state that ``each applicant so 
establishing such status must certify that that applicant'' meets all 
the requirements in order to establish micro entity status. One basis 
given for this suggestion is that joint applicants will generally not 
be privy to each other's private financial information, and should not 
be required to submit a certification as to the qualification of their 
joint applicants.
    Response: Section 1.29(e) provides that a micro entity status 
certification must be signed in compliance with Sec.  1.33(b). Section 
1.33(b) requires that amendments and other papers filed in the 
application be signed by: (1) A patent practitioner of record; (2) a 
patent practitioner not of record who acts in a representative capacity 
under the provisions of Sec.  1.34; or (3) the applicant (Sec.  1.42). 
Section 1.33(b) further provides that all papers submitted on behalf of 
a juristic entity must be signed by a patent practitioner unless 
otherwise specified. If the application names more than one inventor 
and the joint inventors are the applicant under Sec.  1.42(a), a micro 
entity status certification must be signed by: (1) A patent 
practitioner of record; (2) a

[[Page 75029]]

patent practitioner not of record who acts in a representative capacity 
under the provisions of Sec.  1.34; or (3) all of the inventors.
    Comment 17: One comment suggested amending Sec.  1.29(f) to include 
language permitting the micro entity certification to be filed in 
response to a notice of fee deficiency mailed by the Office.
    Response: Certification of micro entity status can be made at any 
stage of prosecution, or at any time before or with payment of a 
maintenance fee after the patent issues. However, a fee may be paid in 
the micro entity amount only if it is submitted with, or subsequent to, 
the submission of a certification of entitlement to micro entity 
status.
    Comment 18: Several comments argued that there should be no need to 
recertify small entity status if micro entity status is lost, because 
the applicant had to certify small entity status to qualify as a micro 
entity and the applicant should continue to qualify for small entity 
status after losing micro entity status.
    Response: Section 1.29(i) as adopted in this final rule provides 
that a notification that micro entity status is no longer appropriate 
will not be treated as a notification that small entity status is also 
no longer appropriate unless it also contains a notification of loss of 
entitlement to small entity status under Sec.  1.27(f)(2). An applicant 
or patentee who files a notification that micro entity status is no 
longer appropriate will be treated as a small entity by default unless 
the notification also contains a notification of loss of entitlement to 
small entity status under Sec.  1.27(f)(2), thus minimizing burdens on 
small entity applicants and patentees. An applicant or patentee who is 
no longer a micro entity or a small entity must provide both a 
notification under Sec.  1.29(i) of loss of entitlement to micro entity 
status and a notification under of Sec.  1.27(f)(2) of loss of 
entitlement to small entity status.
    Comment 19: A number of comments indicated that the proposed 
requirement in Sec.  1.29(g) to determine continued qualification for 
micro entity status each time a fee is paid was overly burdensome. One 
comment indicated that this proposed requirement would inevitably lead 
to additional cost to applicants in prosecuting applications before the 
Office. Several comments suggested that Sec.  1.29(g) be revised to be 
similar to small entity practice such that once micro entity status is 
acquired, fees can continue to be paid in the micro entity amount until 
the issue fee or any maintenance fee is due, or that micro entity 
status be permitted to be maintained throughout the calendar year in 
which micro entity status was established without regard to continued 
qualification. The comments indicated that an entity that licenses 
multiple patent applications will need to confirm that each licensee 
does not have a gross income that exceeds three times the median 
household income for the preceding calendar year, and that an entity 
with a patent application naming multiple inventors will need to 
confirm that each inventor for each application does not have a gross 
income that exceeds three times the median household income for the 
preceding calendar year. One comment alternatively suggested that micro 
entity status be maintained by applicants through the end of a calendar 
year, even if there has been a change in income status during the 
calendar year that disqualifies the applicant from a continued claim to 
micro entity status.
    Response: 35 U.S.C. 123(a) does not allow for a provision similar 
to small entity practice under which once micro entity status is 
acquired, fees can continue to be paid in the micro entity amount until 
the issue fee or any maintenance fee is due or that micro entity status 
be maintained throughout the calendar year in which micro entity status 
was established without regard to continued qualification. 35 U.S.C. 
123(a) requires that a micro entity ``not [have] been named as an 
inventor on more than 4 previously filed patent applications, other 
than applications filed in another country, provisional applications 
under 35 U.S.C. 111(b), or international applications for which the 
basic national fee under 35 U.S.C. 41(a) was not paid'' and ``not, in 
the calendar year preceding the calendar year in which the applicable 
fee is being paid, have a gross income, as defined in section 61(a) of 
the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding three 
times the median household income for that preceding calendar year.'' 
35 U.S.C. 123(a)(2) and (a)(3). Finally, while applicants with complex 
licensing arrangements may consider confirming the status of each 
licensee challenging, this is more a function of the complexity of the 
licensing arrangement than any complexity in the requirement that a fee 
may be paid in the micro entity amount only if status as a micro entity 
as defined in Sec.  1.29(a) or Sec.  1.29(d) is appropriate on the date 
the fee is being paid.
    Comment 20: Several comments objected to the statement in proposed 
Sec.  1.29(h) that ``[i]t should be determined that all parties holding 
rights in the invention qualify for micro entity status.'' One comment 
stated that proposed Sec.  1.29(h) appears to require an opinion that 
all parties holding rights in the invention qualify for micro entity 
status. One comment indicated that because ``parties'' could include an 
applicant under 35 U.S.C. 118 not qualifying as a micro entity but 
filing an application on behalf of an inventor qualifying as a micro 
entity, the statement should be deleted. Another comment indicated that 
the sentence cited from Sec.  1.29(h) is redundant and/or inconsistent 
with the statute as 35 U.S.C. 123(a)(4) expressly includes such a 
limitation whereas 35 U.S.C. 123(d) does not. The comment also 
indicated that the sentence cited from Sec.  1.29(h) is inconsistent 
with Sec.  1.29(d) which would otherwise allow any entity that 
qualifies for small entity status to obtain the benefits of micro 
entity status by assigning, granting, or conveying, a license or other 
ownership interest to a qualified institution of higher education. The 
comment suggested amending the sentence cited from Sec.  1.29(h) by 
replacing ``qualify for micro entity status'' with ``qualify for small 
entity status,'' or alternatively, replacing the phrase ``all parties 
holding rights to the invention'' with ``all applicants.'' One comment 
indicated that ``invention'' is not the equivalent of ``application,'' 
and thus the word ``invention'' in the phrase ``all parties holding 
rights to the invention'' should be changed to ``application,'' or the 
Office should provide guidance on the meaning of the expression 
``rights in the invention.''
    Response: The Office is revising this provision to indicate that 
each applicant must qualify for micro entity status under Sec.  1.29(a) 
or Sec.  1.29(d), and that each other party holding rights in the 
application must qualify for small entity status under Sec.  1.27. Note 
that Sec.  1.27(a)(3) provides for small entity status with respect to 
nonprofit organizations and is applicable to universities or other 
institutions of higher education. See Sec.  1.27(a)(3)(ii)(A). 35 
U.S.C. 123(e) provides that in addition to the limits imposed by 35 
U.S.C. 123, the Director may, in the Director's discretion, impose 
income limits, annual filing limits, or other limits on who may qualify 
as a micro entity pursuant to this section if the Director determines 
that such additional limits are reasonably necessary to avoid an undue 
impact on other patent applicants or owners or are otherwise reasonably 
necessary and appropriate. As discussed previously, the Office has 
determined that requiring all micro entities to qualify as small 
entities and that all other parties holding rights in

[[Page 75030]]

the invention qualify for small entity status is reasonably necessary 
and appropriate to ensure that applicants who do not qualify as a small 
entity do not inappropriately attempt to take advantage of micro entity 
status.
    Comment 21: One comment indicated that Sec.  1.29(h) is an advisory 
opinion, and not a statement of any requirement, and thus should be 
deleted.
    Response: Section 1.29(h) requires that each applicant qualify for 
micro entity status under Sec.  1.29(a) or Sec.  1.29(d), and that each 
other party holding rights in the application qualify for small entity 
status under Sec.  1.27, in order for the applicant to make a 
certification of entitlement to micro entity status. With respect to 
the small entity status requirement, Sec.  1.27(a) requires that any 
person or entity claiming small entity status not have 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.
    Comment 22: Several comments indicated that proposed Sec.  1.29(i) 
is overly burdensome. One comment indicated that proposed Sec.  1.29(i) 
would require that possible loss of entitlement to micro entity status 
be evaluated each time a fee is to be paid. One comment stated that the 
cost of compliance defeats the Congressional purpose of providing for 
micro entity status and thus proposed Sec.  1.29(i) should be stricken.
    Response: Section 1.29(i) requires only that a notification of a 
loss of entitlement to micro entity status must be filed in the 
application or patent prior to paying, or at the time of paying, any 
fee after the date on which status as a micro entity as defined in 
Sec.  1.29(a) or Sec.  1.29(d) is no longer appropriate. As discussed 
previously, Sec.  1.29(g) provides that a fee may be paid in the micro 
entity amount only if status as a micro entity as defined in Sec.  
1.29(a) or Sec.  1.29(d) is appropriate on the date the fee is being 
paid. Section 1.29(i) provides a necessary step for documentation of 
the cessation of micro entity status.
    Comment 23: One comment suggested that Sec.  1.29(i) be amended to 
permit payments for entity status other than micro entity as sufficient 
notification of loss of entitlement to micro entity status, without 
additional correspondence to the Office.
    Response: Office experience with small entity payments is that some 
small entities will occasionally pay patent fees in the full (non-small 
entity) amounts inadvertently. If mere payment of fees in the full or 
small entity amount is treated as a notification of loss of entitlement 
to micro entity status, a micro entity who inadvertently paid a patent 
fee in the full or small entity amount will thereafter no longer be 
treated as a micro entity. This could result in increased costs for 
entities that are entitled to claim micro entity status, and there 
would be a lack of clear documentation on whether micro entity status 
has ceased.
    Comment 24: Several comments indicated that proposed Sec.  1.29(j) 
is vague because the proposed rule does not define what constitutes 
fraud. The comments indicated that the Office should amend the rule to 
make clear what would constitute fraud. One comment stated that fraud 
is a legal conclusion including proof of mental state. One comment 
stated that some small entities not qualifying for micro entity status 
under Sec.  1.29(a) may be tempted to marginally align with a 
university in order to take benefit under Sec.  1.29(d), and requested 
that the Office clarify whether such a strategy would be considered a 
fraud, even if the letter of the rules is met. One comment requested 
guidance on what penalties the Office anticipates enforcing in the 
event that a fraudulent certification is made.
    Response: Section 1.29(j) provides that ``[a]ny attempt to 
fraudulently establish status as a micro entity, or pay fees as a micro 
entity, shall be considered as a fraud practiced or attempted on the 
Office,'' and that ``[i]mproperly, and with intent to deceive, 
establishing status as a micro entity, or paying fees as a micro 
entity, shall be considered as a fraud practiced or attempted on the 
Office.'' The language in Sec.  1.29(j) parallels the corresponding 
small entity provision in Sec.  1.27(h), and thus terms 
``fraudulently'' and ``fraud'' in Sec.  1.29(j) have the same meaning 
as the terms ``fraudulently'' and ``fraud'' in Sec.  1.27(h). The 
definition of common law fraud is based on the definition discussed by 
the U.S. Court of Appeals for the Federal Circuit (Federal Circuit). 
See Unitherm Food Systems, Inc. v. Swift-Ekrich, Inc., 375 F.3d 1341, 
1358 (Fed. Cir. 2004); In re Spalding Sports Worldwide, Inc., 203 F.3d 
800, 807 (Fed. Cir. 2000). Applicants questioning how to resolve close 
situations or what penalties may result from a fraudulent certification 
should consider that: (1) The Federal Circuit has noted that an 
applicant would be ``foolish'' to claim small entity status if there is 
the slightest doubt about an applicant's entitlement to claim small 
entity (DH Tech., 154 F.3d at 1343); (2) depending on future 
developments in the case law, it is possible that a patent could be 
held unenforceable as a consequence of a fraud or inequitable conduct 
relating to a micro entity or small entity certification (this was 
clearly possible for small entity certifications prior to the Federal 
Circuit's decision in Therasense, Inc. v. Becton, Dickinson and Co., 
649 F.3d 1276 (Fed. Cir. 2011) (see, e.g., Nilssen v. Osram Sylvania, 
Inc., 504 F.3d 1223 (2007), and Ulead Systems, Inc. v. Lex Computer 
Management Corp., 351 F.3d 1120 (Fed. Cir. 2003)), but the Federal 
Circuit has not yet decided the question of whether a false declaration 
of small entity status could constitute inequitable conduct under the 
Therasense standard (see Outside the Box Innovations, LLC v. Travel 
Caddy, Inc., 695 F.3d 1285, 1294 (Fed. Cir. 2012); see also Therasense, 
649 F.3d at 1299, n.6 (O'Malley, J., concurring in part and dissenting 
in part)); and (3) there can be further significant penalties for fraud 
(e.g., 35 U.S.C. 257(e) (provides that the matter shall be referred to 
the Attorney General if the Director becomes aware that a material 
fraud on the Office may have been committed in connection with a patent 
that is the subject of a supplemental examination).
    Comment 25: One comment stated that with respect to the provisions 
relating to fraudulent certification (Sec. Sec.  1.29(g) through (k)), 
it would be beneficial to clarify the depth of inquiry which is 
considered acceptable (e.g., good faith attempt) for a representative 
of an applicant to obtain in order to sign a certification. The comment 
indicated that it would be too burdensome on a practitioner to expect 
more than obtaining verbal affirmation from an applicant that the 
applicant meets the guidelines for obtaining micro entity status.
    Response: The depth of inquiry required for any paper presented to 
the Office, including a micro entity status certification, is specified 
in Sec.  11.18. Specifically, Sec.  11.18(b) provides that by 
presenting to the Office or hearing officer in a disciplinary 
proceeding (whether by signing, filing, submitting, or later 
advocating) any paper, the party presenting such paper, whether a 
practitioner or non-practitioner, is making two certifications. The 
first certification is that all statements made therein of the party's 
own knowledge are true, all statements made therein on information and 
belief are believed to be true, and all statements made therein are 
made with the knowledge that whoever, in any matter within the 
jurisdiction of the Office, knowingly

[[Page 75031]]

and willfully falsifies, conceals, or covers up by any trick, scheme, 
or device a material fact, or knowingly and willfully makes any false, 
fictitious, or fraudulent statements or representations, or knowingly 
and willfully makes or uses any false writing or document knowing the 
same to contain any false, fictitious, or fraudulent statement or 
entry, shall be subject to the penalties set forth under 18 U.S.C. 1001 
and any other applicable criminal statute, and further that violations 
of the provisions of this section may jeopardize the probative value of 
the paper. See Sec.  11.18(b)(1). The second certification is that to 
the best of the party's knowledge, information and belief, formed after 
an inquiry reasonable under the circumstances: (1) The paper is not 
being presented for any improper purpose, such as to harass someone or 
to cause unnecessary delay or needless increase in the cost of any 
proceeding before the Office; (2) the other legal contentions therein 
are warranted by existing law or by a nonfrivolous argument for the 
extension, modification, or reversal of existing law or the 
establishment of new law; (3) the allegations and other factual 
contentions have evidentiary support or, if specifically so identified, 
are likely to have evidentiary support after a reasonable opportunity 
for further investigation or discovery; and (4) the denials of factual 
contentions are warranted on the evidence, or if specifically so 
identified, are reasonably based on a lack of information or belief. 
See Sec.  11.18(b)(2).
    Comment 26: Several comments suggested eliminating the requirement 
under proposed Sec.  1.29(k) that any deficiency payment include an 
itemization and an accounting of the total deficiency payment. One 
comment indicated that proposed Sec.  1.29(k) should be revised to 
parallel the rule that applies to an error in paying a small entity fee 
when the large entity fee should have been paid. The comment 
alternatively proposed that the rules could be amended to require: (1) 
One base fee for rectifying the failure to correct micro entity status, 
and (2) an accounting of when the change of status occurred.
    Response: The fee deficiency payment provisions of Sec.  1.29(k) 
track the small entity fee deficiency payment provisions of Sec.  
1.28(c). The Office needs the itemization to properly apply the fee 
deficiency payment so that the Office's records for the application or 
patent will properly show which fees have been paid for the application 
or patent and in what amount.
    Comment 27: One comment suggested the Office establish a database 
of the various certification types and permit annual updating of 
applicant status, rather than individual application status. Another 
comment suggested that Sec.  1.29 be amended to provide for micro 
entity status certifications contained in patent application 
assignments recorded under part 3 of 37 CFR.
    Response: The suggestions are not currently feasible as inventor or 
assignee names are not always stated consistently from application to 
application (either in application papers or in assignment cover 
sheets). The suggestions will be considered if the Office moves to 
adopt a system under which there are unique inventor and applicant-
assignee designations.
    Comment 28: One comment indicated that many practitioners who have 
participated in the LegalCORPS Inventor Assistance Program (a pilot 
patent law pro bono program developed with the support of the Office) 
have seen first-hand that many inventors qualifying for free legal 
assistance through the program will not be able to file applications 
electronically, due in part to being unable to make electronic payments 
via deposit account or credit card. The comment suggested that the 
final rule could address this issue by providing for electronic filing 
of documents along with a written certification by the applicant that 
any fees associated with that filing are being submitted by check 
deposited in the U.S. mail on the date of application filing.
    Response: Electronic filing remains a viable filing option for 
micro entities, even if the applicant does not have a deposit account 
at the Office and even if the applicant does not have sufficient access 
to credit to enable payment by credit card. Fees may be paid by 
electronic funds transfer (EFT), which requires nothing more than a 
checking account. However, before making any payments by EFT, an EFT 
profile must be created at the Office ``Office of Finance On-Line 
Shopping Page'' at https://ramps.uspto.gov/eram/. To begin, click the 
link titled ``Create or Modify an EFT Profile'' on the ``Office of 
Finance On-Line Shopping Page.'' It is important that micro entities 
and other applicants file their applications electronically via EFS-Web 
in order to avoid the non-electronic filing fee under Sec.  1.10, which 
is $400 (and $200 for small and micro entities). Additionally, a small 
or micro entity that files an application in paper (versus 
electronically via EFS-Web) will not receive the discount (currently 
$97.00) available only to small entities that file a patent application 
electronically.

Rulemaking Considerations

    A. Regulatory Flexibility Act: For the reasons set forth herein, 
the Deputy General Counsel for General Law of the United States Patent 
and Trademark Office has certified to the Chief Counsel for Advocacy of 
the Small Business Administration that changes in this final rule will 
not have a significant economic impact on a substantial number of small 
entities. See 5 U.S.C. 605(b). The Office did not receive public 
comments on this certification.
    This final rule revises the rules of practice to allow a subset of 
small entities--i.e., micro entities--to pay further reduced fees, 
namely, a seventy-five percent discount. This final rule sets out 
procedures pertaining to claiming micro entity status, paying patent 
fees as a micro entity, notification of loss of micro entity status, 
and correction of payments of patent fees paid erroneously in the micro 
entity amount. This final rule maintains the criteria in 35 U.S.C. 
123(a) and (d) for entitlement to file a certification of micro entity 
status (note also the requirement in 37 CFR 1.29(d)(1) that an 
applicant claim small entity status in compliance with 37 CFR 1.27 in 
order to claim micro entity status; see also 37 CFR 1.29(h), 35 U.S.C. 
123(e)). This rule also includes clarifications under 37 CFR 1.29(a) to 
refer to non-applicant inventors and joint inventors. The micro entity 
procedures in this final rule track to the extent feasible the 
corresponding small entity procedures under 37 CFR 1.27. Thus, the 
burden to all entities, including small entities, imposed by this final 
rule is no greater than those imposed by the pre-existing regulations 
pertaining to claiming small entity status: paying patent fees as a 
small entity, notification of loss of small entity status, and 
correction of payments of patent fees paid erroneously in the small 
entity amount.
    Requiring that an applicant claim small entity status in compliance 
with 37 CFR 1.27 in order to claim micro entity status under 37 CFR 
1.29(d)(1) will not have a significant economic impact on a substantial 
number of small entities. The Office uses the Small Business 
Administration business size standard for the purpose of paying reduced 
patent fees in 13 CFR 121.802 as the size standard when conducting an 
analysis or making a certification under the Regulatory Flexibility Act 
for patent-related regulations. See Business Size Standard for Purposes 
of United States Patent and Trademark Office Regulatory

[[Page 75032]]

Flexibility Analysis for Patent-Related Regulations, 71 FR 67109, 67109 
(Nov. 20, 2006). A small entity for purposes of the Regulatory 
Flexibility Act analysis is a small entity for purposes of paying 
reduced patent fees. Therefore, requiring in 37 CFR 1.29(d)(1) that an 
entity claim small entity status in compliance with 37 CFR 1.27 in 
order to claim micro entity status will preclude only an applicant or 
patentee who is a large entity (i.e., not a small entity) from claiming 
micro entity status.
    The Office estimates that a minority percentage of small entity 
applications will be filed by paying micro entity fees under this final 
rule. Based upon the data in the Office's Patent Application Locating 
and Monitoring (PALM) system, of the approximately 2,498,000 
nonprovisional patent applications (utility, plant, design, and 
reissue) and requests for continued examination filed in total over the 
last five fiscal years, small entity fees were paid in approximately 
669,000 (26.8 percent). Thus, an average of approximately 500,000 
nonprovisional patent applications and requests for continued 
examination have been filed each year for the last five fiscal years, 
with small entity fees being paid in approximately 134,000 of the 
nonprovisional patent applications and requests for continued 
examination filed each year.
    As indicated above, this rule provides a procedure for small 
entities to attain a 75 percent reduction in fees as a micro entity, as 
provided by statute. The procedures for micro entity status track the 
existing procedures for small entity status. While the rule impacts the 
entire universe of small entity applications and patents, the rule is 
necessary for implementing a further reduction in fees, which is 
entirely beneficial, and no other provision has an economic impact on 
the affected small entities.
    B. Executive Order 12866 (Regulatory Planning and Review): This 
rulemaking has been determined to be not significant for purposes of 
Executive Order 12866 (Sept. 30, 1993).
    C. Executive Order 13563 (Improving Regulation and Regulatory 
Review): The Office has complied with Executive Order 13563. 
Specifically, the Office has, to the extent feasible and applicable: 
(1) Made a reasoned determination that the benefits justify the costs 
of the rule; (2) tailored the rule to impose the least burden on 
society consistent with obtaining the regulatory objectives; (3) 
selected a regulatory approach that maximizes net benefits; (4) 
specified performance objectives; (5) identified and assessed available 
alternatives; (6) involved the public in an open exchange of 
information and perspectives among experts in relevant disciplines, 
affected stakeholders in the private sector, and the public as a whole, 
and provided on-line access to the rulemaking docket; (7) attempted to 
promote coordination, simplification, and harmonization across 
government agencies and identified goals designed to promote 
innovation; (8) considered approaches that reduce burdens and maintain 
flexibility and freedom of choice for the public; and (9) ensured the 
objectivity of scientific and technological information and processes.
    One comment argued that the rulemaking fails to comply with 
Executive Order 13563 on the grounds that: (1) The Office did not 
conduct a burden/benefit analysis which includes realistic professional 
services fees for patent practitioners, the time involved in 
understanding and complying with the rule, and the sanctions imposed by 
rule; (2) proposed 37 CFR 1.29 fails to consider the value to society 
of university inventions, for which 35 U.S.C. 123(d) seeks to provide 
specific benefits, and which imposes no limits on how a university 
might seek to exploit its rights; and (3) proposed 37 CFR 1.29 imposes 
significant burdens for the affected applicants, and is thus not 
tailored to impose the least burden on society consistent with 
obtaining the regulatory objectives.
    The Office considered costs and benefits to applicants claiming 
micro entity status (including universities), as well as to all other 
applicants and the Office in this rulemaking. Executive Order 13563 
reaffirms Executive Order 12866. This rulemaking was deemed by OMB as 
not economically significant as that term is defined in Executive Order 
12866 (Sept. 30, 1993). Therefore, the regulatory analysis provided in 
section 6(a)(3)(C) of Executive Order 12866 and OMB Circular A-4 is 
inapplicable to this rulemaking. The Office, however, did conduct the 
regulatory analysis provided in section 6(a)(3)(C) and OMB Circular A-4 
for the related rulemaking to set and adjust patent fees under section 
10 of the Leahy-Smith America Invents Act. 37 CFR 1.29 does impose the 
least burden on society consistent with obtaining the regulatory 
objectives by permitting an applicant to self-certify entitlement to 
micro entity status, and does not require any further information or 
certification from the applicant provided that the applicant remains 
entitled to micro entity status. In addition, having micro entity 
procedures which track the pre-existing small entity procedures to the 
extent practicable is less burdensome than fashioning new micro entity 
procedures. Finally, while having no requirements would arguably impose 
the least burden on an entity seeking the benefit of micro (or small) 
entity status, it would not impose the least burden on society overall 
and would not obtain the regulatory objectives of creating the 
beneficial option of micro entity status with a seventy-five percent 
fee reduction as provided by statute.
    Revising the regulations as suggested by the comment would expand 
the scope of micro entity status beyond what the statute allows. It 
also would not meet the regulatory objectives of ensuring that a for-
profit, large entity applicant not become a ``micro entity'' (and thus 
obtaining a seventy-five percent discount) merely by licensing or 
assigning some interest (nominal or otherwise) to an institution of 
higher education. The Office received comments (including in response 
to the section 10 rulemaking) in support of the Office imposing 
additional requirements under 35 U.S.C. 123(e) to avoid sham licensing 
agreements for the purpose of improperly claiming micro entity status 
(as improper micro entity claims would result in higher fees for other 
applicants). Thus, the narrow requirements imposed by the Office under 
35 U.S.C. 123(e) are necessary to avoid abuses of micro entity status, 
and simply eliminating them in the name of reducing burden would not 
impose the least burden on society overall and would not obtain the 
regulatory objectives.
    D. Executive Order 13132 (Federalism): This rulemaking does not 
contain policies with federalism implications sufficient to warrant 
preparation of a Federalism Assessment under Executive Order 13132 
(Aug. 4, 1999).
    E. Executive Order 13175 (Tribal Consultation): This rulemaking 
will not: (1) Have substantial direct effects on one or more Indian 
tribes; (2) impose substantial direct compliance costs on Indian tribal 
governments; or (3) preempt tribal law. Therefore, a tribal summary 
impact statement is not required under Executive Order 13175 (Nov. 6, 
2000).
    F. Executive Order 13211 (Energy Effects): This rulemaking is not a 
significant energy action under Executive Order 13211 because this 
rulemaking is not likely to have a significant adverse effect on the 
supply, distribution, or use of energy. Therefore, a Statement of 
Energy Effects is not required under Executive Order 13211 (May 18, 
2001).
    G. Executive Order 12988 (Civil Justice Reform): This rulemaking 
meets

[[Page 75033]]

applicable standards to minimize litigation, eliminate ambiguity, and 
reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive 
Order 12988 (Feb. 5, 1996).
    H. Executive Order 13045 (Protection of Children): This rulemaking 
does not concern an environmental risk to health or safety that may 
disproportionately affect children under Executive Order 13045 (Apr. 
21, 1997).
    I. Executive Order 12630 (Taking of Private Property): This 
rulemaking will not effect a taking of private property or otherwise 
have taking implications under Executive Order 12630 (Mar. 15, 1988).
    J. Congressional Review Act: Under the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.), the United States Patent and Trademark 
Office will submit a report containing this final rule and other 
required information to the United States Senate, the United States 
House of Representatives, and the Comptroller General of the Government 
Accountability Office. In addition, the United States Patent and 
Trademark Office will inform the Committee on the Judiciary of the 
House of Representatives and the Committee on the Judiciary of the 
Senate of any proposed limits under 35 U.S.C. 123(e) at least three 
months before any limits proposed to be implemented pursuant to 35 
U.S.C. 123(e) take effect.
    The changes in this final rule are not expected to result in an 
annual effect on the economy of 100 million dollars or more, a major 
increase in costs or prices, or significant adverse effects on 
competition, employment, investment, productivity, innovation, or the 
ability of United States-based enterprises to compete with foreign-
based enterprises in domestic and export markets. Therefore, this final 
rule is not a ``major rule'' as defined in 5 U.S.C. 804(2).
    K. Unfunded Mandates Reform Act of 1995: The changes set forth in 
this rulemaking do not involve a Federal intergovernmental mandate that 
will result in the expenditure by State, local, and tribal governments, 
in the aggregate, of 100 million dollars (as adjusted) or more in any 
one year, or a Federal private sector mandate that will result in the 
expenditure by the private sector of 100 million dollars (as adjusted) 
or more in any one year, and will not significantly or uniquely affect 
small governments. Therefore, no actions are necessary under the 
provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 
1501 et seq.
    L. National Environmental Policy Act: This rulemaking will not have 
any effect on the quality of the environment and is thus categorically 
excluded from review under the National Environmental Policy Act of 
1969. See 42 U.S.C. 4321 et seq.
    M. National Technology Transfer and Advancement Act: The 
requirements of section 12(d) of the National Technology Transfer and 
Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because 
this rulemaking does not contain provisions which involve the use of 
technical standards.
    N. Paperwork Reduction Act: The Paperwork Reduction Act of 1995 (44 
U.S.C. 3501 et seq.) requires that the USPTO consider the impact of 
paperwork and other information collection burdens imposed on the 
public. This final rule makes changes to the rules of practice that 
would impose new information collection requirements involving fee 
deficiency statements which are subject to review by the Office of 
Management and Budget (OMB) under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501-3549). Accordingly, the Office submitted a proposed 
information collection to OMB for its review and approval when the 
notice of proposed rulemaking was published. The Office also published 
the title, description, and respondent description of the information 
collection, with an estimate of the annual reporting burdens, in the 
notice of proposed rulemaking (See Changes to Implement Micro Entity 
Status for Paying Patent Fees, 77 FR 31812-13).
    The Office received one comment on the proposed information 
collection indicating that the estimate of 3,000 respondents per year 
was a significant underestimate as every inventor employed outside of 
large entities will likely be confronted with the various 
certifications, and that there may be tens of thousands of university 
professors or university students on work-study who qualify under 35 
U.S.C. 123(d).
    The information collection requirements discussed in the notice of 
proposed rulemaking, however, narrowly pertain to the information 
required for fee deficiency payments based upon the previous erroneous 
payment of patent fees in the micro entity amount (See Changes to 
Implement Micro Entity Status for Paying Patent Fees, 77 FR 31812). 
Based upon the number of applicants and patentees who make fee 
deficiency payments under existing 37 CFR 1.28(c) (about 2,250 per 
year), the Office believes that 3,000 respondents per year is a 
reasonable and conservative estimate of the number of applicants and 
patentees who make fee deficiency payments under 37 CFR 1.28(c) or 
1.29(k).
    As discussed in the notice of proposed rulemaking, OMB has 
determined under 5 CFR 1320.3(h) that the certification of micro entity 
status (e.g., Form PTO/SB/15A (gross income basis) or Form PTO/SB/15B 
(institution of higher education basis) does not collect 
``information'' within the meaning of the Paperwork Reduction Act of 
1995 (See Changes to Implement Micro Entity Status for Paying Patent 
Fees, 77 FR 31812). The changes adopted in this final rule do not 
require any further change to the proposed information collection.
    Accordingly, the Office has resubmitted the proposed information 
collection to OMB. The proposed information collection is available at 
the OMB's Information Collection Review Web site (www.reginfo.gov/public/do/PRAMain).
    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall a person be subject to a penalty for failure 
to comply with, a collection of information subject to the requirements 
of the Paperwork Reduction Act, unless that collection of information 
displays a currently valid OMB control number.

List of Subjects in 37 CFR Part 1

    Administrative practice and procedure, Courts, Freedom of 
information, Inventions and patents, Reporting and recordkeeping 
requirements, Small businesses.

    For the reasons set forth in the preamble, 37 CFR part 1 is amended 
as follows:

PART 1--RULES OF PRACTICE IN PATENT CASES

0
1. The authority citation for 37 CFR part 1 continues to read as 
follows:

    Authority:  35 U.S.C. 2(b)(2).


0
2. Section 1.29 is added to read as follows:


Sec.  1.29  Micro entity status.

    (a) To establish micro entity status under this paragraph, the 
applicant must certify that:
    (1) The applicant qualifies as a small entity as defined in Sec.  
1.27;
    (2) Neither the applicant nor the inventor nor a joint inventor has 
been named as the inventor or a joint inventor on more than four 
previously filed patent applications, other than applications filed in 
another country, provisional applications under 35 U.S.C. 111(b), or 
international applications for which the basic

[[Page 75034]]

national fee under 35 U.S.C. 41(a) was not paid;
    (3) Neither the applicant nor the inventor nor a joint inventor, in 
the calendar year preceding the calendar year in which the applicable 
fee is being paid, had a gross income, as defined in section 61(a) of 
the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding three 
times the median household income for that preceding calendar year, as 
most recently reported by the Bureau of the Census; and
    (4) Neither the applicant nor the inventor nor a joint inventor has 
assigned, granted, or conveyed, nor is under an obligation by contract 
or law to assign, grant, or convey, a license or other ownership 
interest in the application concerned to an entity that, in the 
calendar year preceding the calendar year in which the applicable fee 
is being paid, had a gross income, as defined in section 61(a) of the 
Internal Revenue Code of 1986, exceeding three times the median 
household income for that preceding calendar year, as most recently 
reported by the Bureau of the Census.
    (b) An applicant, inventor, or joint inventor is not considered to 
be named on a previously filed application for purposes of paragraph 
(a)(2) of this section if the applicant, inventor, or joint inventor 
has assigned, or is under an obligation by contract or law to assign, 
all ownership rights in the application as the result of the 
applicant's, inventor's, or joint inventor's previous employment.
    (c) If an applicant's, inventor's, joint inventor's, or entity's 
gross income in the preceding calendar year is not in United States 
dollars, the average currency exchange rate, as reported by the 
Internal Revenue Service, during that calendar year shall be used to 
determine whether the applicant's, inventor's, joint inventor's, or 
entity's gross income exceeds the threshold specified in paragraph 
(a)(3) or (4) of this section.
    (d) To establish micro entity status under this paragraph, the 
applicant must certify that:
    (1) The applicant qualifies as a small entity as defined in Sec.  
1.27; and
    (2)(i) The applicant's employer, from which the applicant obtains 
the majority of the applicant's income, is an institution of higher 
education as defined in section 101(a) of the Higher Education Act of 
1965 (20 U.S.C. 1001(a)); or
    (ii) The applicant has assigned, granted, conveyed, or is under an 
obligation by contract or law, to assign, grant, or convey, a license 
or other ownership interest in the particular application to such an 
institution of higher education.
    (e) Micro entity status is established in an application by filing 
a micro entity certification in writing complying with the requirements 
of either paragraph (a) or paragraph (d) of this section and signed in 
compliance with Sec.  1.33(b). Status as a micro entity must be 
specifically established in each related, continuing and reissue 
application in which status is appropriate and desired. Status as a 
micro 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 Sec.  
1.53 as a continuation, divisional, or continuation-in-part application 
(including a continued prosecution application under Sec.  1.53(d)), or 
the filing of a reissue application, requires a new certification of 
entitlement to micro entity status for the continuing or reissue 
application.
    (f) A fee may be paid in the micro entity amount only if it is 
submitted with, or subsequent to, the submission of a certification of 
entitlement to micro entity status.
    (g) A certification of entitlement to micro entity status need only 
be filed once in an application or patent. Micro entity status, once 
established, remains in effect until changed pursuant to paragraph (i) 
of this section. However, a fee may be paid in the micro entity amount 
only if status as a micro entity as defined in paragraph (a) or (d) of 
this section is appropriate on the date the fee is being paid. Where an 
assignment of rights or an obligation to assign rights to other parties 
who are micro entities occurs subsequent to the filing of a 
certification of entitlement to micro entity status, a second 
certification of entitlement to micro entity status is not required.
    (h) Prior to submitting a certification of entitlement to micro 
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 this section. It should be determined 
that each applicant qualifies for micro entity status under paragraph 
(a) or (d) of this section, and that any other party holding rights in 
the invention qualifies for small entity status under Sec.  1.27. The 
Office will generally not question certification of entitlement to 
micro entity status that is made in accordance with the requirements of 
this section.
    (i) Notification of a loss of entitlement to micro entity status 
must be filed in the application or patent prior to paying, or at the 
time of paying, any fee after the date on which status as a micro 
entity as defined in paragraph (a) or (d) of this section is no longer 
appropriate. The notification that micro entity status is no longer 
appropriate must be signed by a party identified in Sec.  1.33(b). 
Payment of a fee in other than the micro entity amount is not 
sufficient notification that micro entity status is no longer 
appropriate. A notification that micro entity status is no longer 
appropriate will not be treated as a notification that small entity 
status is also no longer appropriate unless it also contains a 
notification of loss of entitlement to small entity status under Sec.  
1.27(f)(2). Once a notification of a loss of entitlement to micro 
entity status is filed in the application or patent, a new 
certification of entitlement to micro entity status is required to 
again obtain micro entity status.
    (j) Any attempt to fraudulently establish status as a micro entity, 
or pay fees as a micro entity, shall be considered as a fraud practiced 
or attempted on the Office. Improperly, and with intent to deceive, 
establishing status as a micro entity, or paying fees as a micro 
entity, shall be considered as a fraud practiced or attempted on the 
Office.
    (k) If status as a micro entity is established in good faith in an 
application or patent, and fees as a micro entity are paid in good 
faith in the application or patent, and it is later discovered that 
such micro entity status either was established in error, or that the 
Office was not notified of a loss of entitlement to micro entity status 
as required by paragraph (i) of this section through error, the error 
will be excused upon compliance with the separate submission and 
itemization requirements of paragraph (k)(1) of this section and the 
deficiency payment requirement of paragraph (k)(2) of this section.
    (1) Any paper submitted under this paragraph must be limited to the 
deficiency payment (all fees paid in error) required for a single 
application or patent. Where more than one application or patent is 
involved, separate submissions of deficiency payments are required for 
each application or patent (see Sec.  1.4(b)). The paper must contain 
an itemization of the total deficiency payment for the single 
application or patent and include the following information:
    (i) Each particular type of fee that was erroneously paid as a 
micro entity, (e.g., basic statutory filing fee, two-month extension of 
time fee) along with the current fee amount for a small or non-small 
entity, as applicable;

[[Page 75035]]

    (ii) The micro entity fee actually paid, and the date on which it 
was paid;
    (iii) The deficiency owed amount (for each fee erroneously paid); 
and
    (iv) The total deficiency payment owed, which is the sum or total 
of the individual deficiency owed amounts as set forth in paragraph 
(k)(2) of this section.
    (2) The deficiency owed, resulting from the previous erroneous 
payment of micro entity fees, must be paid. The deficiency owed for 
each previous fee erroneously paid as a micro entity is the difference 
between the current fee amount for a small entity or non-small entity, 
as applicable, on the date the deficiency is paid in full and the 
amount of the previous erroneous micro entity fee payment. The total 
deficiency payment owed is the sum of the individual deficiency owed 
amounts for each fee amount previously and erroneously paid as a micro 
entity.
    (3) If the requirements of paragraphs (k)(1) and (2) of this 
section are not complied with, such failure will either be treated at 
the option of the Office as an authorization for the Office to process 
the deficiency payment and charge the processing fee set forth in Sec.  
1.17(i), or result in a requirement for compliance within a one-month 
time period that is not extendable under Sec.  1.136(a) to avoid the 
return of the fee deficiency payment.
    (4) Any deficiency payment (based on a previous erroneous payment 
of a micro entity fee) submitted under this paragraph will be treated 
as a notification of a loss of entitlement to micro entity status under 
paragraph (i) of this section, but payment of a deficiency based upon 
the difference between the current fee amount for a small entity and 
the amount of the previous erroneous micro entity fee payment will not 
be treated as an assertion of small entity status under Sec.  1.27(c). 
Once a deficiency payment is submitted under this paragraph, a written 
assertion of small entity status under Sec.  1.27(c)(1) is required to 
obtain small entity status.

    Dated: December 14, 2012.
David J. Kappos,
Under Secretary of Commerce for Intellectual Property and Director of 
the United States Patent and Trademark Office.
[FR Doc. 2012-30674 Filed 12-18-12; 8:45 am]
BILLING CODE 3510-16-P