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Small Entity and Micro Entity Status for Patent Fees

April 26, 2026 Aruna 10 min read
uspto small entity discount percentage 2026 — intellectual property law and protection

The USPTO small entity discount percentage 2026 applicants receive is 60 percent, and micro entities receive 80 percent. Both numbers have been in place since the end of 2022, and both are easier to lose than most filers expect.

Patent fees can be a significant financial burden, particularly for independent inventors and small companies. Fortunately, the USPTO provides substantial fee discounts for applicants who qualify as small entities or micro entities. Understanding how to qualify for and maintain these reduced fee statuses can save you thousands of dollars throughout the patent prosecution process and during the life of your patent. At PerspireIP, we help our clients qualify for the appropriate entity status and ensure ongoing compliance. This guide explains everything you need to know about small entity and micro entity patent fee reductions.

Overview of USPTO Fee Discounts

The USPTO provides fee reductions for qualifying small and micro entities to encourage innovation among individuals and small businesses that might otherwise be unable to afford patent protection. The current fee discount structure is:

  • Large entity: full fees — no discount.
  • Small entity: 60% reduction — pays 40% of the large entity fee.
  • Micro entity: 80% reduction — pays 20% of the large entity fee.

These discounts apply to most USPTO patent fees, including filing fees, search fees, examination fees, issue fees, and maintenance fees. Over the lifetime of a patent — from initial filing through three rounds of maintenance fees — the savings from qualifying as a small or micro entity can amount to tens of thousands of dollars for complex applications with many claims.

Small Entity Status: Who Qualifies?

Small entity status is available to three categories of applicants. First, individual inventors qualify as small entities, provided they have not assigned, granted, conveyed, or licensed their rights in the invention to any entity that would not qualify as a small entity. An inventor who has already assigned the invention to a large corporation cannot claim small entity status. Second, small businesses qualify if they have fewer than 500 employees, including employees of affiliates. The 500-employee threshold is measured using Small Business Administration (SBA) guidelines, which count employees of all entities affiliated with the business. Third, nonprofit organizations qualify, including universities, charitable organizations, and scientific or educational institutions, regardless of their size or revenue.

Micro Entity Status: Who Qualifies?

Micro entity status provides the largest fee discount — 80% off large entity fees — and is available under two alternative bases: the gross income basis and the institution of higher education basis.

Gross Income Basis

Under the gross income basis, a micro entity applicant must qualify as a small entity, must not have been named as an inventor on more than four previously filed patent applications (with certain exclusions), must not have had a gross income exceeding three times the median household income for the preceding calendar year (approximately $195,000 as of recent thresholds — verify current thresholds with the USPTO), and must not have assigned, granted, or licensed rights to an entity that exceeds the gross income limit or that has a financial interest in the application and exceeds the limit. All named inventors must satisfy all of these requirements.

Institution of Higher Education Basis

Under the higher education basis, a micro entity applicant must qualify as a small entity and must either be employed by an institution of higher education, assign the invention to an institution of higher education, or be obligated to assign the invention to an institution of higher education. This basis allows university researchers and inventors who work at or assign to qualifying universities to claim micro entity status regardless of their personal income or number of prior filings, making it particularly valuable for academic inventors.

How to Claim Small or Micro Entity Status

Claiming small entity status is straightforward — you assert small entity status on the fee payment forms submitted with your application. No separate certification form is required, though you are certifying to the USPTO that you qualify. Claiming micro entity patent fees requires filing a specific certification form with the USPTO — either a Certification of Micro Entity Status (Gross Income Basis) or a Certification of Micro Entity Status (Institution of Higher Education Basis). These forms must be signed by the applicant or a registered practitioner. You can claim micro entity status at the time of filing or at any subsequent fee payment.

Maintaining Entity Status: Ongoing Obligations

Entity status is not a one-time determination — you must re-evaluate your status at every fee payment. If your circumstances change and you no longer qualify for the reduced fee status you have been claiming, you must notify the USPTO and begin paying the correct fee amount. Specifically, you must notify the USPTO of a loss of entitlement to micro entity status at the time of the fee payment when the change occurred.

  • If a small business grows beyond 500 employees, it loses small entity status.
  • If an inventor’s gross income exceeds the micro entity threshold, they lose micro entity status.
  • If a patent is assigned to a large corporation, the remaining prosecution must be conducted at large entity rates.
  • If a licensee that does not qualify as a small entity is granted rights in the invention, small entity status is lost.

Consequences of Fraudulent Entity Status Claims

Intentionally claiming an entity status you do not qualify for — paying micro entity patent fees when you are actually a large entity — constitutes fraud on the USPTO and can result in the invalidation of the affected patent or application. While inadvertent errors can generally be corrected by paying the difference in fees, intentional misrepresentation is treated very seriously. The USPTO may also impose additional sanctions, and the patent may be unenforceable due to inequitable conduct. Careful compliance with entity status requirements is essential.

Fee Reduction Examples

To illustrate the savings available, consider the following comparison for a typical utility patent application. For a large entity, the basic filing, search, and examination fees total approximately $1,820. For a small entity claiming 40% of large entity rates, the same fees total approximately $730 — saving $1,090. For a micro entity claiming 20% of large entity rates, the fees total approximately $365 — saving $1,455 compared to large entity rates. When you factor in issue fees, maintenance fees, and potential RCE or continuation application fees over the life of a patent, total savings for a micro entity compared to a large entity can easily exceed $15,000-$20,000 per patent.

How PerspireIP Helps with Entity Status

At PerspireIP, we evaluate entity status for every client at the outset of each engagement and at each subsequent fee payment. We help inventors and small companies document their qualification, prepare micro entity certification forms, monitor for changes in status, and notify the USPTO of any status changes that affect fee obligations. Our goal is to ensure our clients pay only the fees they owe — no more, no less.

What the USPTO Small Entity Discount Percentage 2026 Filers Get Covers

The current rates come from the Unleashing American Innovators Act of 2022, signed on 29 December 2022. It raised the small entity reduction from 50 percent to 60 percent and the micro entity reduction from 75 percent to 80 percent. Those are the figures in force today; there has been no further change to the percentages since.

The discount reaches further than most applicants use it for. It applies across the patent fees the Office sets under 35 U.S.C. 41, which includes the filing, search and examination fees, excess claim fees, extension of time fees, the issue fee and every maintenance fee. On a single application carried to full term, the difference between undiscounted and micro entity rates runs into five figures.

Two limits are worth knowing before you build a budget on it. US entity status does not reduce the international filing fee or the international search fee payable in the PCT international phase, which have their own separate reduction scheme with different eligibility criteria. Nor does it reach fees that sit outside section 41, such as the fee for recording an assignment.

The micro entity route also has an income test that moves every year, because it is pegged to census data rather than fixed in the statute. We track the current figure separately in our note on the micro entity gross income limit.

The 500-Employee Test and the Licensing Trap

Under 37 CFR 1.27 a small entity is a person, a small business concern, or a nonprofit organisation. Small business concern takes its meaning from the Small Business Administration size standard at 13 CFR 121.802: no more than 500 employees, counting affiliates rather than the filing company alone.

Headcount is not what usually costs companies their status. The provision that does the damage is the rights test. Entitlement is lost if any rights in the invention have been assigned, granted, conveyed or licensed to an entity that would not itself qualify as a small entity, or if there is an obligation under contract or law to do so.

Read that carefully, because it catches ordinary commercial deals. A twelve-person startup that grants an exclusive licence to a multinational has lost small entity status for that application on the day the licence is signed, even though nothing about its own size changed. So has a company whose development agreement obliges it to assign future improvements to a large customer. The obligation counts, not just the transfer.

There is one carve-out that matters to university and federally funded work. Rights conveyed to a Federal agency as a result of a funding agreement do not, on their own, defeat small entity status. That is why a grant-backed applicant can usually still claim the discount despite the government retaining a licence.

Correcting an Entity Status Error Before It Costs You the Patent

Entity status is not a declaration you make once at filing. Entitlement has to be determined again when the issue fee is paid and again at each maintenance fee payment, and the applicant is obliged to notify the Office if entitlement has been lost. A company that qualified at filing and signed a major licence in year four is expected to catch that itself.

Good-faith mistakes are fixable. Where status was established in good faith and fees were paid in error at the reduced rate, 37 CFR 1.28(c) allows the error to be cured by paying the deficiency, accompanied by an itemised statement setting out each fee, what was paid and what was owed. Done promptly, this is an administrative correction rather than a crisis.

Mistakes that are not made in good faith are a different category entirely. In Nilssen v. Osram Sylvania the Federal Circuit affirmed that although misrepresenting small entity status is not, strictly speaking, inequitable conduct in the prosecution of a patent, a district court is not beyond its authority in holding a patent unenforceable for inequitable conduct in misrepresenting entity status to justify small entity payments. Fifteen patents were held unenforceable in that case on a combination of grounds.

The practical response is unglamorous and effective: record entity status as a docketed item that is re-verified at the issue fee and at each maintenance window, and treat every licence, assignment and funding agreement as an event that triggers a re-check. The saving is real, but it is worth having only if the patent survives to be enforced.

Conclusion

Small entity and micro entity status provide substantial financial relief that makes patent protection accessible to independent inventors and small businesses who might otherwise be priced out of the patent system. Understanding the qualification criteria, claiming the correct status at each fee payment, and monitoring for status changes are essential components of cost-effective patent portfolio management. PerspireIP is here to help you navigate entity status requirements and maximize your fee savings throughout the patent lifecycle. Contact us today to determine whether you qualify for reduced patent fees and how we can help you build a strong patent portfolio at a cost that works for your business.