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When is a Small Business not a Small Entity?
Generally, patent attorneys and patent agents are aware that under its regulations, the Patent and Trademark Office (USPTO) allows certain parties, such as small businesses (referred to generally as “small entities”), to pay reduced fees. This can be a big benefit to small businesses and individual inventors, many of whom have only limited funds with which to prosecute a patent. Most attorneys and agents evaluate a client for small entity status based on the “500 employee rule” ' if the client has fewer than 500 employees, they are a small entity. This rule serves well for a quick “ball park” determination and the elimination of large clients from eligibility, however determining whether a party truly qualifies as a small entity is more complicated. For example, in certain circumstances, a company that qualifies as a small business under the Small Business Administration's (SBA) guidelines might not necessarily qualify as a small entity for the purpose of paying reduced USPTO fees. Improperly claiming small entity status can open the patent to attack during litigation, and the cost of defending against such a claim can easily exceed the savings on government fees.
35 U.S.C. '41(h) and 37 C.F.R. '1.27(b) allow small entities to pay reduced fees. 37 C.F.R. '1.27(a) sets forth some basic rules for evaluating when a party qualifies as a small entity. The evaluation is based on three different classifications: persons, nonprofit organizations, and small business concerns.
1. Solo inventors. 37 C.F.R. '1.27(a)(1) states that solo inventors, in their capacity as individuals, can qualify as small entities. To qualify, an individual must simply not have assigned, granted, conveyed, or licensed rights in the invention, or be under an obligation to assign, grant, convey, or license such rights, to a large entity. (Persons who license their rights to the U.S. government resulting from a rights determination under Executive Order 10096 can still qualify as a small entity, however.) If, for example, an individual inventor has developed a new airplane engine and already convinced a 500-plus employee firm to license the invention prior to applying for a patent, the individual inventor will be treated as a large entity and must pay the associated large entity fees.
Bonus Content: How Emerging Technologies Are Impacting IP: A Chat With Legalweek Speaker Ryan Phelan
A Q&A with conference speaker Ryan Phelan, a partner at Marshall, Gerstein & Borun and founder and moderator of legal blog PatentNext, to discuss how courts and jurisdictions are handling novel technologies, the copyrightability of AI-assisted art, and more.
Overview of Regulatory Guidance Governing the Use of AI Systems In the Workplace
Businesses have long embraced the use of computer technology in the workplace as a means of improving efficiency and productivity of their operations. In recent years, businesses have incorporated artificial intelligence and other automated and algorithmic technologies into their computer systems. This article provides an overview of the federal regulatory guidance and the state and local rules in place so far and suggests ways in which employers may wish to address these developments with policies and practices to reduce legal risk.
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While Federal Legislation Flounders, State Privacy Laws for Children and Teens Gain Momentum
For decades, the Children’s Online Privacy Protection Act has been the only law to expressly address privacy for minors’ information other than student data. In the absence of more robust federal requirements, states are stepping in to regulate not only the processing of all minors’ data, but also online platforms used by teens and children.
Revolutionizing Workplace Design: A Perspective from Gray Reed
In an era where the workplace is constantly evolving, law firms face unique challenges and opportunities in facilities management, real estate, and design. Across the industry, firms are reevaluating their office spaces to adapt to hybrid work models, prioritize collaboration, and enhance employee experience. Trends such as flexible seating, technology-driven planning, and the creation of multifunctional spaces are shaping the future of law firm offices.