Cost Estimates: Small vs. Large Entity

Whenever we are about to file a patent application, one of the first questions we ask is whether the applicant is a small or large entity. Whether it be a national stage or direct priority or standalone, it is always helpful to know this upfront since USPTO patent filing fees are dictated by the size of the applicant. Filing fees for a small are 50% of those for a large.

What is a Large Entity?

Large entity status is attributed to an applicant with 500 or more employees. The employee count would include any affiliates under the control of the applicant (see 13 CFR 121.103 on how to determine affiliation). The employees of an affiliate or affiliated company may need to be counted if such a company falls within the principles of affiliation under Section 121.103 (e.g., when one controls the other or has the power to control the other).

What is a Small Entity?

To qualify for small entity status, the applicant may be:

  • a “small business concern” with fewer than 500 employees;
  • individual inventor applicants (i.e., “persons”); or
  • non-profit organizations regardless of size, including institutions of higher learning (e.g., universities).

The applicant must not have any obligation under contract or law to assign, grant, convey or license any rights in the invention to a large entity.

Case-by-case determination: same applicant can be both small and large

Entity status is determined on a case-by-case basis with respect to each particular patent application. For an applicant that starts off small, the question is whether this applicant has assigned, granted, conveyed or licensed the invention to a large entity, or is under an obligation to do so [see MPEP 509].

For example, it is entirely possible for an applicant to be a small entity in a first patent application, and yet be a large entity in a second patent application that is licensed to a large entity.

What about a nonprofit organization?

A US nonprofit organization may qualify as a small entity if it falls under one of the following categories [see 37 CFR 1.27(a)]:

a) a university or other institution of higher education located in any country;

b) a 501(c)(3) corporation;

c) a nonprofit scientific or educational organization qualified under a nonprofit organization statue of a state of the US.

A foreign university or other institution of higher learning would automatically qualify as a small entity. All other foreign entities must qualify as a nonprofit under US federal law as a 501(c)(3) corporation or under US state law as a nonprofit scientific or educational organization.

How to request refund for overpayment

If large entity fees were mistakenly paid for an applicant that was in fact a small entity, a request for the refund must be filed within three months of the date of the full fee payment [see 37 CFR 1.28]. This three-month period for requesting a refund is not extendable.

What if you underpay?

The issue here is whether or not such an error occurred in good faith. If the erroneous payment(s) were in good faith, the patent owner may attempt to cure the prior deficient payments by submitting the balance due.

If the erroneous payments were not made in good faith, the result may be an unenforceable patent due to inequitable conduct. A false declaration of small entity status with strong evidence of a high level of intent to deceive may lead to a finding of inequitable conduct.

Need help with your patent application?

Email patent attorney Vic Lin at or call (949) 223-9623 to discuss how we can help you file your patent application.

The following two tabs change content below.

Vic Lin

Startup Patent Attorney, Cofounder at Innovation Capital Law Group
We align ourselves with Davids fighting Goliaths. Our registered patent attorneys help innovators get IP that drives funding, growth and sales. Email or call us so we can get to work on your IP: (949) 223-9623 |