In this article, we break down what inventors and startups need to know about small entity and micro entity patent fee discounts — including how much you’ll save, who qualifies, and what happens if your status changes.
Short Answer & Key Takeaways
You likely qualify for significant USPTO fee discounts if you’re an independent inventor, a startup with fewer than 500 employees, or a nonprofit. Small entities save a healthy 60% on most patent fees, while micro entities save a whopping 80%.
These discounts apply to most major costs that must be borne throughout your patent’s lifecycle, like patent application filing fees, examination fees, issue fees, and maintenance fees.
Entity Size |
Discount |
|
Key Requirement |
|---|---|---|---|
Large |
None |
|
None |
Small |
60% |
|
≤500 employees, nonprofit, or individual |
Micro |
80% |
|
Qualify for small entity status + income/filing limits per inventor |
Entity Status Basics
If you already know the basics, feel free to skip ahead. Otherwise, please read on:
The USPTO recognizes three entity size classifications for patent applicants: large, small, and micro. Your classification determines how much you pay in fees throughout the entire patent process.
Think of it like airline tickets. Everyone’s flying to the same destination (a granted patent), but some passengers pay full fare while others get significant discounts for the same seats. The difference? Some passengers qualify for lower prices based on who they are, like students, active-duty military, or low-income customers. With the USPTO, the discount is based on your size, income, and patent history.
Why This Matters
Patent fees add up fast. Just the USPTO filing, issue, and maintenance fees over a full 20-year utility patent’s life can eventually land around roughly $17,800 at large-entity rates.
At small-entity rates, that’s roughly $7,100, and at micro-entity rates, it’s roughly $3,600. That’s a difference of roughly $11,000 or $14,000 per patent, respectively. If you file multiple patents, the savings compound quickly.
A Quick Note on Outdated Information
You might see other sources citing 50% discounts for small entities and 75% for micro entities. Those figures are outdated.
The Unleashing American Innovators Act of 2022 (UAIA), signed into law on December 29, 2022, immediately increased the discounts to 60% and 80% respectively.1aUnleashing American Innovators Act of 2022, Pub. L. 117-328 ☟See all citations. If you’re reading an article that still quotes the old percentages, the rest of its information may be outdated too.
Discount Examples
Let’s cover a few specific examples of commonly required fees to get a sense of these discounts.
The following examples use USPTO fees effective January 19, 2025.2aUSPTO Fee Schedule ☟See all citations. USPTO fees change periodically, so treat the tables as a snapshot and verify current fees before you file or pay a fee.
Patent Application Filing Fees
When you file a utility patent application, you’ll pay filing + search + examination fees upfront. Right off the bat, just on these initial patent application filing fees, small entity saves $1,200 and micro entity saves $1,600 compared to a large entity:
Fee Type |
Large Entity |
Small Entity |
Micro Entity |
|---|---|---|---|
Filing Fee |
$350 |
$140 |
$70 |
Search Fee |
$770 |
$308 |
$154 |
Examination Fee |
$880 |
$352 |
$176 |
Total
|
$2,000
|
$800
|
$400
|
*Fees shown are approximate and subject to change. Always verify current fees at the USPTO’s Fee Schedule page .2bUSPTO Fee Schedule ☟See all citations.
Issue Fees & Maintenance Fees
We’ve covered the fees for when your patent application first enters the scene, but the savings continue on the other end when your patent is allowed.
There’s an issue fee that’s due upon allowance, then maintenance fees due at 3.5, 7.5, and 11.5 years after the patent grant date:
Fee Type |
Large Entity |
Small Entity |
Micro Entity |
|---|---|---|---|
Issue Fee |
$1,290 |
$516 |
$258 |
3.5-Year Maintenance |
$2,150 |
$860 |
$430 |
7.5-Year Maintenance |
$4,040 |
$1,616 |
$808 |
11.5-Year Maintenance |
$8,280 |
$3,312 |
$1,656 |
Total
|
$15,760
|
$6,304
|
$3,152
|
Note that maintenance fees only apply to utility patents — design and plant patents have no maintenance fees.
*Fees shown are approximate and subject to change. Always verify current fees at the USPTO’s Fee Schedule page .2cUSPTO Fee Schedule ☟See all citations.
Total Lifecycle Savings
Let’s add it all up for a single utility patent maintained for its full 20-year term:
Fee Type |
Large Entity |
Small Entity |
Micro Entity |
|---|---|---|---|
Total USPTO Fees |
-$17,800 |
-$7,100 |
-$3,600 |
Percent saved |
N/A |
+60% |
+80% |
Total Savings vs. Large Entity |
N/A |
+$10,700 |
+$14,200 |
For a startup filing five patents, that’s potentially $66,000 in savings at micro entity rates versus large entity rates. That’s real money that can go toward product development, marketing, or additional patent filings. And these figures aren’t even taking into account the discounts on prosecution that is all but guaranteed to occur between our patent filing and patent allowance examples.
Small Entity Requirements
Small entity status is both a destination and a gateway. You must already qualify as a small entity before you can even consider micro entity status. But if you can only get to small entity status, that’s already buying you the majority of the discount.
To qualify as a small entity, you must fall into one of three categories, and you must not have transferred rights to anyone who doesn’t also qualify.335 U.S.C.§41(h) – Definition of small entity ☟See all citations.
Who Qualifies
Individuals.
If you’re an independent inventor who hasn’t assigned your patent rights, or who has assigned your patent rights but to a company/entity that itself qualifies as a small entity (see the definition below), you’re in.
Small businesses.
Your company (including all affiliates*) must have fewer than 500 employees.1bUnleashing American Innovators Act of 2022, Pub. L. 117-328 ☟See all citations. This follows Small Business Administration (SBA) guidelines4a37 C.F.R.§1.27 – Small entity status requirements ☟See all citations., which generally calculate employee count as an average over the preceding 24 months (or over the period the business has existed, if shorter).
*A note on affiliates: The SBA’s affiliation rules can trip up startups. If your company has investors, parent companies, or sister companies, their employees may count toward your 500-person limit. Common triggers include: a venture capital firm that controls multiple portfolio companies, a parent company with majority voting rights, or family-of-funds structures. When in doubt — especially if your startup has raised institutional funding — verify your aggregate employee count with a qualified attorney.
Nonprofit organizations.
This includes universities, 501(c)(3) tax-exempt organizations, and organizations formed under state nonprofit statutes. Certain qualifying foreign nonprofits also count.
The Assignment Trap
Here’s where many applicants trip up: if you’ve assigned, licensed, or are obligated to assign your patent rights to an entity that doesn’t qualify as a small entity, you lose your small entity status.1cUnleashing American Innovators Act of 2022, Pub. L. 117-328 ☟See all citations.
For example, imagine you’re an independent inventor who signed a development agreement with a Fortune 500 company. That agreement includes a clause granting them an exclusive license to your invention. Even though you personally qualify as a small entity, that license to a large entity disqualifies you from claiming small entity fees.
This applies even to obligations to assign — If your employment contract requires you to assign inventions to your large-entity employer, you can’t claim small entity status, even if you file the patent application yourself.
Government Contracts Exception
There’s one notable exception. If you’ve licensed rights to the federal government5,Executive Order 10096 ☟See all citations.635 U.S.C.§202(c) – Disposition of rights ☟See all citations., that license alone doesn’t disqualify you from small entity status. The government gets a license, but you can still pay reduced fees.
However, if a government agency is listed as an owner (not just a licensee), small entity status isn’t available.
Micro Entity Requirements
While micro entity status affords even deeper discounts, its requirements are also deeper.
There’s a critical distinction: while small entity status focuses primarily on the organization, micro entity status adds requirements that apply to each individual inventor.735 U.S.C.§123 – Micro entity defined ☟See all citations.
This means a startup with just 2 employees might “feel” like it would easily qualify as micro, but its inventors might not qualify if their individual incomes or patent histories exceed the limits.
There are two paths to micro entity status. You only need to qualify under one:
Path 1: Gross Income Basis
This is the most common path. You must meet all four requirements2dUSPTO Fee Schedule ☟See all citations., but there are nuances:
1. Qualify as a small entity.
This is the baseline. If you don’t already qualify as a small entity, micro entity is off the table, unfortunately.2. No more than 4 previous patent applications.
Neither you nor any named inventor can have been named on more than four previously filed U.S. patent applications (but see the important exceptions to this rule).3. Income below the limit.
The gross income for the preceding calendar year (i.e., the year before the current one, so if you’re filing in 2026, it’s your 2025 income) must not exceed three times the median U.S. household income. As of September 2025, that limit is $251,190 (check the latest level hyperlinks 8aUSPTO Micro Entity Status page ☟See all citations.). This limit applies to each named inventor individually, as well as to the applicant and any assignee.8bUSPTO Micro Entity Status page ☟See all citations.4. No rights transferred to high-income parties.
You cannot have assigned, granted, licensed, or conveyed rights to any entity that exceeds the gross income limit (unless that entity is an institution of higher education).
Regarding “2. No more than 4 previous patent applications”
The “four previously filed applications” limit is more nuanced than it first appears. Not all applications count toward the application limit:
DO count toward the application limit: |
DO NOT count toward the application limit: |
|---|---|
U.S. nonprovisional applications (utility, design, plant) |
Provisional applications |
Reissue applications |
Applications assigned to a former employer (the “prior employment exception”) |
PCT applications where you’ve paid the basic national fee to enter the U.S. national stage937 C.F.R.§1.29 – Micro entity status requirements ☟See all citations. |
PCT applications where you never entered the U.S. national stage |
Continuation, divisional, and continuation-in-part (CIP) applications |
Foreign applications (even if you filed 20 patents in Europe, they don’t count) |
Strategic Implications
The fact that certain application types don’t count toward the limit creates strategic opportunities for inventors approaching the threshold.
- Provisional applications are your friend: You can file unlimited provisional applications without affecting your micro entity status. Each provisional gives you a 12-month window to decide whether to “convert” to a nonprovisional (a conversion would count toward the limit). If you’re exploring multiple inventions, you can file provisionals freely at the micro entity discount while you determine which ones merit full patent pursuit.
- PCT applications buy you time: Filing a PCT international application doesn’t count against your limit until you enter the U.S. national stage (typically 30 months after your priority date). You could file PCT applications for several inventions, evaluate their commercial potential over two-plus years, and only enter national stage on the most promising ones.
- Note on PCT application discounts: When filing a PCT application, if you designate the USPTO as the Receiving Office or International Searching Authority (RO or ISA), you do get entity discounts on the transmittal fee and search fee, but you do not get discounts on the international filing fee paid to WIPO — everyone pays the same rate.
The Prior Employment Exception
This exception deserves special attention. If you were required to assign patent applications to a former employer as a condition of your employment, those applications don’t count toward your four-application limit.
There’s no cap on this exception. You could have been named on 50 patent applications during your career at a large corporation, leave to start your own company, and still qualify for micro entity status on your new venture’s first application. As long as all 50 of those prior applications were assigned to your former employer.
Example: Sarah, a software engineer, left her job at BigTech Corp where she was named on 12 patent applications (all assigned to BigTech under her employment agreement). She starts her own company and files four patent applications as a micro entity, saving 80% on fees. Her BigTech applications don’t count thanks to the prior employment exception.
Existing micro entity applications stay micro entity
Here’s something many people miss: if you’re paying micro entity fees on applications 1 through 4, and then you file application 5 (hitting the limit), applications 1-4 don’t suddenly become small entity. They remain eligible for micro entity fees. Only the fifth application and beyond must be filed at small entity rates.
This means you can continue paying micro entity maintenance fees on your earlier patent cases even after you’ve exceeded the application limit on new filings.
Example: Sarah, the software engineer from the prior example, files her fifth application. She can no longer claim micro entity status for new filings and now must pay their fees at the small entity rate. But those first four applications? She can still pay micro entity rates on their issue fees and maintenance fees for years to come.
Regarding “3. Income below the limit”
For U.S. taxpayers, “gross income” aligns with “total income” as reported on your tax return. Specifically:
- Individuals: IRS Form 1040, Line 9
- Partnerships: IRS Form 1065, Line 8
- Corporations: IRS Form 1120, Line 11
Important: if you’re married and file jointly, the limit applies to your individual income, not your combined household income. You calculate what your gross income would have been if you had filed separately.
Watch out for one-time income spikes. A capital gain from selling stock or real estate could push you over the limit for that year, even if your regular income is well below. You’d lose micro entity eligibility until the following year when that income is no longer in your “preceding calendar year”.
Path 2: Higher Education Basis
This alternative path doesn’t have income nor application limits. You qualify if:
Option A: You’re employed by a U.S. institution of higher education, and the majority of your income comes from that employment.
Option B: You’ve assigned (or are obligated to assign) ownership of your invention to such an institution.
The institution must qualify as an “institution of higher education” under U.S. law.1020 U.S.C.§1001 – General definition of institution of higher education ☟See all citations. That generally means a US-based, accredited, nonprofit institution that awards bachelor’s degrees (or two-year programs creditable toward a bachelor’s degree). Some edge cases — such as affiliated research foundations or specialized academic entities — can require closer analysis.
One catch: the university itself typically can’t be listed as the applicant and claim micro entity status. The inventor must be listed as the applicant, with the university as the assignee.
Multiple Inventors
When multiple inventors are named on an application, each inventor must independently qualify for micro entity status (via either path 1 or 2).2eUSPTO Fee Schedule ☟See all citations. If even one inventor fails to qualify under either path, the entire application loses micro entity eligibility.
Joint inventor income matters individually — not combined. If one co-inventor earns $300,000 and another earns $100,000, the application can’t claim micro entity status, even though the average is below the limit. Each person must independently qualify.
However, the application may still qualify for small entity status, so you’d pay 60% less rather than 80% less.
How to Claim Status
Claiming your entity status isn’t complicated, but it does require the right paperwork at the right time.
But before proceeding to the next subsections, a note on “applicant” vs. “inventor” might be helpful: Under the America Invents Act (AIA), the “applicant” listed on a patent application can be either the inventor or an assignee (like a company).
This matters for entity status because the certification must come from the applicant. If your company is listed as applicant, the company’s status controls. If inventors are listed as applicants, each inventor’s individual status matters.
Small Entity Status
For small entity status, you must file a written assertion of entitlement, typically by checking the “Applicant claims small entity status” box on your application transmittal form.2fUSPTO Fee Schedule ☟See all citations. Simply paying at the small entity fee rate is not sufficient to establish status for basic filing fees.
No separate form is required (as opposed to the case of micro entity). However, you are making a legal certification by doing so, so be certain you actually qualify.
Micro Entity Status
Micro entity status requires a formal certification form:
Path 1: Form PTO/SB/15A – For the gross income basis (income and filing history)4b37 C.F.R.§1.27 – Small entity status requirements ☟See all citations..
Path 2: Form PTO/SB/15B – For the institution of higher education basis.
Signature
The form must be signed by an authorized party. Who counts as authorized?
- A registered patent practitioner (patent attorney or agent) representing the applicant.
- The sole inventor (if they’re identified as the applicant).
- All joint inventors (if inventors are identified as applicants).
Corporate officers cannot sign the micro entity certification unless they’re also registered patent practitioners. This is a common stumbling block for startups.
Timing
You can file the micro entity certification at any time during prosecution. It’s most efficient to file it with your initial application, so you pay micro entity fees from the start.
If you initially paid small entity or large entity fees but later realize you qualify for micro entity status, you can submit the certification going forward. However, you generally cannot get refunds for previously overpaid fees.
Interestingly, you can later qualify for micro entity status even if you didn’t qualify when you first filed. For example, if your income dropped below the threshold or if the income limit increased. Eligibility is determined at the time each fee is paid, not at the filing date.
When Status Changes
Your entity status isn’t set in stone. Circumstances change — your company grows, you license rights to a larger entity, your income increases, or you file your fifth patent application.
When this happens, you have legal obligations. Ignoring them can jeopardize your patent.
Common Triggers for Losing Entity Status
Losing micro entity status:
- Your income exceeds the limit (watch out for bonuses, stock sales, or inheritance).
- You’re named on your fifth U.S. patent application.
- You assign or license rights to a party that exceeds the income limit.
- If qualifying under the higher education basis: you leave the university, or your primary income shifts elsewhere.
Losing small entity status:
- Your company grows beyond 500 employees.
- You assign or license rights to a large entity.
- You merge with or are acquired by a company that doesn’t qualify.
What to Do Next
The moment you no longer qualify for your current entity status, you must notify the USPTO before or at the time you pay your next fee.
You cannot simply start paying the higher fee amount without written notification. The USPTO requires explicit notice of your status change.
For micro ➜ small entity, file USPTO Form PTO/SB/460 (or another written notice of loss of micro entity status) before you pay your next fee at the higher rate. You don’t need to explain why — you just need to notify the USPTO.
For small ➜ large entity, file USPTO Form PTO/SB/474 (or another written notice of loss of small entity status) before you pay the next issue fee or maintenance fee at the higher rate.
What If You Didn’t Handle It Immediately?
Life happens. Maybe you didn’t realize you’d lost eligibility. Maybe a licensing deal closed while your patent application was sitting with the examiner, and you didn’t think about the entity status implications.
The good news: errors made in good faith can be excused. Here’s what you need to do:
Step 1: Calculate the deficiency — the difference between what you incorrectly paid since the loss of entity status, and that fee amount at the correct entity rate TODAY (not at the time paid).
Step 2: Pay the deficiency to the USPTO.
Step 3: Submit a statement that the error occurred in good faith, along with an itemization of each fee that was underpaid.
The USPTO is generally understanding about good faith errors. The key phrase is “good faith” — you genuinely didn’t know you’d lost eligibility. If you knew you didn’t qualify but paid reduced fees anyway, that’s a different situation entirely (see the next section).
Timing Milestones
There are critical moments when you must reassess your entity status:
Small Entity Status |
Micro Entity Status |
|---|---|
|
|
Yes, micro entity status requires more vigilance. That 80% discount comes with more frequent check-ins.
Can You Regain Status?
Yes, but only in certain circumstances. You can regain micro entity status if the reason for your disqualification changes. For example:
- Your income drops below the threshold in a subsequent year.
- The income limit increases and you now fall below it.
- A license to a large entity terminates.
However, once you’ve exceeded the four-application limit, you generally can’t regain micro entity eligibility under the gross income basis. You’ll have filed too many applications. The exception is if all your prior applications were assigned to former employers.
The higher education path doesn’t have an application limit, so if you return to academia after a stint in industry, you might regain eligibility that way.
Consequences of Errors
Getting your entity status wrong isn’t just an administrative hiccup. The consequences range from annoying to catastrophic.
The New Penalty System
In 2023, Congress added teeth to entity status enforcement.1dUnleashing American Innovators Act of 2022, Pub. L. 117-328 ☟See all citations. The USPTO now has statutory authority to impose financial penalties for false claims of small or micro entity status.
The penalty: at least three times the amount you underpaid.
So if you paid $2,000 less than you should have over the life of a patent, you could owe a minimum of $6,000 in penalties, on top of the original $2,000 deficiency you still owe.
The statute expressly allows penalties even if discovered after issuance, and it does not state a time limit. The USPTO can assess these penalties whether they discover the false claim before or after your patent issues. A patent granted in 2020 with incorrect entity status claimed could face penalties when discovered in 2030.
Patent Enforceability
Even more serious: claiming the wrong entity status can render your patent unenforceable.
The USPTO considers fraudulently claiming entity status (with intent to deceive) as fraud practiced on the Patent Office. Courts have held that patents obtained through fraud may be unenforceable, meaning you can’t use them to stop infringers, rendering the patent valueless.
Real-world scenario: A startup founder claims micro entity status when filing. Two years later, the company closes a Series A round that pushes total employee count (including affiliates through VC control) past 500. The founder forgets to update entity status. Years later, during patent litigation, the defendant’s lawyers discover the discrepancy, because they’ll be reviewing the patent with a fine tooth comb. Suddenly, the enforceability of the entire patent is called into question — right when the company needs it most.
The Good Faith Exception
A December 2024 amendment added an explicit good-faith exception to the penalty provisions, meaning applicants who incorrectly claimed entity status in good faith may avoid the statutory penalty (though they must still pay any underpaid fees).1135 U.S.C.§41(j) – Patent fees; patent and trademark search systems ☟See all citations.
If you incorrectly claimed entity status but did so in good faith — meaning you genuinely believed you qualified — the penalty provisions don’t apply. You’ll still need to pay the deficiency, but you won’t face the 3x multiplier.
What constitutes “good faith”?
- You reasonably believed you met the requirements based on the information available to you
- You made a genuine error, not a calculated attempt to save money
- You promptly corrected the error when you discovered it
What’s not good faith?
- Knowing you didn’t qualify but hoping you wouldn’t get caught
- Ignoring warning signs that your status had changed
- Failing to reassess at required milestones
Referral to Office of Enrollment and Discipline
If the USPTO determines that a registered patent practitioner (attorney or agent) was involved in fraudulent entity status claims, the matter can be referred to the Office of Enrollment and Discipline (OED).
This can result in sanctions, suspension, or even disbarment from practice before the USPTO. It’s why experienced patent attorneys take entity status certifications seriously — they’re putting their careers on the line too.
For the same reason, some attorneys/firms are less proactive about qualifying clients for discounts, so it’s a good idea to explore the possibility for yourself.
Practical Tips
After handling countless patent applications, a few best practices emerge for managing entity status successfully.
Document Your Qualification
When you first claim small or micro entity status, document why you qualify. Keep a record of:
- Employee count at the time of filing
- Prior patent applications in which inventors were named
- Gross income for each inventor (for micro entity)
- Any relevant licensing or assignment agreements
If questions arise years later — when memories have faded and personnel have changed — you’ll have contemporaneous evidence of your good faith basis for claiming that status.
Review Before Major Transactions
Before signing any licensing agreement, acquisition document, or partnership deal, consider the entity status implications. A great business deal can inadvertently disqualify you from small or micro entity status across your entire patent portfolio.
Build entity status review into your deal checklist. Your patent attorney should flag this, but being aware yourself provides an additional safeguard.
When in Doubt, Ask
Entity status isn’t always black and white. Complex corporate structures, international operations, and unusual licensing arrangements can create genuine ambiguity.
When you’re uncertain, consult with a patent attorney. The cost of that consultation is far less than the cost of penalties or an unenforceable patent. And if you’re a pro se filer (meaning representing yourself), visiting the USPTO’s Pro Se Assistance Program page or contacting the Pro Se Assistance Center (866-767-3848) can provide guidance.
Conclusion
The USPTO’s entity status system offers substantial savings — 60% for small entities, 80% for micro entities — that can easily save you tens of thousands of dollars over the life of your patent portfolio.
The key is understanding what you actually qualify for. Small entity status focuses on the organization: size, nonprofit status, and who you’ve assigned rights to. Micro entity status adds individual requirements: each inventor’s income, patent history, or involvement with higher education must fall within the limits.
Claiming the wrong status isn’t worth the risk. With penalties now set at 3x the underpaid amount and potential patent enforceability issues on the line, the smart approach is to claim conservatively and reassess regularly.
If you qualify for these discounts, take advantage of them. If you’re not sure, get clarity before you file. The savings are significant, and the rules are navigable with the right guidance.
What do you think? Do you have any further questions about this article? Did it answer your questions?
We’d love to hear your feedback in the comments below! We’ll happily respond to any further questions and modify this article accordingly.
- [1a]☝︎Return to cited text. [1b]☝︎Return to cited text. [1c]☝︎Return to cited text. [1d]☝︎Return to cited text. Unleashing American Innovators Act of 2022, Pub. L. 117-328
- [2a]☝︎Return to cited text. [2b]☝︎Return to cited text. [2c]☝︎Return to cited text. [2d]☝︎Return to cited text. [2e]☝︎Return to cited text. [2f]☝︎Return to cited text. USPTO Fee Schedule
- [3]☝︎Return to cited text. 35 U.S.C.§41(h) – Definition of small entity
- [4a]☝︎Return to cited text. [4b]☝︎Return to cited text. 37 C.F.R.§1.27 – Small entity status requirements
- [5]☝︎Return to cited text. Executive Order 10096
- [6]☝︎Return to cited text. 35 U.S.C.§202(c) – Disposition of rights
- [7]☝︎Return to cited text. 35 U.S.C.§123 – Micro entity defined
- [8a]☝︎Return to cited text. [8b]☝︎Return to cited text. USPTO Micro Entity Status page
- [9]☝︎Return to cited text. 37 C.F.R.§1.29 – Micro entity status requirements
- [10]☝︎Return to cited text. 20 U.S.C.§1001 – General definition of institution of higher education
- [11]☝︎Return to cited text. 35 U.S.C.§41(j) – Patent fees; patent and trademark search systems
