What To Do When An Applicant’s Entity Status Changes During Prosecution

INTRODUCTION
Applicants who qualify as small entities as defined by 37 CFR 1.27(a) enjoy a 50% reduction in most government fees.  And, in most cases, a small entity applicant remains a small entity throughout the prosecution of an application. This is not always the case, however. Through growth, acquisition, or sale, it is not uncommon for a small entity applicant to no longer meet the requirements for small entity status. This raises a question – what are an Applicant’s obligations when small entity status no longer applies?  Fortunately, there is a rule that addresses this circumstance and it is rather clear.

SUMMARY OF THE RULE – 37 CFR 1.27
37 CFR § 1.27 addresses both (i) when an Applicant must make a determination of entitlement to small entity status and (ii) when the USPTO must be notified of a loss of entitlement to small entity status. The Rule provides the following:

1. Only one assertion is required to establish small entity status and that once established small entity status remains in effect until changed. (37 CFR § 1.27(e)(1));

2. A new determination of entitlement to small entity status is needed when Issue and Maintenance Fees are due. (37 CFR § 1.27(g)(1));

3. After small entity status has been established, small entity fees may properly be paid thereafter without regard to a change in status until an Issue or Maintenance Fee is due. (37 CFR § 1.27(g)(1)); and

4. Notification of loss of entitlement to small entity status is required when Issue and Maintenance Fees are due and must be in writing – payment of a fee in other than the small entity amount is not sufficient notification. (37 CFR § 1.27(g)(2)).

Thus, an Applicant is only required to make a determination of entitlement to small entity status at three specific times during the patenting process. The first is at the time of filing. The second is with payment of the Issue Fee. The third is when any Maintenance Fee is due.

THE PRACTICAL RESULTS OF THE RULE
In practice, the scheme established by Rule 27 yields some very Applicant-friendly results.  Consider the following:

1.  An Applicant need not notify the USPTO of a change in entity status until the payment of the Issue Fee, regardless of when the status change occurred.

2.  Also, an Applicant who no longer qualifies as a small entity need not pay large entity fees until payment of the Issue Fee, regardless of when the status change occurred.

Stated differently, once small entity status has properly been established, an Applicant may continue to pay small entity fees until payment of the Issue Fee, even after the Applicant would no longer qualifies as a small entity.

A FEW ADDITIONAL POINTS
1. Section 509.03 of the Manual of Patent Examining Procedure (MPEP) addresses the mechanics of claiming small entity status and should be a primary resource.

2. The USPTO treats payment of the small entity basic filing fee or the basic national fee with a new application as a written assertion of entitlement to small entity status even if the type of basic filing or basic national fee is inadvertently selected in error. 37 CFR 1.27 (c)(3).

3. Status as a small entity must be specifically established by a separate, written assertion in each related, continuing, and/or reissue application. 37 CFR 1.27 (c)(4).

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The Law Office of Michael E. Kondoudis
Trademark Attorney DC 
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