Micro Entity Status For Universities And AIA Rulemaking On Power Of Attorney

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By Max Colice, Joe Teja, Jennifer Vandenplas, and Matthew A. Smith

The US Patent and Trademark Office recently introduced a discounted “micro entity” rate on official fees for qualifying universities. Unfortunately, recent changes in the USPTO’s rules on applicants and powers of attorney hinders a qualifying university from benefiting from the micro entity discount. Here, we explain how the rules on micro entity status, applicants, and powers of attorney conflict with each other and offer suggestions for taking advantage of the micro entity discount without running afoul of the rule changes.

On March 19, 2013, the USPTO began offering a 75% discount on certain official fees to applicants that met one of the micro entity definitions laid out in new 35 U.S.C. § 123. Two of these definitions were intended to benefit universities, but the statutory language and recent rule changes complicate a university’s ability to take advantage of the micro entity discount. Here, we review the interplay between the statute and the new USPTO rules and describe three possible ways for a qualifying university to benefit from micro entity rates.

When Congress enacted the Leahy-Smith America Invents Act (AIA) in 2011, it defined micro entities to include applicants who were employed by “qualifying universities” (i.e., nonprofit institutions of higher education in the United States as defined in 20 U.S.C. § 1001(a) [1]) and applicants who assigned or licensed their rights to such qualifying universities. The micro entity definitions pertaining to qualifying universities appear in new 35 U.S.C. § 123(d), which reads:

(d) Institutions of Higher Education. -For purposes of this section, a micro entity shall include an applicant who certifies that-

(1) the applicant’s employer, from which the applicant obtains the majority of the applicant’s income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or

(2) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular applications to such an institution of higher education.

Thus, under these provisions, an applicant can qualify as a micro entity by assigning an application to a qualifying university. A university that receives such an assignment, however, cannot necessarily qualify as a micro entity.

Even though the statute does not explicitly define micro entities to include universities, the legislative history suggests that Congress intended universities to benefit from micro entity rates. For instance, in a speech on the House floor, Representative Lamar Smith summarized § 123(d) as follows:

Institutions of higher education qualify for “micro entity” status when paying fees. In other words, an inventor who works for a university or who assigns or conveys an invention to a university qualifies for lower micro entity fee status. [2]

This ostensible Congressional intent would have been realized before AIA-related rule changes. Before the enactment of the AIA, “applicant” was synonymous with “inventor.” An inventor/applicant typically would assign a patent application to his employer, which could assume control of prosecution by submitting evidence of the assignment with a power of attorney. Thus, under the pre-AIA rules, a qualifying university would have been able to benefit from an applicant’s micro entity status in a way envisioned by Representative Smith by either employing the applicant or receiving an assignment from the applicant.

Unfortunately, recent USPTO changes to the definition of “applicant” and the rules on powers of attorney complicate a university’s ability to benefit from the new micro entity rates. Under the new USPTO rules, the “applicant” can be either the inventor(s) or the assignee. In either case, however, the new rules require a power of attorney to be signed by the applicant for applications filed after September 16, 2012. [3] (For continuing applications filed after September 16, 2012, the power of attorney may carry over from the parent application. [4]) Thus, if an assignee wishes to submit a power of attorney, it must also name itself as the applicant. [5]

This situation presents a quandary for university assignees and patent practitioners who work for universities. To qualify for micro entity status, the university that employs the inventor or receives an assignment from the inventor must not be named as the applicant; however, for the university to grant power of attorney, it must be named as the applicant. This suggests that a university cannot grant power of attorney and claim micro entity status concurrently in a new patent application filed after September 16, 2012.

Nevertheless, there are at least three ways for a qualifying university to benefit from the new micro entity rates as Congress intended:

(1)  The qualifying university can file an application that names only the inventors as the applicants to satisfy the statutory requirements. The inventors would then assign their rights in the application to the university to satisfy the small entity requirement. [6] The inventors would also execute the power of attorney per 37 C.F.R. § 1.32(b).

However, having the inventors convey power of attorney in an application that they have assigned to their employer may raise issues with respect to representation, including ethical implications for the prosecuting patent practitioner. [7] For example, to whom does the practitioner receiving the power owe a duty if the inventors leave the university’s employ? Having the inventors convey power of attorney could also create doubt as to the privilege of communications between the qualifying university and the prosecuting patent practitioner.

(2)  As in the first case, the university could file the application naming only the inventors as the applicants. In this case, however, the inventors would assign their rights in the application to the university without submitting a power of attorney (which would quell some questions of representation).

With no power of attorney on record, the USPTO would mail all correspondence to the correspondence address in the Application Data Sheet (ADS) filed with the application. The USPTO would also allow the patent practitioner(s) associated with the correspondence address to sign micro entity certifications, [8] amendments, and most other papers, but not terminal disclaimers [9] or certain express abandonments. [10] In addition, either the university (in its capacity as assignee) or the patent practitioner(s) named on the ADS may change the correspondence address. [11] If the qualifying university decided to file a terminal disclaimer or express abandonment, it could relinquish micro entity status, name itself as the applicant, and convey power (as the applicant) to its patent practitioner.

(3)  A university inventor could assign the application to a small entity, such as a university research foundation, that in turn licenses the application back to the qualifying university and grants power of attorney to a patent practitioner. In this situation, the university research foundation would be the applicant, not the qualifying university. [12], [13] The university research foundation also could be the prosecuting patent practitioner’s client, eliminating potential conflicts of interest and privilege issues.

Alternatively, the USPTO could harmonize its rules on micro entity status and powers of attorney to achieve the desired benefits to qualifying institutions. For instance, the USPTO could allow an assignee to sign a power of attorney without naming itself as the applicant. This would allow qualifying universities to benefit from the micro entity statute without creating issues of representation for their patent practitioners.

Max Colice, Joe Teja, Jennifer Vandenplas, and Matthew A. Smith are with Foley & Lardner LLP.  This article reflects the views of the authors and not necessarily the views of Foley & Lardner LLP or its clients.


[1] Foreign universities are not “institutions of higher education” as defined in 20 U.S.C. § 1001(a).

[2] 157 Cong. Rec. HR4451 (daily ed. Jun. 22, 2011).

[3] 37 C.F.R. § 1.32(b).

[4] See 37 C.F.R. 1.32(d).

[5] See 37 C.F.R. §§ 1.42, 1.46, 3.71, and 3.73.

[6] There is at least one more potential issue: 37 C.F.R. § 1.29(d)(1) specifies that, to qualify for micro-entity status, the applicant must also be a small entity according to 37 C.F.R. § 1.27(a). But 37 C.F.R. § 1.27(a)(1), which defines a “person,” states that an inventor can remain a small entity even if he or she assigns “some rights” (as opposed to “some or all rights”) in the invention to another small entity. Although USPTO representatives state that the USPTO interprets “some rights” to mean “some or all rights,” MPEP § 509.02 states merely that an inventor could qualify for small entity status after conveying or licensing “partial rights” to another small entity.

[7] See 77 Fed. Reg. 48783 (August 14, 2012)(“The power of attorney should be from the assignee where one exists.  Otherwise, the assignee may be paying the bill, while the inventor is providing the power of attorney, thereby possibly raising an issue as to who is the practitioner’s client. Additionally, relationships between an assignee and the inventors may deteriorate. It is not uncommon in these situations for inventors to stop cooperating and in some cases file powers of attorney in an attempt to control prosecution of the application.”); see also http://www.patentlyo.com/hricik/2012/09/who-is-your-client-part-2-inventors-subject-to-assignment-to-your-other-client.html.

[8] See 37 C.F.R. §§ 1.29(e) and 1.33(b).

[9] 37 C.F.R. § 1.321.

[10] 37 C.F.R. § 1.138.

[11] 37 C.F.R. § 1.33(a).

[12] The USPTO has stated that a university research foundation cannot be the “qualifying institution of higher education.” See Changes To Implement Micro Entity Status for Paying Patent Fees; Final Rule, 77 Fed. Reg.75019, 75027–28 (Dec. 19, 2012).

[13] Please note that the USPTO has not yet expressly stated whether or not a university research foundation that licenses its applications to a university could qualify for micro entity status under § 123(d)(2), nor has it addressed the scope of the license required to satisfy § 123(d)(2).

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