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

    Published on 15 July 2013 @ 8:16 am

    Disclaimer: the views expressed in this column are solely those of the authors and are not associated with Intellectual Property Watch. IP-Watch expressly disclaims and refuses any responsibility or liability for the content, style or form of any posts made to this forum, which remain solely the responsibility of their authors.

    Intellectual Property Watch

    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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    We welcome your participation in article and blog comment threads, and other discussion forums, where we encourage you to analyse and react to the content available on the Intellectual Property Watch website. By participating in discussions or reader forums, or by submitting opinion pieces or comments to articles, blogs, reviews or multimedia features, you are consenting to these rules.

    We welcome your participation in article and blog comment threads, and other discussion forums, where we encourage you to analyse and react to the content available on the Intellectual Property Watch website.

    By participating in discussions or reader forums, or by submitting opinion pieces or comments to articles, blogs, reviews or multimedia features, you are consenting to these rules.

    1. You agree that you are fully responsible for the content that you post. You will not knowingly post content that violates the copyright, trademark, patent or other intellectual property right of any third party or which you know is under a confidentiality obligation preventing its publication and that you will request removal of the same should you discover that you have violated this provision. Likewise, you may not post content that is libelous, defamatory, obscene, abusive, that violates a third party's right to privacy, that otherwise violates any applicable local, state, national or international law, that amounts to spamming or that is otherwise inappropriate. You may not post content that degrades others on the basis of gender, race, class, ethnicity, national origin, religion, sexual preference, disability or other classification. Epithets and other language intended to intimidate or to incite violence are also prohibited. Furthermore, you may not impersonate others.

    2. You understand and agree that Intellectual Property Watch is not responsible for any content posted by you or third parties. You further understand that IP Watch does not monitor the content posted. Nevertheless, IP Watch may monitor the any user-generated content as it chooses and reserves the right to remove, edit or otherwise alter content that it deems inappropriate for any reason whatever without consent nor notice. We further reserve the right, in our sole discretion, to remove a user's privilege to post content on our site. IP Watch is not in any manner endorsing the content of the discussion forums and cannot and will not vouch for its reliability or otherwise accept liability for it.

    3. By submitting any contribution to IP Watch, you warrant that your contribution is your own original work and that you have the right to make it available to IP Watch for all purposes and you agree to indemnify IP Watch, its directors, employees and agents against all damages, legal fees and others expenses that may be incurred by IP Watch as a result of your breach of warranty or of these terms.

    4. You further agree not to publish any personal information about yourself or anyone else (for example telephone number or home address). If you add a comment to a blog, be aware that your email address will be apparent.

    5. IP Watch will not be liable for any loss including but not limited to the following (whether such losses are foreseen, known or otherwise): loss of data, loss of revenue or anticipated profit, loss of business, loss of opportunity, loss of goodwill or injury to reputation, losses suffered by third parties, any indirect, consequential or exemplary damages.

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    8. For any content that you post, you hereby grant to IP Watch the royalty-free, irrevocable, perpetual, exclusive and fully sub-licensable license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, perform and display such content in whole or in part, world-wide and to incorporate it in other works, in any form, media or technology now known or later developed.

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