Institution of Higher Education Basis for Micro Entity Status

37 CFR 1.29 Micro entity status.

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(d) To establish micro entity status under this

paragraph, the applicant must certify that:

(1) The applicant qualifies as a small

entity as defined in

§ 1.27

without

relying on a government use license exception under

§

1.27(a)(4)

; and

(2)

(i) 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

(ii) 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 application to such an institution of

higher education.

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35 U.S.C.

123(a)

provides a gross income basis under which an applicant

may establish micro entity status. See

MPEP §

509.04(a)

.

35 U.S.C. 123

provides that a

micro entity shall also 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 application to such

an institution of higher education.

37 CFR 1.29(d)

implements the

provisions of

35 U.S.C. 123(d)

.

To the extent that

35 U.S.C.

123(d)

(unlike

35 U.S.C. 123(a)

) does not

expressly require that an applicant qualify as a small entity under

37 CFR

1.27

, the Office has invoked its authority under

35 U.S.C.

123(e)

to “…impose… other limits on who may qualify as a micro

entity…” in order to expressly require that a party claiming micro entity status via

35

U.S.C. 123(d)

qualify as a small entity under

37 CFR

1.27

at

35 U.S.C.

123(d)

(unlike

35 U.S.C. 123(a)

) does not

expressly require that an applicant qualify as a small entity under

37 CFR

1.27

, the Office has invoked its authority under

35 U.S.C.

123(e)

to “…impose… other limits on who may qualify as a micro

entity…” in order to expressly require that a party claiming micro entity status via

35

U.S.C. 123(d)

qualify as a small entity under

37 CFR

1.27

. Accordingly,

37 CFR 1.29(d)(1)

requires that

an applicant claiming micro entity status on the institution of higher education

basis must certify that the “applicant qualifies as a small entity as defined in

§

1.27

without relying on a government use license exception

under

§

1.27(a)(4)

” in addition to certifying that the other

requirements set forth in

35 U.S.C. 123(d)(1) or (2)

are

met. See

MPEP §

509.02

for a discussion of the requirements for small

entity status.

I.

REQUIREMENTS

An applicant for micro entity status under the

“institution of higher education” basis set forth in

37 CFR

1.29(d)

must satisfy two requirements. First, the applicant

must certify that the applicant qualifies as a small entity as defined in

37 CFR

1.27

. Second, the applicant must certify that either (i) 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 (ii) 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 application to such an institution of higher education.

A.

Small Entity Requirement

In order to meet the small entity requirement,

every party holding rights in the application must qualify as a small entity

under

37

CFR 1.27

. If any rights in the application are assigned,

granted, conveyed, or licensed to a party that does not qualify as a small

entity under

37 CFR 1.27

, the applicant

cannot qualify for any patent fee discount

n of higher education.

A.

Small Entity Requirement

In order to meet the small entity requirement,

every party holding rights in the application must qualify as a small entity

under

37

CFR 1.27

. If any rights in the application are assigned,

granted, conveyed, or licensed to a party that does not qualify as a small

entity under

37 CFR 1.27

, the applicant

cannot qualify for any patent fee discount. An obligation to assign, grant,

convey, or license rights in the application to a party that does not qualify

for small entity status would also disqualify the applicant from receiving any

patent fee discount. In order to qualify for small entity status, and in order

to meet the small entity requirement for micro entity status, there can be no

party holding rights or obligated rights in the application that does not

qualify as a small entity. See

MPEP § 509.02

for a discussion

of the requirements for small entity status.

B.

Section 1.29(d)(2) Requirement

Under

37 CFR

1.29(d)(2)(i)

the applicant must certify that the

applicant’s employer, from which the applicant obtains the majority of the

applicant’s income, is an institution of higher education. Because only a

person can have an “employer,” the applicant certifying under

37 CFR

1.29(d)(2)(i)

must be a person or persons, which in most

cases, means the inventor(s).

Under

37 CFR

1.29(d)(2)(ii)

the applicant must certify that the

applicant has assigned, granted, or conveyed a license or other ownership

interest in the subject application (or is obligated to do so) to such an

institution of higher education. An attempt to obtain micro entity status by

merely seeking to transfer a

de minimus

interest to an

institution of higher education could be considered a sham transaction.

Although the Office considers it highly unlikely that institutions of higher

education would be party to such transactions, the Office plans to closely

monitor the percentage of applicants claiming micro entity status under

35 U.S.C

attempt to obtain micro entity status by

merely seeking to transfer a

de minimus

interest to an

institution of higher education could be considered a sham transaction.

Although the Office considers it highly unlikely that institutions of higher

education would be party to such transactions, the Office plans to closely

monitor the percentage of applicants claiming micro entity status under

35 U.S.C. 123(d)

to ensure that applicants are not

engaging in such transactions in order to obtain micro entity status.

II.

MEANING OF “INSTITUTION OF HIGHER EDUCATION”

Section 101(a) of the Higher Education Act of 1965

defines what is meant by “institution of higher education” in the context of

37

CFR 1.29(d)

. See 20 U.S.C. 1001. Section 101(a) of the

Higher Education Act states that the term “institution of higher education”

means:

an educational institution in any State that—

1. admits as regular students only persons having

a certificate of graduation from a school providing secondary education, or

the recognized equivalent of such a certificate, or persons who meet the

requirements of section 1091(d)(3) of this title;

2. is legally authorized within such State to

provide a program of education beyond secondary education;

3. provides an educational program for which the

institution awards a bachelor’s degree or provides not less than a 2-year

program that is acceptable for full credit toward such a degree, or awards a

degree that is acceptable for admission to a graduate or professional degree

program, subject to review and approval by the Secretary;

4. is a public or other nonprofit institution;

and

5

y education;

3. provides an educational program for which the

institution awards a bachelor’s degree or provides not less than a 2-year

program that is acceptable for full credit toward such a degree, or awards a

degree that is acceptable for admission to a graduate or professional degree

program, subject to review and approval by the Secretary;

4. is a public or other nonprofit institution;

and

5. is accredited by a nationally recognized

accrediting agency or association, or if not so accredited, is an

institution that has been granted pre-accreditation status by such an agency

or association that has been recognized by the Secretary for the granting of

pre-accreditation status, and the Secretary has determined that there is

satisfactory assurance that the institution will meet the accreditation

standards of such an agency or association within a reasonable time.’

Additionally, section 103 of the Higher Education Act

of 1965 provides that the term “State” means the 50 States of the United States as

well as “the Commonwealth of Puerto Rico, the District of Columbia, Guam, American

Samoa, the United States Virgin Islands, the Commonwealth of the Northern Mariana

Islands, and the Freely Associated States’’ and that the Freely Associated States

means the ‘‘Republic of the Marshall Islands, the Federated States of Micronesia,

and the Republic of Palau.’’ See 20 U.S.C. 1003.

Based upon these definitions, public or non-profit

institutions located in one of the 50 States or U.S. territories offering certain

undergraduate educational programs credited toward a bachelor’s degree or

educational programs awarding “a degree that is acceptable for admission to a

graduate or professional degree program” are eligible as an “institution of higher

education” for purposes of establishing micro entity status under

37

CFR 1.29(d)

. Except for universities or other institutions

of higher education located outside the United States, any university or other

U.S

ward a bachelor’s degree or

educational programs awarding “a degree that is acceptable for admission to a

graduate or professional degree program” are eligible as an “institution of higher

education” for purposes of establishing micro entity status under

37

CFR 1.29(d)

. Except for universities or other institutions

of higher education located outside the United States, any university or other

U.S. institution of higher education that qualifies for small entity status by

virtue of being a nonprofit organization under

37 CFR

1.27(a)(3)

meets the criteria of an “institution of higher

education” for micro entity status purposes.

An institution such as a non-profit research

foundation, technology transfer organization, or Federal Government research

laboratory does not qualify as an “institution of higher education” under the

definition of “institution of higher education” set forth in the Higher Education

Act of 1965 for purposes of establishing micro entity status.

A.

Universities and Colleges that Do Not Qualify as Institutions of

Higher Education

One of the requirements for an “institution of

higher education” under section 101(a) of the Higher Education Act of 1965 is

that the institution be non-profit. Therefore, for-profit universities and

colleges do not qualify as an “institution of higher education” for purposes of

establishing micro entity status. As previously stated, foreign universities do

not qualify as an “institution of higher education” for purposes of

establishing micro entity status. A foreign university may offer an on-line

educational program in the United States, however, on-line classes offered in

the United States would not qualify the foreign university as an “institution

of higher education” for purposes of establishing micro entity status. That’s

because the university must be located “in any State” in the context of what

“in any State” meant in 1965 – the year of the Higher Education Act of 1965

er an on-line

educational program in the United States, however, on-line classes offered in

the United States would not qualify the foreign university as an “institution

of higher education” for purposes of establishing micro entity status. That’s

because the university must be located “in any State” in the context of what

“in any State” meant in 1965 – the year of the Higher Education Act of 1965. In

addition, institutions that only grant graduate degrees do not qualify as an

“institution of higher education” for purposes of establishing micro entity

status because section 101(a) of the Higher Education Act of 1965 is limited to

an institution that “provides an educational program for which the institution

awards a bachelor’s degree or provides not less than a 2-year program that is

acceptable for full credit toward such a degree, or awards a degree that is

acceptable for admission to a graduate or professional degree program…”

B.

The University Cannot be the Micro Entity Applicant

Although the

37 CFR

1.29(d)

basis for qualifying for micro entity status is

referred to as the “institution of higher education” basis, it is not the

institution of higher education that can qualify for micro entity status, but

rather inventors who are employees of an institution of higher education (see

37 CFR 1.29(d)(2)(i)

) or inventors or applicants who

have conveyed ownership rights to an institution of higher education (see

37 CFR 1.29(d)(2)(ii)

). The institution (university)

logically cannot make the certifications required under

37 CFR

1.29(d)(2)(i)

and

her education that can qualify for micro entity status, but

rather inventors who are employees of an institution of higher education (see

37 CFR 1.29(d)(2)(i)

) or inventors or applicants who

have conveyed ownership rights to an institution of higher education (see

37 CFR 1.29(d)(2)(ii)

). The institution (university)

logically cannot make the certifications required under

37 CFR

1.29(d)(2)(i)

and

(d)(2)(ii)

(that the employer from which the university

obtains the majority of its income is an institution of higher education as

defined by section 101(a) of the Higher Education Act of 1965, or that the

university itself 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 application).

C.

CERTIFICATION FORM – INSTITUTION OF HIGHER EDUCATION BASIS

The Office’s form PTO/SB/15B contains the

certifications under

37 CFR 1.29(d)

that are

required to establish micro entity status on the institution of higher

education basis. There are 2 signature blocks reflecting that in addition to

the small entity requirement under

37 CFR

1.29(d)(1)

, there are two alternative requirements under

37

CFR 1.29(d)(2)

. The first signature block is for

certifying under

37 CFR 1.29(d)(2)(i)

that

the applicant’s employer, from which the applicant obtains the majority of the

applicant’s income, is an institution of higher education. The second signature

block is for certifying under

37 CFR 1.29(d)(2)(ii)

that

the applicant has assigned, granted, or conveyed a license or other ownership

interest in the subject application (or is obligated to do so) to such an

institution of higher education.