In the course of our work with clients on their various intellectual property needs, patent protection is often at the forefront of our discussions. Patents continue to be among the most valuable assets in business and key elements of a successful intellectual property protection strategy. Clients are often naturally concerned about the fees associated with pursuing patent protection. In addition to the fees necessarily incurred to draft a patent application and to obtain appropriate figures from a patent illustrator, there are significant government fees at the time of filing, during prosecution, when the patent is granted, and subsequently to maintain it.

There is good news, though. Lawmakers have recently passed legislation to help allay some of the concerns arising from the cost of obtaining a patent. As part of the Consolidated Appropriations Act of 2023, Congress included a provision called the Unleashing American Innovators Act that further reduced government fees associated with patent applications for certain applicants, depending on the nature and size of their businesses.

Previously, businesses qualifying as “small entities” were entitled to a discount of 50% off standard fees, while those qualifying as “micro-entities” were entitled to 75% off. Under the Unleashing American Innovators Act, the discounts have been increased to 60% and 80%, respectively. In order to qualify as a small entity, an applicant must be an individual, a small business with less than 500 employees, a university or a non-profit organization. A micro entity must meet the same requirements for small entity status but must also earn no more than a maximum gross income set annually (currently about $212,000) and have not been named as an inventor on more than 4 U.S. non-provisional patent applications that were not assigned to a previous employer. An exception to the income requirements applies for institutions of higher education and essentially also their full-time employees. It is important to note that in order for an applicant to qualify as a small entity or micro entity, it can not be obligated or planning to assign the rights to an entity that would not otherwise qualify for the same status.

The fee reductions are not insubstantial. For instance, the current standard fee for filing a non-provisional application (including the patent office’s search and examination fees) is $1,820. While small entities previously paid $910 for these services, they now can pay as little as $664, provided the application is submitted electronically. And the discounts are not limited to the initial filing fees. For example, the utility patent issue fee of $1,200 is now reduced to $480 for small entities. The fee reductions also apply to the filing of provisional patent applications, design patent applications, and plant patent applications and to all of their subsequent official fees as well.

The goal of the Unleashing American Innovators Act is to reduce the barriers to entry into the U.S. patent system. The expectation is that these reduced fees will help encourage innovation from individual inventors, small businesses, and non-profit and educational institutions. While the additional fee reductions may appear to be small, they will provide a significant cost savings over time, including to eligible volume filers and to overseas clients that are looking to invest or apply for patent protection in the United States. There may be a greater impact abroad where the small reductions in fees will be more significant when currency conversion is taken into account. Of course, the reduction in fees will also help provide flexibility to individual inventors and cost-conscious applicants that are in the early stages of developing their intellectual property portfolios or starting their businesses.

It is important to note that the new fee reductions do not apply to any outstanding issue fees for allowed patent applications where a Notice of Allowance was issued prior to December 29, 2022, when the fee reductions went into effect. We are happy to discuss how these reductions will impact you and to work with you to develop a patent filing strategy that maximizes your intellectual property protection in a cost-effective manner.

The authors gratefully acknowledge the editorial contributions of Laura Winston to the style and language of this post.