University/research institute category of small entity is confounded by MPEP conflicting with CFR.
Namely, the regulation (37 C.F.R. § 1.27) defines a small entity to include certain persons, small businesses, and, at 1.27(a)(3)(ii)(A), referring also to subsection (c), which, in turn, refers to subsection (f), of the same regulation, states that an eligible entity is one which (1) has not assigned the rights of the invention to a large entity and (2) is a “university or other institution of higher education located in any country… .” 35 U.S.C. § 201(i), cited in the
regulation, provides that “[t]he term ‘nonprofit organization’ means universities and other institutions of higher education or … ,” and 26 U.S.C. § 501, indirectly cited, relates to tax exempt status.
As I read these regulations and code sections, it appears to me that foreign universities should qualify as small entities.
However, the Manual of Patent Examining Procedure (MPEP) which is drafted by attorneys at the United States Patent and Trademark Office (USPTO), particularly MPEP § 509.02 (III), narrows the statutory definition in the manner below (ostensibly without authority to do so):
The term “university or other institution of higher education” as used in 37 C.F.R. § 1.27(a)(3)(ii)(A) means an educational institution which (A) 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; (B) is legally authorized within the jurisdiction in which it operates to provide a program of education beyond secondary education; (C)
provides an educational program for which it awards a bachelor’s degree or provides not less than a 2‐year program which is acceptable for full credit toward such a degree; (D) is a public or other nonprofit institution; and (E) is accredited by a nationally recognized accrediting agency or association, or if not so accredited, is an institution that has been granted preaccreditation status by such agency or association that has been recognized by the Secretary for the granting of preaccreditation 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.
The definition of “university or other institution of higher education” as set forth herein essentially follows the definition of “institution of higher education” contained in 20 U.S.C. § 1000. Institutions which are strictly research facilities, manufacturing facilities, service organizations, etc., are not intended to be included within the term “other institution of higher education” even though such institutions may perform an educational function or publish the
results of their work.
I wrote to Senator Reid in December 2012 (still awaiting a response) and Congressman Amodei (in December, which was responded to, but without resolution of the question) is whether Congress intended that foreign (non‐profit) universities be eligible to file patent applications under the “small entity” status. It appears that the USPTO has carved most institutions “located in any country” except the US out of the definition.
For clarification, the legislature recently passed the “America Invents Act” (AIA) which modifies the more modestly named “Patent Act of 1952.” In the AIA, a new entity was created, the “micro entity,” which is entitled to a 75% fee reduction. This “micro entity” is specifically defined, in the US Code (35 U.S.C. § 123) to be limited to those accredited institutions (20 U.S.C. § 1001) detailed in the USPTO’s sua sponte definition of a “small entity” in the MPEP. The “small entity,” which I am asking about, is entitled to a 50% fee reduction.
Depending on Congressional intent, the MPEP may presently contradict that intent, such that, if foreign universities are indeed entitled to a 50% fee reduction, they can request it in good faith.
emailed with a staff member from Rep. Amodei who expressed concern that certain unsavory states could take advantage of the qualification, though the same would be true for private businesses, which are not limited by location. It seems to me that a proper interpretation, given the situation for private
enterprises, would be that foreign non‐profit universities could also qualify as “small” entities.
In any event, it would be helpful if the USPTO clarified (or corrected) this entry in MPEP § 509.02 (III).