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Erroneous Small Entity Designation Can Jeopardize Patent Rights
The U.S. Patent Office permits individuals, nonprofit organizations, and small business concerns to pay reduced fees during prosecution and maintenance of U.S. patents and patent applications if they claim status as a “Small Entity”. However, a U.S. court recently articulated the consequences of improperly claiming small entity status. In Ulead Systems, Inc. v. Lex Computer Management Corp. (351 F.3d 1120 (Fed. Cir. December 9, 2003)), the U.S. Court of Appeals for the Federal Circuit vacated the decision of the U.S. District Court granting summary judgment that U.S. Patent No. 4,538,188 was unenforceable and expired because Lex falsely claimed “Small Entity status” and paid small entity maintenance fees. This case highlights the importance of making thorough and continuing investigations into whether a patent applicant or patentee is qualified for Small Entity status for purposes of fee payments to the U.S. Patent Office.