35 U.S.C. § 123 — Micro entity defined

This section defines "micro entity" status, which qualifies patent applicants for reduced fees. (a) In General. An applicant is a "micro entity" if they certify that they: (1) qualify as a "small entity" under the Director's regulations; (2) have not been named as an inventor on more than 4 previously filed patent applications (not counting foreign filings, provisional applications, or certain unpaid international applications); (3) did not have gross income, in the year before the fee is paid, exceeding three times the median household income as most recently reported by the Census Bureau; and (4) have not given, and are not obligated to give, ownership rights in the application to an entity whose gross income in that same prior year exceeded that same three-times-median threshold. (b) Applications Resulting From Prior Employment. An applicant is not counted as "named" on a prior application for purposes of the 4-application limit in (a)(2) if they assigned, or must assign, all ownership rights in that prior application because of previous employment. (c) Foreign Currency Exchange Rate. If an applicant's or entity's income from the prior year wasn't in U.S. dollars, the IRS's average exchange rate for that year is used to check whether the income exceeds the threshold in (a)(3) or (4). (d) Institutions of Higher Education. An applicant also counts as a micro entity if they certify either that (1) their main employer is an institution of higher education (as defined in the Higher Education Act of 1965), or (2) they have assigned, or must assign, ownership rights in the application to such an institution. (e) Director's Authority. The Director may add further income limits, annual filing limits, or other limits on who qualifies as a micro entity, if reasonably necessary to avoid unfair impact on other applicants or owners. The Director must tell the House and Senate Judiciary Committees about any such proposed limit at least 3 months before it takes effect. (f) Penalty for False Certifications. Anyone found to have falsely certified micro entity status — unless they show the certification was made in good faith — faces a fine set by the Director, of at least three times the fees they avoided paying by making the false claim, whether the false certification is discovered before or after the patent issues.