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Filing as a Small Entity to Save Money as a Large Entity

A recent question on LinkedIn asked: Can an application be filed and prosecuted in the name of individual (say director/president or other employee), and then latter assigned to company? Is such assignment permissible according to the act, and does it provide equal rights to a company, as it would have by filing in its own name?

The answer to this question will depend on the country.

In the United States, an Applicant that intentionally claims small entity status for an invention owned by a large entity to later assign that invention to that large entity is considered to have committed fraud before the USPTO. The rules state that “any attempt to fraudulently establish status as a small entity or pay fees as a small entity will be considered as a fraud practiced or attempted on the Office”  (37 C.F.R. §1.27 (h)). The Office is able to establish fraud because “the written assertion of small entity status or payment of small entity fees is a certification that all statements made are true and whoever willingly and willfully falsifies a material fact may be criminally prosecuted” (37 C.F.R. §1.4 (d)(4)). The punishment for violating these regulations includes “sanctions” and/or “disciplinary actions against the practitioner as deemed appropriate by the Director” as well as terminating the patent application (MPEP 11.18).

The United States government takes fraud against the USPTO very seriously. Consequently, any knowing attempt to obtain reduced fees by inappropriately claiming small entity status should be strictly avoided.


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