How the Patent Office’s Fees are Structured — and How That Can Impact Startups

5 min readApr 26, 2022

By Abby Rives, IP Counsel, Engine Advocacy & Foundation

The nation’s high-tech, high-growth startups are busy — they are building new products and services, diving into industry and market research, hiring engineers and sales teams, building relationships with new customers, and so much more. Some are thinking about applying for patents, and there’s a lot to think about. Startups do not have extra money to spread around, and they have to be very thoughtful and strategic about what they patent. They also have to be nimble, accounting for the fact that a pivot in six months could render a patent application they are thinking about today irrelevant. On the flip side, large companies and repeat players at the patent office have a lot of resources and expertise to devote and can afford to accumulate massive patent portfolios.

Still, for many startups, a patent can be a valuable asset worth pursuing. And by looking through the patent office’s data about who is paying small and micro entity fees for patent applications, we can see how over the past decade U.S. startups and small companies continue to receive a growing number of patents each year.

What are small and micro entity patent fees?

When you apply for a patent, you pay fees to the U.S. Patent and Trademark Office (PTO) in addition to what you pay the attorney or patent agent who helps you prepare and file your application. Predicting what you’ll have to pay, and when, can feel complicated, and the amount varies depending on who is filing, what type of patent they seek, how long it is, etc. PTO application fees are tiered — large companies pay one amount, small entities pay 50 percent less, and micro entities pay 75 percent less than the large companies. Applicants pay some early fees correlated to filing, search, and examination. Then prior to the PTO agreeing to grant the patent (if the examiner deems it patentable), the applicant has to pay issuance fees. And then during the life of the patent, the owner pays maintenance fees at 3.5, 7.5, and 11.5 years after the patent issues. The following rough estimate shows some of the range in PTO fees for a relatively uncomplicated utility patent application:

The definitions for small and micro entities have few layers. Briefly, a small entity could be an individual, a small business (less than 500 employees), or a non-profit. Micro entities are a subset of small entities, further defined one of two ways — either based on gross income or as an institution of higher education. Looking at income, a micro entity: (1) has to also be a small entity, (2) neither the applicant nor the inventor can have been named as an inventor on more than four previous patent applications, and (3) neither the applicant nor the inventor can have a gross income above a certain threshold (three times the median household income). For both small and micro entities to qualify, they cannot have assigned their patents to a large entity. And if you pay the reduced fees of a small or micro entity but do not meet the definition, the consequences can be severe and could cost you your patent.

How many small and micro entities get patents?

Over the past several years, small and micro entities are making up a larger portion of patent holders. Last year, about 20 percent of the utility patents PTO issued went to small entities and 2.5 percent were issued to micro entities. Zooming in on patents issued to applicants based in the U.S., more than 27 percent were issued to small entities and over 4 percent went to micro entities. The number of patents going to small and micro entities has also grown in recent years. U.S. small entities were issued approximately 29,900 patents in 2010 and 42,650 in 2020; U.S. micro entities were issued approximately 4,070 patents in 2014 (the first full year of the program) and 6,900 patents in 2020.

(Calculated based on Performance and Accountability Reports and U.S. Patent Statistics Chart)

What can policymakers do when it comes to PTO fees?

Expand pro bono offerings and make existing programs more visible. PTO fees are only a fraction of the cost of a patent application. Paying a lawyer to prepare and prosecute an application can run anywhere from $6,000 to $15,000 or more. The PTO currently coordinates a pro bono program to connect under-resourced applicants with free legal counsel. But many individuals may not know the program exists. There is room to not only make the program more accessible, but to expand its reach so that more innovators in more parts of the country can benefit and so that the program can help innovators and entrepreneurs with trademark applications.

Improve the PTO’s cost structure. Right now, there is misalignment between the PTO’s fee structure and its costs, creating concerning incentives that can lead to low-quality patents. For example, the examination fees do not actually cover the costs of examination. Instead, the PTO relies on much higher issuance and maintenance fees to cover its costs, which also creates risk that it will not be able to cover them. Policymakers should consider restructuring the fee structure to increase the examination fees larger applicants pay and also use those fees to subsidize applications from smaller businesses.

Disclaimer: This post provides general information related to the law. It does not, and is not intended to, provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Engine is a non-profit technology policy, research, and advocacy organization that bridges the gap between policymakers and startups. Engine works with government and a community of thousands of high-technology, growth-oriented startups across the nation to support the development of technology entrepreneurship through economic research, policy analysis, and advocacy on local and national issues.




Engine is the voice of startups in government. We are a nonprofit that supports entrepreneurship through economic research, policy analysis, and advocacy.