India: Current Scenario Of Small Entity Status Under The Regime Of Amended Patent Rules, 2014

On 28th February, 2014 Indian Patent Office published one of their recent amendments in the Patent (Amendment) Rules, 2014. In this amendment the fee structure has been revised for filing of patent application as well as other proceedings before the Patent Office nearly about double of the earlier fees and 10% additional fee when the applications for patent and other documents are filed through the physical mode, i.e., in hard copy format as opposed to the online mode. Further, a new Form 7 (A) has been provided for filing the "Representation Opposing Grant of Patent" under sub-section (1) of section 25 and sub-rule (1) of Rule 55 of the principal rules. However, no fee shall be payable for the same1.

Apart from introduction of fees and forms, a new form has been introduced fulfilling the criteria for "small entity" which is a third category of applicant for patent for the upliftment of the small scale industries to protect their novel inventions. The fees charged to them have been fixed in between the fees for a natural person and for all persons other than natural persons. These moves of the patent office really escalate the small scale industries to protect under the rein of IPR. This Article brings the current view of the small entity status under the Indian Patent regime and the effect of introduction of Form 28 in the Patents Amendment Rules, 2014.


2The Micro & Small Enterprises (MSEs) Sector continue to be a vibrant sector of the Indian economy. It is estimated that there are about 12.8 million units (over 90 per cent of total industrial units) in this sector employing nearly 31 million people. This sector contributes nearly 39 per cent of the total industrial production and accounts for approximately 33 per cent of the total exports. This sector has consistently registered a higher growth rate than the rest of the industrial sector. There are over 6500 products ranging from traditional to high-tech items, which are being manufactured by the small enterprises in India. After agriculture, the MSEs sector provides the maximum opportunities for both self-employment and jobs in the country. The small enterprises sector in India holds great potential for further expansion and growth in the future. Today Thousands of small and medium enterprises (SMEs) in India are reported to be losing millions in revenues due to lack of awareness about IPRs (intellectual property rights). About 40,000 IP applications are filed in India annually and 85 per cent of these are filed by multinational corporations, leaving a sizable number filed by SMEs. In the developed world, owing to high awareness levels, small entrepreneurs approach venture capital and private equity funds to meet the expenses incurred on cost of protection, enforcement and commercialisation of IPRs. In of the recent study, it has been observed that many small players refrain from seeking patents owing to limited financial resources. Such step by the Indian Patent Office to introduction of the 'Small Entity' and a nominal fee for patent related work is a good step for the boost of SMEs in India.

Now moving ahead regarding the amendment which is as follows3:

  • A third category of applicant for patent has been introduced in the form of "small entity" and the fees charged to them has been fixed in between the fees for a natural person and for all persons other than natural persons (except a small entity). The criteria for "small entity" have been elaborated in the amended rules.
  • A new Form-28 has been introduced in the rules, which has to accompany every new application. For subsequent documents for which a fee has been specified and for which the fee applicable for a small entity is claimed, it should be ensured that Form-28 is filed at-least once against the application number.

4For defining small entities, the Rules refer to the classification of enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (the "MSME" Act). The Rules classify the small entity as a "medium enterprise" under the MSME Act. To qualify as a small entity, the applicant's investment in plants and machinery should be between Rupees 5 to 10 crores (approx. USD 0.8 to 1.6 million) if it is in the business of productions and manufacture of goods. These goods include the goods specified in the First Schedule of the Industries (Development and Regulation) Act, 1951 (available at Page 42 of the Act). However, if the applicant is a service provider, his investment in equipment should be between Rupees 2 to 5 crores (approx. USD 0.3 – 0.8 million).

The Introduction of these amendments for the small entities creates more confusion on retrospectively payable fees, implications of change in status during prosecution, timeline for submission of Form 28, qualification for foreign applicants, among many other allied issues, which would now need clarity and potentially cause issues wherein there is deficiency of fees. Hope these criteria might not become a chance of abandon the patent application but incorrect claiming of Small entity status, or non-declaration of conversion from small-entity to large-entity, may become a ground of revocation of patent by a third party trying to invalidation the patent. Further on seeing the current MSME definition stated in the act, no same was applicable for the foreign industries under the 'plant and machinery' section but no clear instruction has been there in the Patents Amendment Rules, 2014 regarding the submission of document along with Form 28 when filing Patent application in India1.


Today it has been observed that the Universities and research organisations are the top filers of the patent applications in India. On the introduction of the clause of the 'small entity' it has been observed that Foreign Universities and Research organisations classify themselves under this clause. On reading the newly inserted Rule 2 (fa) of the Indian Patents rule, 2014 and interpreting the clear meaning of the word 'enterprises' these Foreign Universities and Research organisations may be covered under the small entity as they provide the research services to the industry. Since, it looks a huge risk for the Foreign Universities and Research organisations to keep themselves under the roof of small entity.


After addition of the small entity in the Patents Amendment Rules, 2014, a new line of confusion has created when the small entities may change the status during the course of prosecution i.e. when the small entity assigns the patent to large entity. On clearly observing the Rule 7(3A) of the Indian Patents Act, 2000 difference in fee has to be paid on the status of new applicant but in situation when the small entity loses its status from Small to large entity after filing the Patent application India. In such cases, should the fee requirement have been decided at each stage of filing the patent related work? And hence it was not clear how the Patent office will handle such realistic situation in future?


In this article amendments herein declared as the Patents (Amendment) Rules, 2014 made by the Patent office, pertaining to introduction of new category of 'small entities', has been discussed. It has been observed that the, rules laid herein are silent on the nature of evidence needed to be submitted by "small entities" demonstrating that they meet the qualifying criteria. It is also not clear as to whether Universities & Research Institutions classify themselves as "small entities" and that what will happen if small entities change their status during prosecution. Further there is an ambiguity in terms of foreign applicants where no proper documents have been discussed along with Form 28 when filing patent applications in India. This amendment will laid remark on IPO for giving clear instruction on the issues discussed above and soon IPO would do well to clarify the position of universities and research institutions along with small entity in India and in abroad.



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