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Another day, another change at the USPTO.
If you have ever filed a patent application, you know there is a section that asks for your entity status: Large, Small, or Micro. If you have ever asked yourself whether size matters, the answer is now officially yes.
On October 24, 2025, the Office of the Assistant Commissioner for Patents released an Advance Notice of Change to the Manual of Patent Examining Procedure (MPEP) (https://www.uspto.gov/sites/default/files/documents/uaiamemo-oct2025.pdf) regarding false assertions or certifications of entity status. This is not the kind of memo that makes headlines, but the changes can ruin your day if you get it wrong.
What Is an "Entity Status"?
In the patent world, your entity status determines how much you pay in USPTO fees. The different tiers are intended to level the playing field between inventors and large corporations, but like all good things, the system only works when everyone is honest.
A large entity is the default. These entities pay full price for everything.
A small entity is generally a startup, small business, or individual inventor. You qualify if you have fewer than 500 employees, have not assigned your patent rights to a large entity, and are not owned by a large entity. Small entities receive a 50 percent discount on most fees.
Then there is the micro entity, which represents the underdog's underdog. To qualify, you must first meet the small entity requirements and also have a gross income less than three times the median United States household income (approximately $240,000 this year). In addition, the inventor or inventors cannot have been named on more than four prior patent applications. The discount at this level is a whopping 75 percent.
What Is Changing in the MPEP
Claiming a reduced entity status is not a casual formality. It is a legal certification under 37 C.F.R. § 11.18, in which the applicant tells the government, under penalty of sanction, that it is entitled to pay a reduced amount. 37 C.F.R. § 11.18 specifically provides that by presenting any paper to the USPTO, a party certifies that all statements are true and made after a reasonable inquiry, and that any knowing or willful falsification may result in sanctions or even criminal penalties.
Until now, the USPTO did not routinely review correspondence for compliance with 37 C.F.R. § 11.18. In practice, this issue typically surfaced only during litigation, when a defendant's legal team searched the prosecution history for anything that could be used as leverage. Even then, it rarely resulted in a patent being invalidated because courts often found that a mistaken fee payment was not sufficient to render the patent unenforceable unless it was made with deceptive intent.
The memorandum revises several key sections of the MPEP to reflect a stricter enforcement approach. The USPTO now expressly authorizes the Office of Petitions to review entity status claims and to determine whether an applicant or patent owner was entitled to the claimed discount.
Sections 509.03(b) and 509.04 now state that fraudulently or improperly claiming small or micro entity status, particularly with intent to deceive, constitutes fraud practiced on the Office. If such conduct occurs, the applicant can be referred to the Deputy Commissioner for Patents for further action. That phrase, "fraud practiced on the Office," carries serious consequences. It is the patent law equivalent of being sent to the principal's office.
The memorandum also adds a new entry under MPEP § 1002.02(b) to address petitions for reconsideration of fines or sanctions resulting from a determination that an entity status claim was falsely made and not in good faith. So if you get caught checking the wrong box, there's now a formal process to beg for mercy.
In short, the USPTO has established a clear procedural framework to identify, review, and penalize false entity claims.
What Practitioners Should Take Away
This is not a new expansion of power. Rather, it is a formal acknowledgment of authority that the USPTO has always possessed but rarely exercised. The difference now is that the USPTO has put this in writing and has made clear that it intends to use that authority.
The memorandum concludes with a simple statement: these changes take effect immediately and supersede the 2024 MPEP. In other words, enforcement begins now.
For practitioners, this means that entity status cannot be treated as a one-time box to check. Companies expand, merge, and change ownership, and those changes can alter eligibility for reduced fees. Always verify entity status before filing rather than guessing at the deadline. Resist the temptation to select "small entity" simply because it saves a few dollars. If there is any uncertainty, the safer approach may be to pay as a large entity and request a refund later. It may be easier to recover overpaid fees than to explain to the Office of Petitions why your so-called micro entity just went public on NASDAQ.
Entity status discounts are an important tool for inventors and startups, but they only work when everyone participates in good faith. As the USPTO has now made clear, a false discount today can result in significant costs tomorrow.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
