Patent Lodge

On December 29, 2022, the Unleashing American Innovators Act (UAIA) was signed into law. Under the UAIA, the United States Patent Trademark Office (USPTO) is required to assess a penalty of not less than three times the amount that an entity failed to pay to the USPTO when the entity is found to have falsely made an assertion or certification of small or micro entity status unless a good faith error can be shown. This penalty is in addition to payment of the fee deficiency as well as any additional penalties available under the law such as prosecution delay and possible patent term adjustment impact and potential attorney discipline.

The penalty provided by the UAIA did not seem to get much notice when enacted but in a presentation made by the USPTO this past April, the USPTO said it is creating a dedicated work group specifically to respond to known threats at the USPTO. This group has been created and is called the Patent Fraud Detection and Mitigation Working Group. False designation of entity status in a patent application is considered one such threat because it is viewed as unjustly diminishing the resources of the USPTO and thereby impeding the examination of other applications.

As is well known, applicants and owners may qualify for small or micro entity status and be afforded a significant reduction in most USPTO fees (80% for micro and 60% for small entity).

At the USPTO discretion, a review may be conducted of an entity status claim for compliance with all relevant USPTO rules.

When there is prima facie evidence that the entity status claimed is in error, the USPTO will send a deficiency notice to the applicant, which provides one of three opportunities for response:

1. If the assertion was not falsely made, a reply must be submitted that includes an explanation supported by sufficient evidence to rebut the preliminary determination;
2. If the assertion was falsely made but in good faith, an itemization of the total deficiency owed must be provided along with payment and an explanation supported by sufficient evidence that the assertion was made in good faith; and
3. If the assertion was falsely made and a good faith explanation is not submitted, an itemization of the total deficiency owed must be provided along with payment as well as an offer to pay any fine once assessed.

Currently the USPTO indicates on its website that over 2,200 fee deficiency notices have been sent.

Thus, for example, it is advised that the entity status be checked and affirmed before the payment of any fee to the USPTO throughout the prosecution of an application as the entity status may change due to assignment of rights.

As an aside, another announced threat to the patent system is falsified signatures. As is known, all signatures must be personally entered by the named signatory. This does not permit a first person to type in the signature of a second person even if the second person directs the first person to do so. The USPTO website indicates that since October 2024, it has terminated over 3,300 applications due to falsified signatures.