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I know that I meet the first condition where I have 0 patent filings. Also, my revenue is less than 10 thousand dollars a year. Though, I do not understand the third term. Can someone explain to me this condition named "GROSS INCOME LIMIT ON PARTIES WITH AN “OWNERSHIP INTEREST.” I am planning on patenting something then started a project on kickstarter asking for 400-500 thousand dollars. If i understand this right, will that condition prevent me from starting a kickstarter campaign?

Thanks.

  • Just to clarify, you want to first file a patent application and afterwards fund via kickstarter? – DonQuiKong Jan 28 '17 at 10:29
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The rule you are referring to is probably 37 CFR § 1.29(a)(4), which provides:

Neither the applicant nor the inventor nor a joint inventor has assigned, granted, or conveyed, nor is under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census.

"Ownership interest" relates to any kind of proprietary rights that another party might have over the patent application. Part ownership is the most obvious form of ownership interest.

Thus a translation of this into simple non-legal English might be:

The applicant or invention has not given (or promised to give) rights to the patent application to someone else, if that person earns more than 3× median household income.

Would Kickstarter contributions count as an ownership interest?

It seems unlikely, but it depends precisely how your Kickstarter campaign is set up.

If backers are given 1% ownership in the patent, or shares in the company which holds the patent (or something like that), then they would have an ownership interest in the patent, and would need to comply with the income requirements. It seems unlikely that a campaign would be set up like this though.

However, if the backers are given a copy of the product (which may or may not be patented, it is irrelevant), then they will be receiving no rights over the patent application itself: they simply get a good. This is therefore not an ownership interest.

What if my entity status changes?

That is fine: you simply need to notify the USPTO before or while paying the next fee (37 CFR § 1.29(i)). You will then be paying small or large entity fees (depending on the situation).

If you pay a fee at the wrong rate, this may be considered fraud (which could result in, among other things, an invalid patent) (37 CFR § 1.29(j)). However, this may be remedied if the mistake was made in good faith (37 CFR § 1.29(k)).

  • what if some company approached me after I put my project on Kickastarter stating they want to invest or purchase my project. Would this invalidate my patent? If that is the case, can I simply use the small entity patent so that the patent does not invalidate my patent in this particular case? Can a license be changed from micro to small later without losing my rights if I decided that a company can invest or partner with me? – Rick James Jan 28 '17 at 10:59
  • @RickJames I've added this to my answer, but you'd be fine as long as you notify the USPTO of the change in entity status. – Maca Jan 28 '17 at 11:06
  • thanks for the detailed answer. You said "you simply need to notify the USPTO before or while paying the next fee." So, if my status change, I need to contact USPTO and notify them. That I understand. Will I have to pay the fee difference at the the same first year. Keep in mind that I am using a provisional patent and not a permanent one until the next year. Does that mean I need to pay the normal (not small not micro) fee after one year when I receive the 400k+ funds I need for my project or I must change my provisional patent and pay the full fee. Thanks. – Rick James Jan 28 '17 at 11:34
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    @RickJames You only pay the large entity fee on any fees that arise after you become a large entity. That is, you don't need to retrospectively go back to top up the fees you already paid when you were legitimately a micro entity. So if you are a large entity (because you got a big investment) when you file the non-provisional, the non-provisional fee will be at the large entity rate. – Maca Jan 28 '17 at 11:37
  • I really cannot thank you enough for the detailed information. Now, I am no longer confused. Thanks. – Rick James Jan 28 '17 at 11:40

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