The 2020 Patents Rules gave small entities the same discounted fees as startups and individuals — a welcome boost. But when such an application transfers to a large entity, Rule 7(3) demands paying the difference in fees. Calculating that difference is where it gets messy.
What changed
The Patents (Second Amendment) Rules, 2020 (in force 4 November 2020) recategorised applicants and their fees into two classes:
- natural person(s), startup(s) or small entit(y)/(ies); and
- Other(s) — alone or with any of the above.
This lets small entities claim the fee concession previously reserved for natural persons and startups — reducing their burden and encouraging more small-entity filings.
Rule 7(3): pay the difference on transfer
Rule 7(3) says that if an application transfers from a natural person/startup/small entity to an “Other” (a large entity) — e.g. by assignment — the new applicant must pay the difference in the two fee scales, along with the transfer request, because the applicant’s status changed.
Helpfully, the Rules clarify that when a startup/small entity stops being one (by lapse of recognition or crossing a financial threshold), it needn’t pay the difference.
The rationale is ethical: stop large entities from capturing the small-entity concession via transfers.
The implementation barrier
Sound in principle — hard in practice. Patent prosecution involves many fee events: additional claims, request for examination, extensions of time, renewals, and more. So on transfer, the “Other” must trace every payment made against the application and compute the difference — and there have been multiple revisions to the fee schedule over the years, compounding the difficulty. Genuine miscalculations become likely.
Recommendations
- Consolidated fee transcript. The Patent Office, with its digitised records, should send the applicant a consolidated fee transcript to support Rule 7(3) compliance.
- Show the difference at filing. The patents portal could display the fee difference (or the transcript) when the transfer is filed — or at least let the applicant request the transcript.
- Attach the transcript to any objection. If the Office objects for non-payment under Rule 7(3), it should attach the consolidated transcript citing all payments, so the “Other” can correctly calculate and pay — avoiding erroneous payments and redundant back-and-forth.
Rule 7(3) is needed to protect the system’s integrity — but its implementation must be viable and practical. A lack of consolidated records invites genuine mistakes by applicants, counsel or agents; the fixes above would save everyone time and effort.
The takeaways
- Small entities now get startup/individual fees — a real encouragement to file.
- Rule 7(3) charges the fee difference when an application moves to a large entity.
- Calculating that difference is hard — many fee events, plus historic schedule revisions.
- A consolidated fee transcript from the Office would make compliance clean and error-free.
Frequently asked questions
What did the Patents (Second Amendment) Rules, 2020 change? They recategorised applicants into two classes and extended the reduced fees (previously for individuals and startups) to small entities.
What does Rule 7(3) require? When an application transfers from a natural person/startup/small entity to a large entity, the new applicant must pay the difference between the two fee scales.
Do you always pay the difference when status changes? No — if a startup or small entity simply ceases to qualify (lapse of recognition or crossing a threshold), the difference isn’t payable; it’s transfers to a large entity that trigger it.
Why is Rule 7(3) hard to implement? Patent prosecution has many fee events and the fee schedule has been revised over the years, making it difficult to trace all payments and compute the exact difference — a consolidated fee transcript would help.
Useful official resources
- The Patents Act, 1970
- Indian Patent Office — patents