Qualifying as a Small Entity

Under the Indian Patents Rules, 2003, rule 2(fa) defined “small entity” as:

(i) in case of an enterprise engaged in the manufacture or production of goods, an enterprise where the investment in plant and machinery does not exceed the limit specified for a medium enterprise under clause (a) of sub-section (1) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006); and

(ii) in case of an enterprise engaged in providing or rendering of services, an enterprise where the investment in equipment is not more than the limit specified for medium enterprises under clause (b) of sub-section (1) of Section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).

Explanation 1. — For the purpose of this clause, "enterprise" means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951) or engaged in providing or rendering of any service or services in such and industry.

Explanation 2. — In calculating the investment in plant and machinery, the cost of pollution control, research and development, industrial safety devices and such other things as may be specified by notification under the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), shall be

excluded.

Explanation 3. —The reference rates of foreign currency of the Reserve Bank of India shall prevail.

In July 2020, the government of India revised the definition of a “Small Enterprise”. An applicant may claim the status of a “Small Entity” if the following criteria can be fulfilled:

• Investment in Plant and Machinery or Equipment does not exceed INR 50 crore (USD 68,64,125 approx)
• Annual Turnover does not exceed INR 250 crore (USD 3,43,20,625 approx)

Documents required as Proof

An applicant wishing to be declared as a small entity, has to file a declaration in Form 28, and furnish proof relating to the status of being a small entity. If an applicant wishes to file a new patent application, a form 28 should accompany form1. However, if the applicant has already filed a patent application, and wishes to file any other forms which attracts a fee, form 28 should be filed at least once accompanying the form which the applicant desires to file. Further, to substantiate a Form 28 filing, the following documents will be required:

• Indian applicant:
  • Evidence of registration under the Micro, Small and Medium Enterprises Act, 2006 (i.e. the MSME or Udyog Aadhar Certificate). You may go through this link to obtain the same.

• For a non-Indian applicant:
  • A self-declaration regarding small entity status
  • Any document as evidence of eligibility
    • A self-attested copy of the latest balance sheet in English and a self-attested copy of the latest profit and loss statement in English.
    • A certificate/declaration from a Chartered Accountant.

Eligibility for Expedited Examination:

Under the Indian Patents Rules, applicants (Indian or foreign) in the “Small Entity” category may file a request for expedited examination in Form 18-A. However, it must be accompanied by Form-28.

Reduced Government Fee:

Under Patents (2nd Amendment) Rules, 2020 notified on November 04, 2020), the types of Applicants for a patent application have been classified into 2 categories, namely:

• Natural person(s) or Startup(s) or Small entit(y)/(ies)
• Other(s) (i.e. commonly called large entities)

Now, Small Entities enjoy a concession (80%) in the IPO fees.

Conclusion

In light of this, applicants wishing to claim small entity status need to furnish certain proof and documentation to claim this status. This article tries to help such applicants to claim small entity status.

We hope you found this article useful. You may be interested in reading our articles:

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Filing a national phase patent application in India after filing a PCT application 

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