Nesarikar v. PTO — Federal Circuit Affirms Dismissal of Micro-Entity Fee Dispute for Lack of Standing

Background

Ashlesha, Anika, and Abhijit Nesarikar are named inventors on U.S. Patent Application No. 18/069,288 and at least five earlier-filed applications. When they filed the ‘288 application in late 2022, they certified that they qualified as a “micro entity” under 35 U.S.C. § 123 and paid only the discounted fees that come with that status — an 80% reduction in certain application fees. Micro-entity status is available only to applicants who have not been named on more than four previously filed applications, unless those earlier applications were subject to an assignment obligation arising from prior employment.

The PTO flagged the certification as potentially erroneous because the Nesarikars were named on more than four prior applications. In response, the Nesarikars invoked the § 123(b) assignment-obligation exception, asserting that they were required to assign all their applications — including the ‘288 application itself — to a former employer. However, they never produced the actual assignment agreement or quoted its language. The PTO found their representations insufficient, ceased examining the application, and the ‘288 application became abandoned when fees went unpaid.

The Nesarikars then sued the PTO in the Eastern District of Texas, challenging the denial of micro-entity status under the Administrative Procedure Act and seeking injunctive relief. The district court dismissed for lack of Article III standing.

The Court’s Holding

The Federal Circuit affirmed, holding that the Nesarikars failed to allege a cognizable injury-in-fact. The court identified a fundamental tension in the Nesarikars’ position: to invoke the micro-entity exception, they asserted that they were obligated to assign all rights in the ‘288 application to a former employer. But that admission meant they had no cognizable personal stake in the application. An applicant who has assigned away (or is obligated to assign away) all ownership rights in an application lacks the concrete interest necessary for Article III standing to challenge how the PTO administers that application.

The court also rejected alternative theories of standing. It found that neither the Privacy Act nor the Paperwork Reduction Act claims alleged in the complaint could independently supply the necessary Article III injury, since even those claims depended on the Nesarikars having a concrete interest in the ‘288 application — which their own assignment-obligation representations negated.

Key Takeaways

• Claiming an assignment obligation to get micro-entity status can backfire. Inventors who assert they are obligated to assign their applications may simultaneously forfeit standing to challenge PTO fee determinations, because they lack a personal stake in the application’s outcome.
• The PTO can require evidence of assignment obligations. Bare assertions of an assignment obligation are insufficient — the PTO may demand copies of the actual agreements, and failure to provide them can result in loss of micro-entity status and eventual abandonment.
• Pro se inventors must still satisfy Article III standing requirements. Even with liberal construction of pro se pleadings, the fundamental standing requirement of a concrete, particularized injury cannot be waived.

Why It Matters

This nonprecedential decision highlights a practical trap for inventors seeking reduced patent fees. The micro-entity fee discount under § 123 can save applicants thousands of dollars, but the assignment-obligation exception in § 123(b) comes with a hidden cost: asserting that you are obligated to assign the very application you’re prosecuting may eliminate your standing to fight for it. Patent applicants and small-entity practitioners should carefully consider whether invoking the assignment-obligation exception is consistent with maintaining a personal stake in the application — or whether it creates an irreconcilable tension that courts will use to dismiss their claims.