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Home / Should I Assign My Patent to My Company?

Should I Assign My Patent to My Company?

Thomas Weifan Mon

SHOULD I ASSIGN MY PATENT TO MY COMPANY?

Whether you already own a patent or are pursuing a patent for your big idea, one important consideration is whether to own the patent rights individually, to assign the patent rights to your company, or to create a company and then assign your patent rights to this newly formed company. 

Which option is best for yourself as the inventor and your patent will depend on the specific circumstances related to your patent. We’ll explore different considerations for you as you decide whether or not assigning your patent to your company is right for you

What Does Patent Assignment Mean?

Patent assignment transfers your ownership rights  in your patent from yourself to your company. This means that once you assign the patent, you transfer all ownership and control of that patent and its intellectual property rights as the patent inventor to another entity/company, known as an “assignee”. If you are currently in the application phase, this means you transfer all ownership and interest in your patent application to the company. 

This differs from another popular way people utilize their patents — licensing their patent rights.  Licensing a patent  does not provide the licensee with complete ownership of the patent rights. The licensor still retains some rights to the underlying patent. For example, the licensee may be able to use the patent for only a specific time period or only if  the licensee pays a specific royalty rate . 

Man writing on paper

Should I Form a Company to Assign My Patent to?

Whether to form a company that you can assign your patent to will depend on your long term plans. If you plan to offer services or to make and/or sell products or technology, establishing a company is likely a good idea for you.

Forming a company will provide you protection against any potential liability that may occur in the future that is related to the patent. Forming a company will also provide a platform from which to offer your products, technology, or services. But this still does not mean it would be best to assign the patent to that company.  Once the company owns the patent, it is an asset that may be vulnerable to creditors.

Of course, if you form a company you must continually observe certain corporate formalities to retain the protection and benefits of having a company. This includes holding regular board meetings, keeping finances distinct, and other laws that may vary depending on your location. 

This is why it is a good idea to  consult an attorney , especially one who specializes in intellectual property, to understand the requirements and benefits of forming a company. 

Advantages to Assigning Your Patent to Your Company

As a  patent owner , there are several advantages to assigning your patent rights to your company.

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Limits Your Liability

By assigning your patent to your company, including a company you form yourself, you limit any potential personal liability that may arise related to the patent. This means your personal assets are not on the line should issues arise down the line and litigation ensue related to your patent. Consider, however, that most liability arises actions taken such as manufacturing and selling products, and not simply by owning the patent. 

Provides a Clear Structure

Assigning your patent to your company provides very clear structure and understanding regarding who owns the rights to the patent. If you choose to only license your patent to your company rather than assigning the patent rights in full, it may be more complicated when trying to draft a comprehensive and cohesive licensing agreement between you and your company.  This is also helpful when there are investors or other partners that would like to see the patent owned by a company in which they themselves have an ownership interest.

Puts the Public on Notice

If you choose to assign patent rights to your company, this puts the public on notice about your patent and the corresponding intellectual property rights.  You must make certain postings on public websites  regarding your patent certifications. Assigning the rights to your company provides a medium to showcase this information to the public. 

Aids in Licensing Opportunities

Assigning your patent rights to your company can help as you pursue and negotiate licensing opportunities with other entities. If you are planning to license your patent in return for royalties, having an entity that can be the negotiator of the patent rather than you as an individual will lend more credibility to the transaction. This in turn will attract more reputable businesses who will be the best partners to aid in your patent’s success. 

Three women in business attire sitting together

Build Asset Valuation

By assigning your patent rights to your company, you build your company’s asset valuation. Your patent rights will be seen as a valuable intangible interest, which is important when attracting investors or lenders should you need additional funds. 

Disadvantages to Assigning Your Patent Rights

There are also some disadvantages to assigning your patent rights to your company that you will want to consider as you make this decision. 

Removes Control Over The Patent

One key consideration for many patent holders is who will control the  intellectual property rights associated with the patent . By assigning your patent to your company, you give up your individual control over the patent. 

Depending on your corporate structure, this may mean that any decisions related to the patent are now controlled by your company’s board of directors. You may also have to give up control of your company in exchange for receiving financing from outside investors. And as mentioned previously, making the patent a corporate asset makes it vulnerable to seizure by creditors of the company.

Incurs Incorporation Costs

Another consideration,  aside from patent costs , as you look to assign your patent is that it costs money to create and maintain a corporation. These costs will vary depending on where you live, the type of entity you form, and how much of the details are completed by an attorney. You will also probably have to pay yearly corporate taxes for your company. 

How to Assign Patent Rights

If you have decided to go ahead and assign patent rights to your company, you must draft an Assignment Agreement.  This Assignment Agreement must have language that assigns all rights to any and all patents related to a specific patent application. This Assignment Agreement must be signed by all inventors of the patent. 

You then must record this Assignment Agreement with the United States Patent and Trademark Office. This recording can be done online through the  Electronic Patent Assignment System . This can be done at any point during the patent application process. 

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assign patent rights

Patent assignment—How-to guide

Find out more about business management

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by   LegalZoom staff

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Updated on: February 15, 2024 · 13min read

1. Overview

  • 2. Do's & don’ts checklist

3. Patent assignment instructions

A company’s ability to buy and sell property is essential to its long-term life and vitality. Although it does not take up physical space, too much intellectual property can burden a company, directing limited funds towards maintaining registrations, defending against third-party claims, or creating and marketing a final product. Selling unused or surplus intellectual property can have an immediate positive effect on a company’s finances, generating revenue and decreasing costs. When it does come time to grow a business, companies looking to purchase property (including patents and other inventions) to support their growth must be sure that the seller does, in fact, have title to the desired items. A properly drafted patent assignment can help in both circumstances. 

A patent assignment is the transfer of an owner’s property rights in a given patent or patents, and any applications for such patents. These transfers may occur on their own or as parts of larger asset sales or purchases. Patent assignment agreements provide both records of ownership and transfer and protect the rights of all parties.

If you follow the enclosed sample and guidelines, you will have a written acknowledgment of the rights and responsibilities being transferred as part of your sale. This will provide essential documentation of ownership and liability obligations, and you will be well on your way to establishing a clear record of title for all of your patents. 

2. Do's & don’ts checklist

  • A patent is a set of exclusive rights in an invention given by the government to its inventor for a limited period of time. Essentially, in exchange for the inventor’s agreement to make his or her invention public and allow others to examine and build on that work, the government provides the inventor with a short-term monopoly on his or her creation. In other words, he or she is the only person who can make, use, or sell that invention.
  • A patent assignment can take many forms. It can be the transfer of an individual’s entire interest to another individual or company. It can also be the transfer of a specific part of that interest (e.g., half interest, quarter interest, etc.) or a transfer valid only in a designated area of the country. The exact form of the transfer is specific to the agreement of the parties.
  • Licenses are different than assignments. The individual who receives license rights from the patent holder is not gaining ownership—rather, he or she is getting assurance from the patent holder that he or she will not be sued for making, using, or selling the invention. The terms of the license will vary from agreement to agreement and may address issues of royalties, production, or reversion. If you are looking only to license your invention and not to sell all or part of it, you should not use the enclosed document.
  • A patent transfer is usually accomplished through a contract, like the written agreement form that follows. However, after the parties have negotiated and signed their agreement, the transfer must be recorded with the U.S. Patent and Trademark Office (USPTO). The agreement will not be effective if this registration is not made. Moreover, if the transfer is not recorded within three (3) months from the date of the assignment, there can be no later purchasers. In other words, the patent is no longer sellable to a third party by the assignee if it is not recorded quickly and correctly.
  • There is a $40 fee for recording each assignment of a patent or patent application. If you are submitting your transfer papers to the USPTO by mail, you should send them (together with a cover sheet and the fee) to Mail Stop Assignment Recording Services, Director of the United States Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450. Note that if you submit your assignment by mail, you should not use the original since the document will not be returned to you. In addition, the copy you submit must be on paper that is “flexible, strong white, non-shiny, and durable.”
  • Although you should feel free to adapt the document to suit your arrangement, you should always identify the patent(s) being assigned by their USPTO number and date and include the name of the inventor and the invention’s title (as stated in the patent itself). This is a requirement of federal law, and failure to follow it could invalidate your assignment.
  • The advantage of selling your invention or patent outright (and not simply licensing or attempting to develop and market it yourself) is that you are guaranteed payment at the price you and the purchaser have negotiated. On the other hand, that one-time payment is all that you will ever receive for your property. You will no longer have the right to control anyone else’s use of your creation. By using it yourself or offering a temporary license, you retain the potential for future income. However, such income is by no means certain, and your opportunities are paralleled by risk. Before selling all of your rights in a patent or patent application, make sure this is the best (and most lucrative) approach for you and your company.
  • Do not enter into an agreement without completing your due diligence. If you are purchasing a patent, conduct searches with the USPTO and online directories to make sure the seller actually has complete and unique rights in the offered property. Has an application already been filed by another person or company? What are the chances that this is a patentable item? Although your findings will not provide guarantees, you may have protection as an “innocent purchaser” if disputes arise. You might also find critical information about the value of the patent. Consider hiring a professional to help in your investigation. Comparing patents and applications often requires a specialized and technical understanding to know how useful and unique each one is. 
  • If you are selling an invention or patent, make sure you own it. Although this may seem obvious, ownership of intellectual property is sometimes not clear-cut. This may be the case if, for example, the invention was created as part of your employment or if it was simply sold or otherwise transferred to somebody else. A thorough search of the USPTO website should be conducted before you attempt to sell your property.
  • Both parties should review the assignment carefully to ensure that all relevant deal points have been included. It is better to be over-inclusive than under-inclusive. Do not assume that certain expectations or terms are agreed to if they are not stated expressly in the document.
  • Sign two copies of the assignment, one for you and one for the other party.
  • It’s a good idea to have your assignment notarized. This will limit later challenges to the validity of a party’s signature or of the transfer itself.
  • If your agreement is complicated, do not use the enclosed form. Contact an attorney to help you draft an assignment that will meet your specific needs. 

The following provision-by-provision instructions will help you understand the terms of your assignment.

The numbers and letters below (e.g., Section 1, Section 2(a), etc.) correspond to the provisions in the agreement. Please review the entire document before starting your step-by-step process. 

  • Introduction of parties. Identifies the document as a patent assignment. Write in the date on which the agreement is signed. Identify the parties and, if applicable, what type of organization(s) they are. Note that each party is given a name (e.g., “Assignor”) that will be used throughout the agreement. The Assignor is the party that is giving (“assigning”) its ownership interest and the Assignee is the party receiving it.
  • Recitals. The “whereas” clauses, referred to as recitals, define the world of the assignment and offer key background information about the parties. In this agreement, the recitals include a simple statement of the intent to transfer rights in the patent.  Remember that the Assignor can transfer all or part of its interest in the Patents. If the entire property is being transferred, use the word “all.” If only part of an Invention or Patent is being transferred, specify the amount being assigned (e.g., one-half, one-quarter, etc.).
  • Section 1: Assignment of patents. This constitutes the assignment and acceptance of the assignment of the Patents and Inventions. Note that the property being assigned is not described in the agreement itself. The Assignment references “Schedule 1” and explains that the full description is located on that schedule. Be as complete and clear as possible in your description of the property being transferred.
  • Section 2: Consideration. In most agreements, each party is expected to do something. This obligation may be to perform a service, transfer ownership of property, or pay money. In this case, the Assignee is giving money (sometimes called “consideration”) to receive the Assignor’s property. Enter the amount to be paid, and indicate how long the Assignee has to make that payment after the agreement is signed.
  • Section 3: Authorization to a director. The Assignor’s authorization to issue any Patents in the Assignee’s name. In other words, this tells the head of the USPTO that the transfer is valid and that ownership is changing hands by virtue of the Assignment. The bracketed last sentence is only applicable if the assignment is being recorded before a patent application number has been issued by the USPTO. It allows this application number to be written in after the assignment is recorded. If the applications have already been filed, and there have been application numbers issued, delete this bracketed sentence.
  • 4(a): it is the sole owner of the Inventions and the Patents. If there are other owners who are not transferring their interests, use the bracketed phrase. This means that the only part being transferred is the Assignor’s part.
  • 4(b): it has not sold or transferred the Inventions and the Patents to any third party
  • 4(c): has the authority to enter the agreement.
  • 4(d): does not believe that the Inventions and the Patents have been taken from any third party without authorization (e.g., a knowing copy of another company’s invention).
  • 4(e): does not know of any permissions that have to be obtained in order for the assignment to be completed. In other words, once the agreement is signed, the assignment will be effective without anyone else’s input.
  • 4(f): the Patents weren’t created while the creator was employed by a third party. In many cases, if an individual is employed by a company and comes up with a product, the company will own that product. This section offers assurance to the Assignee that there are no companies that will make that claim about the Patents being sold. If you and the other Party want to include additional representations and warranties, you can do so here. 
  • 5(a): has the authority to enter the agreement.
  • 5(b) has enough funds to pay for the assignment.  If you and the other Party want to include additional representations and warranties, you can do so here. 
  • Section 6: No early assignment. Prevents the Assignee from re-transferring the inventions or patents, or using any of them as collateral for loans, until it has made complete payment of the money due under the agreement. 
  • Section 7: Documentation. The Assignor’s promise to help with any paperwork needed to complete an assignment (e.g., filing information about the assignment with the USPTO and transferring document titles). The bracketed phrases make the additional promise that the Assignor will help with transfer paperwork for filings outside of the country. If this is not relevant to your agreement, delete the bracketed phrases.
  • Section 8: No further use of inventions or patents . Indicates that after the effective date of the agreement, the Assignor will stop using all of the inventions and patents being transferred and will not challenge the Assignee’s use of those inventions or patents.
  • Section 9: Indemnification. A description of each party’s future obligations if the patent or any application is found to infringe on a third party’s rights. There are two options provided, and you should choose the one that best fits with your situation. In the first, the Assignor takes all responsibility for infringement, promising to pay all expenses and costs relating to the claim. In the second, the Assignor makes its responsibilities conditional, greatly limiting its obligations if a claim is brought. Select only one of these options, and delete the other.
  • Section 10: Successors and assigns. States that the Parties’ rights and obligations will be passed on to successor organizations (if any), or organizations to which rights and obligations have been permissibly assigned.
  • Section 11: No implied waiver. Explains that even if one Party allows the other to ignore or break an obligation under the agreement, it does not mean that the Party waives any future rights to require the other to fulfill those (or any other) obligations.
  • Section 12: Notice. Lists the addresses to which all official or legal correspondence should be delivered. Write a mailing address for both the Assignor and the Assignee.
  • Section 13: Governing law. Allows the parties to choose the state laws that will be used to interpret the document. Note that this is not a venue provision. The included language will not impact where a potential claim can be brought. Write the applicable state law in the blank provided.
  • Section 14: Counterparts/electronic signatures. The title of this provision sounds complicated, but it is simple to explain: it says that even if the Parties sign the agreement in different locations, or use electronic devices to transmit signatures (e.g., fax machines or computers), all of the separate pieces will be considered part of the same agreement. In a modern world where signing parties are often not in the same city—much less the same room—this provision ensures that business can be transacted efficiently without sacrificing the validity of the agreement as a whole.
  • Section 15: Severability. Protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if a state law is passed prohibiting choice-of-law clauses, it will not undo the entire agreement. Instead, only the section dealing with the choice of law would be invalidated, leaving the remainder of the assignment enforceable.
  • Section 16: Entire agreement. The Parties’ agreement that the document they’re signing is “the agreement” about the issues involved. Unfortunately, the inclusion of this provision will not prevent a Party from arguing that other enforceable promises exist, but it will provide you some protection from these claims.
  • Section 17: Headings. Notes that the headings at the beginning of each section are meant to organize the document and should not be considered operational parts of the note.
  • Schedule 1: List of patents. In order for a patent assignment to be effective, the patents being transferred must be clearly identified. Be thorough in your description and attach any registrations or drawings that you may have. If you do include drawings, reference the inclusion of those items in the schedule (e.g., “*See attached drawing.”). Enter the patent registration number, and the name of all of the registered inventors of the patent(s) (even if they are not parties to this Assignment). If the assignment relates to a patent application, identify the application number (consisting of a series code and a serial number, e.g., 07/123,456). If the assignment relates to a provisional patent application or an application that is being filed at the same time as (or after) the assignment, you must also provide the name of each inventor and the title of the invention.

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23 Oct 2023

Patent Ownership vs. Inventorship: Who Really Controls the Rights to a Patent?

By Michael K. Henry, Ph.D.

Patent Ownership vs. Inventorship: Who Really Controls the Rights to a Patent?

  • Intellectual Property
  • Patent Prosecution

This is the first in a two-part blog series on owning and transferring the rights to a patent. (Read Part Two here: Patent Assignment: How to Transfer Ownership of a Patent. )

People commonly confuse patent inventorship with ownership — or assume that they are the same thing. But they are distinct concepts: The owner of a patent holds the legal rights and benefits granted by the patent. The inventor is not always the owner of the patent, and so doesn’t always control those rights.

If your business is about to file a patent application (or if you’ve filed them in the past), it’s important to properly understand how these concepts differ to avoid legal disputes down the line and to protect the value of your intellectual property assets.

What Is Patent Inventorship?

Simply put, the inventors are the ones who developed the invention—they’re the innovators, the creative minds, behind the patent.

There are legal rules for determining who should be listed as an inventor on a patent. Different jurisdictions define inventorship differently; in this section, we’ll describe how it’s defined under U.S. law.

An Inventor Must Have Contributed to the Conception of the Invention

Under U.S. law , the inventor is a person who has contributed to conception of the subject matter described in at least one claim in the patent application.

Conception is  normally defined as  “the formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention, as it is thereafter to be applied in practice.” 

In simpler terms, a person has “conceived” an invention when their idea is clear enough to enable someone in their field to implement the invention in a practical form (the legal term for this is “reduction to practice”).

Importantly, inventorship is based solely on the claims in a patent —  not the entire disclosure . So, a person qualifies as an inventor only if they helped conceive something that’s described in at least one of the patent’s claims.

An Inventor Need Not Have Reduced the Idea to Practice

However, the inventor is  not  necessarily the person who has reduced the invention to practice. So if a person implements (builds, codes, or carries out) an invention under the direction of someone else who conceived the entire novel idea, the implementer is  not  an inventor —  unless they made an additional, inventive contribution during the implementation process.

As an example, let’s say you’ve invented a new component for a mechanical system. The machinist who manufactures the component according to your specification is  not  an inventor. 

But if the machinist adds a feature (or makes some other substantive change) that you didn’t conceive in your design — and that added feature is claimed in the patent application — then the machinist should typically be listed as an inventor on the patent application.

As another example, let’s say you’ve invented a new machine-learning algorithm. A developer who codes the algorithm according to your specification, using standard coding tools, is  not  an inventor. 

But if the developer adds functionality that you didn’t conceive in your original algorithm — and that functionality is claimed in the patent application — then the developer should be listed as an inventor on the patent application.

Can We List Multiple Inventors in a Patent Application? 

As long as a person has contributed to at least one claim in the patent application, they are considered an inventor, and should be listed as such on the patent application. 

Inventors are  not  required to have:

  • Made an equal contribution
  • Contributed to every claim
  • Physically worked together at any time

IRRELEVANT FACTORS IN DETERMINING INVENTORSHIP

As we mentioned earlier, inventorship for a U.S. patent or patent application is determined by the legal standard summarized above. In my experience working with a variety of tech companies, our clients typically don’t have a hard time figuring out who should be listed as an inventor.

However, questions do arise from time to time, and it’s not uncommon for organizations to need help figuring out how the legal standard applies in certain circumstances. There are some recurring themes where inventorship can get clouded by other factors.

With that in mind, it’s often helpful to clarify that the following factors are not part of the legal standards, but are commonly (and incorrectly) perceived to determine inventorship: 

  • Internal company politics : Many times, a junior employee  writing an invention disclosure for a patent application will feel compelled to list their supervisor as an inventor. But they shouldn’t! Unless the supervisor actually qualifies as an inventor according to the legal standards we discussed above.
  • Authorship : Every field has its own standards for who should be listed as an author on a scholarly publication or white paper. For example, in most science labs, the principal investigator is almost always listed as the last author. However, inventorship is determined using a different set of standards — so don’t confuse the two.
  • Agreement: Inventorship can’t be determined by a private agreement—for example, joint development agreements or collaboration agreements might affect ownership but they do not impact inventorship.
  • Company : A company can never be listed as an inventor; only its employees can be. But a company  can  be the owner of a patent… which leads us to the concept of ownership.

What Is Patent Ownership?

According to  the rules and practice of the U.S. Patent and Trademark Office (USPTO),  the patent owner is the entity who has authority to  file patent applications  and take action in a pending application. The patent owner is also the entity who has the right to enforce an issued patent, for example, by filing a patent infringement lawsuit. 

In the vast majority of patent applications, the inventors are employees of a company that owns the patent rights (by virtue of an  employment agreement  with the company). In that scenario, the company is the “applicant” who has the authority to file and prosecute patent applications, and the inventor does not have any standing with the patent office. 

Once the patent issues , the owner of a patent enjoys significant commercial benefits, as they have the right to exclude others from making, using, selling, offering for sale, or importing the claimed invention.

By default, the USPTO presumes the original applicant is the owner of an application and any resulting patent — but the original applicant may transfer ownership of the patent to a different entity. We take a deeper dive into that process in the next post in this series, Patent Assignment: How to Transfer Ownership of a Patent .

What If My Employee Is the Inventor — Will My Company Own the Patent? 

Your business can claim ownership of an invention only if your employee has assigned ownership to the business. If the employee doesn’t do this (and continues to retain ownership), you won’t be able to enforce the patent rights against them or against your competitors. For example, if employee-inventors don’t assign their rights to the company:

  • The inventors can profit from the invention, even if they no longer work for you
  • The inventors can license the patent rights to a third party (e.g., your competitor) without sharing the royalties with you
  • The inventors could form a competing company and sell a competing product

For this reason, if your employees are creating valuable IP for your business, you should have them sign  employment agreements  that will assign ownership of the IP to your business.

Want to know more about how to assign ownership? Keep an eye out for our next post in the series, where we’ll walk you through the process.

Keeping Track of Inventors Using IDRS

Avoid costly legal disputes by keeping track of all inventors who have contributed to creating an invention, and make sure they all execute a written assignment to document your business’s ownership of the patent rights. 

Use our FREE  invention disclosure record (IDR) template  to easily record all information related to your invention — download it now!

DOCUMENT YOUR INVENTIONS Get our free Invention Disclosure Record template to track all the details necessary for documenting your company’s ownership of its inventions.

PROTECT YOUR INTELLECTUAL PROPERTY

Tracking the intellectual property that your employees create is not only a good business practice — it also helps to streamline the patent process itself.

Our FREE invention disclosure template is a simple document that helps you:

  • Record essential details about your invention
  • Provide evidence of important dates
  • Speed up the process of conceiving an invention and filing a patent application
  • Craft stronger patent claims

Fill out the short form on this page to get the template now.

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Michael K. Henry, Ph.D.

Michael K. Henry, Ph.D., is a principal and the firm’s founding member. He specializes in creating comprehensive, growth-oriented IP strategies for early-stage tech companies.

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assign patent rights

Increased employee mobility, health challenges, and the economic downturn due to the COVID-19 pandemic may result in more inventors than usual being unavailable to assign patent rights.  Fortunately, applicants may procure a U.S. patent even if an assignment document cannot be obtained for the application to be filed.  This article summarizes the requirements for filing and prosecuting a U.S. patent application filed post-America Invents Act (AIA) without a patent assignment and identifies pitfalls when establishing ownership of patent rights for patent prosecution.  Inventors being unavailable may also complicate obtaining the declarations required for U.S. patent prosecution, but solutions are available as we previously discussed  here .

Need for an Assignment

For a patent to issue to an assignee, the United States Patent and Trademark Office (the “USPTO”) must be made formally aware of the assignment so that the assignee is recognized as the patent applicant.  Filing an Application Data Sheet (ADS) for a patent application identifying the assignee as the applicant provides informal notice to the USPTO.   MPEP § 301  discusses ownership/assignability of patents and applications, including formal assignment recordation at the USPTO.  Recording an assignment may be necessary to permit the assignee to “take action” in the patent application during prosecution and for the patent to issue in the name of the assignee.   37 CFR 1.46 ; MPEP §§  301 ,  302 ,  605 .  In other words, assignees may face obstacles prosecuting a patent without an executed assignment.  The assignment(s) must transfer the entirety of patent rights from each of the inventors to the assignee, e.g., corporation, partnership, university, government entity, etc.  There can be multiple assignees if different inventors assign their rights to different assignees, a situation that results in two or more partial assignees that must each be identified to the USPTO as an applicant.   MPEP § 301 .

As only one patent assignment is required per inventor per patent application, subsequent applications claiming priority may often rely on an earlier assignment (depending on the assignment’s particular language).  If new subject matter is introduced in the application being filed, such as in a continuation-in-part application, another assignment may be required.

Persons who may file a Patent Application without an Assignment

Fortunately, applicants may procure a patent even if an inventor is not available to sign an assignment before application filing or during prosecution before payment of the issue fee. 

A person to whom the inventor is under the obligation to assign the invention may file a patent application and be identified as the applicant.  An assignment can then be subsequently executed and the USPTO notified as discussed above.  Alternatively, other documentary evidence of ownership, such as an employment agreement, invention disclosure form, or other documentation, can be recorded with the USPTO in lieu of a signed assignment document.   37 CFR 1.46 .  Employment agreements may contain language stating that the inventor assigns all rights, title, and interests in any invention developed while employed by the employer.  In some instances, the employment agreement may affirmatively state that the employee is under an obligation to assign the invention to the employer.  An invention disclosure form may contain language stating that the inventor’s signature on the form acknowledges the inventor’s assignment of and/or obligation to assign any rights, title, and interest in the invention disclosure to the employer.  If the invention disclosure form includes the inventor’s signature, this may be sufficient evidence that the employer is an obligated assignee.   37 C.F.R. 1.46(b)(1) .  It is important to examine any documentary evidence of ownership before recordation to identify any information (e.g., industry trend language, discussion of prior art, personal information of an employee, etc.) that may require redaction before recordation and/or may make public recording of the documentary evidence an undesirable option for the applicant.

Also, a person who shows sufficient proprietary interest in the matter may file a patent application and be identified as the applicant upon showing that such an action is appropriate, with the resulting patent being issuable in the applicant’s name.   37 CFR 1.46 .  If filing a national stage application, the applicant must have been identified in the international stage of the international application or as the applicant in the publication of the international registration. 

Showing Sufficient Proprietary Interest or Obligation to Assign

As provided in  37 CFR 1.46(b)(2) , “[i]f the applicant is a person who otherwise shows sufficient proprietary interest in the matter, such applicant must submit a petition including: (i) The fee set forth in § 1.17(g); (ii) A showing that such person has sufficient proprietary interest in the matter; and (iii) A statement that making the application for patent by a person who otherwise shows sufficient proprietary interest in the matter on behalf of and as agent for the inventor is appropriate to preserve the rights of the parties.”  Additionally, as stated in  MPEP § 409.05 , “[t]he ability for a person who otherwise shows sufficient proprietary interest in the matter to make an application for patent is not limited to situations in which all of the inventors refuse to execute the application, or cannot be found or reached after diligent effort.”

Showing sufficient proprietary interest requires “proof of the pertinent facts and a showing that such action is appropriate to preserve the rights of the parties.”   37 CFR 1.46(a) ;  37 CFR 1.424 .  Showing sufficient proprietary interest is discussed in  MPEP § 409.05  and may be established in various ways depending on the circumstances.  MPEP § 409.05 states that

A proprietary interest obtained other than by assignment or agreement to assign may be demonstrated by an appropriate legal memorandum to the effect that a court of competent jurisdiction (federal, state, or foreign) would by the weight of authority in that jurisdiction award title of the invention to the 37 CFR 1.46 applicant.  The facts in support of any conclusion that a court would award title to the 37 CFR 1.46 applicant should be made of record by way of an affidavit or declaration of the person having firsthand knowledge of same.  The legal memorandum should be prepared and signed by an attorney at law familiar with the law of the jurisdiction involved.  A copy (in the English language) of a statute (if other than the United States statute) or a court decision (if other than a reported decision of a federal court or a decision reported in the United States Patents Quarterly) relied on to demonstrate a proprietary interest should be made of record.

Remember that an applicant as a person who otherwise shows sufficient proprietary interest in the matter must submit the required petition, fee, and information prior to paying the issue fee as set forth in  37 CFR 1.46 .

Final Considerations

Patent applicants can gain control over patent prosecution and assert patent rights even without execution of a signed assignment by an inventor.  Before doing so, however, applicants should coordinate with patent counsel regarding their particular circumstances and should consult current USPTO rules.

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IP Assignment and Licensing

IP rights have essentially transformed intangibles (knowledge, creativity) into valuable assets that you can put to strategic use in your business. You can do this by directly integrating the IP in the production or marketing of your products and services, thereby strengthening their competitiveness. With IP assignement and IP licensing, IP owners can also use your IP rights to create additional revenue streams by selling them out, giving others a permission to use them, and establishing joint ventures or other collaboration agreements with others who have complementary assets.

  Expert tip: Assignment, license and franchising agreements are flexible documents that can be adapted to the needs of the parties. Nevertheless, most countries establish specific requirements for these agreements, e.g. written form, registration with a national IP office or other authority, etc. For more information, consult your IP office .

IP rights assignment

You can sell your IP asset to another person or legal entity.

When all the exclusive rights to a patented invention, registered trademark, design or copyrighted work are transferred by the owner to another person or legal entity, it is said that an assignment of such rights has taken place.

Assignment is the sale of an IP asset. It means that you transfer ownership of an IP asset to another person or legal entity.

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IP for Business Guides

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IP licensing

You can authorize someone else to use your IP, while maintaining your ownership, by granting a license in exchange for something of value, such as a monetary lump sum, recurrent payments (royalties), or a combination of these.

Licensing provides you with the valuable opportunity to expand into new markets, add revenue streams through royalties, develop partnerships etc.

If you own a patent, know-how, or other IP assets, but cannot or do not want to be involved in all the commercialization activities (e.g. technology development, manufacturing, market expansion, etc.) you can benefit from the licensing of your IP assets by relying on the capacity, know-how, and management expertise of your partner.

  Expert tip: Licensing can generally be sole, exclusive or non-exclusive, depending on whether the IP owner retains some rights, or on whether the IP rights can be licensed to one or multiple parties.

Technology licensing agreements

Trademark licensing agreements, copyright licensing agreements, franchising agreements, merchande licensing, joint venture agreements, find out more.

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Patents, Trademarks, Copyright, and Trade Secret help for Entrepreneurs and Businesses

Should you assign patent rights?

Should you assign patent rights?

You have an idea for a product, an app, or a service, and you want to pursue patent protection.  But should you assign patent rights to your company?  Or if you haven’t started a company, should you so that you can assign the patent to it?  Like any business decision, there are pros and cons to each choice.  This post assumes that you are an inventor (see my post on who is a patent inventor and what is inventorship ) for patent application purposes, and that you are an owner of your company – if you’re an employee, the situation is different.  Let’s look at legal considerations.

What does it mean to assign patent rights?

When you assign patent rights, you transfer all ownership and control of the patent application and any patents that come from it.  A different option is to license your patent rights.  A license may be a complete transfer of the ability to use the patent, but a license can also be limited: it could be temporary; it could be revoked; it could be limited by when or where the licensee can use the patent rights, or by what products the licensee can make, or by how many users or sales the licensee may have.  A license can be exclusive, so that you license to only that licensee, or it could be non-exclusive, so that you could license to more than one person or company.  An assignment is not a license – an assignment is complete.

Should you form a company?

If you plan to make or sell products, or offer a service, it almost always makes sense to form a company.  Having a company will make it easier to use your patent to help generate a revenue stream.  And having a company can give you protection from personal liability, provided you follow corporate rules and manage the company properly.  If you don’t have a company, you should assess whether it makes business sense for you to form one, and you should consult an attorney about your business plans.  And for a cautionary tale on forming a partnership, rather than a company, have a look at my post on the  Apple Computer founders and partnerships .

Should you assign your patent rights to your company?

If you’re a founder or co-founder, or co-owner, of a company, you may be required to assign any rights in any patent applications and issued patents to your company, bearing your patent strategy in mind (see my posts on a staged provisional patent application strategy , and on choosing a patent strategy ).  This assumes the inventions relate to the company, as it may be the reason you’ve founded the company.  And if you aren’t obliged to assign your patent, should you?  Usually, my recommendation is that you should.

There are advantages to assigning your patent rights to your company:

Clarity.   Assigning the rights means your company has a more clear right to make, use, and sell the product or service covered by the relevant patent or patents – it’s actually the right to exclude others from doing so.  If you don’t assign, you’ll have to license the rights to the company.  A license will require more work (which means more expense) than an assignment.  And if you try to save money on the license by finding an example and changing the names, you risk losing one of the key benefits of having a company: the protection from personal liability.

Notice.  The assignment is public, and should be recorded at the USPTO – this puts everyone on notice that the company owns the patent rights.

Negotiations.  When you assign patent rights to your company, you can take advantage of the corporate structure to negotiate licenses and royalty agreements with other companies.

Valuation.  Assigning your patent rights to your company helps to build the asset valuation of your company, which will be important to any investors or lenders you may seek.  Investors and lenders will often require you to assign patent rights to your company before they will complete a transaction with your company.

There are disadvantages to assigning your patent rights:

Control.  For most founders, the primary concern in assigning patent rights to their company is the potential loss of control of their patent rights.  If you lose control of your company as a condition of receiving investment, or due to mismanagement of the company, or because of other circumstances, you may not be able to recover control of the patent rights.  But taking on investment is generally necessary and beneficial – or you wouldn’t do it; and other circumstance leading to a loss of control are much less likely and are within your control.

Costs.  It will cost some money to incorporate and complete the assignment.  But those costs are relatively small, and they come with many benefits.  And if you’re wondering about the costs of a patent application, take a look at my post on patent application cost .

How do you assign patent rights?

To assign patent rights, each inventor must sign an Assignment Agreement, which can be a relatively simple two-page contract.  The Assignment Agreement must assign all rights to any patents that are issued relating to the patent application.  The assignment must be recorded with the USPTO, using the  Electronic Patent Assignment System .  This can be done any time before the patent is issued by the USPTO.  The Assignment Agreement doesn’t have to be signed when we file a patent application.

Other considerations?

When your company owns a patent, it can affect the asset valuation of the company, which can have consequences for your tax and accounting.  You should discuss this with your tax attorney and/or your accountant before proceeding to assign patent rights.   Do you have questions about the process of patent prosecution or patent assignments?  I’d be glad to hear from you in the comments.   Call me at 617-340-9295 or email me at my Contact Me page.   Or, find me on Facebook , Twitter , Google+ , LinkedIn , Google Local , or Avvo .

Information Disclosure Statement in Patent Applications

[…] This information is needed for a patent application because this will determine whether the company can file as a small entity or a large entity, which has a big effect on USPTO fees.  This also will indicate whether the company has properly controlled and gotten assignments of the rights to the invention. […]

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A cautionary tale for assignment of rights in u.s. patents.

In Omni MedSci, Inc. v. Apple Inc. , ___ F.4th ___, Nos. 2020-1715, -1716 (Fed. Cir. Aug. 2, 2021), the U.S. Court of Appeals for the Federal Circuit held that the University of Michigan’s technology transfer bylaws did not constitute an automatic assignment of a professor’s patent rights. This decision has important implications for the drafting of employee agreements as they relate to the ownership of inventions, which in the U.S. vest initially in the inventors.

In 2012, Dr. Islam, a tenured professor at University of Michigan (“UM”), took an unpaid leave-of-absence in order to start a new company, Omni. During his leave, Dr. Islam filed several provisional patent applications that he expected to form the backbone of the IP portfolio for the new company. In 2013, after resuming work at UM, Dr. Islam assigned the issued patents to Omni.

Omni subsequently brought suit against Apple for infringement of two patents descended from the provisional applications filed by Dr. Islam during his leave. Apple moved to dismiss alleging that Omni lacked standing because UM was the real patent owner. Apple argued that UM’s bylaws automatically transferred legal title to the patents to UM, leaving Dr. Islam with no rights to assign to Omni. The district court rejected Apple’s arguments and denied the motion; in a split decision, the Federal Circuit affirmed.

Did UM’s Bylaws Effectuate an Automatic Assignment?

Like all professors at UM, Dr. Islam signed an employment agreement when he was first hired in 1995 in which he agreed to abide by UM’s bylaws.  Those bylaws provided that patents “resulting from activities which have received no support … from the University shall be the property of the inventor,” whereas patents based on activities supported by the University “shall be the property of the University.” The question for the court was whether the bylaws created an obligation to assign or constituted an automatic assignment of the patents at issue, which would have automatically transferred title to UM and left Dr. Islam with no rights in the invention to assign to Omni.

The distinction between automatic assignments and obligations to assign is nicely illustrated by the Stanford v. Roche case. There, Professor Holodniy, a Stanford professor, conducted research at Cetus pursuant to a confidentiality agreement. After his return to Stanford, Professor Holodniy assigned the resulting patent applications to Stanford. When Stanford subsequently sued Roche, Roche raised an ownership defense based on the language in the confidentiality agreement with Cetus. The Cetus agreement stated that Holodniy “will assign and do[es] hereby assign” his rights to Cetus for inventions made “as a consequence of [his] access” to Cetus. By contrast, Holodiny’s employment agreement with Stanford stated that he “agree[d] to assign” rights in inventions resulting from his employment. The Federal Circuit held that the Cetus contract, by virtue of its present-tense “do[es] hereby assign” language, automatically assigned rights to Cetus, but the Stanford contract’s future-tense language did not.

In Omni , the Federal Circuit observed that UM’s bylaws did “not unambiguously constitute either a present automatic assignment or a promise to assign in the future.” The express purpose of the bylaws was, however, to determine under which conditions employees were obliged to assign their inventions to UM and when they would own it themselves. Moreover, after disclosing an invention to the Office of Technology Transfer, employees at UM were asked to sign an Invention Report, which referenced the bylaws and provided: “As required, I/we hereby assign.” The Federal Circuit contrasted the “unambiguous present assignment” in the Invention Report with the language in the bylaws, noting that “[e]ach case in which [the] court found a present automatic assignment examined contractual language with a present tense executing verb. Such present-tense active verbs effectuate a present action.” Thus, the Federal Circuit concluded that the bylaws were “most naturally read as a statement of intended disposition and a promise of a potential future assignment, not as a present automatic transfer.”

Takeaways: How to Play it Safe

While the Federal Circuit noted that there are no “magic words,” the following language has been held to constitute an automatic assignment: “the Employee assigns all of his or her right, interest, or title in any invention to the Employer” ( SiRF Tech v. Int’l Trade Comm’n ); “agrees to and does hereby grant and assign” ( DDB Techs. ); “hereby conveys, transfers, and assigns” ( Speedplay v. Bebop ); and “agrees to grant and does hereby grant” ( FilmTec Corp. v. Allied-Signal ). By contrast, passive verbs in indefinite or future tense are less likely to effectuate a present assignment.  Indeed, agreements providing that an invention “shall be the property of … and all rights thereto will be assigned” to an employer have been held not to be an automatic assignment, but rather, an obligation to assign in the future. By following the language of these precedents, employers and employees can ensure their agreements provide for the desired ownership of inventions.

Concluding Remarks

In dissent, Judge Newman argued that the holding “overturns decades of unchallenged understanding and implementation of the University’s employment agreement and policy documents.” Whether or not this is true, institutions and corporations would be well-advised to review the language used in their employment agreements to ensure it achieves the intended purpose.

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United States Patent and Trademark Office - An Agency of the Department of Commerce

Learn how to apply for a patent

Published on: 03/05/2024 14:30 PM

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COMMENTS

  1. 301-Ownership/Assignability of Patents and Applications

    A patent or patent application is assignable by an instrument in writing, and the assignment of the patent, or patent application, transfers to the assignee (s) an alienable (transferable) ownership interest in the patent or application. 35 U.S.C. 261 . II. ASSIGNMENT. "Assignment," in general, is the act of transferring to another the ...

  2. Patent Assignment: How to Transfer Ownership of a Patent

    A patent assignment is an agreement where one entity (the "assignor") transfers all or part of their right, title and interest in a patent or application to another entity (the "assignee"). In simpler terms, the assignee receives the original owner's interest and gains the exclusive rights to pursue patent protection (through filing ...

  3. Patents Assignments: Change & search ownership

    Assignment Center makes it easier to transfer ownership or change the name on your patent or trademark registration. See our how-to guides on using Assignment Center for patents and trademarks. If you have questions, email [email protected] or call customer service at 800-972-6382.

  4. Should I Assign My Patent to My Company?

    How to Assign Patent Rights. If you have decided to go ahead and assign patent rights to your company, you must draft an Assignment Agreement. This Assignment Agreement must have language that assigns all rights to any and all patents related to a specific patent application. This Assignment Agreement must be signed by all inventors of the patent.

  5. Managing a patent

    The transfer or sale of a patent or application is executed through an assignment. Patent law also provides for assignment of part interests (half, fourth, etc.) in a patent. Upon assignment, the assignee becomes the owner of the patent and has the same rights as the original owner. If the patent is mortgaged, ownership passes to the lender ...

  6. The basics of patent assignments

    Here's a high-level overview of how patent assignments work: when a patent's owner or applicant assigns it to another individual or company, the assignor agrees to relinquish their rights to enforce or benefit from it in the future. You can assign rights for applications still pending with the United States Patent and Trademark Office (USPTO).

  7. Patent assignment—How-to guide

    A patent assignment is the transfer of an owner's property rights in a given patent or patents, and any applications for such patents. These transfers may occur on their own or as parts of larger asset sales or purchases. Patent assignment agreements provide both records of ownership and transfer and protect the rights of all parties.

  8. "Patent Owners Should Mind Assignee Rights Restrictions,"

    In other words, a patent owner cannot assign more rights than it possesses. The patent owner may also have contractual obligations, or even incentives, to protect those prior license grants. Consequently, it may want to shield the earlier licensees by reserving rights for itself, or imposing restrictions on future purchasers. ...

  9. Employee Inventors and Patent Ownership: Whose Rights Are They Anyway?

    The assignment of rights may be accomplished through use of a written, signed instrument. 4 The prompt recording of such an instrument with the United States Patent and Trademark Office (USPTO) is the most secure and effective way for an employee-inventor to assign his or her patent rights to the employer, for at least two reasons. First, it will prompt the USPTO to issue a certificate of ...

  10. Assignment Center

    EPAS is the Electronic Patent Assignment System that allows users to submit patent reassignment requests online. EPAS is being replaced by the new Assignment Center, which will offer more features and functionality for patent and trademark assignments. Users can access EPAS until February 5, 2021, when the transition to Assignment Center will be completed.

  11. Sample Patent Assignments

    6210 Stoneridge Mall Road, Ste 240. Pleasanton, CA 94588. ASSIGNMENT OF RIGHTS OF PATENT: An assignment is intended for use for a patent that has been issued by the U.S. Patent and Trademark Office (USPTO). ASSIGNMENT OF RIGHTS TO APPLICATION: This type of assignment is for the rights to an invention for which a patent application has been ...

  12. Agree to Assign vs. Hereby Assign: In Stanford v. Roche, the Word

    Stanford eventually obtained the assignment rights for the invention from Holodniy and acquired three patents as a result. In 1991, Roche acquired Cetus, and Roche commercialized the assay ...

  13. Don't Just Agree to Transfer Patent Rights—Do It!

    Patent and invention assignments must be in writing, and they must cause a present transfer of rights from the inventor to the prospective owner. It is not enough to say that the employee "will assign" the rights in the future or "hold in trust" such rights for the employer's benefit. The assignment must actually assign the patent rights.

  14. Patent Ownership vs. Inventorship: Who Really Controls the Rights to a

    This is the first in a two-part blog series on owning and transferring the rights to a patent. (Read Part Two here: Patent Assignment: How to Transfer Ownership of a Patent.) People commonly confuse patent inventorship with ownership — or assume that they are the same thing. But they are distinct concepts: The owner of […]

  15. US Patents Without a Signed Assignment of Patent Rights

    Recording an assignment may be necessary to permit the assignee to "take action" in the patent application during prosecution and for the patent to issue in the name of the assignee. 37 CFR 1. ...

  16. IP Assignment and Licensing

    IP rights assignment. You can sell your IP asset to another person or legal entity. When all the exclusive rights to a patented invention, registered trademark, design or copyrighted work are transferred by the owner to another person or legal entity, it is said that an assignment of such rights has taken place. ... If you own a patent, know ...

  17. Transferring ownership/ Assignments FAQs

    Assignment Center makes it easier to transfer ownership or change the name on your patent or trademark registration. See our how-to guides on using Assignment Center for patents and trademarks. If you have questions, email [email protected] or call customer service at 800-972-6382.

  18. Should you assign patent rights?

    Assigning the rights means your company has a more clear right to make, use, and sell the product or service covered by the relevant patent or patents - it's actually the right to exclude others from doing so. If you don't assign, you'll have to license the rights to the company. A license will require more work (which means more ...

  19. PDF Chapter 300 Ownership and Assignment

    In 37 CFR 3.1 , assignment of patent rights is defined as "a transfer by a party of all or part of its right, title and interest in a patent [or] patent application...." An assignment of a patent, or patent application, is the transfer to another of a party' s entire ownership interest or a percentage of that party's ownership

  20. A Cautionary Tale for Assignment of Rights in U.S. Patents

    In Omni MedSci, Inc. v. Apple Inc., ___ F.4th ___, Nos. 2020-1715, -1716 (Fed. Cir. Aug. 2, 2021), the U.S. Court of Appeals for the Federal Circuit held that the University of Michigan's technology transfer bylaws did not constitute an automatic assignment of a professor's patent rights.This decision has important implications for the drafting of employee agreements as they relate to the ...

  21. Assigning patent rights to others

    An assignment of a patent or patent application is void unless it is in writing. Post 1 January 2005, the need for assignments to be signed by both assignees and assignors was removed for assignments of UK patents. This change was effected via the Regulatory Reform (Patents) Order 2004. Nevertheless, it is still common for both parties and not ...

  22. Starting a patent assignment request in Assignment Center

    Published on: January 29, 2024 14:47. Learn how to use start a patent request in Assignment Center. Assignment Center is a publicly available USPTO system for recording assignments and other documents relating to interests in patents and trademarks. Other ways to view this video. Watch it on YouTube.

  23. 300

    323.01(c)-Assignment or Change of Name Improperly Filed and Recorded by Another Person Against Owner's Application or Patent 323.01(d)-Expungement of Assignment Records 324-Establishing Right of Assignee To Take Action in Application Filed Before September 16, 2012

  24. Learn how to apply for a patent

    Patent Center. Single interface replacement for EFS-Web, Private PAIR and Public PAIR. Check application status. Check patent application status with Patent Center. Fees and payment. Pay maintenance fees and learn more about filing fees and other payments. Patent Trial & Appeal Board. Resolve disputes regarding patents with PTAB. Global Dossier