patent assignment vs ownership

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Who Owns What: Assignment and Ownership of Patents and Applications

Why does ownership of a patent/patent application matter?

A patent is a government-granted property right that can be used to exclude others from making, using, selling, offering to sell, and importing an invention for a specified time. Patents provide important commercial benefits (discussed in detail in our companion piece What You Need To Know About Patents ) — but only for patent owners.

So who owns a patent/patent application?

In the US, the inventor is presumed to be the initial owner of a patent or patent application. If there is more than one inventor, there may be more than one owner. Ownership can be transferred or reassigned. If your company values intellectual property and has employees who are encouraged to innovate, here are a few important strategies to ensure that your company can benefit from patents generated through employee inventions.

Agreements with employees and service providers (Automatic Assignment) : Companies should have all employees sign confidential information and inventions assignment agreements before employees start generating intellectual property. Having employees sign these agreements at the beginning of their employment, before any work is done, is the best course of action. Likewise, failure to correctly structure IP provisions in agreements with third parties such as service providers and consultants prior to the execution of any work has caused serious issues for many companies. A form of confidential information and inventions assignment agreement for California employees is available , and a form of consulting agreement for US consultants (which contains IP assignment provisions) is available.
Obligation to Assign : In some situations, even if your employees have not signed an agreement, they may still be obligated, either by contract or local law, to assign patent/patent application ownership to your company. For example, this could occur if the invention was developed on the job, the employee was hired specifically to invent for the company, and/or the inventor is an officer of the company.
Explicit Assignments : Even when employees have signed appropriate agreements, your company should execute new patent-specific assignments whenever patent applications are filed. These assignments name the specific invention, patent, and/or patent application, and can have additional legal weight if the ownership of a patent is disputed.

Joint ownership of patent/patent application rights can be complicated. As with any property right, multiple owners can make for multiple legal scenarios. For example, co-owners would have to join together to bring a patent infringement lawsuit. By contrast, the opposite is true for licensing: a co-owner can license its patent/patent application rights to a third party, independent of the other co-owner(s), unless they have an agreement otherwise. Co-owners can also independently sell, mortgage, transfer, and will their rights to a patent/patent application. To avoid these kinds of issues, most attorneys recommend that a single entity be the patent/patent application owner, whenever possible. If this is not possible, then it is important to correctly structure IP provisions in an agreement, for example, ideally where one party exclusively licenses back all rights in the co-owned patent/patent application.

How do I make sure my company owns these patents/patent applications?

Well-structured ownership assignments are legally binding, but what does “well-structured” mean? Patent/patent application assignments have several formal requirements to be considered valid. Assignments must:

Be in writing – unlike some other contracts, oral assignments or oral agreements to assign patent/patent application rights are rarely enforceable;
Clearly identify all parties – recite names, addresses, and relationship of both the assignor(s) and assignee;
Identify the property clearly – include the patent/patent application number, title, inventors, and filing date;
Recite exchange of consideration – this is a standard for almost any contract, and here, even nominal consideration (e.g., $1) is sufficient;
Execution be notarized or attested to by one, preferably, two non-inventor witnesses – notarization or witnessing serves as evidence that the signatures (and, thus, the assignment) is valid. There is a lot of interest in utilizing an e-signature platform, such as DocuSign, for execution of Assignments. However, this is still a developing area, and the rules differ significantly around the world. If use of e-signatures is an important consideration for your Company, e.g., your employees are geographically diversified, you should consult with your IP counsel so as to understand the local laws and potential ramifications in countries that are important to your business.

Following these rules is a good practice and is an essential starting place to ensure the validity and enforceability of your assignment. However, validity does not end here. As with any contract, the legal language is key to eliminating ambiguity in your agreements.

Finally, make sure that any assignment in a patent/patent application is recorded with the US Patent and Trademark Office ( USPTO ) as soon as possible after execution. If an assignment is not recorded with the USPTO within three months from its effective date, the assignee’s claim to ownership could be at risk. For example, if an assignor were to subsequently improperly assign to another purchaser that was not aware of the previous assignment and the previous assignment had not been recorded with the USPTO, the subsequent purchaser may be able to successfully claim ownership.

You’re the new owner!

A patent is only as valuable as it is enforceable, and ownership is a key element of enforceability. Licensing , manufacturing, distributing, or otherwise making exclusive use of your invention can only be ensured if the patent is both valid and enforceable. Having ownership protection in place prior to the development of your intellectual property, as well as the correct legal ownership assignment documents executed afterward, can help ensure that you can make the most of your company’s ingenuity.

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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.

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.

GET THE TEMPLATE

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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.

How to Slow Down Patent Prosecution with the USPTO

By Michael Henry

Don't miss a new article. Henry Patent Law's Patent Law News + Insights blog is designed to help people like you build smart, scalable patent strategies that protect your intellectual property as your business grows. Subscribe to receive email updates every time we publish a new article — don't miss out on key tips to help your business be more successful.

Patent Ownership in the United States - Best Practices to Preserve Your Rights

Written by: andrew berks.

The issue of who actually owns a patent or pending patent application is obviously very important. This blog post will briefly explain how patent ownership works under US patent law, so inventors, managers, and other non-experts can better understand this important topic when working with a patent attorney.

Ownership Overview

Patents are a form of intellectual property. All property (including patents) has an owner, which may be an individual (i.e., a person), or a group of people, or a corporate owner. A corporate entity can be a limited liability company (LLC), a corporation (S corp or C corp), a partnership, or any other corporate entity allowed by the law of any state. Much of patent ownership is analogous to the ownership of real property or ownership of things like cars. Just like with any property, patents can be bought, sold, and licensed (analogous to renting a property). Of course, there are differences – mainly because patents are intangible. You can’t put a patent in your garage. So lets discuss how patent ownership works and best practices.

Default – Patents are Owned by the Inventors

By default, US patents are owned by the inventors if no other action regarding ownership is taken. All patents and patent applications require at least one inventor, so this requirement is always met from the time of filing. Leaving patents in the name of the inventors is not necessarily a problem, but a best practice is to transfer the ownership to a corporate entity (see discussion of patent assignments below). Here are some issues with leaving patents in the name of the inventors:

For a single inventor, if the inventor dies or becomes disabled, the ownership of the patent becomes questionable. The patent may become subject to a probate proceeding.
For a group of inventors, each person owns an undivided equal share of the patent. That means that if there are, say, four inventors, each inventor owns 25% of the patent, and each inventor can do whatever they want with that share. For example, one inventor/owner could start producing a product covered by the patent that the other inventors don’t like. The others may think the price is too low or the quality is poor. With the default ownership, the other inventors have no basis to stop a rogue co-inventor from causing mischief.
Another group inventor problem is that if the inventors have a falling out, one inventor can assign their interest, complicating the ownership of the patent.
Potential licensees, business partners, or investors typically want to do business with another corporate entity, not an individual or group of individuals. In the case of a group of inventors, each inventor must agree to sell or license the patent. If one inventor/owner objects, a deal that other owner/inventors want could be ruined.

By transferring the ownership to a corporate entity such as an LLC, S-corporation, or C-corporation, many of these issues go away or become contractual issues between owners of the corporate entity, which are easier to deal with.

Alternative – Patents Owned by an Applicant

Alternatively, patents can now be filed by a corporate entity (called an “Applicant”). Note however, that naming an Applicant at the time of patent filing is not a substitute for a patent assignment. A patent application naming an applicant should also have an assignment from the inventors, even if a corporate owner is provided at the time of filing.

Patent Assignments

In patents, selling a patent (or a partial ownership in a patent) is called an assignment . Inventors of patents or any current owner can assign their interest in a patent or patent application to another party, such as a corporate owner or another person, at any time during the life of the patent. With an assignment, ownership and all rights that go with the patent are transferred from an a ssignor (i.e., the seller) to an assignee (i.e., a buyer). Assigning a patent or patent application is analogous to selling an asset, such as a house or a car. With an assignment, the patent is effectively sold to someone else. Partial interests can be sold, so for example, one inventor in a group of inventors can assign their individual interest, which could be a serious problem and tie up the ownership and value of the patent. This is a reason why an assignment to a single corporate entity for a group inventorship patent may be important.

Assignment of Patent Applications

Patent applications not yet granted can also be assigned, and there are good reasons for doing so.

For a group of inventors, getting an assignment very early in the process can avoid the problem of a disagreement among inventors. By assigning to a corporate entity promptly after the patent application is filed, the ownership picture is secure from the patent application filing.
For both individual and group inventors, an assignment to a corporate entity makes the patent more attractive to investors, potential buyers, or licensees. Investors, potential buyers or licensees typically would much rather deal with a corporate entity rather than an individual investor.

Obligations to assign

Many inventions are made by employees, such as scientists or engineers working for a company. This discussion also applies to consultants. A best practice is for employers to insist on an obligation to assign any invention made by an employee or consultant inventor to the employer. There is case law that an invention made by an employee or consultant using company time and resources, without an express obligation to assign, belongs to the employer. However, these rights are weak and can lead to costly litigation, delays, and loss of rights. By including an obligation of any employee-inventor to assign their patent to a corporate entity, this problem is avoided. This provision should be added to employment or consulting agreements if patentable subject matter is a likely to be developed. Even if an employee and employer have a disagreement or falling out, the employer can still assert ownership over a patent if there is an obligation to assign on file. Special language is required under the case law to perfect an obligation to assign future rights, so this should be discussed with a patent attorney. Any compensation due to an employee-inventor is a separate question. That issue should be negotiated in advance of any work assignment.

Patent Licenses

Many inventors and companies are not interested in commercializing a patented invention and may desire instead to license the invention to another party that has the capability of manufacturing or marketing a patented product. A patent license is analogous to renting a house. The owner gives another party the right to use the property in exchange for payments (rent). So a license is a transfer of some, but not all, rights in a patent or patent application. Patent licensing is a big discussion beyond the scope of this blog post. The main point for this discussion is that patent licenses can be classified as exclusive or non-exclusive . In an exclusive license , the licensor (the party that owns the patent) does not license the patent to any other licensees. In a non-exclusive license , the licensor makes licenses to multiple licensees. An exclusive licensee has special rights in terms of enforcement. An exclusive licensee may bring a patent infringement suit without involving the patent assignee.

Enforcement

A key feature in patent law is that only a patent assignee or exclusive licensee has standing to bring a lawsuit for patent infringement. A non-exclusive licensee or some other third party, even if they have some kind of interest in the patent, cannot bring a suit for infringement on their own. Ultimately, this may be the most critical factor in this discussion. The ability to bring a suit for patent infringement to protect the patent right is what makes patents valuable assets. Consequently, it is important to understand which parties have this right.

Ensuring the correct party has rights to a patent or patent application is a critical aspect of managing a patent portfolio. Properly addressing ownership issues at an early stage is a best practice. Contact us for assistance with this important aspect of patent ownership.

PatentTrademarkBlog

Who owns the patent rights (patent owner vs. applicant vs. assignee), who is the patent owner.

US law presumes that a patent application is owned by the individual inventor(s) unless another person or entity is properly identified and substantiated as the patent owner. So the inventor is assumed the owner unless otherwise indicated.

Who is the patent applicant?

As far as patent applications are concerned, “applicant” basically means the owner. A patent applicant specifically refers to a person (which may also be a company – aka “juristic person”) who has the right to apply for the patent – in other words, the patent owner. Therefore, in the typical situation where an employee’s invention is owned by the employer, the employee would be identified as the inventor and the employer the applicant.

If there is no transfer to a company or another person, then the original inventor(s) will also be the applicant.

Who is the patent assignee?

If a company or organization owns the patent rights, then the simplest way to clear the record and let the public know is to file a patent assignment signed by the inventor. A patent assignment is a simple document where each inventor acknowledges that the patent application belongs to someone else. The executed assignment is recorded with the Assignments division of the USPTO. The “assignor’ refers to the one giving away the rights, and the “assignee” refers to the one receiving the rights.

Who owns the continuing applications?

An original patent application may often lead to continuing applications. To account for this possibility, a well drafted patent assignment should state that all continuing applications stemming from the original application will also belong to the assignee. This avoids the need to get inventors to sign a new assignment whenever a continuing application is filed.

Who is the patent owner if the inventor will not sign the assignment?

It’s not uncommon for inventors to leave a company and become unavailable, which is why it’s best to get inventors to sign the assignment as early as possible when they’re still around. If an applicant cannot get missing inventors to sign the assignment, the applicant should gather documentary evidence of its ownership. This documentation should be recorded with the USPTO prior to paying the issue fee:

If the applicant is the assignee or a person to whom the inventor is under an obligation to assign the invention, documentary evidence of ownership (e.g., assignment for an assignee, employment agreement for a person to whom the inventor is under an obligation to assign the invention) should be recorded as provided for in part 3 of this chapter no later than the date the issue fee is paid in the application. 37 CFR 1.46(b)(1 )

The documentary evidence can take the form of an employment agreement stating that the inventor was under an obligation to assign the invention to the company.

Who is the patent owner when there is no employment agreement?

What if there is neither an executed assignment nor an employment agreement? MPEP Section 409.05 states that an applicant’s proprietary interest may be demonstrated by a legal memorandum showing how a court would award title of the invention to the applicant. So, if you can show that case law in your side, a legal brief to that effect may be filed that may be sufficient to show proprietary interest.

If employment agreement exists: employer vs. employee, university vs. student

Most companies in the business of innovating require employees to sign an employment agreement containing an assignment of inventions clause. Similarly, universities and academic institutions may require certain students to sign an assignment of inventions agreement. In both cases, such IP assignment agreements typically state that the employer owns the IP to anything developed by the employee within the scope of, or related to, the employee’s duties.

In California, Labor Code § 2870 states:

(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either: 1. Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or 2. Result from any work performed by the employee for the employer. (b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable. CA Labor Code § 2870

How to Determine Whether Employer or School Might Own Your Invention

Assuming a signed employment agreement exists, a few initial questions should be considered upfront in trying to figure out who might own patent rights to your invention:

Was the invention developed by the employee entirely on his or her own time?
Was the invention developed by the employee without using the employer’s equipment, supplies, facilities or trade secret information?

If the answer is yes to both questions, then the invention could belong to the employee. However, a few additional questions must also be considered to see if any exceptions apply:

At the time of conception or reduction to practice of the invention, did the invention relate to the employer’s business or R&D?
Did the invention result from any work performed by the employee for the employer?

In answering these last two questions, timing is key. If an employee developed an invention after employment terminated with a prior employer, then the employer would not have any ownership rights to the invention. [see Applied Materials, Inc. v. Advanced Micro-Fabrication Equipment, Inc., 2007-5248 (N.D. Cal. May 20, 2009) ]. Otherwise, such an over-reaching assignment clause would constitute a non-compete agreement which is unenforceable in California [see California Business and Professions Code § 16600 ].

Unless we’re dealing with protectable trade secrets , the principle here is that you can’t make ex-employees erase from their memory their knowledge and experience, and you can’t preclude them from earning a living using that know-how.

If no employment agreement, was the employee hired to invent?

Even without an employment agreement specifying that IP belongs to the employer, an employee may have an obligation to assign patent rights to the employer if the employee was hired to invent . If the invention is the precise subject of their employment, then the employee may have an obligation to assign patent rights to the employee. The same result may apply if an employee was given a specific task of developing a device or process to which the invention relates.

What if an employee was not hired to invent or develop a specific device?

If an employee was not hired to invent or develop a specific device or process, ownership most likely will belong to the employee but the employer may have certain “shop rights.” The shop rights doctrine states that an employer may have an implied nonexclusive and nontransferable royalty-free license to use an employee’s invention if the employee uses company time and materials to create the invention.

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Home / Should I Assign My Patent to My Company?

Should I Assign My Patent to My Company?

Thomas Weifan Mon

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 .

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.

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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Who Owns What: Patent Assignment and Ownership Blog Cooley Go

Why does patent ownership matter?

A patent is a government-granted property right that can be used to exclude others from making, using or selling an invention for a specified time (how long depends on the type of patent). Patents can provide important commercial benefits (discussed in detail in our companion piece What You Need To Know About Patents ) — but only for patent owners.

So who owns a patent?

In the US, the inventor is presumed to be the initial owner of a patent or patent application. If there is more than one inventor, there may be more than one owner. Ownership can be transferred or reassigned. If your company values intellectual property and has employees that are encouraged to innovate, here are a few smart strategies to ensure that your company can benefit from patents generated through employee inventions.

Agreements with service providers (Automatic Assignment) : Companies should have all employees sign confidentiality and invention assignment agreements (discussed in detail here ) before employees start generating intellectual property. Having employees sign these agreements at the beginning of their employment, before any work is done, is the best course of action. Failure to structure IP-related agreements with your services providers correctly has caused serious issues for many companies.
Obligation to Assign : Even if your employees haven’t signed an agreement, they may still be obligated, either by contract or local law, to assign patent ownership to your company. Relevant instances include if the invention was developed on the job, the employee was hired specifically to invent for the company, or the inventor is an officer of the company. Other situations could apply.
Explicit Assignments : Even when employees have signed appropriate agreements, your company should execute new patent-specific assignments whenever patent applications are filed. These assignments name the specific invention and can have additional legal weight whenever ownership of a patent is disputed.

Joint ownership of patent rights can be complicated. As with any property right, multiple owners make for multiple legal scenarios. For example, co-owners have to join together to bring a patent infringement lawsuit. By contrast, the opposite is true for licensing: a co-owner can license its patent rights to a third party, independent of the other co-owner(s), unless they have an agreement otherwise. Co-owners can independently sell, mortgage, transfer, and will their rights to a patent. To avoid these kinds of issues, most attorneys recommend that a single entity be the patent owner.

How do I make sure my company owns these patents?

Well-executed ownership assignments are legally binding, but what does “well-executed” mean? Patent ownership assignments have several formal requirements to be considered valid. Assignments must:

Be in writing – unlike some other contracts, oral assignments or oral agreements to assign patent rights are rarely enforceable;
Clearly identify all parties – recite names, addresses, and relationship of the assignor(s) and assignee;
Identify the property clearly – state patent or patent application number, title, inventors, and filing date;
Recite exchange of consideration – this is a standard for almost any contract, and here, even nominal consideration (e.g., $1) is sufficient;
Be notarized – notarization serves as prima facie evidence the signatures (and thus the assignment) is valid, but if notarization isn’t possible, the signatures should be attested to by two witnesses.

These rules are good practice and are an essential starting place to ensure the validity and enforceability of your patent assignments, but validity doesn’t end here. As with any quality contract, the legal language is key to eliminating ambiguity in your agreements.

Finally, make sure any assignment or other interest in a patent is recorded with the US Patent and Trademark Office ( USPTO ) as soon as possible after execution. If an assignment or other interest isn’t recorded with the USPTO within three months from its effective date, the assignee’s claim to ownership could be at risk. For example, if an assignor were to subsequently improperly assign to another purchaser that is unaware of the previous assignment and the prior assignment had not been recorded with the USPTO, the subsequent purchaser may be able to successfully claim ownership.

You’re the new owner!

A patent is only as valuable as it is enforceable, and ownership is a key element of enforceability. Licensing, manufacturing, distributing, or otherwise making exclusive use of your invention can only be ensured if the patent has legal standing in court. If you are not the lawful owner of a patent, making use of the legal protections for your invention will be difficult, if not impossible. Having thorough ownership protection in place prior to the development of your intellectual property, and the correct legal ownership assignments afterward, will ensure that you can make the most of your company’s ingenuity.

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Who Owns What Assignment and Ownership of Patents and Applications

Why does ownership of a patent/patent application matter.

So who owns a patent/patent application?

Agreements with employees and service providers (Automatic Assignment) : Companies should have all employees sign confidential information and inventions assignment agreements (discussed in detail here ) before employees start generating intellectual property. Having employees sign these agreements at the beginning of their employment, before any work is done, is the best course of action. Likewise, failure to correctly structure IP provisions in agreements with third parties such as service providers and consultants prior to the execution of any work has caused serious issues for many companies. A form of confidential information and inventions assignment agreement for California employees is available here , and a form of consulting agreement for US consultants (which contains IP assignment provisions) is available here .
Obligation to Assign: In some situations, even if your employees have not signed an agreement, they may still be obligated, either by contract or local law, to assign patent/patent application ownership to your company. For example, this could occur if the invention was developed on the job, the employee was hired specifically to invent for the company, and/or the inventor is an officer of the company.
Explicit Assignments: Even when employees have signed appropriate agreements, your company should execute new patent-specific assignments whenever patent applications are filed. These assignments name the specific invention, patent, and/or patent application, and can have additional legal weight if the ownership of a patent is disputed.

How do I make sure my company owns these patents/patent applications?

Be in writing – unlike some other contracts, oral assignments or oral agreements to assign patent/patent application rights are rarely enforceable;
Clearly identify all parties – recite names, addresses, and relationship of both the assignor(s) and assignee;
Identify the property clearly – include the patent/patent application number, title, inventors, and filing date;
Recite exchange of consideration – this is a standard for almost any contract, and here, even nominal consideration (e.g., $1) is sufficient; and
Execution be notarized or attested to by one, preferably, two non-inventor witnesses – notarization or witnessing serves as evidence that the signatures (and, thus, the assignment) is valid. There is a lot of interest in utilizing an e-signature platform, such as DocuSign, for execution of Assignments. However, this is still a developing area, and the rules differ significantly around the world. If use of e-signatures is an important consideration for your Company, e.g., your employees are geographically diversified, you should consult with your IP counsel so as to understand the local laws and potential ramifications in countries that are important to your business.

Finally, make sure that any assignment in a patent/patent application is recorded with the US Patent and Trademark Office (USPTO) as soon as possible after execution. If an assignment is not recorded with the USPTO within three months from its effective date, the assignee’s claim to ownership could be at risk. For example, if an assignor were to subsequently improperly assign to another purchaser that was not aware of the previous assignment and the previous assignment had not been recorded with the USPTO, the subsequent purchaser may be able to successfully claim ownership.

You’re the new owner!

A patent is only as valuable as it is enforceable, and ownership is a key element of enforceability. Licensing, manufacturing, distributing, or otherwise making exclusive use of your invention can only be ensured if the patent is both valid and enforceable. Having ownership protection in place prior to the development of your intellectual property, as well as the correct legal ownership assignment documents executed afterward, can help ensure that you can make the most of your company’s ingenuity.

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What is a patent assignment?

April 26, 2023 by James Yang

Patent assignments are common during the patent process. They allow startups to own the ideas, solutions, and work products of the independent contractors that they hire. They also allow companies to own the inventions or solutions that their engineers create. In this article, we’ll explore everything you need to know about patent assignments, from their definition and purpose to how to find the owner of a patent.

A patent assignment is a legal document that transfers ownership of a patent from one party to another. The invention rights vest with the person that conceives of the invention unless the inventor has assigned the invention rights to another using the patent assignment. Understanding the basics of patent assignments is crucial for anyone that hires engineers, or independent contractors, purchases a patent, or licenses a patent.

What are the requirements of the patent assignment?

Here are the requirements for a valid patent assignment:

The patent assignment must be in writing. Patent rights cannot be transferred from one party to another verbally . There is no such thing as a verbal patent assignment.
Confirm that the party assigning the patent rights has the right to transfer the patent to the receiving party. You can do this by looking up all of the previous patent assignments associated with the patent. Below, I provide the link to the patent office where you can find these prior patent assignments. You are looking for a clear chain of title from the inventor (i.e., assignor) to the assignee.
The patent assignment should clearly identify the patent being transferred. Moreover, it should state that all other related patents are included in the transfer.
The assignor must sign the document. Notarization is not necessary but it would be helpful in the event of litigation.
The assignee must record the patent assignment with the records office at the USPTO within 3 months after execution of the patent assignment. Otherwise, the patent assignment may be invalid.

Can a patent assignment be invalid if the requirements are not met?

A patent assignment can be invalid or not effective at transferring the patent rights from the assignor to the assignee. As such, the assignee needs to do their due diligence to make sure the assignment is proper.

Here are a few action items the assignee can check for their due diligence:

Do they own the patent?
Is the chain of title clear from the inventors to the assignor?
Are there any liens on the patent?
A patent can be a part of a larger portfolio. Make sure that all of the patents in the portfolio are included in the assignment.
The assignment document should include a catch-all phrase so that the entire patent portfolio is transferred, not just one of the patents.

Who are the assignor and assignee?

The assignor is the person or entity that is transferring away their patent rights. In the example above, the inventor would be the assignor.

The assignee is the person or entity that receives the patent rights.

Who owns the invention?

An invention is initially owned by the inventor . Invention rights initially vest with the person that conceives or came up with the solution to a problem. In contrast to an inventor, a scribe merely follows the instructions of the inventor. For example, an engineer might design a solution and ask a draftsperson to draw up the concepts conceived by the inventor. The engineer would be considered the inventor. The draftsperson would be considered the scribe. The scribe does not have any invention rights. Nevertheless, you should have the draftsperson sign an invention assignment agreement just in case they do contribute to the invention.

What is the purpose of a patent assignment?

A patent assignment is used when the patent rights are sold to another party. For example, when the inventor sells their invention rights to a company, the inventor transfers their patent rights to the company. The transfer of patent rights is done with a patent assignment.

Patent assignments are also used to make sure that all invention rights are owned by one entity. Otherwise, the startup or company wouldn’t own all of the patent rights even if they paid someone to build a product.

For example, you come up with a clever idea but don’t know how to engineer the product. As such, you hire an engineer (i.e., an independent contractor) to design the product for you. Under US patent laws, the independent contractor is considered the inventor, and the invention rights vest with the independent contractor. You don’t own the ideas of the independent contractor even if you paid money to the independent contractor for their work. The patent assignment transfers the invention rights from the independent contractor to you. Now, you can get a patent for their ideas.

In another example, companies hire engineers to design products. Without a patent assignment, these engineers could get patents for their work. Patent assignments transfer the invention rights from the engineers to the company to allow the company to obtain a patent if desired.

Patent assignments arise in many other situations but they all work the same. They transfer the patent rights from one party to another.

How do you determine ownership of a patent?

All patents are recorded at the records office of the United States Patent and Trademark Office. You can find out who owns a patent by looking up the patent number using the following link: Patent Assignment Search .

The documents you find recorded at the records office of the USPTO may not relate to the transfer of patent rights. Sometimes, they relate to leans that are placed on the patents such as when the patent owner took out a loan for the business.

What you are looking for is a clear chain of title from the inventor or inventors to a company. If a sale of the patent rights occurred, a clear chain of tile needs to exist from the company to the buyer. Otherwise, the patent rights have a cloud in their chain of title.

As such, you have to read each of the documents to make sure that there is a clear chain of title from the inventors to the last owner of the patent.

Patent assignments are crucial for businesses and startups. They allow for the transfer of ownership of the patent from one party to another and ensure that the invention rights are not jeopardized.

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What is a Patent Assignment?

Whether you’re curious about assigning a patent to someone else or having a patent assigned to you, you might be wondering what a patent assignment is? Patent law allows patent holders to assign patents to other parties. Patent assignments often take place between an employee and his company, however, it’s not uncommon for a person to assign his interest to a patent to a third party. So, what exactly is a patent assignment? We will cover this below.

What is a Patent Assignment ?

A patent assignment is an agreement by the patent holder (assignor) to transfer his interest and ownership of a patent to another party known as the assignee (party receiving patent rights). Once a patent holder executes an assignment agreement assigning his interest in a patent to another party, the assignor loses his rights under the patent. The assignor (transferor) will no longer be able to stop others from using, making, and selling the patent invention. Instead, the assignee gains these rights.

In the United States, patent assignments are very common between an employee and his company because a company or business cannot apply for a patent. An inventor has to apply for a patent and then the inventor then assigns his interest under a patent to the company for which he is working.

If you’re an inventor and you want to assign your patent to another party, just remember that patent assignments are final. Once an inventor assigns (transfers) his interest in a patent to another party, the assignment (transfer of rights) cannot be undone, it’s final.

What is a Patent Assignor?

A patent assignor is a party that transfers it’s interest and right to the patent to the transferee (assignee) or the party receiving the patent. Once an agreement is executed and recorded with the patent office, the assignee becomes the patent right holder.

What is a Patent Assignee?

Requirements to execute a patent assignment agreement.

Once the assignment agreement is executed, it must be filed with the USPTO for the agreement to take effect. Please remember that the agreement needs to be in writing, oral agreements are not sufficient to transfer the rights from the patent holder to the assignee.

The assignment agreement must include the following information:

Who Owns the Patent After a Patent Assignment?

Assigning a patent vs licensing a patent.

Assigning a patent is much different than licensing a patent. When a patent holder assigns his interest in a patent to another party, he is usually transferring ownership of the patent to the other party. Patent licensing is different in that a license is merely a transfer of the right to use the patent in the manner specified in the licensing agreement. Assignments transfer ownership while a license transfers the right to use the patented invention. That said, if a patent is assigned, the information of the assignor and assignee will become part of the public record. Whereas if an inventor licenses his patent, that information is not typically published to the public.

Does a Patent Assignment Need to be Notarized?

The USPTO does not require patent assignments to be notarized. The patent office only requires that the assignment be executed and signed by both the assignor and the assignee. Once an agreement is executed and signed by the parties, the assignment must be recorded with the patent office.

Can Multiple People Own a Patent?

Yes, multiple people can own a patent. For example, if three inventors make a single invention, all three are considered joint inventors and their names should appear on the patent application, as well as the issued patent.

If there are multiple inventors on a patent application, all inventors must execute an assignment agreement to assign each of their interest to the assignee for the assignee to own the entire patent.

Patent Assignment Tips

1) hire an attorney to assist you with your patent assignment, 2) don’t forget to record a patent assignment.

If you have been assigned a patent, don’t forget to record your assignment with the USPTO. We say this because patent assignments don’t go into effect unless the assignment is recorded with the patent office. Recording a patent assignment tells the patent office that you are the new owner of the patent.

If an assignee does not record the assignment with the patent office, it is as if the assignment never took place. Also, if it’s not recorded, the assignor could possibly assign the patent to a third party. So, make sure to record your assignment as quick as possible.

3) Notarize Your Assignment Agreement

4) how much does it cost to record an assignment with the uspto, patent assignment.

Let’s do a quick recap. A patent assignment is the transfer of ownership of a patent from one party to another. The party transferring its right is known as the assignor and the party receiving the patent rights is known as the assignee.

Should I License or Should I Assign My Patent?

The differences between the licensing and the assignment of a patent.

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After you've brought your new idea to full fruition, you've invented it; and after you've gotten your intellectual property protection , you've patented it. Like most independent inventors, the next task at hand will be commercializing your product, you make money from it.

If the following conditions apply to you:

You have decided for a variety of reasons that you shouldn't be the one to manufacture, market, and distribute your invention yourself, you invented a better mousetrap but you don't want to go into the mousetrap business.
You were/are not an employee and your invention was/is not automatically assigned to your employer as specified in your contract .

There are two common ways to profit from your patent: licensing and assignment. Let's take a look at the differences between the two and help you decide which path is better for you.

The Licensing Route

Licensing involves a legal written contract where you the owner of the patent are the licensor, who grants rights to your patent to a licensee, the person that wants to license your patent. Those rights can include: the right to use your invention, or copy and sell your invention. When licensing you can also write "performance obligations" into the contract, for example, you don't want your invention to just sit on the shelf so you can include a clause that your invention must be brought to market within a certain amount of time. Licensing can be an exclusive or non-exclusive contract. You can determine how long the licensing contract will be in effect. Licensing is revocable by a breach of contract, by preset time limits, or by a failure to meet performance obligations.

The Assignment Route

Assignment is the irrevocable and permanent sale and transfer of ownership of a patent by the assignor (that's you) to the assignee. Assignment means that you will no longer ever have any rights to your patent. Typically its a one-time lump sum total sale of your patent.

How The Money Rolls In - Royalties, Lump Sum

With licensing your contract can stipulate a one-time payment or/and that you receive royalties from the licensee. These royalties usually last up until your patent expires, that could be twenty years that you receive a small percentage of the profits from each product that is sold. The average royalty is about 3% of the wholesale price of the product, and that percentage can commonly range from 2% to 10%, and in very rare cases up to 25%. It really depends on what kind of invention you have made, for example; a brilliant piece of software for an application with a foreseeable market can easily command double-digit royalties. On the other hand, the inventor of the flip-top drink can is one of the richest inventors in the world, whose royalty rate was only a tiny percentage.

With assignments you can also receive royalties, however, lump-sum payments are much more common (and bigger) with assignments. It should be pointed out that because licensing is revocable when someone doesn't pay you your royalties that's a breach of contract, and you can cancel the contract and take away their rights to use your invention. You would not have the same weight with assignments because they are irrevocable. So in most cases, it is better to go the licensing route when royalties are involved.

So which is better, royalties or a lump sum? Well consider the following: how novel is your invention, how much competition does your invention have and how likely is it that a similar product will hit the market? Could there be a technical or regulatory failure? How successful is the licensee? If there are no sales, ten percent of nothing is nothing.

All the risks (and benefits) involved with royalties are avoided with a lump sum payment, and with assignments, that lump sum payment you receive, you never have to refund. However, negotiations for a lump sum payment do acknowledge the fact that the buyer is paying more upfront because they are assuming more risks to gain themselves a greater profit in the long run.

Deciding Between Assignment or Licensing

Royalties should be the main consideration when deciding between licensing or assignment. If you choose to receive royalties, choose licensing. If you want the capital that the best lump sum payment will bring you choose assignment. Are you in debt from your invention project? Would the money advance other projects and erase your debts?

Or is your invention ready for commercialization, ready to make and sell, and you have determined that sales would be good and that you want royalties, then licensing is probably the better choice for you.

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> Intellectual Property Licensing and Transactions
> Ownership and Assignment of Intellectual Property

Book contents

Intellectual Property Licensing and Transactions
Copyright page
Acknowledgments
Introduction
Part I Introduction to Intellectual Property Licensing
1 The Business of Licensing
2 Ownership and Assignment of Intellectual Property
3 The Nature of an Intellectual Property License
4 Implied Licenses and Unwritten Transactions
5 Confidentiality and Pre-license Negotiations
Part II License Building Blocks
Part III Industry- and Context-Specific Licensing Topics
Part IV Advanced Licensing Topics

2 - Ownership and Assignment of Intellectual Property

from Part I - Introduction to Intellectual Property Licensing

Published online by Cambridge University Press: 21 June 2022

Chapter 2 covers issues surrounding the assignment of IP (i.e., fixing its ownership as a prerequisite to transacting in it), and contrasts ownership with licensing of IP. It specifically covers the assignment of rights in patents, copyrights, trademarks and trade secrets, including within the employment context (i.e., shop rights , individuals hired to invent and works made for hire). The Supreme Court decision in Stanford v. Roche is considered at length. The chapter concludes with a thorough discussion of the issues presented by joint ownership of IP.

Summary Contents

2.1 Assignments of Intellectual Property, Generally 19

2.2 Assignment of Copyrights and the Work Made for Hire Doctrine 22

2.3 Assignment of Patent Rights 27

2.4 Trademark Assignments and Goodwill 37

2.5 Assignment of Trade Secrets 41

2.6 Joint Ownership 42

The owner of an intellectual property (IP) right, whether a patent, copyright, trademark, trade secret or other right, has the exclusive right to exploit that right. Ownership of an IP right is thus the most effective and potent means for utilizing that right. But what does it mean to “own” an IP right and how does a person – an individual or a firm – acquire ownership of it? This chapter explores transfers and assignments of IP ownership, first in general, and then with respect to special considerations pertinent to patents, copyrights and trademarks. Assignments and transfers of IP licenses , another important topic, are covered in Section 13.3 , and attempts to prohibit an assignor of IP from later challenging the validity of transferred IP (through a contractual no-challenge clause or the common law doctrine of “assignor estoppel”) are covered in Chapter 22 .

2.1 Assignments of Intellectual Property, Generally

Once it is in existence, an item of IP may be bought, sold, transferred and assigned much as any other form of property. Like real and personal property, IP can be conveyed through contract, bankruptcy sale, will or intestate succession, and can change hands through any number of corporate transactions such as mergers, asset sales, spinoffs and stock sales.

The following case illustrates how IP rights will be treated by the courts much as any other assets transferred among parties. In this case, the court must interpret a “bill of sale,” the document listing assets conveyed in a particular transaction. Just as with bushels of grain or tons of steel, particular IP rights can be listed in a bill of sale and the manner in which they are listed will determine what the buyer receives.

Systems Unlimited v. Cisco Systems

228 fed. appx. 854 (11th cir. 2007) (cert. denied).

Following the settlement of a dispute between Systems Unlimited, Inc. and Cisco Systems, Inc. over the ownership of certain intellectual property, Cisco agreed to covey the property to Systems. In the resulting bill of sale, Cisco:

granted, bargained, sold, transferred and delivered, and by these presents does grant, bargain, sell, transfer and deliver unto [Systems], its successor and assigns, the following:

Any and all of [Cisco]’s right, title and interest in any copyrights, patents, trademarks, trade secrets and other intellectual property of any kind associated with any software, code or data, including without limitation host controller software and billing software, whether embedded or in any other form (including without limitations, disks, CDs and magnetic tapes), and including any and all available copies thereof and any and all books and records related thereto by [Cisco]

Cisco never delivered [copies of] any of the software to Systems. Alleging that it had been damaged by the non-delivery, Systems sued Cisco for breaching the bill of sale contract and for violating the attendant obligations to deliver the software under the Uniform Commercial Code.

Systems contends that the district court erred in granting summary judgment in favor of Cisco because: (1) the plain language of the bill of sale required Cisco to deliver the software; (2) the bill of sale, when read in conjunction with other contemporaneous agreements, required delivery; and (3) the UCC, which governs the bill of sale, requires that all goods be delivered at a reasonable time. Systems is wrong on each point.

The bill of sale is interpreted in accord with its plain language absent some ambiguity. Here, the parties agree that the bill of sale is clear and unambiguous.

The bill of sale provides that Cisco will “grant, bargain, sell, transfer and deliver unto [Systems] … [a]ny and all of [Cisco]’s right, title and interest in any copyrights, patents, trademarks, trade secrets and other intellectual property of a kind associated with any software, code or data.” As the district court explained, this language unambiguously means that Cisco was required by the bill of sale to transfer to Systems all of its rights in intellectual property associated with certain software and data. There is no mention in the plain language of the contract itself of Cisco being obligated to transfer the actual software, and we will not imply any such obligation absent some good reason under law.

Systems says there are two good reasons to imply an obligation by Cisco to transfer the software. First, Systems argues that the bill of sale must be interpreted in conjunction with the settlement agreement between Systems and Cisco and other documents relating to the intellectual property. These other agreements, Systems claims, include an obligation by Cisco to deliver the software with any conveyance of intellectual property.

Assuming without deciding that the other agreements include language requiring Cisco to deliver the software, they are not relevant here because Systems has never alleged Cisco violated these other agreements. Systems’ complaint alleges only a violation of the bill of sale contract, and there is no obligation in that contract to deliver the software. The bill of sale does not reference or incorporate any other agreement.

To get around this point, Systems argues that “when instruments relate to the same matters, are between the same parties, and made part of substantially one transaction, they are to be taken together.” It is true that this is one of the canons for construing a contract under California law. But it is also true that this canon, as with most others, is inapplicable where the contract that is alleged to have been breached is unambiguous. Here, the language of the bill of sale is unambiguous. Thus, there is no need to apply any canons of construction.

Systems also argues that the UCC imposes a duty on Cisco to deliver the software. We will assume without deciding that Systems’ reading of the UCC is correct. Even so, the provisions of the UCC only apply to contracts that deal predominately with “transactions in goods.” The sale of intellectual property, which is what is involved here, is not a transaction in goods. Thus, the UCC does not apply. Accordingly, the plain language of the bill of sale governs and, as the district court held, it does not include a provision requiring Cisco to deliver any software.

Notes and Questions

1. IP and the UCC . The court in Systems v. Cisco holds that IP licenses and other transactions are not governed by Article 2 of the UCC, which pertains to sales of goods. In Section 3.4 we will discuss whether and to what degree Article 2 applies to IP licenses . But this case relates not to a license, but to a “sale” of software. Why doesn’t UCC Article 2 apply? Should it?

2. Delivery of what ? What does this language from the bill of sale refer to, if not delivery of software: “including any and all available copies thereof”? Does this language represent a drafting mistake by Systems’ attorney? Or an intentional omission by Cisco?

3. The need for software . Why is Systems so upset that Cisco has allegedly refused to deliver the software in question? How useful is an assignment of copyright and other IP to someone who is not in possession of the software code that is copyrighted? Has Cisco “pulled a fast one” on Systems and the court, or is there a valid business reason that could justify Cisco’s failure to deliver the software ?

4. Statute of frauds . Assignments of copyrights, patents and trademarks must all be in writing (17 U.S.C. § 204(a), 35 U.S.C. § 261, 15 U.S.C. § 1060(3)). Why? This requirement does not apply to most licenses, which may be oral. Can you think of a good reason for this distinction?

5. State law and mutual mistake . Despite the federal statutory nature of patents, courts have long held that the question of who holds title to a patent is a matter of state contract law. Footnote 1 This issue arose in an interesting way in Schwendimann v. Arkwright Advanced Coating, Inc ., 959 F.3d 1065 (Fed. Cir. 2020). In Schwendimann , the plaintiff’s former company purported to assign her a patent application in 2003. Due to a clerical error by the law firm handling the matter, the assignment document filed with the patent office listed the wrong patent name and number. In 2011, the plaintiff filed an action asserting the patent against an alleged infringer. The defendant, discovering the incorrect assignment document from 2003, moved to dismiss on the ground that the plaintiff did not hold any enforceable rights at the time she filed suit and thus lacked standing. The district court, interpreting applicable state law, held that the 2003 assignment was the result of a “mutual mistake of fact” that did not accurately reflect the intent of the parties. Accordingly, the erroneous document could be reformed and was sufficient to support standing to bring suit. The Federal Circuit affirmed. Judge Reyna dissented, reasoning that, irrespective of the district court’s later reformation of the erroneous assignment, the plaintiff’s failure to own the patent at the time her suit was filed necessarily barred her suit under Article III of the Constitution. Which of these positions do you find more persuasive? Notwithstanding the holding in favor of the plaintiff, is there a claim for legal malpractice against the law firm in question ?

2.2 Assignment of Copyrights and the Work Made for Hire Doctrine

Under § 201(a) of the Copyright Act, copyright ownership “vests initially in the author or authors of the work.” A copyright owner may assign any of its exclusive rights, in full or in part, to a third party. The assignment generally must be in writing and signed by the owner of the copyright or his or her authorized agent (17 U.S.C. § 204(a)).

If a work of authorship is prepared by an employee within the scope of his or her employment, then the work is a “work made for hire” and the employer is considered the author and owner of the copyright (17 U.S.C. § 201(b)). In addition, if a work is not made by an employee but is “specially ordered or commissioned,” it will be considered a work made for hire if it falls into one of nine categories enumerated in § 101(2) of the Act: a contribution to a collective work, a part of a motion picture or other audiovisual work, a translation, a supplementary work, a compilation, an instructional text, a test, answer material for a test, or an atlas. Commissioned works that do not fall into one of these nine categories (for example, software) are not automatically considered to be works made for hire, and copyright must be assigned explicitly through a separate assignment or sale agreement.

Warren v. Fox Family Worldwide, Inc.

328 f.3d 1136 (9th cir. 2003).

HAWKINS, Circuit Judge.

In this dispute between plaintiff-appellant Richard Warren (”Warren”) and defendants-appellees Fox Family Worldwide (“Fox”), MTM Productions (“MTM”), Princess Cruise Lines (“Princess”), and the Christian Broadcasting Network (“CBN”), Warren claims that defendants infringed the copyrights in musical compositions he created for use in the television series “Remington Steele.” Concluding that Warren has no standing to sue for infringement because he is neither the legal nor beneficial owner of the copyrights in question, we affirm the district court’s Rule 12 dismissal of Warren’s complaint.

Warren and Triplet Music Enterprises, Inc. (“Triplet”) entered into the first of a series of detailed written contracts with MTM concerning the composition of music for “Remington Steele.” This agreement stated that Warren, as sole shareholder and employee of Triplet, would provide services by creating music in return for compensation from MTM. Under the agreement, MTM was to make a written accounting of all sales of broadcast rights to the series and was required to pay Warren a percentage of all sales of broadcast rights to the series made to third parties not affiliated with ASCAP or BMI. These agreements were renewed and re-executed with slight modifications in 1984, 1985 and 1986.

Warren brought suit in propria persona against Fox, MTM, CBN, and Princess, alleging copyright infringement, breach of contract, accounting, conversion, breach of fiduciary duty, breach of covenants of good faith and fair dealing, and fraud.

Warren claims he created approximately 1,914 musical works used in the series pursuant to the agreements with MTM; that MTM and Fox have materially breached their obligations under the contracts by failing to account for or pay the full amount of royalties due Warren from sales to parties not affiliated with ASCAP or BMI; and that MTM and Fox infringed Warren’s copyrights in the music by continuing to broadcast and license the series after materially breaching the contracts. As to the other defendants, Warren claims that CBN and Princess infringed his copyrights by broadcasting “Remington Steele” without his authorization. Warren seeks damages, an injunction, and an order declaring him the owner of the copyrights at issue.

Defendants argu[ed] that Warren’s infringement claims should be dismissed for lack of standing because he is neither the legal nor beneficial owner of the copyrights. The district court dismissed Warren’s copyright claims without leave to amend and dismissed his state law claims without prejudice to their refiling in state court, holding that Warren lacked standing because the works were made for hire, and because a creator of works for hire cannot be a beneficial owner of a copyright in the work. Warren appeals.

The first agreement [between the parties], signed on February 25, 1982, states that MTM contracted to employ Warren “to render services to [MTM] for the television pilot photoplay now entitled ‘Remington Steele.’” It also is clear that the parties agreed that MTM would “own all right, title and interest in and to [Warren’s] services and the results and proceeds thereof, and all other rights granted to [MTM] in [the Music Employment Agreement] to the same extent as if … [MTM were] the employer of [Warren].” The Music Employment Agreement provided:

As [Warren’s] employer for hire, [MTM] shall own in perpetuity, throughout the universe, solely and exclusively, all rights of every kind and character, in the musical material and all other results and proceeds of the services rendered by [Warren] hereunder and [MTM] shall be deemed the author thereof for all purposes.

Figure 2.1 Warren claimed that he created 1,914 musical works for the popular 1980s TV series Remington Steele .

The parties later executed contracts almost identical to these first agreements in June 1984, July 1985, and November 1986. As the district court noted, these subsequent contracts are even more explicit in defining the compositions as “works for hire.” Letters that Warren signed accompanying the later Music Employment Agreements provided: “It is understood and agreed that you are supplying [your] services to us as our employee for hire … [and] [w]e shall own all right, title and interest in and to [your] services and the results and proceeds thereof, as works made for hire.”

That the agreements did not use the talismanic words “specially ordered or commissioned” matters not, for there is no requirement, either in the Act or the caselaw, that work-for-hire contracts include any specific wording. In fact, in Playboy Enterprises v. Dumas , 53 F.3d 549 (2d Cir. 1995), the Second Circuit held that legends stamped on checks were writings sufficient to evidence a work-for-hire relationship where the legend read: “By endorsement, payee: acknowledges payment in full for services rendered on a work-made-for-hire basis in connection with the Work named on the face of this check, and confirms ownership by Playboy Enterprises, Inc. of all right, title and interest (except physical possession), including all rights of copyright, in and to the Work.” Id. at 560. The agreements at issue in the instant case are more explicit than the brief statement that was before the Second Circuit.

In this case, not only did the contracts internally designate the compositions as “works made for hire,” they provided that MTM “shall be deemed the author thereof for all purposes.” This is consistent with a work-for-hire relationship under the Act, which provides that “the employer or other person for whom the work was prepared is considered the author.” 17 U.S.C. § 201(b).

Warren argues that the use of royalties as a form of compensation demonstrates that this was not a work-for-hire arrangement. While we have not addressed this specific question, the Second Circuit held in Playboy that “where the creator of a work receives royalties as payment, that method of payment generally weighs against finding a work-for-hire relationship.” 53 F.3d at 555. However, Playboy clearly held that this factor was not conclusive. In addition to noting that the presence of royalties only “generally” weighs against a work-for-hire relationship, Playboy cites Picture Music, Inc. v. Bourne, Inc ., 457 F.2d 1213, 1216 (2d Cir. 1972), for the proposition that “[t]he absence of a fixed salary … is never conclusive.” 53 F.3d at 555. Further, the payment of royalties was only one form of compensation given to Warren under the contracts. Warren was also given a fixed sum “payable upon completion.” That some royalties were agreed upon in addition to this sum is not sufficient to overcome the great weight of the contractual evidence indicating a work-for-hire relationship.

Warren also argues that because he created nearly 2,000 musical works for MTM, the works were not specially ordered or commissioned. However, the number of works at issue has no bearing on the existence of a work-for-hire relationship. As the district court noted, a weekly television show would naturally require “substantial quantities of verbal, visual and musical content.”

The agreements between Warren and MTM conclusively show that the musical compositions created by Warren were created as works for hire, and Warren is therefore not the legal owner of the copyrights therein.

1. Employee v. Contractor . In Warren v. Fox the musical compositions created by Warren fell into one of the nine categories of “specially commissioned works” that qualify as works made for hire under § 101(2) of the Copyright Act (audiovisual works), even if they were not made by employees of the commissioning party. They will thus be classified as works made for hire so long as they can be shown to have been “specially commissioned” – the focus of the debate in Warren . A slightly different question arose in Community for Creative Non-Violence v. Reid , 490 U.S. 730 (1989). In that case Reid, a sculptor, was engaged by a nonprofit organization, CCNV, to create a memorial “to dramatize the plight of the homeless.” Sculpture is not one of the nine enumerated categories of commissioned works. Thus, even if Reid’s sculpture were “specially commissioned” (as it probably was), it would not be classified as a work made for hire under § 101 unless Reid were considered to be an employee of CCNV. CCNV argued that it exercised a certain degree of control over the subject matter of the sculpture, making it appropriate to classify Reid as its employee. The Court disagreed:

Reid is a sculptor, a skilled occupation. Reid supplied his own tools. He worked in his own studio in Baltimore, making daily supervision of his activities from Washington practicably impossible. Reid was retained for less than two months, a relatively short period of time. During and after this time, CCNV had no right to assign additional projects to Reid. Apart from the deadline for completing the sculpture, Reid had absolute freedom to decide when and how long to work. CCNV paid Reid $15,000, a sum dependent on completion of a specific job, a method by which independent contractors are often compensated. Reid had total discretion in hiring and paying assistants. Creating sculptures was hardly regular business for CCNV. Indeed, CCNV is not a business at all. Finally, CCNV did not pay payroll or Social Security taxes, provide any employee benefits, or contribute to unemployment insurance or workers’ compensation funds.

Does the structure of the works made for hire doctrine under § 101(2) of the Copyright Act make sense? Why should specially commissioned works be considered works for hire only if they fall into one of the nine enumerated categories? Why is a musical composition treated so differently than a sculpture?

2. Manner of compensation . The form of compensation received by the author is mentioned in both Warren v. Fox and CCNV v. Reid . Why is this detail significant to the question of works made for hire? Are the courts’ conclusions with respect to compensation consistent between these two cases?

3. Software contractors and assignment . For a variety of professional, financial and tax-planning reasons, software developers often work as independent contractors and are not hired as employees of the companies for which they create software. And, like the sculpture in CCNV v. Reid , software is not one of the nine enumerated categories of works under § 101(2) of the Copyright Act. Thus, even if it is specially commissioned, software will not be considered a work made for hire. As a result, companies that use independent contractors to develop software must be careful to put in place copyright assignment agreements with those contractors. And because contractors often sit and work beside company employees with very little to distinguish them, neglecting to take these contractual precautions is one of the most common IP missteps made by fledgling and mature software companies alike. If you were the general counsel of a new software company, how would you deal with this issue?

4. Recordation . Section 205 of the Copyright Act provides for recordation of copyright transfers with the Copyright Office. Recordation of transfers is not required, but provides priority if the owner attempts to transfer the same copyrighted work multiple times:

§ 205(d) Priority between Conflicting Transfers.—As between two conflicting transfers, the one executed first prevails if it is recorded, in the manner required to give constructive notice … Otherwise the later transfer prevails if recorded first in such manner, and if taken in good faith, for valuable consideration or on the basis of a binding promise to pay royalties, and without notice of the earlier transfer.

As students of real property will surely observe, this provision resembles a “race-notice” recording statute under state law. As such, the second transferee of a copyright may prevail over a prior, unrecorded transferee if the second transferee records first without notice of the earlier transfer. Note also that this provision is applicable only to copyrights that are registered with the Copyright Office.

5. Statutory termination of assignments . Sections 203 and 304 of the Copyright Act provide that any transfer of a copyright can be revoked by the transferor between 35 and 40 years after the original transfer was made. Footnote 2 This remarkable and powerful right is irrevocable and cannot be contractually waived or circumvented. It was intended to enable authors who were young and unrecognized when they first granted rights to more powerful publishers to profit from the later success of their works. For example, in 1938 Jerry Siegel and Joseph Shuster, the creators of the Superman character, sold their rights to the predecessor of DC Comics for $130. Siegel and Shuster both died penniless in the 1990s, while Superman earned billions for his corporate owners.

Though Sections 203 and 304 were originally directed to artists, writers and composers, these provisions apply across the board to all copyrighted works including software and technical standards documents. The possibility that an original developer of Microsoft Windows could suddenly pull the plug on millions of existing licenses is somewhat ameliorated because the reversion does not apply to works made for hire or derivative works. Nevertheless, one must ask why these reversionary rights apply to software and technical documents at all. If such works of authorship are excluded as works made for hire under Section 101(2), why shouldn’t they also be excluded from Sections 203/304? Footnote 3 Is there any justification for allowing developers of copyrighted “technology” products to terminate assignments made decades ago?

6. Divisibility of copyright . Prior to the Copyright Act of 1976, copyright ownership was not divisible. That is, the owner of a copyright, say in a book, could not assign the exclusive right to produce a film based on that book to a third party. The right to produce a film could be licensed to a third party, but an attempted assignment of the right would potentially be invalid or treated as a license. Footnote 4 But today, under 17 U.S.C. § 201(d)(2), “Any of the exclusive rights comprised in a copyright, including any subdivision of any of the rights specified by section 106, may be transferred … and owned separately.” What do you think was the rationale for this change in the law? Why would, say, a film studio prefer to “own” the right to produce a film based on a book rather than have a license to do so?

Figure 2.2 The creators of the Superman character died in near poverty while the Man of Steel went on to form a multi-billion-dollar franchise. Sections 203 and 304 of the US Copyright Act were enacted to enable authors and their heirs to terminate any copyright assignment or license between 35 and 40 years after originally made in order to permit them to share in the value of their creations .

2.3 Assignment Of Patent Rights

As with other IP rights, patents, patent applications and inventions may be assigned. Patent rights initially vest in inventors who are, by definition, individuals. Unlike copyright, there is no work made for hire doctrine under US patent law. However, if an employee is “hired to invent” – that is, to perform tasks intended to result in an invention – then the employee may have a legal duty to assign the resulting invention to his or her employer. Footnote 5

Unfortunately, the “hired to invent” doctrine is murky and inconsistently applied. Footnote 6 Thus, most employers today contractually obligate their employees to assign rights in inventions and patents to them when made within the scope of their employment and/or using the employer’s resources or facilities. This requirement exists in the private sector, at nonprofit universities and research institutions, as well as government agencies. The initial assignment from an inventor to his or her employer is often filed during prosecution of a patent on a form provided by the Patent and Trademark Office. If such an assignment is not filed, the inventor’s employer obtains no rights in an issued patent other than so-called “shop rights” that allow the employer to use the patented invention on a limited basis. Footnote 7

Beyond the initial assignment from the inventor(s), the owner of a patent may assign it to a third party as any other property right. The following case turns on whether an inventor assigned his rights to his employer at the time the invention was conceived, or when the patent was issued.

Filmtec Corporation v. Allied-Signal Inc.

939 f.2d 1568 (fed. cir. 1991).

PLAGER, CIRCUIT JUDGE

Allied-Signal Inc. and UOP Inc. (Allied), defendants-appellants, appeal from the preliminary injunction issued by the district court. The trial court enjoined Allied from “making, using or selling, and actively inducing others to make use or sell TFCL membrane in the United States, and from otherwise infringing claim 7 of United States Patent No. 4,277,344 [’344].” Because of serious doubts on the record before us as to who has title to the invention and the ensuing patent, we vacate the grant of the injunction and remand for further proceedings.

The application which ultimately issued as the ‘344 patent was filed by John E. Cadotte on February 22, 1979. The patent claims a reverse osmosis membrane and a method for using the membrane to reduce the concentration of solute molecules and ions in solution. Cadotte assigned his rights in the application and any subsequently issuing patent to plaintiff-appellee FilmTec. This assignment was duly recorded in the United States Patent and Trademark Office. Defendant-appellant Allied manufactured a reverse osmosis membrane and FilmTec sued Allied for infringing certain claims of the ’344 patent.

John Cadotte was one of the four founders of FilmTec. Prior to founding FilmTec, Cadotte and the other founders were employed in various responsible positions at the North Star Division of Midwest Research Institute (MRI), a not-for-profit research organization. MRI was principally engaged in contract research, much of it for the United States (Government), and much of it involving work in the field of reverse osmosis membranes.

The evidence indicates that the work at MRI in which Cadotte and the other founders were engaged was being carried out under contract (the contract) to the Government. The contract provided that MRI

agrees to grant and does hereby grant to the Government the full and entire domestic right, title and interest in [any invention, discovery, improvement or development (whether or not patentable) made in the course of or under this contract or any subcontract … thereunder].

It appears that sometime between the time FilmTec came into being in 1977 and the time Cadotte submitted his patent application in February of 1979, he made the invention that led to the ’344 patent. As we will explain, just when in that period the invention was made is critical.

Cadotte left MRI in January of 1978. Cadotte testified that he conceived his invention the month after he left MRI. Allied disputes this, and alleges that Cadotte conceived his invention and formed the reverse osmosis membrane of the ’344 patent earlier—in July of 1977 or at least by November of 1977 when he allegedly produced an improved membrane.

Allied alleges that the evidence establishes that the contract between MRI and the Government grants to the Government “all discoveries and inventions made within the scope of their [i.e., MRI’s employees] employment,” and that the invention claimed in the ’344 patent was made by Cadotte while employed by MRI. From this Allied reasons that rights in the invention must be with the Government and therefore Cadotte had no rights to assign to FilmTec. If FilmTec lacks title to the patent, FilmTec has no standing to bring an infringement action under the ’344 patent. FilmTec counters by arguing that the trial court was correct in concluding that the most the Government would have acquired was an equitable title to the ’344 patent, which title would have been made void under 35 U.S.C. § 261 by the subsequent assignment to FilmTec from Cadotte.

The parties agree that Cadotte was employed by MRI and that the contract between MRI and the Government contains a grant of rights to inventions made pursuant to the contract. However, the record does not reflect whether the employment agreement between Cadotte and MRI either granted or required Cadotte to grant to MRI the rights to inventions made by Cadotte. Allied argues that Cadotte’s inventions were assigned nevertheless to MRI. Allied points to the provision in the contract between MRI and the Government in which MRI warrants that it will obligate inventors to assign their rights to MRI.

While this is not conclusive evidence of a grant of or a requirement to grant rights by Cadotte, it raises a serious question about the nature of the title, if any, in FilmTec. FilmTec apparently did not address this issue at the trial, and there is no indication in the opinion of the district court that this gap in the chain of ownership rights was considered by the court.

Between the time of an invention and the issuance of a patent, rights in an invention may be assigned and legal title to the ensuing patent will pass to the assignee upon grant of the patent. If an assignment of rights in an invention is made prior to the existence of the invention, this may be viewed as an assignment of an expectant interest. An assignment of an expectant interest can be a valid assignment.

Figure 2.3 FilmTec reverse osmosis membrane filter.

Once the invention is made and an application for patent is filed, however, legal title to the rights accruing thereunder would be in the assignee, and the assignor-inventor would have nothing remaining to assign. In this case, if Cadotte granted MRI rights in inventions made during his employ, and if the subject matter of the ’344 patent was invented by Cadotte during his employ with MRI, then Cadotte had nothing to give to FilmTec and his purported assignment to FilmTec is a nullity. Thus, FilmTec would lack both title to the ’344 patent and standing to bring the present action.

The district court was of the view that if the Government was the assignee from Cadotte through MRI, the Government would have acquired at most an equitable title, and that legal title would remain in Cadotte. The legal title would then have passed to FilmTec by virtue of the later assignment, pursuant to Sec. 261 of the [Patent Act]. Sigma Eng’g v. Halm Instrument , 33 F.R.D. 129 (E.D.N.Y. 1963).

But Sigma , even if it were binding precedent on this court, does not stretch so far. The issue in Sigma was whether the plaintiff, assignee of the patent rights of the inventors, was the real party in interest such as to be able to maintain the instant action for patent infringement. Defendant claimed that the inventors’ employer had title to the invention by virtue of the employment contract which obligated the inventors to transfer all patent rights to inventions made while in its employ. As the court expressly noted, no such transfers were made, however, and the court considered any possible interest held by the employer in the invention to be in the nature of an equitable claim.

In our case, the contract between MRI and the Government did not merely obligate MRI to grant future rights, but expressly granted to the Government MRI’s rights in any future invention. Ordinarily, no further act would be required once an invention came into being; the transfer of title would occur by operation of law. If a similar contract provision existed between Cadotte and MRI, as MRI’s contract with the Government required, and if the invention was made before Cadotte left MRI’s employ, as the trial judge seems to suggest, Cadotte would have no rights in the invention or any ensuing patent to assign to FilmTec.

Because of the district court’s view of the title issue, no specific findings were made on either of these questions. As a result, we do not know who held legal title to the invention and to the patent application and therefore we do not know if FilmTec could make a sufficient legal showing to establish the likelihood of success necessary to support a preliminary injunction.

It is well established that when a legal title holder of a patent transfers his or her title to a third party purchaser for value without notice of an outstanding equitable claim or title, the purchaser takes the entire ownership of the patent, free of any prior equitable encumbrance. This is an application of the common law bona fide purchaser for value rule.

Figure 2.4 Schematic showing possible assignment pathways for Cadotte’s invention.

Section 261 of Title 35 goes a step further. It adopts the principle of the real property recording acts, and provides that the bona fide purchaser for value cuts off the rights of a prior assignee who has failed to record the prior assignment in the Patent and Trademark Office by the dates specified in the statute. Although the statute does not expressly so say, it is clear that the statute is intended to cut off prior legal interests, which the common law rule did not.

Both the common law rule and the statute contemplate that the subsequent purchaser be exactly that—a transferee who pays valuable consideration, and is without notice of the prior transfer. The trial judge, with reference to FilmTec’s rights as a subsequent purchaser, stated simply that “FilmTec is a subsequent purchaser from Cadotte for independent consideration. There is no evidence presented to imply that FilmTec was on notice of any previous assignment.” The court concluded that, even if the MRI contract automatically transferred title to the Government, such assignment is not enforceable at law as it was never recorded.

“the bona fide purchaser for value cuts off the rights of a prior assignee who has failed to record the prior assignment in the Patent and Trademark Office by the dates specified in the statute.”

Since this matter will be before the trial court on remand, it may be useful for us to clarify what is required before FilmTec can properly be considered a subsequent purchaser entitled to the protections of Sec. 261. In the first place, FilmTec must be in fact a purchaser for a valuable consideration. This requirement is different from the classic notion of a purchaser under a deed of grant, where the requirement of consideration was a formality, and the proverbial peppercorn would suffice to have the deed operate under the statute of uses. Here the requirement is that the subsequent purchaser, in order to cut off the rights of the prior purchaser, must be more than a donee or other gratuitous transferee. There must be in fact valuable consideration paid so that the subsequent purchaser can, as a matter of law, claim record reliance as a premise upon which the purchase was made. That, of course, is a matter of proof.

In addition, the subsequent transferee/assignee—FilmTec in our case—must be without notice of any such prior assignment. If Cadotte’s contract with MRI contained a provision assigning any inventions made during the course of employment either to MRI or directly to the Government, Cadotte would clearly be on notice of the provisions of his own contract. Since Cadotte was one of the four founders of FilmTec, and the other founders and officers were also involved at MRI, FilmTec may well be deemed to have had actual notice of an assignment. Given the key roles that Cadotte and the others played both at MRI and later at FilmTec, at a minimum FilmTec might be said to be on inquiry notice of any possible rights in MRI or the Government as a result of Cadotte’s work at MRI. Thus once again, the key to FilmTec’s ability to show a likelihood of success on the merits lies in the relationship between Cadotte and MRI.

In our view of the title issue, it cannot be said on this record that FilmTec has established a reasonable likelihood of success on the merits. It is thus unnecessary for us to consider the other issues raised on appeal concerning the propriety of the injunction. The grant of the preliminary injunction is vacated and the case remanded to the district court to reconsider the propriety of the preliminary injunction and for further proceedings consistent with this opinion.

VACATED AND REMANDED .

1. Recording of title . As noted in Section 2.1 , Note 4, assignments of patents may be recorded at the Patent and Trademark Office. As provided in 35 U.S.C. § 261,

An interest that constitutes an assignment, grant or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage.

This provision is a modified form of the familiar “race-notice” recording statute that applies to real estate transactions. Footnote 8 Unlike the comparable provision of the Copyright Act (17 U.S.C. § 205(d), discussed in Section 2.2 ), the second assignee of a patent may prevail over a prior, unrecorded assignee if the second assignee records first without notice of the earlier assignment unless the first assignee records within three months of the first assignment. An assignee of a patent thus has a three-month grace period in which to record its transfer without fear of being superseded by a second assignment. What is the reason for this three-month grace period, which exists neither in copyright nor real property law?

2. Inquiry notice . The court in FilmTec borrows the notion of “inquiry notice” from the law of real property recording. What is inquiry notice? Footnote 9 How does it differ from actual notice and constructive notice?

3. Present v. Future Grants of Patent Rights . The court in FilmTec explains that “the contract between MRI and the Government did not merely obligate MRI to grant future rights, but expressly granted to the Government MRI’s rights in any future invention. Ordinarily, no further act would be required once an invention came into being; the transfer of title would occur by operation of law.” That is, disregarding MRI’s failure to record the transfer, MRI’s present grant of rights in a future patent to the government (assuming that MRI had previously obtained the requisite rights from Cadotte) would automatically convey those rights to the government as soon as an invention was made.

A similar fact pattern arose in Stanford v. Roche , 563 U.S. 776 (2011) (reproduced, in part, in Section 14.1 ). In that case, a Stanford researcher who was obligated under Stanford’s policies to assign inventions to Stanford also signed an agreement assigning his future invention rights to Cetus Corp. while visiting the company to use its equipment. The Federal Circuit ruled for Cetus, reasoning that, under FilmTec , the researcher’s present assignment of future patent rights to Cetus automatically became effective when a patent application was filed, leaving nothing for him to assign to the holder of a future promise of assignment (i.e., Stanford). Stanford successfully sought certiorari on different grounds (whether the Bayh–Dole Act overrode these contractual provisions), and the Supreme Court affirmed the judgment for Cetus without reaching the assignment issue.

However, Justices Breyer and Ginsburg dissented (joined by Justice Sotomayor, who concurred in the judgment) on the ground that the Federal Circuit’s 1991 rule in FilmTec seemingly contradicted earlier precedent. Citing one 1867 treatise and a 1958 law review note, Justice Breyer proposed that before FilmTec , “a present assignment of future inventions (as in both contracts here) conveyed equitable, but not legal, title” and that this equitable interest “grants equitable enforcement to an assignment of an expectancy but demands a further act, either reduction to possession or further assignment of the right when it comes into existence.” In other words, the researcher’s present “assignment” of his future patent rights to Cetus would give Cetus an equitable claim to seek “legal title” once an invention existed or a patent application was filed. On this basis, Justice Breyer concludes,

Under this rule, both the initial Stanford and later Cetus agreements would have given rise only to equitable interests in Dr. Holodniy’s invention. And as between these two claims in equity, the facts that Stanford’s contract came first and that Stanford subsequently obtained a postinvention assignment as well should have meant that Stanford, not Cetus, would receive the rights its contract conveyed.

Despite Justice Breyer’s dissatisfaction with the holdings of FilmTec and Stanford v. Roche , their approach to future assignments still appears to be the law. Footnote 10 Which approach do you think most accurately reflects the intentions of the parties? What policy ramifications might each rule have ?

4. Shall versus does. The result in Stanford v. Roche turns on the wording of two competing legal instruments – Dr. Holodniy’s assignments to Cetus and Stanford. As noted by the Federal Circuit in the decision below, Holodniy’s initial agreement with Stanford constituted a mere promise to assign his future patent rights to Stanford, whereas his agreement with Cetus acted as a present assignment of his future patent rights to Cetus, thus giving the patent rights to Cetus (583 F.3d 832, 841–842 (2009)). As explained by Justice Breyer in his dissent: Footnote 11

In the earlier agreement—that between Dr. Holodniy and Stanford University—Dr. Holodniy said, “I agree to assign … to Stanford … that right, title and interest in and to … such inventions as required by Contracts and Grants.” In the later agreement—that between Dr. Holodniy and the private research firm Cetus—Dr. Holodniy said, “I will assign and do hereby assign to Cetus, my right, title, and interest in” here relevant “ideas” and “inventions.” The Federal Circuit held that the earlier Stanford agreement’s use of the words “agree to assign,” when compared with the later Cetus agreement’s use of the words “do hereby assign,” made all the difference. It concluded that, once the invention came into existence, the latter words meant that the Cetus agreement trumped the earlier, Stanford agreement. That, in the Circuit’s view, is because the latter words operated upon the invention automatically, while the former did not.

What could Stanford have done to avoid this problem? How do you think the result of Stanford v. Roche affected the wording of university patent policies and assignment documents in general? Footnote 12 Given this holding, should an assignment agreement ever be phrased in any way other than “Assignor hereby grants to Assignee … ”? Was Dr. Holodniy himself at fault in this situation? What, if anything, should he have done differently ?

5. Breadth of employee invention assignments . As noted in the introduction to this section, employers who wish to obtain assignments of the inventions created by their employees must do so pursuant to written assignment agreements. But how broad can these assignments be? In Whitewater West Indus. v. Alleshouse , 2020 U.S. App. LEXIS 36394 (Fed. Cir. 2020), the Federal Circuit reviewed an employee assignment agreement that contained the following provision:

a. Assignment: In consideration of compensation paid by Company, Employee agrees that all right, title and interest in all inventions, improvements, developments, trade-secret, copyrightable or patentable material that Employee conceives or hereafter may make or conceive , whether solely or jointly with others:

(a) with the use of Company’s time, materials, or facilities; or (b) resulting from or suggested by Employee’s work for Company; or (c) in any way connected to any subject matter within the existing or contemplated business of Company

shall automatically be deemed to become the property of Company as soon as made or conceived, and Employee agrees to assign to Company, its successors, assigns, or nominees, all of Employee’s rights and interests in said inventions, improvements, and developments in all countries worldwide. Employee’s obligation to assign the rights to such inventions shall survive the discontinuance or termination of this Agreement for any reason.

This provision, on its face, appears to require not only that current employees assign their inventions to the company (a typical provision in employment agreements), but also that former employees continue to make such assignments indefinitely in the future, so long as such inventions are “in any way connected to any subject matter within the existing or contemplated business of Company.” Needless to say, this provision is quite aggressive.

Richard Alleshouse, a designer of water park attractions, was hired by Wave Loch, Inc., a company operating in California, in October 2007. In September 2008, Alleshouse signed a Covenant Against Disclosure and Covenant Not to Compete containing the above assignment clause. In 2012, Alleshouse left Wave Loch to cofound a new company in the same line of business. There, he continued to develop and patent features of surfing-based water park attractions. In 2017, Wave Loch (through its successor Whitewater West) sued Alleshouse for breach of contract and correction of inventorship, seeking to acquire title to three patents on which Alleshouse was listed as a co-inventor following his departure from Wave Loch.

In evaluating Wave Loch’s claim, the Federal Circuit considered California Business and Professions Code § 16600, which states: “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” This statutory provision has traditionally been interpreted to prohibit companies from imposing noncompetition restrictions on former employees. In this case, however, the Federal Circuit extended its reach to prohibit assignments of future IP rights not based on the company’s own IP. In assessing the over-breadth of the provision, the court noted that:

No trade-secret or other confidential information need have been used to conceive the invention or reduce it to practice for the assignment provision to apply. The obligation is unlimited in time and geography. It applies when Mr. Alleshouse’s post-employment invention is merely “suggested by” his work for Wave Loch. It applies, too, when his post-employment invention is “in any way connected to any subject matter” that was within Wave Loch’s “existing or contemplated” business when Mr. Alleshouse worked for Wave Loch.

Under these circumstances, the court invalidated the assignment provision, reasoning that it “imposes [too harsh a] penalty on post-employment professional, trade, or business prospects—a penalty that has undoubted restraining effect on those prospects and that a number of courts have long held to invalidate certain broad agreements with those effects.”

Interestingly, Wave Loch cited Stanford v. Roche in its defense, arguing that the court there interpreted § 16600 to uphold the invention assignment provision used by Cetus. The Federal Circuit rejected this argument, however, stating that in Stanford , unlike Whitewater , “there was simply no evidence of a restraining effect on [the researcher’s] ability to engage in his profession.” But as pointed out by Professor Dennis Crouch, “The weak point of the Federal Circuit’s decision [in Whitewater ] is that it is seemingly contrary to its own prior express statement [in Stanford ] that ‘section 16600 [applies] to employment restrictions on departing employees, not to patent assignments.’” Footnote 13

Which view do you find more persuasive? Should Alleshouse have been required to assign his post-departure patents to Wave Loch? What would the result be in a state that did not have an analog to California’s § 16600? Should this question be resolved under Federal patent law ?

6. When does an assignable invention exist ? Another twist relating to employee invention assignments involves the point in time when an “invention” actually comes into existence and can thus be assigned. In Bio-Rad Labs, Inc. v. ITC and 10X Genomics (Fed. Cir. 2021), two employees each agreed to assign to Bio-Rad, their employer, any IP, including ideas, discoveries and inventions, that he “conceives, develops or creates” during his employment. Both employees left Bio-Rad to form 10X Genomics, which competed with Bio-Rad. Four months later, 10X began to file patent applications on technology that the employees had worked on while at Bio-Rad. The employees claimed that, while their work at 10X was related to their work at Bio-Rad, they did not actually “conceive” the inventions leading to their patents until after they had joined 10X. The Federal Circuit, applying California employment and contract law, agreed, holding that the assignment clause in the Bio-Rad agreements related to “intellectual property” and that an unprotectable “idea,” even if later leading to a patentable invention, was not IP and could thus not be assigned. That is, the court found that the assignment duty under the agreement was “limited to subject matter that itself could be protected as intellectual property.” If this is the case, then why did the Bio-Rad agreement expressly call for the assignment of “ideas” in addition to inventions and other forms of IP?

Figure 2.5 Richard Alleshouse was the product manager for Wave Loch’s FlowRider attraction, shown here as installed on the upper deck of a Royal Caribbean cruise ship.

Professor Dennis Crouch contrasts Bio-Rad with Dana-Farber Cancer Inst., Inc. v. Ono Pharm. Co., Ltd ., 964 F.3d 1365 (Fed. Cir. 2020), in which unpatentable, pre-conception ideas did give rise to a claim for ownership of patentable inventions conceived later. Footnote 14 Which approach do you think most accurately reflects the intentions of the parties? How would you draft an assignment agreement to unambiguously cover pre-conception ideas, or to avoid such assignments?

7. Indivisibility of patent rights . Unlike copyrights (see Section 2.2 , Note 5), the rights “within” a patent are indivisible. That is, the owner of a patent may not assign one claim of the patent to another, nor may it assign the exclusive right to make or sell one particular type of product. As set out by the Supreme Court in Waterman v. MacKenzie , 138 U.S. 252 (1891), a patent owner’s only options are to assign (1) the whole patent, (2) an undivided part or share of the whole patent, or (3) the patent rights “within and throughout a specified part of the United States” (a rarity these days). Thus, when a patent owner, under option (2), assigns “an undivided part” of a patent, the assignee receives an undivided interest in the whole, becoming a tenant in common with the original owner and any other co-owners (the rights and duties of such joint patent owners are discussed in greater detail in Section 2.5 ). Why do patents and copyrights differ in this regard? Should patents be “divisible” like copyrights? What advantages or disadvantages might arise from such divisibility?

8. Past infringement . The general rule in the United States is that “one seeking to recover money damages for infringement of [a] patent … must have held the legal title to the patent during the time of the infringement.” Arachnid, Inc. v. Merit Indus., Inc . 939 F.2d 1574, 1579 (Fed. Cir. 1991). Thus, the assignee of a patent only obtains the right to sue for infringement that occurred while it owned the patent. As the Supreme Court held a century and a half ago, “It is a great mistake to suppose that the assignment of a patent carries with it a transfer of the right to damages for an infringement committed before such assignment.” Moore v. Marsh , 74 U.S. (7 Wall.) 515 (1868). This rule often acts as a trap for the unwary (see, e.g., Nano-Second Technology Co., Ltd. v. Dynaflex International , 2013 U.S. Dist. LEXIS 62611 (N.D. Cal.) (language purporting to assign “the entire right, title and interest” to a patent failed to convey the right to sue for past infringement)). As a result, if the assignee wishes to sue for infringement occurring prior to the date of the assignment, the assignment must contain an express conveyance of this right. Does this rule still make sense today? Why might an assignor of a patent not wish to assign the right to sue for past infringement to a purchaser of the patent? What language would you use in an assignment clause to convey this important right to the assignee ?

Problem 2.1

The Brokeback Institute (BI) is a leading medical research center. The IP assignment clause in its standard consulting agreement reads as follows:

Consultant hereby assigns to BI all of its ownership, right, title, and interest in and to all Work Product. An Invention will be considered “Work Product” if it fits any of the following three criteria: (1) it is developed using equipment, supplies, facilities, or trade secrets of BI; (2) it results from Consultant’s work for BI; or (3) it relates to BI’s business or its current or anticipated research and development.

How would you react to and/or revise this clause if you represented a consultant who was one of the following:

a. A software developer being engaged by BI for a six-month, full-time engagement to update BI’s medical records software database.

b. A Nobel laureate biochemist with a faculty appointment at Harvard who will be visiting BI to teach a three-week summer class to freshman pre-med students.

c. A brain researcher from Oxford who has been invited to serve on the scientific advisory board of a BI grant-funded neurosurgery project, which will involve participation in one telephonic board meeting per calendar quarter.

d. A pathologist who will advise BI on the design of its new pathology lab, which is expected to require fifty hours of work over the next year.

Problem 2.2

Help out Stanford University by drafting an IP assignment clause applicable to its faculty members, including those who occasionally visit other institutions and companies to use their equipment and facilities.

2.4 Trademark Assignments and Goodwill

Like copyrights and patents, trademarks may be assigned by their owners. But as IP rights, trademarks differ in important respects from copyrights and patents. Most fundamentally, as discussed in the following case, an assignment of a registered trademark is invalid unless it is accompanied by an assignment of the associated business goodwill.

Sugar Busters LLC v. Brennan

177 f.3d 258 (5th cir. 1999).

KING, Chief Judge

Plaintiff-appellee Sugar Busters, L.L.C. (plaintiff) is a limited liability company organized by three doctors and H. Leighton Steward, who co-authored and published a book entitled “ SUGAR BUSTERS! Cut Sugar to Trim Fat ” in 1995. In “ SUGAR BUSTERS! Cut Sugar to Trim Fat ,” the authors recommend a diet plan based on the role of insulin in obesity and cardiovascular disease. The authors’ premise is that reduced consumption of insulin-producing food, such as carbohydrates and other sugars, leads to weight loss and a more healthy lifestyle. The 1995 publication of “ SUGAR BUSTERS! Cut Sugar to Trim Fat ” sold over 210,000 copies, and in May 1998 a second edition was released. The second edition has sold over 800,000 copies and remains a bestseller.

Brennan then co-authored “ SUGAR BUST For Life! ,” which was published in May 1998. “ SUGAR BUST for Life ” states on its cover that it is a “cookbook and companion guide by the famous family of good food,” and that Brennan was “Consultant, Editor, Publisher, [and] Sales and Marketing Director for the original, best-selling ‘ Sugar Busters!™ Cut Sugar to Trim Fat .’” Approximately 110,000 copies of “ SUGAR BUST for Life !” were sold between its release and September 1998.

Plaintiff filed this suit in the United States District Court for the Eastern District of Louisiana on May 26, 1998. Plaintiff sought to enjoin [Brennan] from selling, displaying, advertising or distributing “ SUGAR BUST for Life !,” to destroy all copies of the cookbook, and to recover damages and any profits derived from the cookbook.

The mark that is the subject of plaintiff’s infringement claim is a service mark that was registered in 1992 by Sugarbusters, Inc., an Indiana corporation operating a retail store named “Sugarbusters” in Indianapolis that provides products and information for diabetics. The “SUGARBUSTERS” service mark, registration number 1,684,769, is for “retail store services featuring products and supplies for diabetic people; namely, medical supplies, medical equipment, food products, informational literature and wearing apparel featuring a message regarding diabetes.” Sugarbusters, Inc. sold “any and all rights to the mark” to Thornton-Sahoo, Inc. on December 19, 1997, and Thornton-Sahoo, Inc. sold these rights to Elliott Company, Inc. (Elliott) on January 9, 1998. Plaintiff obtained the service mark from Elliott pursuant to a “servicemark purchase agreement” dated January 26, 1998. Under the terms of that agreement, plaintiff purchased “all the interests [Elliott] owns” in the mark and “the goodwill of all business connected with the use of and symbolized by” the mark.

The district court found that the mark is valid and that the transfer of the mark to plaintiff was not “in gross” because

[t]he plaintiff has used the trademark to disseminate information through its books, seminars, the Internet, and the cover of plaintiff’s recent book, which reads “ Help Treat Diabetes and Other Diseases .” Moreover, the plaintiff is moving forward to market and sell its own products and services, which comport with the products and services sold by the Indiana corporation. There has been a full and complete transfer of the good will related to the mark …

A trademark is merely a symbol of goodwill and has no independent significance apart from the goodwill that it symbolizes. Therefore, a trademark cannot be sold or assigned apart from the goodwill it symbolizes. The sale or assignment of a trademark without the goodwill that the mark represents is characterized as in gross and is invalid.

The purpose of the rule prohibiting the sale or assignment of a trademark in gross is to prevent a consumer from being misled or confused as to the source and nature of the goods or services that he or she acquires. Use of the mark by the assignee in connection with a different goodwill and different product would result in a fraud on the purchasing public who reasonably assume that the mark signifies the same thing, whether used by one person or another. Therefore, if consumers are not to be misled from established associations with the mark, [it must] continue to be associated with the same or similar products after the assignment.

Plaintiff’s purported service mark in “SUGARBUSTERS” is valid only if plaintiff also acquired the goodwill that accompanies the mark; that is, “the portion of the business or service with which the mark is associated.” [Brennan] claim[s] that the transfer of the “SUGARBUSTERS” mark to plaintiff was in gross because “[n]one of the assignor’s underlying business, including its inventory, customer lists, or other assets, were transferred to [plaintiff].” [Brennan’s] view of goodwill, however, is too narrow. Plaintiff may obtain a valid trademark without purchasing any physical or tangible assets of the retail store in Indiana – the transfer of goodwill requires only that the services be sufficiently similar to prevent consumers of the service offered under the mark from being misled from established associations with the mark.

In concluding that goodwill was transferred, the district court relied … on its finding that “plaintiff is moving forward to market and sell its own products and services, which comport with the products and services sold by the Indiana corporation.” Steward testified, however, that plaintiff does not have any plans to operate a retail store, and plaintiff offered no evidence suggesting that it intends to market directly to consumers any goods it licenses to carry the “SUGAR BUSTERS!” name. Finally, we are unconvinced by plaintiff’s argument that, by stating on the cover of its diet book that it may “[h]elp treat diabetes and other diseases” and then selling some of those books on the Internet, plaintiff provides a service substantially similar to a retail store that provides diabetic supplies. We therefore must conclude that plaintiff’s purported service mark is invalid.

1. Acquiring goodwill . The Servicemark Purchase Agreement between Elliott and Sugar Busters, LLC clearly purported to transfer “the goodwill of all business connected with the use of and symbolized by” the SUGARBUSTERS mark. Given this language, why did the Fifth Circuit find that the goodwill of the business was not transferred? In view of the court’s holding, how would you advise a client if it desires to acquire a trademark but not to conduct the same business as the prior owner of the mark?

2. Consumer confusion . Generally, trademark infringement cases hinge on whether an alleged infringer is causing consumer confusion as to the source of goods or services. A similar theory applies to the Fifth Circuit’s rule on in gross trademark assignments: If the new goods sold under the mark are significantly different than the old goods sold under the mark, then consumers might be confused as to the source and nature of the goods being sold. Why is this the case? What is the harm in this confusion?

3. Effect of an in gross transfer . Professor Barton Beebe notes, in discussing the Sugar Busters case, that “In most situations … the assignee may claim exclusive rights in the mark, but the basis of and the priority date for those rights stems only from the assignee’s new use of the mark, not from any previous use by the assignor.” Footnote 15 This conclusion is sensible – without the accompanying goodwill, the acquirer gets nothing from the original mark owner, but may begin to use the mark afresh and may build up goodwill based on its own use. But does this reasoning correspond with the holding of Sugar Busters ? Note the date on which the plaintiff purported to acquire the trademark from Elliott (January 26, 1998), when Brennan’s allegedly infringing book was released (May 26, 1998) and when the plaintiff brought suit against Brennan (May 26, 1998). Even if the plaintiff acquired no trademark rights at all from Elliott, wouldn’t it have acquired some enforceable rights between January and May, 1998? And what about any common law trademark rights that the plaintiff accrued from the 1995 publication of its first Sugar Busters book?

4. Toward free transfer ? Professor Irene Calboli argues that the rule requiring transfer of goodwill with trademarks is an outdated trap for the unwary that should be abolished. She hypothesizes a transaction in which a new company acquires the Coca-Cola Company, observing all the proper formalities, and then decides to apply the famous Coca-Cola mark not to carbonated colas, but to salty snacks. Will consumers be confused? Possibly, but the new owner is perfectly within its rights to apply the mark to its snack products rather than colas. Would consumers be worse off if the transaction documentation had neglected to reflect a transfer of goodwill? Calboli reasons that

the rule of assignment “with goodwill” is failing to meet its purpose and … rather than focusing on a sterile and confusing requirement, the courts should focus directly on the assignee’s use of the mark. If this use is likely to deceive the public, the courts should declare the assignments at issue void. Yet, if no likelihood of confusion or deception results from the transaction, the courts should allow the assignments to stand. Footnote 16

Do you agree? Does the prohibition on in gross transfers of trademarks serve any useful purpose today? Footnote 17

5. Recordation . The recordation requirements for trademarks are similar to those for patents. As provided under 15 U.S.C. § 1060(3):

An assignment shall be void against any subsequent purchaser for valuable consideration without notice, unless the prescribed information reporting the assignment is recorded in the United States Patent and Trademark Office within 3 months after the date of the assignment or prior to the subsequent purchase.

As with patents, this provision is a modified form of “race-notice” recording statute. The second assignee of a trademark may prevail over a prior, unrecorded assignee if the second assignee records first without notice of the earlier assignment unless the first assignee records within three months of the first assignment.

6. Security interests and mortgages . The recording statute for patents 35 U.S.C. § 261 refers to “a subsequent purchaser or mortgagee” of a patent, whereas the statute for trademarks refers only to “a subsequent purchaser.” Why does the trademark statute omit mention of mortgagees? Can a trademark be mortgaged? What might prevent this from happening effectively?

7. Short-form assignments . Intellectual property rights are often conveyed as part of a larger corporate merger or acquisition transaction. In order to avoid filing the entire transaction agreement with the Patent and Trademark Office for recording purposes, the parties often execute a short-form assignment document that pertains only to the assigned patents or trademarks. This short-form document is then recorded at the Patent and Trademark Office. A sample of such a short-form assignment follows.

Short-Form Trademark Assignment (for Filing with the US Patent and Trademark Office)

This assignment is made as of the ____ day of ______________ by ASSIGNOR INC., a _______ corporation having a principal place of business at ______________, hereinafter referred to as the ASSIGNOR, to ASSIGNEE CORP., a ___________ corporation, having a principal place of business at __________________, hereinafter referred to as ASSIGNEE.

WHEREAS, ASSIGNOR is the owner of the registered trademarks and trademark applications, hereinafter collectively referred to as the TRADEMARKS, identified on Schedules “A” and “B” attached hereto, together with the good will and all rights which may have accrued in connection therewith.

WHEREAS, ASSIGNEE is desirous of acquiring the entire right, title and interest of ASSIGNOR in and to said TRADEMARKS together with said rights and the good will of the business symbolized thereby.

NOW, THEREFORE, for good and valuable consideration paid by the ASSIGNEE, receipt of which is hereby acknowledged, ASSIGNOR does hereby sell, assign, transfer and set over to ASSIGNEE, its successors and assigns, ASSIGNOR’s entire right, title and interest in and to the TRADEMARKS, together with said good will of the business symbolized thereby, said TRADEMARKS to be held and enjoyed by the ASSIGNEE, its successors and assigns as fully and entirely as the same would have been held and enjoyed by the ASSIGNOR had this assignment not been made.

ASSIGNOR covenants and agrees to execute such further and confirmatory assignments in recordable form as the ASSIGNEE may reasonably require to vest record title of said respective registrations in ASSIGNEE.

IN WITNESS WHEREOF, ASSIGNOR has caused this Assignment to be executed by a duly authorized officer.

By: _____________________ Date: ____________________

2.5 Assignment of Trade Secrets

Like other IP rights, trade secrets may be assigned by their owners. As the leading treatise on trade secret law announces in the heading of one of its chapters, “Trade Secrets Are Assignable Property.” Footnote 18 Yet the assignment of trade secrets is perhaps the least developed and understood among IP types.

Part of the complexity arises from the fact that the term “trade secret” refers to two distinct concepts: A trade secret is, on one hand, a piece of information that derives value from being kept secret. Yet the term also refers to the set of enforceable legal rights that give the “owner” of that information legal redress for its improper acquisition or usage. In some ways, this dichotomy is similar to that seen with patents and copyrights. On one hand, there is an invention, and on the other hand, a patent right that gives its owner enforceable legal rights with respect to that invention. Likewise, a work of authorship and the copyright in that work of authorship. Unfortunately, trade secrecy law is hobbled by the existence of only a single term to describe both the res that is protected, and the legal mode of its protection.

It is for this reason that the few courts that have considered issues surrounding trade secret assignment have distinguished between “ownership” of a trade secret and its “possession.” In DTM Research, L.L.C. v. AT&T Corp ., 245 F.3d 327, 332 (4th Cir. 2001), the court held that “While the information forming the basis of a trade secret can be transferred, as with personal property, its continuing secrecy provides the value, and any general disclosure destroys the value. As a consequence, one ‘owns’ a trade secret when one knows of it, as long as it remains a secret.” Accordingly, the court held that a party possessing secret information is entitled to seek redress against another party that misappropriated it, even if the first party lacks “fee simple” title to that information (i.e., if the first party itself allegedly misappropriated the information from another).

Possession of a trade secret also figures prominently in cases that discuss the assignment of trade secrets. When the owner of a copyrighted work of art transfers the copyright to a buyer, the transferor loses its right to reproduce the work further. Likewise, when the owner of a trade secret transfers that secret to a buyer, the transferor loses its right to exploit that secret further. As the court explained in Memry Corp. v. Ky. Oil Tech., N.V ., 2006 U.S. Dist. LEXIS 94393 at *16 (N.D. Cal. 2006), “in giving up all rights to use of the secrets through assignment, the assignor is implicitly and legally bound to maintain the secrecy of the information contained in the trade secrets.”

2.6 Joint Ownership

Just like real and personal property, IP may be co-owned by multiple parties. But the laws regarding joint ownership of IP are different than those affecting real and personal property. To make matters worse, they also differ based on the kind of IP involved, and they vary from country to country. As a result, planning for joint ownership of IP can become fraught with risks and traps for the unwary. As one waggish practitioner has written, “‘Joint ownership of IP’ – no words strike more terror into the heart of an IP practitioner than the task of having to provide appropriate contractual provisions in such a situation.” Footnote 19

Joint ownership of IP rights impacts prosecution of patents and trademarks, exploitation of those rights, and licensing and enforcement of rights. These principles are discussed below in the context of patents, copyrights, trade secrets and trademarks under US law.

2.6.1 Patents

When more than one individual makes an inventive contribution to an invention, the resulting patent will be jointly owned. As explained by the Federal Circuit in Ethicon v. United States Surgical Corp. , 135 F.3d 1456, 1465 (Fed. Cir. 1998), “in the context of joint inventorship, each co-inventor presumptively owns a pro rata undivided interest in the entire patent, no matter what their respective contributions.”

The rights of joint owners of patents are described in 35 U.S. Code § 262:

In the absence of any agreement to the contrary, each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States, without the consent of and without accounting to the other owners.

Thus, each co-owner of a patent may independently exploit the patent without the consent of its co-owners. But unlike copyrights, joint owners of patents do not owe one another a duty of accounting or sharing of profits. Thus, the co-owner of a patented process that uses it to embark on a profitable new manufacturing venture has no obligation to share any of its earnings with the co-owners of the patent.

Any co-owner of a patent may also license it to others, again with no obligation to share royalties or other amounts received with its co-owners. Footnote 20 While a co-owner may grant an exclusive license to a third party, and that exclusivity may operate to prevent the granting co-owner from granting further licenses to others, it has no effect on the other co-owners of the patent, who may continue to exploit or grant other licenses under the patent.

Likewise, any co-owner of a patent may bring suit to enforce it against an infringer, but in order for the suit to proceed, it must join all other co-owners in the suit (see Section 11.1.5 ). Moreover, as illustrated in Ethicon , a retroactive license from any co-owner will serve to authorize the infringer’s conduct, thus defeating a suit brought by fewer than all co-owners .

2.6.2 Copyrights

There are some similarities between the treatment of joint owners under US copyright and patent law. Under US copyright law, each co-owner of a copyright may independently exploit the copyright without permission of the other co-owners. This exploitation includes performance, reproduction, creation of derivative works and all other exclusive rights afforded by the Copyright Act. However, unlike patents, a copyright co-owner who earns profits from the exploitation of a jointly owned work must render an accounting to his or her co-owners and share the profits with them on a pro rata basis. Thus, if three members of a band compose a song, and one of them quits to pursue a solo career, the soloist must account to the other two for any profits that he or she earns from performing the song (or a derivative of it) for the duration of the copyright.

Likewise, any co-owner of a copyright may license the copyright to others. As with patents, an exclusive license granted by a single co-owner will not be particularly valuable to the licensee, as the other co-owners are free to license the same rights to others. Such an exclusive license will thus be considered nonexclusive for purposes of standing to sue. Footnote 21 As with other exploitation, the copyright licensor must account to the other co-owners for any profits earned based on the license.

Finally, any co-owner of a copyright may sue to enforce the copyright against an infringer without the consent of the other co-owners. As with patents, a license from any co-owner will serve to authorize the infringer’s conduct. But unlike patent infringement litigation, notice to the co-owners of a copyright, and their joinder in an infringement suit, is not mandatory, but discretionary in the court (see 17 U.S.C. § 501(b), discussed in greater detail in Section 11.1.5 , Note 5).

2.6.3 Trade Secrets

There is scant case law, and little reliable commentary, discussing the rights and obligations of joint owners of trade secrets to one another. Yet from the authority that exists, it appears that joint owners of trade secrets, unlike joint owners of patents and copyrights, are not free to exploit jointly owned trade secrets without the consent of their co-owners.

Thus, in Morton v. Rank Am., Inc ., 812 F. Supp. 1062, 1074 (C.D. Cal. 1993), one co-owner of trade secrets relating to the operations of the Hard Rock Café chain sued another co-owner who used the information in violation of a noncompetition agreement. The court held that, under California law, being the co-owner of a trade secret does not necessarily insulate one from a claim of trade secret misappropriation. In Jardin v. DATAllegro, Inc ., 2011 U.S. Dist. LEXIS 84509 *15 (S.D. Cal. 2011), another California court, citing Morton , held that a joint owner of a trade secret could be liable for disclosing the trade secret in a patent application without the permission of his co-owner.

It also appears, in at least one case, that a co-owner of a trade secret may sue a third party for misappropriation of that trade secret without the consent of the other co-owner(s). In MGP Ingredients, Inc. v. Mars, Inc ., 465 F. Supp. 2d 1109 (D. Kan. 2006), MGPI and SNM jointly owned trade secrets relating to the formulation of the popular Greenies® dog chews. MGPI alleged that SNM impermissibly disclosed these trade secrets to Mars, Inc., which then began to manufacture its own dog chews using the secret formula. The court rejected Mars’ motion to dismiss MGPI’s suit for trade secret misappropriation against both SNM and Mars on the basis that SNM was a co-owner of the trade secrets .

2.6.4 Trademarks

Unlike patents, copyrights and trade secrets, the primary purpose of a trademark is to act as an indication of the source of goods or services. The ownership of a single mark by two or more entities contradicts this fundamental principle and is thus “disfavored” by the law. As the Sixth Circuit cautions in Yellowbook Inc. v. Brandeberry , 708 F.3d 837, 845 (6th Cir. 2013),

Joint ownership is disfavored in the trademark context. By their nature, trademarks derive their value from exclusively identifying a particular business. If customers are confused about which business the mark refers to, one of the users may unfairly benefit from the goodwill of the other, or the goodwill of the mark may be dissipated entirely. Beneficial joint ownership or licensing schemes may be devised, but courts are not well placed to fill in these details, and parties (and customers) are typically best served by exclusive ownership.

Nevertheless, the PTO permits joint ownership of registered marks. One scenario in which this is permitted is when the joint owners are related companies that exhibit a “unity of control” that eliminates consumer confusion because the joint owners are, for practical purposes, operating as a single unit. Footnote 22 In another scenario, two parties may be granted “concurrent” registrations for the same mark in connection with a similar product in different geographic markets. Footnote 23 In addition, the owner of a trademark registration may assign a partial interest in that registration to a third party, after which both parties will be co-owners of the registration. Footnote 24 This situation occurs, inter alia , as a result of the break-up of joint ventures and the inheritance of businesses by multiple heirs or testamentary beneficiaries. Footnote 25

When a jointly owned trademark serves as an indication of source, no individual co-owner has the right to exploit that mark separately from the collective use made by the joint owners. For example, the four original members of the musical group “The Commodores” held common law trademark rights in the group’s name. When Thomas McClary, one of the group’s members, left the group and began to perform under the names “The 2014 Commodores” and “The Commodores Featuring Thomas McClary” the other group members sued him for trademark infringement and a number of other causes. The Eleventh Circuit held in Commodores Entm’t Corp. v. McClary , 879 F.3d 1114 (11 th Cir. 2018) that “The rights to use the name ‘The Commodores’ remained with the group after McClary departed, and the corollary is also true: McClary did not retain rights to use the marks individually.”

1. Vive la difference ? Why is there such discord among four areas of US IP law regarding the rights of joint owners? Would there be value in harmonizing these different systems? How would you recommend that such harmonization be pursued?

2. Economic justifications . Judge Richard Posner offers a potential economic justification for the discrepancies in the treatment of jointly owned copyrights and patents.

In both domains, a joint owner is allowed to use or license the jointly owned work without the permission of the other owner or owners; this rule reduces transaction costs by eliminating bilateral monopoly. But the joint owner of a copyright who uses or licenses a copyright must account to the other owners for the profits of the use and share them with those others, while the joint owner of a patent need not. The latter rule provides greater encouragement to inventors to keep working to improve their inventions, consistent with the continuously improving quality of technology, but not of the arts. Footnote 26

What do you think of this explanation? Would requiring the co-owner of a patent to share its profits from the exploitation of the patent with its co-owners decrease innovation? Why doesn’t the accounting requirement similarly dampen creative activity?

Figure 2.6 Though he was an original member of the musical group The Commodores, Thomas McClary did not retain rights to utilize the group’s name after he left the band in 1984.

3. International inconsistency . Commentators have long observed that US law is out of step with the laws of many other countries in how it handles jointly owned IP. For example, in many countries in Europe and Asia, IP rights may not be exploited, licensed or asserted without the consent of all joint owners. Is this approach preferable? What does it mean for joint owners of IP?

In 1990, Professor Robert Merges and Lawrence Locke analyzed the laws of the United States and various other countries regarding their handling of joint patent owners. They concluded, among other things, that:

The American rule permitting co-owners to work their patent without compensating the other co-owners is preferable to the French rule requiring compensation … [T]he French rule can lead to a situation where both co-owners elect not to work the patent, in hopes of forcing the other co-owner to work it and split the profits. Since society has an obvious interest in seeing patented technology developed, the American rule is better.

The right of co-owners to license and assign their full interest, or any portion of it, should be restricted according to the rule in effect on the continent, in Great Britain and in Japan: consent of all co-owners should be required. This will prevent one co-owner from taking advantage of the others … Footnote 27

Do you concur with these recommendations? Why or why not? Should any of Merges and Locke’s recommendations be applied to forms of IP other than patents?

1 See Enovsys LLC v. Nextel Commc’ns Inc ., 614 F.3d 1333, 1342 (Fed. Cir. 2010).

2 See also Section 12.4 , Note 4, discussing these statutory provisions as mechanisms for terminating copyright licenses .

3 See Timothy K. Armstrong , Shrinking the Commons: Termination of Copyright Licenses and Transfers for the Benefit of the Public , 47 Harv. J. Legis . 359 , 405–09 ( 2010 ) (discussing implications for software) and Jorge L. Contreras & Andrew Hernacki , Copyright Termination and Technical Standards , 43 U. Baltimore L. Rev . 221 ( 2014 ) (discussing implications for technical standards) .

4 See Jonathan M. Barnett , Why Is Everyone Afraid of IP Licensing ? 30 Harv. J.L. & Tech. 123 , 126 ( 2017 ) .

5 See Standard Parts Co. v. Peck , 264 U.S. 52 (1924) (employee hired to invent a specific improvement owed a duty to assign patent rights to the employer even though the employment contract did not specifically mention patent rights).

6 See 8 Chisum on Patents § 22.03[2] (“The line between these ‘hired-to-invent’ and ‘general employment’ categories is a fine one, and it often must be drawn on the basis of sharply conflicting testimony … [ Standard Parts Co. v. Peck ] has served as a precedent for a multitude of decisions by lower federal courts, both finding (1) an employment to invent and (2) the absence of such employment.”)

7 As explained by Professor Chisum, “The classic ‘shop right’ doctrine provides that an employee who uses his employer’s resources to conceive an invention or to reduce it to practice must afford to his employer a nonexclusive, royalty-free, nontransferable license to make use of the invention, even though the employee subsequently obtains a patent thereon. The shop right is not an ownership interest in the patent. Rather it constitutes a defense to a charge of patent infringement by the employee or his/her assignee.” 8 Chisum on Patents § 22.03[3].

8 See, e.g., Jesse Dukeminier et al., Property 716 ( 8th ed., Wolters Kluwer Law & Business , 2014 ) .

9 For a discussion and lively critique of this doctrine, see Carol M. Rose , Crystals and Mud in Property Law , 40 Stan. L. Rev . 577 ( 1988 ) .

10 Professor Sean O’Connor analyzes the FilmTec rule and Justice Breyer’s critique in Sean O’Connor , The Aftermath of Stanford v. Roche: Which Law of Assignments Governs? , 24 Intell. Prop. J. 29 ( 2011 ) . Professor Dennis Crouch considers these issues in the context of patent prior art in Dennis Crouch , Not-Yet Filed Invention Rights, Patently-O, December 2, 2020, https://patentlyo.com/patent/2020/12/filed-invention-rights.html .

11 For a discussion of the substance of Justice Breyer’s dissent in Stanford v. Roche , see Section 2.3 , Note 3.

12 See Parker Tresemer , Best Practices for Drafting University Technology Assignment Agreements after FilmTec, Stanford v. Roche, and Patent Reform , 2012 U. Ill. J.L. Tech. & Pol’y 347 ( 2012 ) (offering concrete proposals for the improvement of university assignment documents), Sean M. O’Connor , The Real Issue Behind Stanford v. Roche: Faulty Conceptions of University Assignment Policies Stemming from the 1947 Biddle Report , 19 Mich. Telecomm. & Tech. L. Rev. 379 , 421 ( 2013 ) (noting that “it is not clear that universities will be able or willing to impose new present assignment agreements upon their faculty without some form of consideration or shared governance consultation”). Notwithstanding the notoriety of Stanford v. Roche , not all universities appear to have gotten the message. For example, in Omni Medsci, Inc. v. Apple Inc. , 7 F.4th 1148 (Fed. Cir. 2021), the Federal Circuit held that a University of Michigan bylaw providing that intellectual property in a faculty member’s inventions “shall be the property of the University” did not automatically assign the inventor’s rights in the invention to the university. It explains that “On its face, [the clause] does not unambiguously constitute either a present automatic assignment or a promise to assign in the future. It does not say, for example, that the inventor ‘will assign’ the patent rights—language that this court has previously held to constitute an agreement to assign rather than a present assignment. Nor does it say that the inventor ‘agrees to grant and does hereby grant’ title to the patent—language that this court has previously held to constitute a present automatic assignment of a future interest. We conclude that [the clause] is most naturally read as a statement of intended disposition and a promise of a potential future assignment, not as a present automatic transfer.”

13 Dennis Crouch, Overbroad Assignment Agreement: Invalid under California Law, Patently-O, November 19, 2020, https://patentlyo.com/patent/2020/11/overbroad-assignment-california.html .

14 See Dennis Crouch, Pre-Invention Innovations Not Captured by Employment Agreement Duty to Assign, Patently-O, April 29, 2021, https://patentlyo.com/patent/2021/04/invention-innovations-employment.html .

15 Barton Beebe, Trademark Law: An Open Source Casebook, version 4.0 at Part III, 127 (2017).

16 Irene Calboli , Trademark Assignment “With Goodwill”: A Concept Whose Time Has Gone , 57 Fla. L. Rev. 771 , 776 ( 2005 ) .

17 Note that the requirement that a trademark license be accompanied by a transfer of goodwill was rejected in Dawn Donut Co. v. Hart’s Food Stores, Inc ., 267 F.2d 358 (2d Cir. 1959), discussed in Section 13.1 .

18 Milgrim on Trade Secrets, § 2.02.

19 Neil Wilkof , Joint Ownership of a Trade Mark: The Tribulations of Termination , IPKat, November 26, 2010 , https://ipkitten.blogspot.com/2010/11/joint-ownership-of-trade-mark.html .

20 See Schering Corp. v. Roussel-UCLAF SA , 104 F.3d 341, 344 (Fed. Cir. 1997) (“Each co-owner’s ownership rights carry with them the right to license others, a right that also does not require the consent of any other co-owner”).

21 See Sybersound Records, Inc. v. UAV Corp. , 517 F.3d 1137 (9th Cir. 2008).

22 See Trademark Manual of Examining Procedure (TMEP), 1201.07(b)(ii).

23 15 U.S.C. § 1052(d) (“Concurrent registrations may also be issued by the Director when a court of competent jurisdiction has finally determined that more than one person is entitled to use the same or similar marks in commerce. In issuing concurrent registrations, the Director shall prescribe conditions and limitations as to the mode or place of use of the mark or the goods on or in connection with which such mark is registered to the respective persons”).

24 Trademark Manual of Examining Procedure (TMEP), 501.06.

25 See, e.g., Iskenderian v. Iskenderian , 144 Cal. App. 4th 1162 (Cal. App. 2006) (trademark in family restaurant was validly transferred by late parent to three children).

26 Richard A. Posner , Intellectual Property: The Law and Economics Approach , 19 J. Econ. Persp. 57 , 70 ( 2005 ).

27 Robert P. Merges & Lawrence A. Locke , Co-ownership of Patents: A Comparative and Economic View , 72 J. Pat. & Trademark Off. Soc’y 586 ( 1990 ).

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Ownership and Assignment of Intellectual Property
Jorge L. Contreras , University of Utah
Book: Intellectual Property Licensing and Transactions
Online publication: 21 June 2022
Chapter DOI: https://doi.org/10.1017/9781009049436.003

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Joint Patent Ownership: Who Owns What

By Venjuris

In a previous post, we discussed difference between inventorship and ownership in regards to patents. To recap, only inventors (i.e., someone who contributed to creating the invention) can be an “inventor,” but anyone can become a patent owner. A non-inventor typically becomes a patent owner by a written agreement signed by the inventor, that transfers ownership (e.g., an assignment). This situation is more complicated when you have multiple inventors or multiple owners.

Here are the basic differences between individual patent ownership and joint patent ownership:

1. Individual Ownership – An individual person or single entity may own the entire patent. For example, if there is only one inventor, and that inventor has not assigned the patent, that inventor owns the entire patent. Individual ownership, however, ca

n also occur when all parties having an ownership interest (all inventors and assignees) assign the patent to one person or entity.

2. Joint Ownership – Multiple parties can share ownership in a patent. For example, joint ownership occurs when there are:

Multiple inventors who have not assigned their patent rights;
Multiple parties who have been assigned patent rights; or
A combination of assignee(s), and inventor(s) who have not assigned their patent rights.

Each joint inventor may only assign the interest he or she holds. Thus, an assignment by one joint inventor means that the assignee, is only a partial assignee. A partial assignee likewise may only assign the interest it holds; thus, assignment by a partial assignee renders a subsequent assignee a partial assignee. See how fast it can get complicated?!

Rights of Co-Owners or Joint Owners

Unless the co-inventors have an agreement to the contrary, each co-inventor shares full patent rights with any other co-inventor(s). That is, each co-inventor can make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States without the consent of and without accounting to the other co-inventors.

Joint ownership has some inherent limitations. For one thing, because each joint owner can exercise rights without having to account to other joint owners, each joint owner can grant licenses to third parties without the consent of the other joint owners. While this sounds good at first, it also means that no single joint owner has the power to grant an exclusive license given that the other joint owners can grant licenses to third parties, too.

Additionally, in order to bring a lawsuit for patent infringement against a third-party, all joint owners must be named plaintiffs. If one joint inventor refuses to join the action as a plaintiff, this can end the lawsuit and effectively stop the other patent owners from pursuing infringers.

If you need more information about patent ownership, please send us a message . We have lawyers licensed in Arizona, Connecticut, and New York, and we can handle federal intellectual property matters in any U.S. state and assist with international matters. For even more information, sure to connect with us on Facebook .

Post by patent attorney Joseph Meaney , edited by social media attorney Ruth Carter .

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The basics of patent law - assignment and licensing

The articles cover, respectively: Types of intellectual property protection for inventions and granting procedure ; Initiating proceedings ; Infringement and related actions ; Revocation, non-infringement and clearing the way ; Trial, appeal and settlement ; Remedies and costs ; Assignment and Licensing and the Unified Patent Court and Unitary Patent system .

The articles underpin Gowling WLG's contribution to Chambers' Global Practice Guide on Patent Litigation 2017, for which Gordon Harris and Ailsa Carter wrote the UK chapter.

Introduction

Any patent, patent application or any right in a patent or patent application may be assigned (Patents Act 1977 (also referred to as "PA") s.30(2)) and licences and sub-licences may be granted under any patent or any patent application (PA s.30(4)).

The key difference between an assignment and a licence is that an assignment is a transfer of ownership and title, whereas a licence is a contractual right to do something that would otherwise be an infringement of the relevant patent rights. Following an assignment, the assignor generally has no further rights in relation to the relevant patent rights. On the granting of a licence, the licensor retains ownership of the licensed rights and generally has some continuing obligations and rights in relation to them (as set out in the relevant licence).

Formalities

Any assignment of a UK patent or application, or a UK designation of a European patent, must be in writing and signed by, or on behalf of, the assignor. For an assignment by a body corporate governed by the law of England and Wales, the signature or seal of the body corporate is required (PA s.30-31). With regards the assignment of a European patent application however, such assignment must be in writing and signed not just by the assignor but by both parties to the contract (Article 72 EPC).

There is no particular statutory provision regarding the form of a licence or sub-licence (exclusive or otherwise). However, in view of the advisability of registration (discussed below) and legal certainty, it is sensible that any licence be in writing. In addition, normal contractual formalities apply, such as intention to create legal relations, consideration and certainty of terms, etc.

Registration

Registration (with the UKIPO) of an assignment or licence is not mandatory. However, if the registered proprietor or licensor enters into a later, inconsistent transaction, the person claiming under the later transaction shall be entitled to the property if the earlier transaction was not registered (PA s.33). Registration is therefore advisable. Failure to register an assignment or an exclusive licence within six months will also impact the ability of a party to litigation to claim costs and expenses (PA s.68) and might, potentially, enable an infringer to defend a claim for monetary relief on the basis of innocent infringement (PA s.62).

The procedure for registration is governed by the Patents Rules 2007. The application should be made on the appropriate form, should include evidence establishing the transaction, instrument or event, and should be signed by or on behalf of the assignor or licensor. Documents containing an agreement should be complete and of such a nature that they could be enforced. A translation must be supplied for any documentary evidence not in English.

In practice (particularly in the context of a larger corporate transaction in which many different asset classes are being transferred, not just intellectual property), parties sometimes agree short form documents evidencing the transfer of the relevant patent rights and will submit these for registration. This can enable parties to save submitting full documents for the whole transaction, which may include sensitive commercial information that is not relevant to the transfer of the patent rights themselves.

Types of licence

A licensee may take a non-exclusive or exclusive licence from the licensor. The distinction between such licences is both legally and commercially significant.

On a basic level an exclusive licence means that no other person or company can exploit the rights under the patent and this means the licensor is also excluded from exploiting such rights. Exclusivity may be total or divided up by reference to, for example, territory, field of technology, channel, or product type. The extent of exclusivity generally goes to the value of the rights being licensed and will feed into the agreed financials. It is worth noting that the term "exclusive licence" does not have a statutory definition under English law, so it is very important to define the contractual scope of exclusivity in the relevant licence agreement.

In the event a licensor wants to retain the ability to exploit the rights in some way (for example an academic licensor may want the ability to continue research activities) then appropriate carve outs from the exclusivity should be expressly stated in the licence agreement.

A non-exclusive licensee has the right to exploit rights within the patent as determined by the licence agreement. However, the licensor may also exploit such rights as well as granting multiple other licences to third parties (which may include competitors of the original licensee).

Much less common is a sole licence, by which the patent proprietor agrees not to grant any other licences but gives the licensee the right to use the technology and may also still operate the licenced technology itself.

Compulsory licences

A compulsory licence provides for an individual or company to seek a licence to use another's patent rights without seeking the proprietor's consent. Compulsory licences under patents may be granted in circumstances where there has been an abuse of monopoly rights, but are very rarely granted in the UK.

An application for a compulsory licence can be made by any person (even a current licensee of the patent) to the Comptroller of Patents at any time after three years from the date of grant of the patent. In respect of a patent whose proprietor is a national of, or is domiciled in, or which has a real and effective industrial or commercial establishment in, a country which is a member of the World Trade Organisation, the applicant must establish one of the three specified grounds for relief. If satisfied, the Comptroller has discretion as to whether a licence is granted and if so upon what terms. The grounds are:

demand for a patented product in the UK is not being met on reasonable terms;
the exploitation in the UK of another patented invention that represents an important technical advance of considerable economic significance in relation to the invention claimed in the patentee's patent is prevented or hindered provided that the Comptroller is satisfied that the patent proprietor for the other invention is able and willing to grant the patent proprietor and his licensees a licence under the patent for the other invention on reasonable terms;
the establishment or development of commercial or industrial activities in the UK is unfairly prejudiced;
by conditions imposed by the patentee, unpatented activities are unfairly prejudiced.

The terms of the licence shall be decided by the Comptroller but are subject to certain restrictions on what type of licence can be granted, namely the licence: cannot be exclusive; can only be assigned to someone who has been assigned the part of the applicant's business that enjoys use of the patented invention; will be for supply to the UK market; will include conditions allowing the patentee to adequate remuneration; and must be limited in scope and duration to the purpose for which the licence is granted.

Infringement

The type of licence is also significant when it comes to tackling infringement. Under statute, an exclusive licensee has the same right as the proprietor of a patent to bring proceedings with respect to infringement committed after the date of the licence and such proceedings may be brought in the licensee's name (PA 67(1)). An exclusive licensee of a patent application may also bring proceedings in its own name (PA ss. 67(1) & 69). In practice, however, these statutory provisions are often excluded or varied by parties negotiating complex licensing transactions. A licensee may also have a right under a licence to bring proceedings for an infringement occurring before the licence came into effect.

A non-exclusive licensee does not have any right under statute to bring proceedings in its own name. However, this could be negotiated into a licence agreement, though it may be difficult for a licensor to agree this point if it has multiple non-exclusive licensees.

Effect of non-registration on infringement proceedings

There is no requirement that a licence must be registered before proceedings can be commenced by an exclusive licensee. However, non-registration can affect a licensee's ability to recover its costs in relation to such proceedings.

Implied terms

Established rules of construction apply to assignment and licence agreements. Parties should ensure that important terms are included as express terms. There is no implied warranty that any assigned or licensed patent will be valid, or that an assignee or licensee will work the invention (for example, that they will exploit the rights and manufacture products). In certain very limited circumstances a court will order 'rectification' of an assignment or licence agreement, namely a court will order a change in the assignment or licence agreement to reflect what the agreement ought to have said in the first place. Regardless of this, all key terms should be included expressly in all assignment and licence agreements.

Termination of licences

Except where there is express contractual provision or where a licence has been wrongly terminated and damages sought, under English law there is no compensation payable to licensees on termination of a licencing agreement. The licence agreement should be clear as to what circumstances may give rise to termination, for example the non-payment of royalties, material breach or insolvency. The agreement should also make clear what happens in the event of termination in relation to, for example, existing stock of licensed products or work in progress.

Next in our 'The basics of patent law' series, we will be discussing the Unified Patent Court and Unitary Patent system.

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Related Insights & Resources

“Patent Owners Should Mind Assignee Rights Restrictions,” Law360, June 1, 2020.

Extracted from Law360

Parties seeking to transfer ownership of a patent subject to preexisting licenses often face a difficult task.

On the one hand, the patent owner may desire to obtain the benefits of those prior licenses even after the patent is assigned to a new owner.

On the other, any rights retained by the patent owner, and any restrictions placed on the future assignee, may jeopardize the standing of the assignee to enforce the patent without joining the former owner.

To further complicate this delicate balance, the U.S. Court of Appeals for the Federal Circuit's decision in Lone Star Silicon Innovations LLC v. United Microelectronics Corp., and subsequent district court cases applying that decision, have looked to the totality of the contract at issue to determine whether the assignee has standing, subjecting any contractual restrictions on the assignees' rights to further scrutiny.

It is therefore useful to determine which encumbrances must be contractually imposed (and subjected to additional scrutiny) and which are automatically transferred to the assignee when it steps into the shoes of the assignor. It is well-settled that an assignee takes a patent subject to any preexisting encumbrances that run with the patent. But what does it mean to run with the patent? And how should an assignor ensure that future transferees are bound by those provisions?

An Overview of What Runs With the Patent

Patents are, by definition, the right to exclude others from using an invention. When the patent owner has given up the right to exclude another entity through the grant of a license or covenant not to sue, it cannot then transfer that right to exclude to another party. This is true regardless of whether the assignee is aware of the prior actions by the patent owner. 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.

This dilemma is further complicated by standing considerations. Courts across the country have grappled with what rights a licensee must possess to have standing to sue for patent infringement. The generally accepted principle is that the licensee must have all substantial rights to sue in its own name.[1] Courts look at the totality of the agreement, i.e., all provisions and their cumulative effect on substantial rights. Courts tend to focus, however, on restrictions that impair enforcement and alienation.

Thus, particular care should be taken when imposing contractual limitations on an assignee's ability to enforce the patent or further transfer the rights it obtains. The line between a preexisting encumbrance that runs with the patent and a substantial right retained by the former patent owner is often difficult to ascertain.

In the recent Lone Star case, the Federal Circuit considered an agreement that restricted assignee Lone Star's ability to enforce or assign the patents without consent of the patent owner, and it further restricted Lone Star's ability to transfer the patents unless the subsequent buyer agreed to be bound by the same restrictions as Lone Star. The court concluded that, when viewed in the totality, Lone Star lacked all substantial rights and thus had standing to sue only if it joined the original patent owner.

Since the Lone Star decision, district courts have examined contractual restrictions to determine whether transferees had all substantial rights necessary to maintain suit without joining the respective patent owners. For example, following Lone Star, district courts have refused to allow an assignee to sue in its own name where the assignee was required to obtain consent prior to filing suite against two specific entities.[2]

As a result of the uncertainty surrounding standing to sue when preexisting rights exist, patent owners looking to assign future rights are wise to consider which rights and obligations automatically transfer and which ones must be contractually imposed.

And for any encumbrances that are imposed contractually, the impact on the assignee's standing to sue should be assessed. Ultimately, patent owners need to assess the relative risks of protecting their existing licensing arrangements against the possibility that doing so will result in the loss of the assignor's independent standing to sue.

Encumbrances That Run With the Patent

As a general rule, only those encumbrances that relate to the actual use of the patent are deemed to run with that right to exclude. The most common encumbrances of this type are those that restrict the ability to use an invention, including explicit licenses authorizing use, and covenants not to sue to enforce a patent right. Once granted, the patent owner's exclusionary rights against the receiving party are diminished. A subsequent assignee then takes a patent subject to those existing licenses and covenants not to sue.[3]

But the term license in this context can be misleading. Most patent license agreements contain not only provisions granting rights to use the patent at issue but also other provisions governing payment (through running royalties or lump sums), dispute resolution, confidentiality and many other issues. A common misperception is that the entire license runs with the patent and therefore binds subsequent assignees, but sellers — and buyers — should beware.

In contrast to license grants and covenants not to sue that impact use of an invention and run with the patent, procedural terms in a licensing agreement that do not directly impact the use of the patent may not be binding on subsequent buyers. Yet the outcome of such provisions is often unclear.

Arbitration Clauses

The Federal Circuit has held that arbitration clauses do not run with the patent because they are unrelated to the actual use of the patent.[4] Instead, these provisions are viewed as features of the underlying contract negotiated by the original parties that do not bind any subsequent patent owner unless that restriction is imposed as part of the contractual patent assignment.

Confidentiality Provisions

Patent license agreements often contain contractual obligations to keep terms of the agreement confidential. Courts have classified confidentiality provisions as procedural terms that do not bind subsequent assignees.[5] Like arbitration clauses, confidentiality provisions relate to the contractual obligations between the negotiating parties, rather than the patent itself, and again generally do not run with the patent upon transfer.

Licenses to use a patent are often directly conditioned on royalty payments for that use. Similarly, patent assignments sometimes require payment of royalties to the original patent owner for future enforcement actions brought by the assignee. While royalty rights may seem to run with the patent — as the commercial benefit of the grant of a right to use the patented invention — some courts have found they do not.[6] These courts have reasoned that the royalty payments are personal between the contracting parties and thus do not bind future assignees.

This outcome is particularly concerning if a patent is assigned to a party in return for a share of future royalties earned by the new patent owner. If that new patent owner subsequently assigns the patent to a third party, the original owner may not have any recourse against that third party to enforce its royalty rights absent a separate contractual arrangement that binds the future assignee.

Not all courts have reached the same conclusion, however. At least one court has distinguished between past royalties, which are not transferred, and future royalties, which are transferred.[7] The court explained that the assignee of a patent becomes vested with the rights of the patentee, but also takes the patent subject to the patentee's previous acts. Under this view, royalties due after the transfer are incident to and transferred with the patent absent an express reservation.

That presumption is reversed with previously accrued royalties though. The right to recover prior royalties or damages for prior infringement may be assigned, but the assignment of a patent without more is not sufficient to confer those rights on the assignee.

Practice Recommendations

Only those encumbrances deemed to run with the patent — those that relate to the actual use of the patent — are likely to bind successors in interest. Potential buyers should perform due diligence on the patents to determine whether the patents are subject to any preexisting licenses or covenants not to sue. Even if the patent owner does not inform the potential buyer of such commitments, they will likely bind the buyer after transfer.

To the extent a patent owner wants (or is contractually obligated) to ensure that existing encumbrances continue to bind future assignees of the patent, it should make sure that all restrictions not specifically tied to the use of the patent are contractually imposed on future assignees.

Such provisions preserve the patent owner's breach of contract rights against the original licensee should that licensee transfer the agreement without the obligations it was required to include. Care should be taken, however, to ensure that any contractual restrictions do not result in the retention of a substantial right that impedes the assignees' standing to sue future infringers.

[1] Lone Star Silicon Innovations LLC v. United Microelectronics Corp. , UMC Grp. (USA), 925 F.3d 1225 (Fed. Cir. 2019).

[2] Home Semiconductor Corp. v. Samsung Elecs. Co., Ltd. , No. 13-cv-2033, 2020 WL 1470867 (D. Del. Mar. 26, 2020).

[3] Innovus Prime, LLC v. Panasonic Corp. , No. C-12-00660, 2013 WL 3354390 (N.D. Cal. July 2, 2013).

[4] Datatreasury Corp. v. Wells Fargo & Co. , 522 F.3d 1368, 1372-73 (Fed. Cir. 2008).

[5] Paice, LLC v. Hyundai Motor Co. , No. 12-499, 2014 WL 3533667, at *9-10 (D. Md. July 11, 2014).

[6] In re Particle Drilling Techs., Inc. , No. 09-33744, 2009 WL 2382030 (S.D. Tex. July 29, 2009); Jones v. Cooper Indus., Inc. , 938 S.W.2d 118 (14th Dist. Tex. 1996).

[7] In re Novon Int'l, Inc. v. Novamont S.P.A. , Nos. 98-cv-677E(F), 96-BK-15463B, 2000 WL 432848, at *5 (W.D.N.Y. Mar. 31, 2000).

General Publications October 5, 2020 “What Ethernet Patent Ruling Means for Claim Amendments,” Law360 , October 5, 2020. Continuation practice is as popular as ever at the U.S. Patent and Trademark Office. This is due, at least in part, to the potential for patent challenges before the Patent Trial and Appeal Board (PTAB). This article examines the considerations for both patent owner and challenger for continuation applications stemming from PTAB patent challenges.
Patent Case Summaries June 4, 2019 Patent Case Summaries | Week Ending May 31, 2019 A weekly summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit and the opinions designated precedential or informative by the Patent Trial and Appeal Board.
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Chapter 0300

Ownership and assignment.

301.01-Accessibility of Assignment Records
302.01-Assignment Document Must Be Copy for Recording
302.02-Translation of Assignment Document
302.03-Identifying Patent or Application
302.04-Foreign Assignee May Designate Domestic Representative
302.05-Address of Assignee
302.06-Fee for Recording
302.07-Assignment Document Must Be Accompanied by a Cover Sheet
302.08-Mailing Address for Submitting Assignment Documents
302.09-Facsimile Submission of Assignment Documents
302.10-Electronic Submission of Assignment Documents
303-Assignment Documents Not Endorsed on Pending Applications
304‑305-[Reserved]
306.01-Assignment of an Application Claiming the Benefits of a Provisional Application
307-Issue to Non-Applicant Assignee
308-Issue to Applicant
309-Restrictions Upon Employees of U.S. Patent and Trademark Office
310-Government License Rights to Contractor-Owned Inventions Made Under Federally Sponsored Research and Development
311-Filing of Notice of Arbitration Awards
312-[Reserved]
313-Recording of Licenses, Security Interests, and Documents Other Than Assignments
314-Certificates of Change of Name or of Merger
315-Indexing Against a Recorded Certificate
316-[Reserved]
317.01-Recording Date
317.02-Correction of Unrecorded Returned Documents and Cover Sheets
317.03-Effect of Recording
318-Documents Not to be Placed in Files
319-[Reserved]
320-Title Reports
321‑322-[Reserved]
323.01(a)-Typographical Errors in Cover Sheet
323.01(b)-Typographical Errors in Recorded Assignment Document
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
325-Establishing Right of Assignee To Take Action in Application Filed On or After September 16, 2012

United States Patent and Trademark Office

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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.

IP for Business Guides

Learn more about the commercialization of patents, trademarks, industrial designs, copyright.

Read IP for Business Guides

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.

Learn more about Technology Transfer .

IMAGES

Patent Ownership And Assignment
Free Patent Assignment Template & FAQs
PATENT OWNERSHIP VS. INVENTORSHIP: WHO REALLY CONTROLS THE RIGHTS TO A
Patent Assignment: Difference between Assignment of Patent and License
Patents: The Difference Between Ownership vs Inventorship
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What is a Provisional Patent?
Copyright Act, 1957 Important Notes, Que and Ans
Secret to Legally Protecting Your AI Work
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Inventorship and Assignment: Two Vital Concepts in Patent Law

COMMENTS

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 ...
Who Owns What: Patent Assignment and Ownership
Explicit Assignments: Even when employees have signed appropriate agreements, your company should execute new patent-specific assignments whenever patent applications are filed. These assignments name the specific invention, patent, and/or patent application, and can have additional legal weight if the ownership of a patent is disputed.
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.
Patent Assignment: How to Transfer Ownership of a Patent
Patent Assignment vs. Licensing . Keep in mind that an assignment is different from a license. The difference is analogous to selling versus renting a house. In a license agreement, the patent owner (the "licensor") gives another entity (the "licensee") permission to use the patented technology, while the patent owner retains ownership ...
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 […]
Patent Ownership in the United States
Patent Assignments. In patents, selling a patent (or a partial ownership in a patent) is called an assignment. Inventors of patents or any current owner can assign their interest in a patent or patent application to another party, such as a corporate owner or another person, at any time during the life of the patent. With an assignment ...
What is a Patent Assignment?
A patent assignment is a written agreement that transfers all ownership and control of the defined property (e.g., patent, patent application, patent family) from an assignor to an assignee for a fixed sum. An assignment is distinct from a license, which merely grants a licensee the right to practice the invention claimed in a patent without ...
Who owns the patent rights (patent owner vs. applicant vs. assignee)?
A patent assignment is a simple document where each inventor acknowledges that the patent application belongs to someone else. The executed assignment is recorded with the Assignments division of the USPTO. ... the applicant should gather documentary evidence of its ownership. This documentation should be recorded with the USPTO prior to paying ...
Should I Assign My Patent to My Company?
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".
Who Owns What: Patent Assignment and Ownership
These assignments name the specific invention and can have additional legal weight whenever ownership of a patent is disputed. Joint ownership of patent rights can be complicated.
Who Owns What Assignment and Ownership of Patents and Applications
Explicit Assignments: Even when employees have signed appropriate agreements, your company should execute new patent-specific assignments whenever patent applications are filed. These assignments name the specific invention, patent, and/or patent application, and can have additional legal weight if the ownership of a patent is disputed.
What is a patent assignment?
A patent assignment is a legal document that transfers ownership of a patent from one party to another. The invention rights vest with the person that conceives of the invention unless the inventor has assigned the invention rights to another using the patent assignment. Understanding the basics of patent assignments is crucial for anyone that ...
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. Show all FAQs. Browse FAQs.
What is a Patent Assignment? (Detailed Answer)
An assignment transfers the ownership of the patent from the inventor or employee to the company for which he is working. That said, assignments can also be made by any two parties that agree to transfer ownership of a patent. So, now we know that a patent holder can transfer his patent rights to a third party, can an inventor assign a pending ...
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 ...
Deciding to Licence or Assign When Selling a Patent
Assignment is the irrevocable and permanent sale and transfer of ownership of a patent by the assignor (that's you) to the assignee. Assignment means that you will no longer ever have any rights to your patent. Typically its a one-time lump sum total sale of your patent.
2
2.1 Assignments of Intellectual Property, Generally . Once it is in existence, an item of IP may be bought, sold, transferred and assigned much as any other form of property. Like real and personal property, IP can be conveyed through contract, bankruptcy sale, will or intestate succession, and can change hands through any number of corporate transactions such as mergers, asset sales, spinoffs ...
Joint Patent Ownership: Who Owns What
Here are the basic differences between individual patent ownership and joint patent ownership: 1. Individual Ownership - An individual person or single entity may own the entire patent. For example, if there is only one inventor, and that inventor has not assigned the patent, that inventor owns the entire patent. Individual ownership, however ...
Basics of patent law: assignment and licensing
The key difference between an assignment and a licence is that an assignment is a transfer of ownership and title, whereas a licence is a contractual right to do something that would otherwise be an infringement of the relevant patent rights. Following an assignment, the assignor generally has no further rights in relation to the relevant ...
"Patent Owners Should Mind Assignee Rights Restrictions,"
Parties seeking to transfer ownership of a patent subject to preexisting licenses often face a difficult task. ... Similarly, patent assignments sometimes require payment of royalties to the original patent owner for future enforcement actions brought by the assignee. While royalty rights may seem to run with the patent — as the commercial ...
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
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. Assignment is the sale of an IP ...

Who Owns What: Assignment and Ownership of Patents and Applications

Why does ownership of a patent/patent application matter?

So who owns a patent/patent application?

How do I make sure my company owns these patents/patent applications?

You’re the new owner!

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

What Is Patent Inventorship?

An Inventor Must Have Contributed to the Conception of the Invention

An Inventor Need Not Have Reduced the Idea to Practice

Can We List Multiple Inventors in a Patent Application?

IRRELEVANT FACTORS IN DETERMINING INVENTORSHIP

What Is Patent Ownership?

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

Keeping Track of Inventors Using IDRS

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Patent Ownership in the United States - Best Practices to Preserve Your Rights

Ownership Overview

Default – Patents are Owned by the Inventors

Alternative – Patents Owned by an Applicant

Patent Assignments

Assignment of Patent Applications

Obligations to assign

Patent Licenses

Enforcement

PatentTrademarkBlog

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Who owns the continuing applications?

Who is the patent owner if the inventor will not sign the assignment?

Who is the patent owner when there is no employment agreement?

If employment agreement exists: employer vs. employee, university vs. student

How to Determine Whether Employer or School Might Own Your Invention

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What if an employee was not hired to invent or develop a specific device?

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Should I Assign My Patent to My Company?

What Does Patent Assignment Mean?

Should I Form a Company to Assign My Patent to?

Advantages to Assigning Your Patent to Your Company

Limits Your Liability

Provides a Clear Structure

Puts the Public on Notice

Aids in Licensing Opportunities

Build Asset Valuation

Disadvantages to Assigning Your Patent Rights

Removes Control Over The Patent

Incurs Incorporation Costs

How to Assign Patent Rights

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Do You Have Intellectual Property (IP) You Need To Protect?

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Business Exit Strategies for Patent-Heavy Companies

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