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29 Jan 2024

Patent Assignment: How to Transfer Ownership of a Patent

By Michael K. Henry, Ph.D.

• Intellectual Property
• Patent Prosecution

This is the second in a two-part blog series on owning and transferring the rights to a patent. ( Read part one here. )

As we discussed in the first post in this series, patent owners enjoy important legal and commercial benefits: They have the right to exclude others from making, selling, using or importing the claimed invention, and to claim damages from anyone who infringes their patent.

However, a business entity can own a patent only if the inventors have assigned the patent rights to the business entity. So if your employees are creating valuable IP on behalf of your company, it’s important to get the patent assignment right, to ensure that your business is the patent owner.

In this post, we’ll take a closer look at what a patent assignment even is — and the best practices for approaching the process. But remember, assignment (or transfer of ownership) is a function of state law, so there might be some variation by state in how all this gets treated.

What Is a Patent Assignment and Why Does it Matter?

A patent assignment is an agreement where one entity (the “assignor”) transfers all or part of their right, title and interest in a patent or application to another entity (the “assignee”). 

In simpler terms, the assignee receives the original owner’s interest and gains the exclusive rights to pursue patent protection (through filing and prosecuting patent applications), and also to license and enforce the patent. 

Ideally, your business should own its patents if it wants to enjoy the benefits of the patent rights. But  under U.S. law , only an inventor or an assignee can own a patent — and businesses cannot be listed as an inventor. Accordingly, patent assignment is the legal mechanism that transfers ownership from the inventor to your business.

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. Like a property rental, a patent license contemplates an ongoing relationship between the licensor and licensee.

In a patent assignment, the original owner permanently transfers its ownership to another entity. Like a property sale, a patent assignment is a permanent transfer of legal rights.

U sing Employment Agreements to Transfer Patent Ownership

Before your employees begin developing IP,  implement strong hiring policies  that ensure your IP rights will be legally enforceable in future.

If you’re bringing on a new employee, have them sign an  employment agreement  that establishes up front what IP the company owns — typically, anything the employee invents while under your employment. This part of an employment agreement is often presented as a self-contained document, and referred to as a “Pre-Invention Assignment Agreement” (PIAA).

The employment agreement should include the following provisions:

• Advance assignment of any IP created while employed by your company, or using your company’s resources
• An obligation to disclose any IP created while employed by your company, or using your company’s resources
• An ongoing obligation to provide necessary information and execute documents related to the IP they created while employed, even after their employment ends
• An obligation not to disclose confidential information to third parties, including when the employee moves on to a new employer

To track the IP your employees create, encourage your employees to document their contributions by completing  invention disclosure records .

But the paperwork can be quite involved, which is why your employment policies should also include  incentives to create and disclose valuable IP .

Drafting Agreements for Non-Employees

Some of the innovators working for your business might not have a formal employer-employee relationship with the business. If you don’t make the appropriate arrangements beforehand, this could complicate patent assignments. Keep an eye out for the following staffing arrangements:

• Independent contractors:  Some inventors may be self-employed, or they may be employed by one of your service providers.
• Joint collaborators:  Some inventors may be employed by, say, a subsidiary or service company instead of your company.
• Anyone who did work through an educational institution : For example, Ph.D. candidates may not be employees of either their sponsoring institution or your company.

In these cases, you can still draft contractor or collaborator agreements using the same terms outlined above. Make sure the individual innovator signs it before beginning any work on behalf of your company.

O btaining Written Assignments for New Patent Applications

In addition to getting signed employment agreements, you should  also  get a written assignments for each new patent application when it’s filed, in order to memorialize ownership of the specific patent property.

Don’t rely exclusively on the employment agreement to prove ownership:

• The employment agreement might contain confidential terms, so you don’t want to record them with the patent office
• Because employment agreements are executed before beginning the process of developing the invention, they won’t clearly establish what specific patent applications are being assigned

While you  can  execute the formal assignment for each patent application after the application has been filed, an inventor or co-inventor who no longer works for the company might refuse to execute the assignment.

As such, we recommend executing the assignment before filing, to show ownership as of the filing date and avoid complications (like getting signatures from estranged inventors).

How to Execute a Written Patent Agreement

Well-executed invention assignments should:

• Be in writing:  Oral agreements to assign patent rights are typically not enforceable in the United States
• Clearly identify all parties:  Include the names, addresses, and relationship of the assignor(s) and assignee
• Clearly identify the patent being assigned:  State the patent or patent application number, title, inventors, and filing date
• Be signed by the assignors
• Be notarized : If notarization isn’t possible, have one or two witnesses attest to the signatures

Recording a Patent Assignment With the USPTO

Without a recorded assignment with the U.S. patent office, someone else could claim ownership of the issued patent, and you could even lose your rights in the issued patent in some cases. 

So the patent owner (the Assignee) should should record the assignment through the  USPTO’s Assignment Recordation Branch . They can use the  Electronic Patent Assignment System (EPAS)  to file a  Recordation Cover Sheet  along with a copy of the actual patent assignment agreement.

They should submit this paperwork  within three months  of the assignment’s date. If it’s recorded electronically, the USPTO  won’t charge a recordation fee .

Need to check who owns a patent?  The USPTO website  publicly lists all information about a patent’s current and previous assignments.

When Would I Need to Execute a New Assignment for a Related Application?

You’ll need only one patent assignment per patent application, unless new matter is introduced in a new filing (e.g., in a  continuation-in-part , or in a non-provisional application that adds new matter to a  provisional application ). In that case, you’ll need an additional assignment to cover the new matter — even if it was developed by the same inventors.

What If an Investor Won’t Sign the Written Assignment?

If you can’t get an inventor to sign an invention assignment, you can still move forward with a patent application — but you’ll need to document your ownership. To document ownership, you can often rely on an   employee agreement ,  company policy ,  invention disclosure , or other employment-related documentation.

D o I Need to Record My Assignments in Foreign Countries?

Most assignments transfer all rights, title, and interest in all patent rights throughout the world.

But in some countries, the assignment might not be legally effective until the assignment has been recorded in that country — meaning that the assignee can’t enforce the patent rights, or claim damages for any infringement that takes place before the recordation. 

And there might be additional formal requirements that aren’t typically required in the United States. For example, some countries might require a transfer between companies to be signed by both parties, and must contain one or both parties’ addresses.

If you’re assigning patents issued by a foreign country, consult a patent attorney in that country to find out what’s required to properly document the transfer of ownership.

N eed Help With Your Patent Assignments?

Crafting robust assignment agreements is essential to ensuring the proper transfer of patent ownership. An  experienced patent professional  can help you to prepare legally enforceable documentation.

Henry Patent Law Firm has worked with tech businesses of all sizes to execute patent assignments —  contact us now  to learn more.

GOT A QUESTION? Whether you want to know more about the patent process or think we might be a good fit for your needs – we’d love to hear from you!

Michael K. Henry, Ph.D.

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

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A license is a grant (assignment) to the licensee of various licensed rights.  The situation can be further obscured by the fact that one can assign the licensed rights from one entity to another.  Thus, the first recordation of a license may be recorded as a “license,” while the assignment of those same licensed rights to another entity may be recorded as an “assignment.”  The only way to really understand the situation is to review the actual documents, which are all readily available from the recordation branch of the patent office.

Note that the patent office sometimes refers to licenses as a species of assignment.  That is correct, because one is assigning license rights.

Not necessarily.  Assignments are only needed if you are contractually obligated, by employment or otherwise, to make the assignment.

An important corollary is that an inventor can merely license his patent rights to a company that is exploiting the invention, and keep title to those rights in his own name.  Investors are usually unhappy with that arrangement, but there can be significant advantages.  One major advantage is that the patent holder is a “necessary and indispensable” to any litigation over patent validity.  Any competitor trying to invalidate the patent must file the action in the district where the inventor resides.

Assignments of provisionals have substantially the same pros and cons as assigning formal utility and design applications.  See the previous FAQ.

Since there are costs attending the handling and recording of assignments, many inventors and companies prefer to hold off on assigning provisional applications until filing of the corresponding formal (utility or PCT) applications.  That is a dangerous strategy.  In the interim between filing the provisional and the formal applications, there are all sorts of unfortunate events that can make later assignments difficult or impossible, including death or disability of an inventor, reluctance of an inventor to file an assignment due to a separation from a company, or divorce.

It is not technically necessary to re-file assignments for divisional or straight continuation applications.  A properly worded prior assignment recorded against the original application is automatically effective because the assignment recorded against the parent application gives the assignee rights to the subject matter common to both applications.

In the case of a substitute or continuation-in-part application, a prior assignment of the original application is not applied to the substitute or continuation-in-part application because the assignment recorded against the original application gives the assignee rights to only the subject matter common to both applications.  Substitute or continuation-in-part applications require the recordation of a new assignment if they are to be issued to an assignee.

Absolutely.  Indeed, it is a very common occurrence that an inventor will assign his invention to a company, and then the company will re-assign the rights after the patent issues.

Assignment is technically free, but it costs about $100 ($40 in filing costs and about $60 in paralegal time) to record the assignment at the U.S. patent office.

Note that the office charges US$ 40 for each patent or patent application listed on the recorda­tion form.  Thus, if an assignment references a family of 5 patent applications, the recorda­tion fee is US$ 200.  Of course paralegal charges would also apply, and possibly attorney time.

Under U.S. law, assignments must be recorded to be effective as against third parties who do not have actual knowledge of the assignment.  The statute is similar to recording statutes used for recording real property.  Thus, although there is no requirement to record an assignment, it is foolish not to do so.

Note that absent some unusual circumstance, patent assignments do not have to be notarized for use within the United States.

Preparing assignments is usually a simple matter of filling in the blanks of a form.  Assignment forms (inventor to company and company to company) and guidelines for preparing such forms can be found in  Strategic Patenting .

Note also that it is important to clearly identify whether the document being recorded is an assignment, license, or other document.  The recording branch does not generally read the documents to verify the content.

The Patent office will proceed as if the signature had been procured from the inventor, but only after establishing that the entity pursuing the application has colorable rights, and only after establishing that the inventor cannot be reached.  Thus, the patent office will need a copy of the employee agreement, assignment, or other documentary evidence establishing those rights.

In the case of a deceased inventor, the patent office will insist upon a statement from the executor of the estate, or an heir if probate is finished.  Where the inventor refuses to sign, or cannot be found, the patent office will insist upon seeing the letters, emails and faxes sent to the inventor, and will need a declaration from the person trying to make contact.

One simply records a certificate of name change or other formal document with the USPTO, using the assignment recordation form.

In foreign countries, name changes can be a real problem, and can cost anywhere from several hundred to a thousand dollars (mostly in attorneys fees).

It depends on the wording of the assignment and the recordation laws of the foreign countries.  Most assignments transfer all rights, title, and interest to U.S. patents and applications, and to corresponding foreign patents and applications.  Even so, the assignments might not be legally effective in a given country until the assignment is recorded in that country.

Some countries insist on a specific assignment that expressly lists that country. Canada, for example, typically requires its own assignments.

Patent infringement damages accrue in some countries only from the date the assignment was actually recorded at the relevant patent office.  Thus, delay in registering can cost a patent holder dearly in reduced patent infringement damages.

The main disadvantage to recording assignments is that many countries (including most or all of Europe) consider assignment of a patent or application to be a taxable transfer, and charge VAT (Value Added Tax) on the estimated value of the application or patent.  Since the value is often low in the early days, and can rise considerably during the life of the patent, the disadvantage of recordation can be mitigated by registering early.

Assignments records at the USPTO are available for  public inspection , but only for patents and published applications.  One can search by reel/frame number, patent or publication number, and assignor or assignee name.

The underlying documents are not available for download, but can be ordered from the assignment branch.  Paper mail requests can take months, but faxed requests are usually filled within a day or two.

No.  One should never rely upon the designation of “assignee” as set forth on the face of a patent.  First, the patent office obtains the “assignment” information directly from the issue fee transmittal form, and there is no verification whatsoever that such information is, or even ever was, correct.  The entry could well have been an error on the part of an attorney, paralegal, or secretary, and the issue fee transmittal form even warns that designation of an assignee of that form does not, in and of itself, affect an assignment.  Second, the patent is never altered after it is published.  Information that was correct at one point in time may well be superseded down the road.  Third, even if the “assignee” information is correct, one cannot know from the face of the patent what rights were assigned.  It might well be that only licensed rights were assigned, or that such rights are subject to a reversion.

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USPTO announces winner of the 2024 National Patent Application Drafting Competition

Published on: 04/15/2024 14:32 PM

The United States Patent and Trademark Office (USPTO) hosted the final round of the National Patent Application Drafting Competition (NPADC) on April 12 at USPTO headquarters in Alexandria, Virginia. 

Congratulations to the winners:

First place - University of Missouri - Kansas City School of Law

Second place - UC Berkeley School of Law

Third place - University of Detroit Mercy School of Law

Finalists - Emory University School of Law and George Washington University Law School

Over the past few months, competitors honed their patent application drafting, amending, and prosecution skills. The competition narrowed from 76 registrations to the top five teams, who met at USPTO headquarters April 12 to present to our panel of judges. In addition to gaining practical experience they will use in their future careers, the students interacted with leaders in the intellectual property community.

To learn more about the competition, please visit the NPADC page on the USPTO website.

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