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Patent Assignment Agreement

This Patent Assignment Agreement is a comprehensive document designed to facilitate the transfer of patent ownership from the original patent owner, known as the assignor, to another party, known as the assignee .

A patent is a legal grant issued by the United States Patent and Trademark Office (USPTO) to an inventor, providing exclusive rights to make, use, and sell their invention for a limited period , typically 20 years from the filing date. This protection is granted in exchange for the public disclosure of the invention. This system encourages innovation and lets inventors benefit from their creations for a specified period of time.

An assignment is the legal transfer of ownership or rights of a patent from one party (assignor) to another (assignee) . Using a Patent Assignment Agreement, the assignor forever relinquishes their rights to the patent, and the assignee assumes control and ownership of those rights for the duration of the patent.

This assignment can be made either before or after a patent application has been issued as a patent. By law, a patent is considered personal property and, so, can be sold or transferred in the same way one could sell a car or a piece of furniture. This document formally initiates the transfer process, providing clarity and protection for both parties involved. This agreement is particularly useful when inventors, companies, or individuals who wish to transfer their patent rights, whether for financial considerations, strategic partnerships, or other business transactions.

This document is different from a Trademark Assignment Agreement, which is used for the transfer of a different kind of intellectual property, known as a trademark. A trademark is usually a brand name or logo, unlike a patent, which is usually an invention of some sort. This is also slightly different from an Intellectual Property Release . Although that form could be used for a patent, it is generally used for copyrighted material, like works of art or pieces of music. In that case, payment is not made and, instead, the copyrighted works are simply "released," or given to another party. This document can also be distinguished from an Intellectual Property Permission Letter, as there, one party is writing to request permission to use the intellectual property of another. The Patent Assignment Agreement would then come after the letter, but the letter is not the formal legal document that initiates the transfer.

How to use this document

This document includes all the information necessary to transfer the ownership of a patent from one party to another. This document should be used when the transfer will be permanent, usually for a one-time fee , and no royalties will be due after the assignment. This document allows the parties to fill in details of the patent to be transferred, such as the patent name, original recordation number, and date the patent was initially issued . This ensures that everything needed for new recordation with the United States Patent and Trademark Office (USPTO) is present.

Once the document has been completed, both parties should sign the document in front of a notary and have the notary complete the notary page. The document must then be recorded with the USPTO within three months of its signing, or it becomes void. The current cost for filing an assignment with the USPTO is $40 per patent. The assignment can be filed either online or by mail.

Applicable law

In the United States, specific federal laws govern patent assignments, primarily under Title 35 of the United States Code , which pertains to the country's patent system. Section 261 of Title 35 outlines the general provisions related to patent ownership and transfers. According to this statute, patent assignments must be in writing to be valid, and they require the signature of the owner of the patent or their authorized representative. The law also specifies that the assignment must be recorded with the USPTO to establish priority and provide notice to the public.

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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.

10 Jan 2024

Geothermal Energy: An Overview of the Patent Landscape

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.

Invention Assignment Agreement

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An invention assignment agreement is a legal contract between an employer and a contractor or employee. It has become important as the world becomes increasingly digital. It is because intellectual property has become an invaluable asset for businesses. Protecting this asset is essential to ensure that companies retain their competitive edge. One way to do this is through an invention assignment agreement. This legal contract assigns ownership rights to any intellectual property created by an employee or contractor during their employment or contract period.

Essential Features of an Invention Assignment Agreement

Invention assignment agreement outlines ownership rights to any intellectual property created during the employee's tenure or contract period. Intellectual property includes patents, copyrights , trade secrets, and trademarks . The invention assignment agreement is essential to ensure that the employer retains ownership of any intellectual property created by the employee or contractor while working for the company.

The agreement typically includes confidentiality, incentives, and dispute-resolution provisions. Employees and contractors should carefully review the terms of the agreement and seek legal advice before signing. Invention assignment agreements are becoming increasingly common in industries that rely heavily on intellectual property, such as technology and biotech.

Importance of Invention Assignment Agreements

There are several reasons why invention assignment agreements are important. Some of these reasons include the following:

• Protecting Intellectual Property: As mentioned earlier, intellectual property is a valuable business asset. Invention assignment agreements help protect this asset by ensuring that the employer retains ownership rights to any intellectual property created by the employee or contractor.
• Clear Ownership: Without an invention assignment agreement, there can be confusion over who owns the intellectual property created during an employee's tenure. The agreement makes it clear that the employer owns intellectual property.
• Avoiding Disputes: Invention assignment agreements can help avoid disputes over intellectual property ownership. The agreement outlines ownership rights and can act as evidence in a dispute.

Benjamin W.

Key Provisions of an Invention Assignment Agreement

When creating an invention assignment agreement, several key provisions should be included. These provisions include:

• Definition of Intellectual Property: Defining what constitutes intellectual property is essential. This ensures that both parties understand what is covered under the agreement.
• Scope of the Agreement: The agreement should specify the types of intellectual property covered, such as patents, copyrights, trade secrets, and trademarks.
• Assignment of Ownership: The agreement should clearly state that the employee or contractor assigns ownership rights to any intellectual property created during their tenure.
• Confidentiality: The agreement should include a confidentiality clause to ensure that the employee or contractor does not disclose confidential information to third parties.
• Incentives: Employers can provide incentives to encourage employees to create intellectual property. The agreement should specify what incentives are available to the employee.

How to Enforce an Invention Assignment Agreement

Enforcing an invention assignment agreement can be challenging, especially if the employee or contractor disputes intellectual property ownership. However, there are several steps that employers can take to enforce the agreement:

• Review the Agreement: The first step is to review the invention assignment agreement to ensure it is legally binding and enforceable. Employers should ensure the agreement is properly signed and all key provisions are included.
• Notify the Employee or Contractor: If the employer believes that the employee or contractor has breached the invention assignment agreement, they should notify the employee or contractor in writing. The notification should specify the alleged breach and provide a copy of the agreement.
• Investigate the Alleged Breach: Employers should investigate the alleged breach to determine if there is evidence of wrongdoing. This may involve reviewing company records, interviewing witnesses, or consulting legal experts.
• Attempt to Resolve the Dispute: If possible, the employer should attempt to resolve the dispute with the employee or contractor. This may involve negotiating a settlement or agreeing to modify the terms of the invention assignment agreement.
• Seek Legal Action: The employer may need legal action if the dispute cannot be resolved. This may involve filing a lawsuit to enforce the agreement or seeking an injunction to prevent the employee or contractor from using the intellectual property.

It is essential to have a solid invention assignment agreement in place to protect your intellectual property. Employers can enforce the agreement and protect their valuable assets by following the steps outlined above. However, seeking legal advice before taking any legal action is important, as the laws governing intellectual property can be complex and vary by jurisdiction. A qualified attorney can provide guidance and protect the employer's rights.

Tips for Invention Assignment Agreement Terms

When negotiating an invention assignment agreement, there are several tips that employees and contractors should keep in mind. Some of these tips include:

• Seek Legal Advice: Employees and contractors should seek legal advice before signing an invention assignment agreement. A lawyer can review the agreement and ensure that the terms are fair.
• Negotiate Incentives: Employees and contractors can negotiate incentives, such as bonuses or equity, for creating valuable intellectual property.
• Clarify Ownership Rights: Employees and contractors should clarify ownership rights to any intellectual property created outside work hours or using their resources.
• Understand the Consequences of Breaching the Agreement: It is essential to understand the consequences of breaching the invention assignment agreement. Breaching the agreement can result in legal action and termination of employment.

Key Terms for Invention Assignment Agreements

• Intellectual Property: Refers to any creation of the mind, including inventions, designs, and artistic works, that can be protected by law.
• Scope of Agreement : Outlines the intellectual property of the invention assignment agreement.
• Assignment of Ownership: Specifies that the employer is the sole owner of any intellectual property created by the employee or contractor during their tenure or contract period.
• Confidentiality: Requires the employee or contractor to keep all information related to the intellectual property confidential.
• Incentives: Employees or contractors may provide compensation or other incentives for creating valuable intellectual property.

Final Thoughts on Invention Assignment Agreements

Invention assignment agreements are essential to protect intellectual property and avoid disputes over ownership rights. Employers should ensure that their employees and contractors sign an invention assignment agreement. Employees and contractors should seek legal advice before signing the agreement and negotiating favorable terms. By following the tips outlined in the blog post, both parties can reach an agreement that protects their interests.

An invention assignment agreement is a legal contract that outlines ownership rights to any intellectual property created during an employee's tenure or contract period. The agreement is essential to ensure that the employer retains ownership of any intellectual property created by the employee or contractor while working for the company.

Key provisions to include in an invention assignment agreement include a definition of intellectual property, the scope of the agreement, assignment of ownership, confidentiality, and incentives. Employees and contractors should seek legal advice before signing the agreement and negotiating favorable terms. By following these guidelines, companies can protect their intellectual property while incentivizing their employees and contractors to create valuable assets.

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

Meet some of our Invention Assignment Agreement Lawyers

28+ years experience. Licensed in Colorado and New York. Areas of expertise: estate planning, wills and trusts; trademark law; patent law; contracts and licensing; small business organization and counseling.

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Creative, results driven business & technology executive with 24 years of experience (15+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.

My career interests are to practice Transactional Corporate Law, including Business Start Up, and Mergers and Acquisitions, as well as Real Estate Law, Estate Planning Law, Tax, and Intellectual Property Law. I am currently licensed in Arizona, Pennsylvania and Utah, after having moved to Phoenix from Philadelphia in September 2019. I currently serve as General Counsel for a bioengineering company. I handle everything from their Mergers & Acquisitions, Private Placement Memorandums, and Corporate Structures to Intellectual Property Assignments, to Employment Law and Beach of Contract settlements. Responsibilities include writing and executing agreements, drafting court pleadings, court appearances, mergers and acquisitions, transactional documents, managing expert specialized legal counsel, legal research and anticipating unique legal issues that could impact the Company. Conducted an acquisition of an entire line of intellectual property from a competitor. In regards to other clients, I am primarily focused on transactional law for clients in a variety of industries including, but not limited to, real estate investment, property management, and e-commerce. Work is primarily centered around entity formation and corporate structure, corporate governance agreements, PPMs, opportunity zone tax incentives, and all kinds of business to business agreements. I have also recently gained experience with Estate Planning law, drafting numerous Estate Planning documents for people such as Wills, Powers of Attorney, Healthcare Directives, and Trusts. I was selected to the 2024 Super Lawyers Southwest Rising Stars list. Each year no more than 2.5% of the attorneys in Arizona and New Mexico are selected to the Rising Stars. I am looking to further gain legal experience in these fields of law as well as expand my legal experience assisting business start ups, mergers and acquisitions and also trademark registration and licensing.

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Patent Assignment Agreement Drafting Tips

When drafting a patent assignment agreement, it is vital to precisely define the assignment scope, identifying the specific patent rights being transferred, including patent applications and issued patents. Clearly identify the assignor and assignee, considering their legal entity status and roles in the assignment process. A well-structured consideration clause outlining compensation or benefits is also imperative. Additionally, the agreement must address ownership and title, providing a clear transfer of patent rights. By carefully considering these factors, parties can minimize potential disputes and achieve a successful patent assignment. A thorough understanding of these principles is necessary to navigate the complexities of patent assignment agreements.

Table of Contents

Understanding Patent Assignment Basics

Assigning patent rights, a vital step in the intellectual property transfer process, requires a thorough understanding of the underlying principles and legal frameworks that govern patent assignments. A patent assignment involves the transfer of ownership rights from one entity to another, and it is essential to grasp the nuances of this process to ensure a successful transfer.

Throughout patent history, assignment strategies have evolved to accommodate the complexities of intellectual property transactions. A well-crafted assignment strategy considers the type of patent, jurisdiction, and assignor's goals to facilitate a seamless transfer. Understanding the legal frameworks governing patent assignments is crucial, as different jurisdictions have unique regulations and requirements. For instance, the United States Patent and Trademark Office (USPTO) requires assignments to be in writing and signed by the assignor. A comprehensive understanding of these principles and frameworks enables parties to navigate the assignment process efficiently, minimizing the risk of costly disputes and ensuring a successful transfer of patent rights. By grasping these fundamental concepts, parties can develop an effective assignment strategy that meets their intellectual property goals.

Defining the Assignment Scope

A well-defined assignment scope is critical to ensuring that the patent rights being transferred are clearly identified and understood by all parties involved. The assignment scope outlines the specific patent rights being assigned, including the patent applications, issued patents, and any related intellectual property. A clearly defined scope helps to avoid ambiguity and potential disputes.

The scope of the assignment may be limited by various factors, including:

When defining the assignment scope, it is essential to consider the asset categories and scope limitations that apply to the patent rights being transferred. By doing so, parties can ensure a clear understanding of the assignment scope and avoid potential disputes.

Identifying the Assignor and Assignee

When drafting a patent assignment agreement, it is crucial to accurately identify the parties involved, specifically the assignor and assignee. This requires defining the parties, determining their legal entity status, and clarifying the assignor's role in the assignment process. By doing so, the agreement can guarantee a clear understanding of the parties' rights and obligations, thereby mitigating potential disputes.

Define the Parties

In a patent assignment agreement, the parties involved are clearly identified as the assignor and assignee, with the assignor being the party transferring the ownership of the patent and the assignee being the party receiving the transferred patent rights. Defining the parties is vital to avoid potential disputes and provide clarity.

The assignor and assignee can be various entity types, such as individuals, corporations, partnerships, or limited liability companies. It is imperative to accurately identify the party roles in the agreement to establish their respective rights and obligations.

When defining the parties, consider the following:

• Clearly state the assignor's name and address
• Specify the assignor's capacity, such as owner or authorized representative
• Identify the assignee's name and address
• Define the assignee's capacity, such as purchaser or licensee

Identify Legal Entities

The assignor and assignee in a patent assignment agreement must be accurately identified as legal entities to establish their respective rights and obligations. This identification is pivotal, as it determines the parties' capacity to enter into the agreement and affects the agreement's enforceability.

When identifying the assignor and assignee, it is imperative to specify their entity types, such as corporations, limited liability companies (LLCs), partnerships, or individuals. This clarification guarantees that the parties' legal structures are correctly represented, which is necessary for assigning patent rights. For instance, if the assignor is a corporation, it is necessary to specify the state of incorporation and the corporate structure, including any parent or subsidiary companies. Similarly, if the assignee is an LLC, its members and managers should be identified. A clear understanding of the parties' corporate structures helps prevent potential disputes and ensures a smooth transfer of patent ownership. By precisely identifying the legal entities involved, the patent assignment agreement can effectively convey the parties' intentions and protect their interests.

Clarify Assignor Role

Accurate identification of the assignor's role is critical in a patent assignment agreement, as it establishes the party with the authority to assign the patent rights. This clarity is essential in defining the assignor's responsibilities and liabilities, particularly in cases of disputes or breaches. A well-defined assignor role also facilitates a smooth transfer of patent ownership, ensuring that the assignee receives the intended rights.

To ensure a comprehensive role definition, consider the following key aspects:

• Assignor's capacity : Clearly state the assignor's capacity to assign the patent rights, including their legal authority and any necessary permissions.
• Assignor's obligations : Outline the assignor's responsibilities, including any warranties, representations, or covenants related to the patent assignment.
• Assignor Liability : Specify the extent of the assignor's liability in case of breaches or disputes, including any indemnification provisions.
• Role boundaries : Establish clear boundaries around the assignor's role, including any limitations or exclusions to their authority.

Establishing the Consideration Clause

Frequently, a patent assignment agreement's consideration clause outlines the specific compensation or benefit the assignor receives in exchange for transferring ownership of the patent rights. This clause is crucial as it specifies the value of the patent rights being transferred. To draft an effective consideration clause, it is essential to determine the fair market value of the patent rights. This can be achieved by conducting a thorough market analysis or by relying on expert valuations.

The consideration clause should clearly state the contract value, which may be a lump sum payment, a royalty rate, or a combination of both. The clause should also specify the timing and method of payment. Furthermore, it is vital to ensure that the consideration clause is mutually agreed upon by both parties to avoid potential disputes. A well-drafted consideration clause provides clarity and certainty, ensuring that the assignor receives fair compensation for the transferred patent rights. By establishing a clear and comprehensive consideration clause, parties can mitigate potential risks and ensure a smooth transfer of patent ownership.

Addressing Ownership and Title

When drafting a patent assignment agreement, it is crucial to address the critical aspects of ownership and title to guarantee a clear understanding of the parties' rights and obligations. Determining patent ownership involves identifying the current owner of the patent rights and their capacity to assign those rights. A well-crafted assignment agreement must also clearly transfer title to the assignee, specifying the scope of the assignment and any limitations or reservations.

Determining Patent Ownership

In the context of patent assignment agreements, determining patent ownership is a critical step that requires a thorough examination of the underlying legal rights and interests of the parties involved. This involves delving into the patent history to identify the original inventors, assignees, and any subsequent transfers of ownership. It is essential to clarify the intellectual boundaries of each party's contribution to the invention, ensuring that all stakeholders are accounted for and their rights are respected.

To ensure accurate determination of patent ownership, consider the following key factors:

• Patent applications and grants : Review the patent office records to identify the original applicant, inventors, and assignees.
• Assignment and transfer agreements : Analyze any previous agreements that may have transferred ownership or rights to the patent.
• Employment agreements and contracts : Examine employment contracts and agreements that may impact patent ownership, such as work-for-hire provisions.
• Joint research and development agreements : Identify any collaborative agreements that may have contributed to the invention and affected patent ownership.

Transferring Title Clearly

Clear and unequivocal language is vital in patent assignment agreements to transfer title effectively, ensuring that the assignee's rights are explicitly defined and protected. Ambiguity in the language can lead to disputes and undermine the validity of the assignment. To avoid this, it is essential to use clear language that explicitly conveys the transfer of title, including the patent's serial number, title, and ownership.

Managing Confidentiality and Disclosure

Frequently, patent assignment agreements require the inclusion of confidentiality provisions to protect sensitive information disclosed during the negotiation and assignment process. These confidentiality clauses are essential to safeguard the intellectual property and trade secrets of the parties involved. Effective management of confidentiality and disclosure is crucial to prevent unauthorized use or disclosure of confidential information .

To ensure adequate protection, consider the following key aspects when drafting confidentiality provisions:

• Define the scope of confidential information, including patent applications, technical data, and business strategies.
• Establish disclosure protocols, outlining the procedures for sharing confidential information, including authorized recipients and secure communication channels.
• Specify the obligations of the receiving party, including non-disclosure, non-use, and return of confidential information upon request.
• Determine the duration of confidentiality obligations, including any exceptions or termination clauses.

Anticipating Dispute Resolution Mechanisms

Dispute resolution mechanisms should be carefully built into the patent assignment agreement to mitigate the risk of costly and time-consuming litigation, should a disagreement arise between the parties. This is particularly vital in patent assignment agreements, where the stakes are high and the potential for disputes is significant.

To facilitate effective dispute resolution, parties should consider incorporating alternative dispute resolution (ADR) mechanisms into the agreement. Arbitration options, for instance, can provide a binding and final resolution to disputes, while also offering a more efficient and cost-effective alternative to litigation. Mediation strategies, on the other hand, can facilitate a more collaborative and informal approach to dispute resolution, allowing parties to reach a mutually beneficial agreement.

When drafting the patent assignment agreement, parties should carefully consider the scope of the dispute resolution mechanism, including the types of disputes that will be subject to ADR, the rules and procedures governing the process, and the role of the arbitrator or mediator . By anticipating and addressing potential disputes through carefully crafted dispute resolution mechanisms, parties can minimize the risk of costly and time-consuming litigation, and guarantee a more efficient and effective resolution to any disputes that may arise.

Frequently Asked Questions

Can a patent assignment agreement be oral instead of written?.

While verbal contracts are generally enforceable, a patent assignment agreement should ideally be in writing to avoid ambiguity and disputes, as oral agreements may be difficult to prove and could be barred by statute limitations.

How Do I Determine the Patent Assignment's Effective Date?

To determine the patent assignment's effective date, examine the agreement's execution date, considering date stamps on signatures and filings. Be aware of potential filing delays, as they may impact the assignment's effective date, potentially altering the patent's ownership timeline.

Are Patent Assignments Publicly Recorded or Kept Confidential?

Patent assignments are publicly recorded with the US Patent and Trademark Office (USPTO), which may compromise confidentiality. However, parties can mitigate confidentiality risks by limiting public disclosure to crucial information, such as the assignment's existence and effective date.

Can a Patent Assignment Be Cancelled or Terminated?

A patent assignment can be cancelled or terminated through mutual consent, a contractual provision, or as a consequence of breach, where the breaching party fails to comply with the agreement's terms, triggering termination clauses.

Do I Need a Lawyer to Draft a Patent Assignment Agreement?

While not legally required, engaging a lawyer to draft a patent assignment agreement is highly recommended, as they bring vital legal expertise to guarantee accuracy and protect interests, outweighing potential cost considerations.

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Free Patent Assignment Agreement Template for Microsoft Word

Download this free Patent Assignment Agreement template as a Word document to help you assign the rights in an existing patent to a third party

Patent Assignment Agreement

This Patent Assignment (hereinafter referred to as the “Assignment”) is made and entered into on [Insert Effect Date] (the “Effective Date”) by and between the following parties:

[Insert Assignor Name] [Insert Assignor Address]

(the “Assignor”)

[Insert Assignee Name] [Insert Assignee Address]

(the “Assignee”)

WHEREAS the Assignor is the sole and rightful owner of certain ideas, inventions, patent applications therefor and patents thereon (collectively referred to as the “Patents”) set forth in Exhibit A attached hereto; and

WHEREAS, the Assignee desires to purchase or acquire the Assignor’s right, title, and interest in and to the Patents; and

WHEREAS, the Assignor and Assignee are both duly authorized and capable of entering into this Assignment.

NOW, THEREFORE, for valuable consideration, the receipt of which is acknowledged, the parties hereto agree as follows:

1. ASSIGNMENT.

The Assignor does hereby sell, assign, transfer and set over to Assignee [Insert Amount]% of its right, title, and interest in the Patents to Assignee for the entire term of the Patents and any reissues or extensions and for the entire terms of any patents, reissues or extensions that may issue from foreign applications, divisions, continuations in whole or part or substitute applications filed claiming the benefit of the Patents. The right, title, and interest conveyed in this Assignment is to be held and enjoyed by Assignee and Assignee’s successors as fully and exclusively as it would have been held and enjoyed by Assignor had this assignment not been made.

The Assignor authorizes United States Patent and Trademark Office and any other applicable jurisdictions outside the United States to record the transfer of the patent and/or patent applications set forth in Exhibit A to Assignee as the recipient of Assignor’s right, title, and interest therein.

Assignor further agrees to: (a) cooperate with Assignee in the protection of the patent rights and prosecution and protection of foreign counterparts; (b) execute, verify, acknowledge and deliver all such further papers, including patent applications and instruments of transfer; and (c) perform such other acts as Assignee lawfully may request to obtain or maintain the Patents and any and all applications and registrations for the invention in any and all countries.

2. WARRANTY.

Assignor warrants that Assignor is the legal owner of all right, title, and interest in the Patents, that the Patents have not been previously pledged, assigned, or encumbered, and that this Assignment does not infringe on the rights of any person.

3. GOVERNING LAW.

This Assignment is governed by and is to be construed in accordance with the laws of the State of [Insert State].

4. ENTIRE AGREEMENT.

This Assignment constitutes the sole agreement of the parties and supersedes all oral negotiations and prior writings with respect to the subject matter hereof.

5. SEVERABILITY.

If one or more provisions of this Assignment are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. If the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision will be excluded from this Assignment, (ii) the balance of the Assignment will be interpreted as if such provision were so excluded and (iii) the balance of the Assignment will be enforceable in accordance with its terms.

6. ADVICE OF COUNSEL.

EACH PARTY ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT WILL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

IN WITNESS whereof, the Assignor and Assignee have executed this Agreement as of the Effective Date.

________________________________________________________________

By: ___________________________________ Date: __________________ [Insert Name of Assignor]

By: ___________________________________ Date: __________________ [Insert Name of Assignee]

List of Patents

U.S. Patent/Application number: _________________ Dated: _________________ Title: _________________

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Patent Assignment Agreement Lawyers & Attorneys

Intellectual property is a valuable asset for any company. You must secure its ownership, whether purchasing a patent  (exclusive rights to make, use or sell an agreement) from another inventor or ensuring you own an invention developed by a contractor or an employee. A patent assignment agreement is a permanent way to transfer this ownership. If you are looking to draft a patent assignment agreement, a patent lawyer from Priori Legal's vetted network of attorneys can help protect your interests.

Understanding Patent Assignment

When you invent a new technology, you have the right to file for a patent on that technology with the United States Patent and Trademark Office (USPTO), which gives you the exclusive rights to make, use, offer for sale, sell, export, or import that invention in the United States. This right remains with the first inventor to file, regardless of who else may have had a claim in developing the technology. Of course, not everyone has an interest in using these rights. Some inventors may choose to sell ownership of all or some rights to a third party through patent assignment. This is done by signing a patent assignment agreement which transfers ownership of these rights.

When a Patent Assignment Agreement Is Necessary

When you choose to assign the rights to an invention over to another party, this must be done through a formal patent assignment agreement. Unlike some contracts, patent assignment agreements cannot be oral or casually written out. A formal contract must be drawn up.

Of course, when a company wants to buy the full permanent rights for a patent, a patent assignment agreement is vital, but any time that a company wants to secure patent rights to an invention they commissioned, a patent assignment agreement can also be used. These are therefore common within independent contractor agreements. Additionally, some companies have employees sign patent assignment agreements as a condition of employment to secure and strengthen the work-for-hire doctrine.

Key Provisions of a Patent Assignment Agreement

A patent assignment agreement is generally a fairly straightforward contract, but it requires several key provisions in order to be both valid and effective. The following are some key provisions that should be addressed in your patent assignment agreement.

Fee and Payment.  In order for a patent assignment agreement to be valid, there must be consideration or payment. It must be specified and paid at signing, even if at the time of employment.

Assignment.  There must be a formal cause saying exactly what will be assigned and when assignment transfers.  

Patent Rights and Definitions.  The exact patent to be transferred must be specified and fully defined as it is registered in the USPTO filing.

Further Assistance.  If the original patent owner must help transition ownership or use of the patent, a further assistance clause will specify how and for how long.

Warranties and Indemnities.  Most patents are transferred as-is, but some patent assignment agreements have warranties and indemnities to protect the parties involved.

Notarization.  For a patent assignment agreement to be valid in the U.S., it must be notarized—or at least signed in front of two witnesses.

Patent Assignment vs. Licensing

Practically, patent assignment is very similar to patent licensing , especially exclusive licenses. Both transfer patent rights to another person or company. While licenses are temporary, however, assignment is permanent. Licensing patent rights is like renting property. Royalties are collected over time, but ownership does not transfer. Patent assignment agreements permanently transfer ownership. You can review and download a free template Patent Assignment Agreement  or Patent License Agreement  in Priori Legal's Document & Form Learning Center . 

How do I record a patent assignment?

Once a patent assignment agreement has been signed, the assignment can be reported to the USPTO using the Electronic Patent Assignment System . This simple process include filling out a Patent Assignment Recordation Coversheet online and attaching the patent assignment agreement for legal documentation. This will be automatically changed then in the system to reflect the new ownership of the patent. To formalize this assignment, however, you must make the assignment of record in the file of the original patent application.

If I hire an independent contractor to create work for my company, do I need to get them to sign a patent assignment agreement?

Unless the original independent contractor agreement contains a clause that assigns the invention created to the hiring organization, they could patent the invention, and your company would have to get that work assigned.

Can I require an employee to sign a patent assignment agreement?

Under work-for-hire doctrine, employees who invent anything during the course of their work duties do not have patent ownership. Instead, the employer is conferred these rights. Still, many employers ensure an added layer of protection by having new employees sign an additional patent assignment agreement at the time of their employment.

Get started by telling us a little bit about your legal needs and a member of our team will begin working on your matchmaking process.

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301 Ownership/Assignability of Patents and Applications [R-10.2019]

35 u.s.c. 261   ownership; assignment..

Subject to the provisions of this title, patents shall have the attributes of personal property. The Patent and Trademark Office shall maintain a register of interests in patents and applications for patents and shall record any document related thereto upon request, and may require a fee therefor.

Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing. The applicant, patentee, or his assigns or legal representatives may in like manner grant and convey an exclusive right under his application for patent, or patents, to the whole or any specified part of the United States.

A certificate of acknowledgment under the hand and official seal of a person authorized to administer oaths within the United States, or, in a foreign country, of a diplomatic or consular officer of the United States or an officer authorized to administer oaths whose authority is proved by a certificate of a diplomatic or consular officer of the United States, or apostille of an official designated by a foreign country which, by treaty or convention, accords like effect to apostilles of designated officials in the United States, shall be prima facie evidence of the execution of an assignment, grant, or conveyance of a patent or application for patent.

An interest that constitutes an assignment, grant, or conveyance shall be void as against any subsequent purchaser or mortgagee for 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.

35 U.S.C. 262   Joint owners.

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.

37 CFR 3.1  Definitions.

For purposes of this part, the following definitions shall apply:

Application means a national application for patent, an international patent application that designates the United States of America, an international design application that designates the United States of America, or an application to register a trademark under section 1 or 44 of the Trademark Act, 15 U.S.C. 1051 or 15 U.S.C. 1126, unless otherwise indicated.

Assignment means a transfer by a party of all or part of its right, title and interest in a patent, patent application, registered mark or a mark for which an application to register has been filed.

Document means a document which a party requests to be recorded in the Office pursuant to § 3.11 and which affects some interest in an application, patent, or registration.

Office means the United States Patent and Trademark Office.

Recorded document means a document which has been recorded in the Office pursuant to § 3.11 .

Registration means a trademark registration issued by the Office.

Ownership of a patent gives the patent owner the right to exclude others from making, using, offering for sale, selling, or importing into the United States the invention claimed in the patent. 35 U.S.C. 154(a)(1) . Ownership of the patent does not furnish the owner with the right to make, use, offer for sale, sell, or import the claimed invention because there may be other legal considerations precluding same (e.g., existence of another patent owner with a dominant patent, failure to obtain FDA approval of the patented invention, an injunction by a court against making the product of the invention, or a national security related issue).

For applications filed on or after September 16, 2012, the original applicant is presumed to be the owner of the application for an original patent. See 37 CFR 3.73(a) . For applications filed before September 16, 2012, the ownership of the patent (or the application for the patent) initially vests in the named inventors of the invention of the patent. See Beech Aircraft Corp. v. EDO Corp., 990 F.2d 1237, 1248, 26 USPQ2d 1572, 1582 (Fed. Cir. 1993). 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 .

“Assignment,” in general, is the act of transferring to another the ownership of one’s property, i.e., the interest and rights to the property. The U.S. Patent and Trademark Office cannot explain or interpret laws that govern assignments and related documents, nor can it act as counselor for individuals. Assignments and other documents are contracts that are governed by the relevant state or jurisdictional law.

In 37 CFR 3.1 , assignment of patent rights is defined as “a transfer by a party of all or part of its right, title and interest in a patent [or] patent application....” An assignment of a patent, or patent application, is the transfer to another of a party’s entire ownership interest or a percentage of that party’s ownership interest in the patent or application. In order for an assignment to take place, the transfer to another must include the entirety of the bundle of rights that is associated with the ownership interest, i.e., all of the bundle of rights that are inherent in the right, title and interest in the patent or patent application. 35 U.S.C. 261 requires transfer of ownership by an assignment to be in writing. See Realvirt, LLC v. Lee, 195 F.Supp.3d 847, 859 (E.D. Va. 2016).

As compared to assignment of patent rights, the licensing of a patent transfers a bundle of rights which is less than the entire ownership interest, e.g., rights that may be limited as to time, geographical area, or field of use. A patent license is, in effect, a contractual agreement that the patent owner will not sue the licensee for patent infringement if the licensee makes, uses, offers for sale, sells, or imports the claimed invention, as long as the licensee fulfills its obligations and operates within the bounds delineated by the license agreement.

An exclusive license may be granted by the patent owner to a licensee. The exclusive license prevents the patent owner (or any other party to whom the patent owner might wish to sell a license) from competing with the exclusive licensee, as to the geographic region, the length of time, and/or the field of use, set forth in the license agreement.

A license is not an assignment of the patent. Even if the license is an exclusive license, it is not an assignment of patent rights in the patent or application.

Individual ownership - An individual entity may own the entire right, title and interest of the patent property. This occurs where there is only one inventor, and the inventor has not assigned the patent property. Alternatively, it occurs where all parties having ownership interest (all inventors and assignees) assign the patent property to one party.

Joint ownership - Multiple parties may together own the entire right, title and interest of the patent property. This occurs when any of the following cases exist:

• (A) Multiple partial assignees of the patent property;
• (B) Multiple inventors who have not assigned their right, title and interest; or
• (C) A combination of partial assignee(s), and inventor(s) who have not assigned their right, title and interest.

Each individual inventor may only assign the interest he or she holds; thus, assignment by one joint inventor renders the assignee 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. All parties having any portion of the ownership in the patent property must act together as a composite entity in patent matters before the Office.

An assignment can be made of record in the United States Patent and Trademark Office (Office) in two different ways, for two different purposes. The differences are important to note:

• (A) An assignment can be made of record in the assignment records of the Office as provided for in 37 CFR Part 3 . Recordation of the assignment provides legal notice to the public of the assignment. It should be noted that recording of the assignment is merely a ministerial act; it is not an Office determination of the validity of the assignment document or the effect of the assignment document on the ownership of the patent property. See 37 CFR 3.54 , MPEP § 317.03 , and Realvirt, LLC v. Lee, 195 F.Supp.3d 847, 862-3 (E.D. Va. 2016). For a patent to issue to an assignee, the assignment must have been recorded or filed for recordation in accordance with 37 CFR 3.11 . See 37 CFR 3.81(a) .
• (B) An assignment can be made of record in the file of a patent application, patent, or other patent proceeding (e.g., reexamination proceeding). This step may be necessary to permit the assignee to “take action” in the application, patent, or other patent proceeding under the conditions set forth in 37 CFR 1.46 and 37 CFR 3.81(a) and MPEP § 325 (for applications filed on or after September 16, 2012) or under the conditions set forth in pre-AIA 37 CFR 3.73 and MPEP § 324 (for applications filed before September 16, 2012). Recordation of an assignment in the assignment records of the Office does not , by itself, permit the assignee to take action in the application, patent, or other patent proceeding.

Additionally, for applications filed under 35 U.S.C. 111(a) , 363 , or 385 on or after September 16, 2012, an assignment may contain the statements required to be made in an oath or declaration (“assignment-statement”), and if the assignment is made of record in the assignment records of the Office, then the assignment may be utilized as the oath or declaration. See 35 U.S.C. 115(e) , 37 CFR 1.63(e) , and MPEP §§ 302.07 , 317 , and MPEP § 602.01(a) .

301.01 Accessibility of Assignment Records [R-10.2019]

37 cfr 1.12  assignment records open to public inspection..

• (1) Separate assignment records are maintained in the United States Patent and Trademark Office for patents and trademarks. The assignment records, relating to original or reissue patents, including digests and indexes (for assignments recorded on or after May 1, 1957), and published patent applications are open to public inspection at the United States Patent and Trademark Office, and copies of patent assignment records may be obtained upon request and payment of the fee set forth in § 1.19 of this chapter. See § 2.200 of this chapter regarding trademark assignment records.
• (2) All records of assignments of patents recorded before May 1, 1957, are maintained by the National Archives and Records Administration (NARA). The records are open to public inspection. Certified and uncertified copies of those assignment records are provided by NARA upon request and payment of the fees required by NARA.
• (b) Assignment records, digests, and indexes relating to any pending or abandoned patent application, which is open to the public pursuant to § 1.11 or for which copies or access may be supplied pursuant to § 1.14 , are available to the public. Copies of any assignment records, digests, and indexes that are not available to the public shall be obtainable only upon written authority of an inventor, the applicant, the assignee or an assignee of an undivided part interest, or a patent practitioner of record, or upon a showing that the person seeking such information is a bona fide prospective or actual purchaser, mortgagee, or licensee of such application, unless it shall be necessary to the proper conduct of business before the Office or as provided in this part.
• (1) Be in the form of a petition including the fee set forth in § 1.17(g) ; or
• (2) Include written authority granting access to the member of the public to the particular assignment records from an inventor, the applicant, the assignee or an assignee of an undivided part interest, or a patent practitioner of record.
• (d) An order for a copy of an assignment or other document should identify the reel and frame number where the assignment or document is recorded. If a document is identified without specifying its correct reel and frame, an extra charge as set forth in § 1.21(j) will be made for the time consumed in making a search for such assignment.

Assignment documents relating to patents, published patent applications, registrations of trademarks, and applications for registration of trademarks are open to public inspection. Records related to assignments of patents, and patent applications that have been published as patent application publications are available on the USPTO website. Images of assignment documents recorded June 1998 and later are also viewable on the Office website. To view images of earlier-recorded assignment documents, members of the public must place an order pursuant to 37 CFR 1.12(d) .

The Office will not open only certain parts of an assignment document to public inspection. If such a document contains two or more items, any one of which, if alone, would be open to such inspection, then the entire document will be open. Thus, if a document covers either a trademark or a patent in addition to one or more patent applications, it will be available to the public ab initio; and if it covers a number of patent applications, it will be so available as soon as any one of them is published or patented. Documents relating only to one or more pending applications for patent which have not been published under 35 U.S.C. 122(b) will not be open to public inspection.

Copies of assignment records relating to pending or abandoned patent applications which are open to the public pursuant to 37 CFR 1.11 or for which copies or access may be supplied pursuant to 37 CFR 1.14 are available to the public. For pending or abandoned applications which are not open to the public pursuant to 37 CFR 1.11 or for which copies or access may not be supplied pursuant to 37 CFR 1.14 , information related thereto is only obtainable upon a proper showing of written authority. For applications filed on or after September 16, 2012, the written authority must be from (A) an inventor, (B) an applicant, (C) the assignee or an assignee of an undivided part interest, (D) a patent practitioner of record, or (E) a person with written authority from (A), (B), or (C) or (D). See 37 CFR 1.12 . For applications filed prior to September 16, 2012, the written authority must be from the applicant or applicant’s assignee or from the attorney or agent of either, or upon a showing that the person seeking such information is a bona fide prospective or actual purchaser, mortgagee, or licensee of such application. See pre-AIA 37 CFR 1.12 .

If the application on which a patent was granted is a division, continuation, or continuation-in-part of an earlier application, the assignment records of that earlier application will be open to public inspection because copies or access may be supplied to the earlier application pursuant to 37 CFR 1.14 .

Assignment records relating to reissue applications are open to public inspection because reissue applications are open to public inspection pursuant to 37 CFR 1.11(b) .

Requests for abstracts of title for assignments of patents recorded after May 1, 1957, are provided by the Certification Division upon request and payment of fee required in 37 CFR 1.19 . Requests for copies of pre-1957 records for patents should be directed to the National Archives and Records Administration (NARA). Since these records are maintained by NARA, it is more expeditious to request copies directly from NARA, rather than from the Office, which would then have to route the requests to NARA. Payment of the fees required by NARA should accompany all requests for copies.

All assignment records from 1837 to April 30, 1957 for patents are now maintained and are open for public inspection in the National Archives Research Room located at the Washington National Records Center Building, 4205 Suitland Road, Suitland, Maryland 20746 and at the Civilian Records Division of the National Archives at College Park, 8601 Adelphi Road, College Park, MD 20740-6001. Assignment records from before 1837 are not available. Individuals should check the National Archives website, www.archives.gov , for how to obtain information from these locations.

• 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

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Invention Assignment Agreements – How to Avoid Pitfalls

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Invention Assignment Agreements – How To Avoid Pitfalls

Contributor.

Intellectual property assets are the lifeblood of many businesses today. No employer wants to see those assets walk out the door when an employee leaves. Employee invention assignment agreements are one crucial tool for protecting intellectual property, but the laws governing them contain traps for the unwary. If the agreement is too narrow or ambiguous, it may allow inventions to slip away. Further, if the agreement fails to include certain provisions, it may be invalid in certain states.

The two most significant forms of employee-created intellectual property are patentable inventions and copyrightable works. The default rules for these creations are polar opposites. While copyrights are presumptively property of the employer, inventions are presumptively property of the employee. Invention assignment agreements are therefore necessary to ensure the employer obtains all of the rights to the greatest possible scope of its employees' creations.

At least nine states have enacted statutes governing employee invention assignment agreements. Seven of those states – California, Delaware, Illinois, Kansas, Minnesota, North Carolina, and Washington – have nearly identical requirements. For example, California Labor Code § 2870 provides:

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:

• 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
• Result from any work performed by the employee for the employer.

The California statute and others also typically require the employer to notify the employee that the invention assignment agreement does not apply to an invention that does not qualify as the employer's invention under the statute.

Making matters even more complicated, Nevada and Utah have unique variants of these statutes. Nevada Stat. § 600.500 makes patentable inventions presumptively the property of the employer. Utah Code § 34-39-1, et seq., by contrast, creates clear lines between "employment inventions" that are owned by the employer and inventions created on an employee's own time that are not.

As a general rule, invention assignment agreements should be drafted to include language that mirrors the requirements of the seven states identified above because that will ensure the agreement is enforceable in those states and most others. Variations can be drafted for Nevada, Utah and any other states that may enact unique restrictions.

Agreements should also be drafted to encompass the widest range of intellectual property possible. In addition to inventions, conceptions, discoveries, improvements, and original works of authorship, the agreement should include an assignment of "know-how" and "ideas" learned or created by the employee while employed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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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. 

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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Legal Templates

Home Assignment Agreement CIIAA

Confidential Information and Invention Assignment Agreement Template

Use our confidential information and invention assignment agreement to protect the work employees produce on company time.

Updated February 5, 2024 Written by Josh Sainsbury | Reviewed by Brooke Davis

A confidential information and invention assignment agreement (CIIAA)  protects intellectual property like trademarks and patents, work products, business ideas, and internal processes.

It prevents the loss of this information by unscrupulous competitors or those seeking to claim the idea as their own. A business has the right to protect its intellectual property when it contributes its funds and resources to ideas or inventions, and a confidential information and invention assignment agreement can provide this protection.

What Is a Confidential Information and Invention Assignment Agreement?

When to use a confidential information and assignment agreement, limits on invention assignment agreements, how to write a ciia agreement, is a confidential information and invention assignment agreement enforceable, confidential information and invention assignment sample.

A confidential information and invention assignment agreement is a legal contract that gives an employer certain rights to inventions. These inventions refer to all the work that employees create during their employment with company resources, on company time, and for the company.

This agreement requires the employee to disclose inventions to the employer and “assign” ownership rights of the invention. The document will also state that the employee must assist the employer in obtaining a patent on the invention, when applicable.

You may want to use a confidential information and invention assignment agreement if:

• You own or manage a business and want to protect intellectual property.
• You work in human resources and need to update documents covering intellectual property.
• You want to protect against the disclosure of confidential information related to an invention.
• You want to ensure exclusive ownership of an invention.

There are limitations to what a confidential information and invention assignment can do. Some of these restrictions are placed by state law. For example, California ( California Labor Code § 2870 ) and Washington ( Washington Revised Code § 49.44.140 ) will not enforce an agreement when the invention was created entirely on the employee’s time and if they didn’t use any employer resources to invent it.

This limitation can deal with complicated nuances, but it is essential to understand that this agreement’s provisions must comply with state law.

The burden of proof usually rests with the employee to show they didn’t use company resources or knowledge in making their invention. Showing this proof may be challenging for the employee, so the agreement will likely remain enforceable despite any challenges by the employee.

Follow these steps to write an effective CIIA agreement:

Step 1 – Describe the Invention Assignment

Most contracts will assign intellectual property rights from the employee to the employer. These clauses will precisely define the invention and intellectual property that the company will own.

It should also specify all rights the employee is ceding to the employer . If the employee is to retain a partial interest as part of your agreement, this clarification will also be included here.

Step 2 – Explain the Confidentiality Requirements

This section will explain that any information related to the invention is confidential. It will also warn of the penalties for a breach of confidentiality.

The employee is not permitted to disclose the information except as permitted by the employer or the contract.

Outlining the effect of a breach helps to create an enforceable contract and warn the employee that you are serious. Some CIIA’s may also contain non-disclosure clauses to ensure confidentiality.

Step 3 – Highlight Any Exceptions

Some states require that a confidentiality and invention agreement have exceptions. This usually includes exceptions for employees who did not use company time, intellectual property, or resources in creating their invention.

Failure to include this exception is often damaging to the contract if a state requires exceptions.

Step 4 – Include Non-Compete Clauses

Many CIIAs include non-compete clauses as well. These clauses state that the employee isn’t allowed to enter business in the same industry for a certain period after leaving the company.

This clause prevents an employee from taking inventions they’ve made during their employment to another competitor or using them in a business of their own.

Non-competes have particular legal requirements in many jurisdictions to be enforceable. In certain professions, a non-compete may be against public policy and unenforceable. Make sure that an attorney analyzes your agreement to ensure it’s enforceable.

Step 5 – State the Duration of Agreement

The contract must explain when the employee’s inventions will become the company’s property. Many clauses explain how this will happen automatically at a particular time or the commencement of a specific event.

This is usually when the company employs the employee and can extend the employment for a certain period.

Step 6 – Provide the Governing Law

Provide the name of the state that will govern the agreement . If an issue arises in the future, you can refer to that particular state’s laws for guidance on how to proceed.

A properly drafted CIIA agreement is legally enforceable. It’s a contract between the employee and the employer and must comply with your state’s general contract requirements. It should typically include:

• Clear terms of the agreement
• Mutual acceptance of the terms
• An offer and an acceptance
• Consideration for the contract

CIIA agreements, in particular, must meet your state’s specific legal requirements. Different jurisdictions may require certain elements to enforce the confidentiality & invention assignment agreement.

This sample CIIA template can help you get started on drafting your own. Download it below as a PDF or Word File:

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Avoid Problems: Get an Invention Assignment Agreement

May 4, 2010 by James Yang

Companies owns invention rights by one of three ways from employees.  A formal Invention Assignment Agreement is typically executed when the employee begins employment.  The Agreement assigns certain inventions of the employee to the company.  Invention rights can also be acquired by way of the Employed-to-Invent doctrine.  In particular, to the extent that the employer specifically hires or directs an employee to exercise inventive faculties, the invention is owned by the employer.  Even if the employer does not have full rights to the employee’s invention, the employer may still have a “shop right” to use the invention without liability for infringement depending on whether the employee utilized company assets to develop the invention.

The following case illustrates the problems associated with companies that do not have invention assignment agreements or with relying upon a sub-contractor that does not have the proper invention assignment procedures in place.  General Electric (“GE”) manufactures jet engines.  GE attempted to manufacture the blades with composite material.  However, the blades were subject to failure.  As a result, GE outsourced engineering and manufacturing of the composite blade to a division of Chromalloy Gas Turbine Corporation (“Chromalloy”).  Chromalloy appointed Teets as the chief engineer for the project.  Unfortunately, Chromalloy did not have an Invention Assignment Agreement in place with Teets.  Eventually, Teets invented a new process for fabricating a durable composite blade which GE purchased for its engines.  A patent application was filed.  Later, Teets asserted that he, not Chromalloy owned the invention rights in the process for fabricating the composite blade.  The lower Court held that Chromalloy at least had “shop rights” in the invention.  As such, at the least, Chromalloy could continue to sell the new composite blades to GE.  Upon appeal, the Federal Circuit held that Chromalloy had more than just “shop rights” but also owned the patent rights.  Although the Teets did not expressly assign the invention to Chromalloy, the Court construed an implied-in-fact contract to assign the invention to Chromalloy based on the particulars of the employment relationship.  Teets v. Chromalloy Gas Turbine Corporation, 83 F.3d 403 (Fed. Cir. 1996).

Based on this case, it is important to set up proper procedures and documentation to clarify ownership of intellectual property rights cases not only in the employment context but also when hiring a sub-contractor.  Employers should implement procedures to obtain invention assignment agreements from employees.  It may also be important to ensure that your sub contractors have proper invention assignments from its employees to prevent any delays in production if one of the sub-contractor’s employees objects to intellectual property ownership issues.

Should you have any questions, please feel free to contact me.

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Patent Invention Assignment Agreement (United States)

This Wisdom of the Crowd (ACC member discussion) addresses the adoption of a patent invention assignment agreement to protect a company's intellectual property, under US law. This resource was compiled from questions and responses posted on the forum of the Intellectual Property and Small Law Departments ACC Networks.*

*(Permission was received from the ACC members quoted below prior to publishing their eGroup Comments in this Wisdom of the Crowd resource.)

My board of directors has requested we create a Patent Invention or Assignment of Invention Agreement for new employees to sign.

• Do you use a separate agreement or include it as part of a non-disclosure/confidential information/non-compete agreement? Do you have all employees sign it or only employees in areas that would actually create something? If you started using the form after employees were already hired, did you go back to existing employees and have them sign it? Were you successful in getting existing employees to sign it? Do you have a sample agreement you could share?

Wisdom of the Crowd:

Response #1:.

• I've usually seen it as part of the employment/consulting agreement as a section. I find that it limits the amount of paperwork and makes it much more convenient. My preference would be to have all employees sign it. If you think about it, even those who work in marketing are creating IP (perhaps nothing patentable). I would. You'd have to do an amendment and make sure there is consideration. 1

Response #2:

You'd probably have to research the relevant jurisdictions (bearing in mind that the relevant jurisdiction is going to be the state you'd plan to enforce the agreement -- most likely the state of residence of the employee at the time you're needing to do something about it) to determine if the state is a so-called "blue-pencil" state or not. (Non-compete is one of those limited numbers of topics where most states won't respect the document's choice of law provision, and courts tend to enforce based on the law of the enforcee's residence based on principles of 'fundamental public policy.') Since you'd likely conclude that in theory that's a 50-state problem, you'll also want to consider drafting the non-compete (to the extent you want one at all...) as self-blue-penciling (i.e., give the judge a way to use the document itself to remove or modify parts of the document that may be offensive under the applicable law without tossing the entirety, which in theory would overcome any state that has rejected the blue-pencil notion).

All that said, I think many might wonder if it is wise to mix in that one element -- non-compete -- in the middle of the whole, for the very reason you elude to. There are certainly plenty of pretty safe provisions like confidentiality that are not likely to get your document tossed out that you could mix in with the invention assignment. Then you could still put the non-compete in its own separate document (allowing you to maybe tailor it only to those employees who really merit it, and that would allow you to make all employees across the board sign the less dangerous confidentiality/invention-assignment document without worrying about the non-compete voiding the whole).

Bear in mind that invention assignment provisions have their own 50-state problem, in that many of our states have enacted magic-word statutes that impact the enforceability of those provisions (i.e., you need the magic words in the agreement or else it's potentially non-enforceable). (These all essentially go towards the notion that you can't use an invention assignment agreement to take ownership of "own time" inventions that were done outside the scope of employment.) I've seen many compromises, ranging from an attached schedule that effectively adds the magic words for each of the states at issue, to a drafting method that attempts to incorporate words from the most likely states and otherwise takes a chance that the words will at least meet the spirit of other states' laws and that the judge will have some willingness to look past literal statute readings. I think (no real research to back me up, just random observation...) in most cases folks tend toward the latter notion, which suggests that most think the risks are fairly low, but as always, "Your mileage may vary."

(Your own analysis of the risk might consider your company and its industry -- Are you dealing with engineers who tend to hop from job to job among competing companies that hate each other and might like to find a way to prevent you from filing that patent? The likelihood then of needing to pull out the document to force the former employee to sign off on something is much higher, as is the likelihood the former employee will be backed by expensive lawyers provided by his new employer. But, maybe you look at your pool of employees and figure the likelihood of them moving is low, or that it's unlikely they'll really care to be seen as burning their bridges back to former employment, and that they'd really prefer to get their names on a patent. Those are judgment calls you'd have to make as you pick your strategy.) 2

Response #3:

1. do you use a separate agreement or include it as part of a non-disclosure/confidential information/non-compete agreement.

No and no - except for a few oldtimers who needed to be retrofitted, it's part of the overall employment agreement. To the follow-up question, I believe ours is a separate item in the employment agreement, not part of the confidentiality/noncompete section. You can have both in the main agreement, so it's all in one place, instead of scattered documents. Just make sure they are in separate and clearly labeled sections. That way if a court strikes a section, it will usually leave the rest of the agreement intact.

2. Do you have all employees sign it or only employees in areas that would actually create something?

Everybody, because you never know who will be involved in the inventions.

3. If you started using the form after employees were already hired, did you go back to existing employees and have them sign it? Were you successful in getting existing employees to sign it?

Yes, and yes. One argument for additional consideration is the continued employment, although courts can look askance at that so use it sparingly. NB: One of the persons who needed to be retrofitted was our head of HR! Apparently in the mists of time when he originally joined, the employment agreements contained neither the noncompete nor the assignment language. He joked that he was being used as a good example.

4. Do you have a sample agreement you could share?

This site has some good basic suggestions: http://www.contractstandards.com/document-checklists/inventions-assignment-agreement-analysis/assignment-of-inventions

You might check this article for some useful information: http://digital.law.washington.edu/dspace-law/bitstream/handle/1773.1/1169/8wjlta79.pdf?sequence=4 . 3

Response #4:

I'd separate them, and then for the majority of your employees, throw the non-compete in the trash. Why pollute the contract you really want to enforce with provisions of dubious enforceability? If you have employees in California, the non-compete is worthless; good luck keeping the inventions.

I can understand putting top sales people under a non-compete on the way in, or have one signed as part of a separation package. But really - every employee under a non-compete? Admins and janitors? Seems over the top, and not worth the effort.

All IMHO, of course. 4

4 Response from Collin Webb, Assistance General Counsel, Hexagon Group, Norcross, GA (Intellectual Property Committee eGroup, June 21, 2014).

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Patent Assignments in Employment Agreements – a Sometimes Overlooked, but Always Important Component

• November 16, 2021

By: Peter C. Lando and Thomas P. McNulty

With assistance from summer intern Tyler Gruttadauria

Businesses, of course, have a strong interest in owning intellectual property created by their employees. Intellectual property—patents, copyrights, and other confidential and proprietary information including trade secrets—is often the most valuable asset a business can own, so it is important to ensure that employee developments and inventions belong to the employer. In the United States, inventions presumptively belong to the inventor, and any transfer of ownership (“assignment”) must be in writing to be effective. Rather than requiring employees to sign assignment agreements for each patent application filing, employers sometimes rely on employment agreements and handbooks to establish ownership in intellectual property created by an employee. Employers often provide employment agreements with assignment clauses that are intended to give the employer rights in inventions made by the employee during the period of employment. These assignment clauses are often treated as mere boilerplate, yet the precise wording of these clauses can have major impacts on the effectiveness and limitations of any assignment.

Ensure that you have an Assignment and not a mere promise to assign

When drafting an agreement to have an employee assign future inventions, it is vital that the language used in an assignment clause states a present-tense, actual assignment. Phrases such as “hereby assign,” “agrees to grant and does hereby grant,” or that inventions “shall belong” to the employer and employee “hereby conveys, transfers and assigns” have been deemed by the courts to be effective to transfer ownership of a future invention without the need for any subsequent agreement. Ownership effectively transfers immediately, once the invention has been made. Assignment clauses that use future tense language, on the other hand, generally will require an additional agreement to result in a transfer of ownership of the invention, and any intellectual property (“IP”) covering the invention. Terms such as “will assign,” “agree to assign,” “will be assigned,” and the like, have been found by numerous courts to constitute nothing more than a promise or contract to assign an invention in the future, but not to serve as an actual assignment.

In addition to the wording used in the assignment clause, the language of any carve-outs should also be scrutinized. Agreements may contain a carve-out clause to exclude a new employee’s prior inventions from being assigned, or to prevent assignment of inventions unrelated to the employee’s work from being swept into the assignment provision. A broad, non-specific carve-out clause may prevent an employee agreement from automatically assigning inventions of that employee, even where the assignment clause includes the proper “hereby assign” type of language, because this leaves open the possibility that an invention is not subject to the assignment clause. This contrasting language may create an ambiguity in the employment agreement that subjects it to construction under state law, which in turn may allow for the employee to introduce extrinsic evidence, such as conversations that took place during employment negotiations, to defeat the automatic assignment. While patent assignment provisions are governed by Federal Circuit law, resolution of contractual ambiguities is governed by state law, which varies considerably regarding the admissibility of such extrinsic evidence.

Failure to obtain an automatic assignment can have negative consequences

An assignment clause that is deemed ineffective to automatically transfer ownership of an invention can create significant problems for an employer. In such circumstances, a business would not have standing to bring a patent infringement suit until it has taken the necessary steps to obtain a valid assignment. This may require the filing of a breach of contract claim against the employee to require fulfillment of the contractual obligations, including execution of assignment documents. In the interim, infringers could continue practicing the invention; and if the infringing activity has gone on long enough, the six-year statute of limitations may prohibit full recovery of damages. Further, if an inventor/employee has made only a promise to assign, and instead transfers ownership to a third party who lacks knowledge of the assignment obligation, that second transfer of ownership may well prevail, leaving the original employer with no exclusionary rights at all.

Ineffective assignment provisions can affect more than just litigation. Businesses and investors typically conduct IP due diligence when entering into transactions involving the investment in or sale of IP assets, company divisions or entire entities, and any weaknesses in assignment provisions may affect the perceived value of the IP assets and/or business being considered.

Do not count on the “Hired-to-Invent” doctrine to result in ownership of employee inventions

Some employers do not require employees to sign an agreement containing an assignment of inventions because they believe that they automatically own inventions that they paid someone to create. Under the “hired-to-invent” doctrine, this will only occasionally be correct. Employees or contractors hired (and paid) specifically to create a particular invention or to solve a particular problem may be deemed to have implicitly assigned their rights in the invention to the employer. This is a highly fact-based determination, however, and applies only to inventions created in response to the specific thing the employee was hired to do. A mere title of “researcher” or even “inventor” will not, standing alone, suffice to ensure ownership of inventions by the employer. Further, until a court has ruled one way or the other, an employer relying on this doctrine will not have any certainty in its rights to the invention. Should the court rule against the employer, it would lose the exclusionary rights it believed it possessed and may face an infringement lawsuit from the employee or anyone to whom the employee may have assigned the invention/patent rights.

Absent an effective assignment, an employer may obtain limited “shop rights” in inventions made using the employer’s time, materials, facilities or equipment. Shop rights take the form of an implied license to practice the invention, precluding the employee from obtaining damages or injunctive relief on a patented invention. Shop rights are limited, however, and do not allow the employer to prevent others from competing by practicing the invention. Further, shop rights cannot be transferred via license or assignment, effectively devaluing the IP assets and, perhaps, the company.

Other Considerations

In addition to having the proper “hereby assign” language, employment contracts should ensure that inventions , rather than just patents or patent applications, are subject to the assignment clause. Language stating that all inventions, improvements, discoveries, and the like, whether or not patentable or copyrightable, are subject to the assignment, ensures that information that could be protected through other regimes, such as trade secrets, automatically become the property of the employer.

Intellectual property has taken on an ever-increasing role in determining the value of a business. A company’s ability to develop and protect its intellectual property is a key factor in its future success. Given this, it is important that businesses recognize that assignment provisions of employment agreements are not mere boilerplate, but instead may be one of the most important legal provisions that ultimately can impact not only an employment arrangement, but the value of the business itself.

• Peter C. Lando
• Thomas P. McNulty

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