Patent Assignee

The patent assignee is the owner of the patent — the party that holds the right to exclude others from making, using, selling, offering for sale, or importing the patented invention: INVENTOR vs. ASSIGNEE: under 35 U.S.C. § 115, a patent is initially owned by the inventor(s); in most commercial contexts, inventors immediately assign their rights to their employer under an employment or invention assignment agreement; the assignee then becomes the owner of the patent application and resulting patent; ASSIGNMENT REQUIREMENT: a patent assignment must: (a) be in writing (35 U.S.C. § 261); (b) be signed by the assignor (the party giving up rights); (c) identify the patent or application being assigned; (d) state that ownership is being transferred (not merely licensed); EFFECTIVE DATE: a patent assignment is effective between the parties as of its execution date, even before it is recorded at the USPTO; but recording is required to protect the assignee's rights against subsequent good-faith purchasers; USPTO ASSIGNMENT DATABASE: patent assignments are recorded through the USPTO's Assignment Center (previously EPAS — Electronic Patent Assignment System); recorded assignments appear in the USPTO's public assignment database; AUTOMATIC ASSIGNMENT (AIA): after the AIA, a patent applicant need not be the inventor — an entity to which the inventor has assigned (or is obligated to assign) the application can file directly on the assignee's behalf; previously, inventors always had to be named as the original applicant; SUCCESSION: the AIA also allows an employer to have patents issued directly to the employer as applicant (not the individual inventor), simplifying the chain of title for large companies with many employee inventors.

Recording patent assignments at the USPTO protects the assignee's rights and provides public notice of ownership: RECORDING REQUIREMENT: 35 U.S.C. § 261: an assignment is void against any subsequent purchaser or mortgagee who, for valuable consideration, did not have notice of the prior assignment, UNLESS the earlier assignment is recorded in the USPTO within 3 months of its date OR before the subsequent purchaser purchases; WHAT RECORDING DOES: (a) CONSTRUCTIVE NOTICE: a recorded assignment puts the world on constructive notice that ownership has changed; a subsequent purchaser cannot claim they were unaware of the prior assignment; (b) PRIORITY AGAINST SUBSEQUENT PURCHASERS: if the same patent is purportedly assigned to two different parties, the first assignment recorded at the USPTO generally prevails (with some nuance); (c) PUBLIC RECORD: title searches on patents rely on the USPTO assignment database; lenders, licensees, and potential purchasers check this database before transacting; HOW TO RECORD: submit the assignment document (or a copy) to the USPTO Assignment Center; pay the current recording fee; the assignment is indexed by patent number, application number, and assignor/assignee name; REEL AND FRAME: each recorded assignment is given a reel and frame number that appears in subsequent filings to identify the recorded document; ASSIGNMENT CHAIN: for patents that have been bought and sold multiple times, the assignment chain traces every transfer from the original assignor (typically the inventor) to the current owner; a break in the chain creates title defects; OWNERSHIP DISPUTES: if an inventor argues they did not properly assign a patent (e.g., they allege the employment agreement is invalid or the assignment was procured by fraud), an action to correct inventorship or ownership must be brought; Stanford v. Roche (S.Ct. 2011): an explicit assignment ('I hereby assign') trumps a mere obligation to assign ('I will assign'); a promise to assign in the future does not automatically transfer ownership.

Co-ownership of a patent creates a complex ownership structure with important implications for licensing and enforcement: HOW CO-OWNERSHIP ARISES: (a) multiple inventors from different companies collaborate; if one inventor assigns to Company A and another assigns to Company B, and both are named inventors, the patent is co-owned by A and B; (b) a patent is purchased and sold in fractional interests; (c) a patent assignment is made to joint assignees as tenants-in-common; RIGHTS OF CO-OWNERS (35 U.S.C. § 262): each co-owner can: (a) USE the patent independently (make, use, sell the patented invention); (b) LICENSE the patent to third parties WITHOUT the consent of other co-owners; (c) receive royalties from its own licenses without sharing with the other co-owners; each co-owner CANNOT: sell or assign its interest without the other's consent (tenants-in-common rule); THE LICENSING PROBLEM: the fact that each co-owner can license independently without sharing royalties is a significant commercial problem; a licensee who needs permission from only one co-owner effectively gets a license for free (they don't need the other co-owner's permission — the other co-owner can independently license them for free); this substantially reduces the leverage of a co-owned patent in licensing negotiations; ENFORCEMENT PROBLEM: all co-owners must join an infringement lawsuit; if one co-owner refuses to join, the other cannot sue; Ethicon v. United States Surgical (Fed. Cir. 1998): a co-owner can defeat an infringement lawsuit simply by refusing to participate; this is a powerful veto right; CO-OWNERSHIP AGREEMENTS: to prevent these problems, co-owners should enter an IP co-ownership agreement: (a) allocating who has the right to license, and on what terms; (b) requiring one party to control enforcement decisions (and fund litigation); (c) revenue-sharing provisions; (d) right of first refusal if one party wants to sell their interest.

Patents are valuable assets that are regularly transferred in commercial transactions — each transaction type has specific requirements and risks: M&A ASSIGNMENT: in an asset purchase, patents must be specifically identified and assigned; a general 'all assets' transfer does NOT automatically transfer patents without recordation; separate patent assignment agreements are required for each patent or portfolio; due diligence should identify: all patents owned; patents assigned but not yet recorded; licenses granted that survive the sale; IN STOCK ACQUISITIONS: when the entire company is purchased (stock deal), patents stay with the target entity — no separate assignment is needed because the entity continues; however, if the target is subsequently merged into the acquirer, an assignment is needed; SECURITY INTERESTS IN PATENTS: patents can be pledged as collateral for loans; the security interest is created by an agreement under Article 9 of the UCC; but for perfection (making the security interest effective against third parties), recording in the USPTO Patent Assignment Database is required for patents; Cybernetic Services v. Matsushita (9th Cir. 2001) and related cases; BANKRUPTCY: in bankruptcy, patents are assets of the estate; the trustee or debtor-in-possession can sell patents to generate funds for creditors; patents are sold 'free and clear' of most encumbrances; however, licensees retain rights under § 365(n) (see Mission Product Holdings); INVOLUNTARY TRANSFER: a court can order the involuntary assignment of a patent as part of a judgment; this is rare but occurs when a court finds that a party was obligated to assign a patent (e.g., under an employment agreement) and failed to do so; GOVERNMENT MARCH-IN RIGHTS (BAYH-DOLE): for patents developed with federal funding, the government retains march-in rights to license the patent if the patent owner fails to commercialize the technology.

Patents can be assigned in part — either as a share of ownership or as rights in a defined geographic or temporal scope: WHAT CAN BE PARTIALLY ASSIGNED: (a) UNDIVIDED INTEREST: an inventor can assign 50% of a patent, creating a co-ownership relationship; both co-owners hold undivided interests in the entire patent; (b) TERRITORIAL INTEREST: an assignment can be limited to a specific geographic area; example: 'all rights to the patent in the territory of Germany'; effectively a license but treated as an assignment for that territory; (c) FIELD OF USE: an assignment can cover only rights in a specific field of use; but courts have sometimes treated field-of-use 'assignments' as licenses rather than true assignments, affecting standing to sue; FRACTIONAL INTEREST SALES: a patent owner can sell 50% of a patent (as an undivided interest) to raise capital; the buyer becomes a co-owner; all the § 262 co-ownership rules apply; INVENTOR COMPENSATION PROGRAMS: many universities and research institutions assign patents to a technology transfer office but contractually obligate the institution to share royalties with the inventor (typically 30-50% of net royalties); this is NOT a partial patent assignment — the institution owns 100% of the patent; the revenue sharing is a contractual obligation; ASSIGNMENT OF PATENT RIGHTS IN PATENT POOLS: when a patent pool is formed, the contributing company does not assign the patent to the pool administrator; instead, the company grants a license to the pool administrator to sublicense; the contributing company retains ownership; ASSIGNMENT VS. LICENSE: many arrangements that LOOK like partial assignments are actually licenses; the difference is whether title (ownership) transfers or only a right to use; title transfer = assignment; right to use = license.