Patent Ownership

Under 35 U.S.C. § 101 and § 116, a patent is initially owned by the inventor(s) — the person or persons who conceived the claimed invention. This is a fundamental principle: patent rights vest in the individual who conceived the novel idea. Even if an employer paid for the research, provided the lab, or directed the general area of investigation, the initial legal title to the resulting patent belongs to the human inventor(s). If there are multiple inventors (joint inventors), each joint inventor owns an undivided interest in the entire patent — meaning each can independently license the patent (though not without the others for an exclusive license), and each can sue for infringement without joining the others, subject to accounting obligations. TRANSFER: initial inventor-owned rights are then transferred — by written assignment — to employers, investors, or other parties. Without a valid, written assignment, an employer or other party does NOT own the patent, even if they funded the research. Exception: government employees; certain federal funding agreements under the Bayh-Dole Act (which governs federally funded inventions and gives the funding agency specific rights).

An employer owns an employee's invention in three primary circumstances: (1) WRITTEN ASSIGNMENT AGREEMENT — the most common and reliable basis; the employee signs an employment agreement (or a separate IP assignment agreement) stating that inventions conceived during employment that relate to the employer's business are assigned to the employer; these agreements are standard in technology companies, pharmaceutical firms, and research institutions; (2) HIRED TO INVENT — even without a written assignment agreement, if the employee was specifically hired to invent or to solve a specific technical problem, courts may hold that the invention is owned by the employer by implication; the classic example: an engineer hired specifically to design a new type of engine who invents a new engine design — the employer likely owns that invention; (3) SHOP RIGHT (see below). LIMITS ON EMPLOYEE ASSIGNMENT CLAUSES: several U.S. states — including California (Cal. Lab. Code § 2870), Delaware, Illinois, Minnesota, North Carolina, Washington — restrict employers' ability to claim employee inventions; these state laws generally void assignment clauses that reach inventions: (a) developed entirely on the employee's own time without using employer's equipment, supplies, or trade secrets, AND (b) that do not relate to the employer's current or reasonably anticipated business. BEST PRACTICE: technology employers should have all employees (and often contractors) sign IP assignment agreements at the start of employment; without such agreements, ownership disputes are expensive and uncertain.

The shop right doctrine is an implied, non-exclusive, royalty-free license that an employer receives to use an employee's patented invention when the employee used the employer's resources, time, or facilities to develop the invention — even if the employee retains ownership of the patent. STANDARD: The leading Supreme Court case is United States v. Teets v. Chromalloy Gas Turbine Corp. (also traced to Standard Parts Co. v. Peck, S.Ct. 1924 and Teets v. Chromalloy Gas Turbine Corp., Fed. Cir. 1996). REQUIREMENTS: (1) The invention was made during the employee's employment; (2) The employee used the employer's time, materials, or facilities in making the invention; (3) The employer did not have a written assignment agreement covering the invention. SCOPE: The shop right is: non-exclusive (the employer cannot sub-license and cannot exclude others); royalty-free (no compensation to the employee); personal to the employer (cannot be transferred in most circuits). RESULT: the employee/inventor owns the patent and can license it to others (including competitors); the employer simply retains the right to use the invention without paying the employee. Shop right is a limited remedy — employers should always use written assignment agreements rather than relying on this doctrine.

When two or more inventors contribute to the conception of a claimed invention, they are joint inventors and each owns an undivided interest in the entire patent. Key joint ownership rules under 35 U.S.C. § 262: (1) INDEPENDENT LICENSING — each joint owner may make, use, sell, offer for sale, or import the patented invention WITHOUT the consent of, and WITHOUT accounting to, the other joint owner(s); each can independently license the patent to third parties; (2) NO CONSENT REQUIRED — unlike partnership or LLC law, a co-owner of a patent does NOT need the other owners' permission to license the patent, enter into commercial transactions, or otherwise exploit the patent; (3) ACCOUNTING OBLIGATION — while no consent is required, courts may impose an obligation to account to co-owners for proceeds from independently granted licenses; (4) INFRINGEMENT SUITS — all joint owners are generally required to join as co-plaintiffs in an infringement suit; a co-owner who refuses to join effectively prevents the other co-owner from suing; (5) CO-OWNER CANNOT BE SUED — a patent owner cannot sue a co-owner of the patent for infringement of that same patent. PRACTICAL IMPLICATION: the joint ownership rules make co-owned patents difficult to enforce and to license exclusively. To avoid these problems, joint development agreements should include provisions requiring all inventors to assign their interests to a single entity or establishing clear licensing rules between co-owners.

Patent ownership is transferred by assignment — a written document in which the patent owner (assignor) transfers their ownership rights to another party (assignee). Key requirements under 35 U.S.C. § 261: (1) WRITING REQUIRED — assignments of patents or applications must be in writing; oral assignments are not effective as to third parties; (2) SIGNED BY ASSIGNOR — the assignment must be signed by the patent owner or their authorized representative; (3) IDENTIFY THE PATENT — the assignment must identify the patent or application being assigned (by patent number or application number); (4) RECORDATION — to be protected against subsequent bona fide purchasers for value, the assignment must be recorded with the USPTO within 3 months of execution (or before the subsequent purchaser acquires); (5) PARTIAL ASSIGNMENTS — the patent owner can assign an undivided percentage interest (e.g., 50%) in the patent, creating a joint ownership situation. PRE-ASSIGNMENT AGREEMENTS: employment agreements that say 'Inventor hereby assigns to [Employer] all inventions made during employment' create an obligation to assign; the actual transfer may require a separate, specific assignment document per invention, or the employment agreement language may itself constitute the assignment (Stanford v. Roche, S.Ct. 2011 — 'will assign' creates a contractual obligation to assign; 'hereby assigns' constitutes a present assignment of future inventions). Stanford v. Roche: the Supreme Court held that Bayh-Dole Act does not automatically vest title in universities — the inventor must still execute an assignment.