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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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Patent Assignment Agreement - Template - Word & PDF

Country: United States

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Patent Assignment Agreement

Jump to section, what is a patent assignment agreement.

A patent assignment agreement is a document that transfers the rights to an invention or idea from one person or company to another. This agreement includes all necessary information such as the name and contact information for both parties, any limitations on what can be done with the patented technology, and how much money should change hands if someone licenses the patent.

Patent assignment agreements are not always needed when selling a product or process, but they need to be written if you want to protect your intellectual property (IP) rights and make sure no one else uses them without permission.

Common Sections in Patent Assignment Agreements

Below is a list of common sections included in Patent Assignment Agreements. These sections are linked to the below sample agreement for you to explore.

Patent Assignment Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.19 4 dex1019.htm PATENT ASSIGNMENT AGREEMENT , Viewed December 14, 2021, View Source on SEC .

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Meet some of our Patent Assignment Agreement Lawyers

With over ten years of intellectual property experience, I’m happy to work on your contractual matter. I am very diligent and enjoy meeting tight deadlines. Drafting memoranda, business transactional documents, termination notices, demand letters, licenses and letter agreements are all in my wheelhouse! Working in a variety of fields, from construction to pharmaceutical, I enjoy resolving any disputes that come across my desk.

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.

Jeremiah C.

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.

Jason is a self-starting, go-getting lawyer who takes a pragmatic approach to helping his clients. He co-founded Fortify Law because he was not satisfied with the traditional approach to providing legal services. He firmly believes that legal costs should be predictable, transparent and value-driven. Jason’s entrepreneurial mindset enables him to better understand his clients’ needs. His first taste of entrepreneurship came from an early age when he helped manage his family’s small free range cattle farm. Every morning, before school, he would deliver hay to a herd of 50 hungry cows. In addition, he was responsible for sweeping "the shop" at his parent's 40-employee HVAC business. Before becoming a lawyer, he clerked at the Lewis & Clark Small Business Legal Clinic where he handled a diverse range of legal issues including establishing new businesses, registering trademarks, and drafting contracts. He also spent time working with the in-house team at adidas® where, among other things, he reviewed and negotiated complex agreements and created training materials for employees. He also previously worked with Meriwether Group, a Portland-based business consulting firm focused on accelerating the growth of disruptive consumer brands and facilitating founder exits. These experiences have enabled Jason to not only understand the unique legal hurdles that can threaten a business, but also help position them for growth. Jason's practice focuses on Business and Intellectual Property Law, including: ​ -Reviewing and negotiating contracts -Resolving internal corporate disputes -Creating employment and HR policies -Registering and protecting intellectual property -Forming new businesses and subsidiaries -Facilitating Business mergers, acquisitions, and exit strategies -Conducting international business transactions ​​ In his free time, Jason is an adventure junkie and gear-head. He especially enjoys backpacking, kayaking, and snowboarding. He is also a technology enthusiast, craft beer connoisseur, and avid soccer player.

I am the Founding Member of Evan Ficaj Law Firm PLLC, and I am passionate about helping businesses launch, grow, and succeed. My law firm assists clients with business, contract, entertainment, IP, and estate planning matters.

We are business and immigration attorneys, committed to delivering compassion-driven and innovative legal solutions that better our clients' lives. Founded in 2019, Carbone Law provides legal services tailored to the unique needs of our clients. We pride ourselves in building a personable attorney-client relationship and are dedicated to establishing a complete understanding of our client’s legal issues, so that we can develop an effective plan for achieving their desired results. Michael T. Carbone, Esq. started Carbone Law with the goal of delivering exceptional legal services to his community. At Carbone Law, Michael counsels individuals and small businesses on a variety of legal issues. Whether aiding families in building successful applications for immigration benefits or advising freelancers and business owners on contract, governance and related issues and the complexities of complying with federal, state and local laws, Michael is committed to building a lasting relationship with his clients.

New York Business litigation attorney with corporate, securities and contracts experience.

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License back

License back clause samples

8. Confidentiality. EdiZONE shall, from and after the Effective Date, take all commercially reasonable measures to preserve the confidentiality of any trade secrets and proprietary information included in the Incremental IP, and will treat the same as Confidential Information of Purple for purposes of Section 11 (Confidentiality) of the Assignment and License Back . In addition, each Party agrees to keep the terms of this Agreement, including but not limited to the amount of the Transfer Payment, confidential, and neither will disclose the same to any third party without the other Party’s consent; provided, however, that either Party may disclose the terms of this Agreement: (i) as reasonably necessary to comply with applicable laws, regulations, or securities exchange rules or to enforce its rights hereunder; (ii) in confidence to its business or legal advisors; and/or (iii) in confidence to its actual or prospective investors, acquirers, providers of capital, licensees, and/or assignees in order to advise them of the nature and extent of the Parties’ rights and obligations hereunder.

11/10/2020 (Purple Innovation, Inc.)

Retained Rights; License Back . The licenses granted to Foundational IP hereunder are subject to and contingent upon Company’s compliance with all of its obligations hereunder, including, but not limited to, the payment by Company to Flagship of all payments required under this Agreement, and further subject to rights hereby retained by Flagship and/or granted by Company to Flagship. Company hereby grants to Flagship a non-exclusive, royalty-free, fully paid, sublicensable (to Flagship Entities and service providers thereof) license to practice, and permit Flagship Entities to practice, the Foundational IP within the Licensed Field in the Territory solely to perform under the Managerial Agreement.

01/13/2021 (Sana Biotechnology, Inc.)

(g) Personal License Back . During the term of this Agreement, Enochian will grant the Consultant the nonexclusive, royalty-free, personal right to assign to any of its members who are medical doctors the right to use the intellectual property controlled by Enochian relating to HIV treatment in humans solely to treat patients in the personal practice of medicine by such members (the “Right to Use”).

09/30/2019 (Enochian Biosciences Inc)

Section 2.1 Present Assignment and License Back . It is intendedby Borrower that this Assignment constitute a present, absolute assignment of the Leases, Rents, Lease Guaranties and Bankruptcy Claims, and not an assignment for additional security only. Nevertheless, subject to the terms of this Section 2.1 and the terms of the Loan Agreement and the Cash Management Agreement, Lender grants to Borrower a revocable license to collect, receive, use and enjoy the Rents, as well as any sums due under the Lease Guaranties. Borrower shall hold the Rents, as well as all sums received pursuant to any Lease Guaranty, or a portion thereof sufficient to discharge all current sums due on the Obligations, in trust for the benefit of Lender for use in the payment of such sums.

03/25/2020 (Lodging Fund REIT III, Inc.)

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Home of the Litigation Quality Patent

The main difference between assigning your intellectual property rights to another person or entity vs. licensing them to use your intellectual property is that in an assignment, ownership does not stay with the original owner, but goes to the assignee. In a licensing agreement, the licensee is granted the use of the intellectual property, but the ownership stays with the original holder of the property rights, whether a copyright, a trademark, or a patent. Which arrangement is better for your particular situation can be complicated to figure out. Let one of our experienced patent attorneys at Thompson Patent Law help you make the decision and draw up the kind of agreement that will work best for you. Call our office today at (512) 649-1046.

What is an Assignment Agreement?

An assignment agreement is a legal contract that transfers the ownership of intellectual property rights—usually a copyright, patent, or trademark—to another person or entity. The original owner of the rights does not retain any interest in the intellectual property in question. Assignments must be registered with the United States Patent and Trademark Office (USPTO) in most cases. Assignments carry a one-time, lump-sum payment at the time the agreement is signed and recorded. The original owner does not get any ongoing income from the intellectual property that they have assigned to another party. Assignments agreements are enforceable in court if they have been executed and recorded properly.

What is a Licensing Agreement?

In a licensing agreement, the original owner of the intellectual property rights does retain an interest in the intellectual property in question. The agreement may include a time limit on the licensee’s use of the product or idea, and usually includes some kind of ongoing payments to the owner of the rights (the licensor). Profits are generally not guaranteed at any particular level but may be set out as a percentage of the recipient licensee’s profits. In some licensing agreements, the licensor retains the right to use the property simultaneously, and in other agreements, the licensee is granted exclusive rights for a period of time.

Am I Better Off with a Licensing Agreement or an Assignment?

Each situation, each business, and each intellectual property rights owner is different. The best way to determine what the right course for you might be is to talk with an experienced professional intellectual property attorney . The lead attorney at Thomson Patent Law, Craige Thompson, has over 20 years of experience dealing with intellectual property rights issues and can give you the solid legal advice you need to decide whether to license or assign your hard-won intellectual property rights. Call us today to get your questions answered at (512) 649-1046.

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§ 9:14. Patent assignment and license back agreement | Secondary Sources | Westlaw

§ 9:14. Patent assignment and license back agreement

Techlic § 9:14 multimedia and technology licensing agreements assignment agreements  (approx. 12 pages).

Original text

What Are Patent Assignments? Patent Licensing?

A patent is a form of Intellectual Property.  It may be sold (assigned) or licensed to somebody else.

What Is A Patent Assignment?

Patent law provides for the transfer or sale of a patent by a written agreement called an " assignment " that can transfer the entire ownership interest in the patent. The assignee , when the patent is assigned to him or her, becomes the owner of the patent and has the same rights that the original patentee had.

Patent law also provides for the assignment of a part interest, that is, a half interest, a fourth interest, etc., in a patent.

You can also grant an assignment that is only for a particularly specified part of the United States.

Use a Notary Public

An assignment, grant, or conveyance of any patent or application for patent should be acknowledged before a notary public or officer authorized to administer oaths or perform notarial acts. The certificate of such acknowledgment constitutes undisputable evidence of the execution of the assignment, grant, or conveyance.

Recording of Assignments

The US Patent Office records assignments, grants, and similar instruments sent to it for recording, and the recording serves as notice. If an assignment, grant, or conveyance of a patent or an interest in a patent (or an application for patent) is not recorded in the US Patent Office within three months from its date, there can be no subsequent purchaser(s).

Assignments - Correct Style

Any written document should identify the patent by number and date. The name of the inventor and title of the invention as stated in the patent should also be given. An written document relating to a patent application should identify the application by its application number and date of filing, the name of the inventor, and title of the invention as stated in the application should also be given.

Sometimes an assignment of an application is executed at the same time that the application is prepared and before it has been filed in the Office. Such assignment should adequately identify the application, as by its date of execution and name of the inventor and title of the invention, so that there can be no mistake as to the application intended.

Assignee - Listed on Patent

If an application has been assigned and the assignment is recorded, on or before the date the issue fee is paid, the patent will be issued to the assignee as owner. If the assignment is of a part interest only, the patent will be issued to the inventor and assignee as joint owners.

Joint Ownership - Patent Licensing

Patents may be owned jointly by two or more persons as in the case of a patent granted to joint inventors, or in the case of the assignment of a part interest in a patent. Any joint owner of a patent, no matter how small the part interest, may make, use, offer for sale and sell and import the invention for his or her own profit provided they do not infringe another’s patent rights, without regard to the other owners, and may sell the interest or any part of it, or grant patent licensing to others, without regard to the other joint owner, unless the joint owners have made a contract governing their relation to each other. It is accordingly dangerous to assign a part interest without a definite agreement between the parties as to the extent of their respective rights and their obligations to each other if the above result is to be avoided.

Patent Licensing

The owner of a patent may grant licenses to others. Since the patentee has the right to exclude others from making, using, offering for sale or selling or importing the invention, no one else may do any of these things without his/her permission. A patent licensing agreement is in essence nothing more than a promise by the licensor not to sue the licensee. No particular form of license is required; a license is a written contract and may include whatever provisions the parties agree upon, including the payment of royalties, etc.

The drawing up of a license agreement (as well as assignments) is within the field of an attorney at law familiar with patent matters and/or Intellectual Property. A few States have prescribed certain formalities to be observed in connection with the sale of patent rights.

If you have a patent you can attempt to license your patent rights.  A license  gives permission to the Licensee to use the patent in return for a fee, or royalties.

Create a list of potential manufacturers who may be interested in your product.

Find manufacturers by looking in stores and magazines for similar products. Visit product related tradeshows. Your local library should have great reference material on manufacturers. Use online manufacturer databases such as the Thomas Register to search for companies that make a product like yours. You can do an Internet search for manufacturers by using the keywords of your product.

Send a Marketing Letter

First, the owner of the patent (licensor) must determine if it will grant an exclusive or non-exclusive license. A patent license is a waiver by the licensor of the right to exclude the licensee from practicing under the patent rights. Licensees would prefer to obtain an exclusive license if possible. In addition to the commercial disadvantages of a non-exclusive license, a non-exclusive licensee acquires no affirmative rights with respect to the enforcement of the licensed patents. Unless the non-exclusive license specifically provides some protections, the licensor has no duty to protect the non-exclusive licensee’s interests in the event of patent infringement, abandonment of the patent, or other licensee’s with better terms. The licensor may want to preserve the ability to license to several licensees in order to ensure that the patent rights are fully utilized, instead of tying the patent rights to just one entity. One of the biggest fears of a licensor is that the licensee will not fully commercialize the intellectual property and the licensor is left with nothing to show for its patent efforts. As discussed below, the licensee can address these fears by including certain provisions, such as minimum royalties or milestones that the licensee must meet, or by limiting the license to a particular field of use. An exclusive license provides the licensee the promise that the licensor will not practice under the patent, and that the licensor will not grant licenses to any other parties. No reservation of rights in the licensor is implied in an unequivocal exclusive license, although many licensees may wish to specifically state that no such rights are reserved for the licensor to practice under the patent rights. There are some authors who believe that an exclusive license does not in and of itself preclude the patent owner from issuing any more licenses and they feel that the license should expressly state this fact. An exclusive license does not imply, however, that the licensor has not granted any non-exclusive licenses prior to this grant of an exclusive license, and the license agreement should specifically provide a representation that the licensor has not issued any prior licenses. In addition, an exclusive license does not alone grant a right to sublicense. This right must be separately granted. In order to obtain an exclusive license, the licensee may have to agree to a minimum annual royalty provision. The licensee may expect to commercialize the patent rights in the very first year of the license, or more likely, after a period of time. A minimum royalty provision typically provides that if the royalties do not total a set minimum amount after an agreed upon commercialization period, the licensor may terminate the license agreement or the licensee must pay the difference in what the actual royalties paid and the set minimum annual royalty amount. The alternative to the termination provision, which is extremely severe to a new company trying to commercialize under the patent rights, is to convert the license agreement to a non-exclusive license, unless the licensee pays the minimum royalty amount. The licensor may also attempt to ensure that the exclusive licensee commercializes the patent rights by a general "best efforts" clause. Both parties should avoid this clause in favor of more objective standards. The courts may interpret such a clause to require the dedication of all of the licensee’s resources towards exploitation of the licensed patents, when realistically most licensees will have a number of other significant business endeavors to support. Instead, the parties may rely on the minimum annual royalty provision to ensure commercialization efforts or strive to place objective milestones that the licensee will have to meet. The milestones can be anything definitive that the licensee feels it can realistically meet in the stated time frame. For example, the licensee may be required to obtain an approved New Drug Application with the Food and Drug Administration by a certain date. Licensees should be aware that there is an implied obligation to exploit the licensed patent on the part of an exclusive licensee. An exclusive license may also be limited to a field of use as a way to limit the licensor’s risk of licensee non-exploitation. Under this approach, a licensor can grant exclusive rights to different licensees in distinct markets or application areas. Care must be taken in defining the field of use in these arrangements. The licensor may want to retain rights to practice the patent rights and insert a reservation of rights in grantor clause in the license agreement. Generally such rights are limited to noncommercial research uses, allowing the exclusive licensee the ability to fully commercialize under the patent rights. Or the licensor may have granted prior non-exclusive licenses to other parties and therefore it needs to reserve some rights in recognition of these licensees. It is also important in patent license agreements to address the issue of improvements. Improvements can be broadly defined as anything that does the same function as the licensed invention in a better or cheaper way; or a modification of a part or process in the invention; or anything that would perform a similar function as the licensed patent and that would infringe one or more of the claims of the licensed patent. Either the licensor or the licensee may be capable of creating an improvement and the parties should carefully consider if they want the benefit of the improvement. If so, then there should be a grant of the improvement to the other party, similar in scope to the grant of the main patent rights. The issue of royalties tends to be the most contentious in the patent licensing negotiation process. The licensee wants to be sure that the costs in the commercialization effort are recouped, while the licensor wants to recover its patent costs and reap the rewards of the invention. Both parties try to look into the crystal ball to see what the market will bear, what the costs to produce will be, and set a realistic royalty rate that allows for a reasonable profit margin. The parties should look to the market place and what other royalty rates have been negotiated for similar products to be able to set some reasonable rate for their invention. The base for royalty calculations should reflect the licensee’s use of the patent rights and also be easily subject to accounting and reporting. Sometimes licensors desire to use the licensee’s profit on the licensed product as the royalty base, while licensees are usually reluctant to open their books to such inspection. The costs of raw materials may also be considered but as these costs tend to fluctuate, without regard to the value of the licensed product, they may not be appropriate as a base. Usually the net sales price is used as the base, after deduction for trade and quantity discounts, but before deductions of such other costs such as freight and commissions. Payment of royalties on the use of licensed products that are not sold but otherwise disposed (such as used by affiliates of the licensee) should also be addressed in the agreement. When considering the method of calculating royalties and royalty rates, it is important not to overlook the mechanics of reporting and payment due date obligations. The agreement should clearly specify when reports are required to be made and when royalty payments are due. Payment needs to be made in conjunction with a quarterly or semi-annual accounting report on the royalties received by licensee. Licensors usually reserve the right to annually audit the records, at their expense, to be sure they are receiving the proper amount of royalties. Licensors are advised to also include a provision to audit for a period of time after termination of the license to be sure they have received all the royalties that are due and owing to them. Most license agreements provide that licensee shall pay for the audit if there is an underpayment of a certain percentage.

The US Patent Office will publish in its official gazette a notice that your patent is available for licensing or sale for a fee.

For additional information about patents, visit the website of the Patent and Trademark Office, www.uspto.gov .

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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

Technology and IP Law Glossary

License-back clause, provision.

A provision in a contract, assignment or license agreement that requires the recipient of intellectual property rights (e.g., the licensee) to license back to the grantor or licensor certain rights to practice the intellectual property or improvements to the intellectual property.  Thus a license back provision might cover:

• In an assignment of a patent, a license back of certain field of use or territories to the assignor;
• In a patent license, a provision requiring the licensee to license to the licensor improvements to the intellectual property.

License back provisions may raise issues in competition law and are generally addressed in competition licensing guidelines .  They are particularly sensitive if they are exclusive license-back provisions.

In intellectual property licenses involving standards , it is not unusual to require licensees to license back to the licensor (or the standard setting group), on a non-exclusive basis, with rights to sublicense, any essential intellectual property, in particular patents, necessary to practice the standard as it may be evolved. This is done so as to preserve the integrity of the standard. The term grant-back clause is a near synonym, but may suggest an assignment . Non-exclusive license-back clauses raise fewer competition issues than grant-back clauses.

Related Terms

• Advisory Opinion
• Antitrust Guidelines
• Block Exemption
• Minimum Viable Market/Audience [Scale]
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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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