How do you make sure that your business owns your patent?
If You Are a Sole Proprietor …
If you are the sole inventor and owner of your invention and you operate as a sole proprietor, your personal and business affairs are essentially one and the same. There is no need to transfer ownership to your business. You will personally own your invention and any money you make from it.
If You Are Not a Sole Proprietor
However, if you’ve formed a corporation, partnership (general or limited), or limited liability company (LLC) to develop and/or exploit the invention, you’ll ordinarily transfer ownership of your invention to the business entity you’ve formed. If you’re the only owner of this entity—that is, you’ve formed a one-person corporation or LLC—such a transfer is little more than a legal formality, since you own the entire corporation or LLC. However, if you’re in a partnership or share ownership of a corporation or LLC with one or more people, you’ll be effectively giving part ownership of your invention to your fellow business owners—that is, they will be co-owners of an entity that owns your invention.
Note that if you’ve formed a corporation and are its employee, the employee ownership rules discussed in this article above will apply. Moreover, if you’re an officer or director of a corporation, you may have a fiduciary duty to assign your invention to the corporation. This may be so even if you have no duty to assign your invention to the corporation under patent ownership rules.
Learn more about Who Owns a Patent.
If the invention is patented, any assignment must be recorded with the U.S. Patent Office (USPTO). To record it, you must send the USPTO a copy of the signed, notarized assignment with a completed USPTO cover sheet and fee. The form (PTO-1595) can also be downloaded directly from the USPTO website and the assignment can be recorded electronically. Click here for current fees per recorded patent assignment. (Assignments can also be recorded electronically.) You can learn more about recording assignments at the USPTO website. To record the assignment by mail, send the cover sheet and assignment to:
Commissioner of Patents and Trademarks
Washington, D.C. 20231
Now, as a result of passage of the America Invents Act (AIA), the assignee (the person or company to whom the inventor assigned rights) can now be listed as a the patent applicant (the “obligated assignee”). Although proof of the assignment is not required at the time of filing, the assignment document must be filed by the time that the issue fee is due for the application.
For More Information
Portions of this article are derived from What Every Inventor Needs to Know About Business & Taxes by Attorney Stephen Fishman.
For assistance with the preparation and filing of a provisional patent application, see Nolo’s Online Provisional Patent Application.