I am about to get a patent for a process. I wonder what are the pros and cons of getting it in my name as an individual? Or in the name of my small company (INC) that I own?
I will appreciate your opinion on this. Thanks folks.
A patent application in the US must be filed in the name of the inventor(s). While the inventor is the applicant, the application may be assigned to another person or company. Employment contracts typically include provisions requiring that the employee assign inventions created within the scope of employment.
In addition to control issues (after you assign the patent to the company, if you lose control of the company, then you lose control of the patent), there may be tax implications for keeping the patent in your name or assigning it to your company. The pros and cons for your particular situation should be discussed with your own attorney, and not on this public forum. Good luck.
This answer is for informational purposes only. It is not intended as specific legal advice regarding your question. The answer could be different if all of the facts were known. This answer does not establish an attorney-client relationship.
Under US law, only the inventor (i.e. persons and not corporations) can file for a patent. In one typical arrangement, the inventor files and assigns the application to a company. Many employment contracts include a duty to assign IP to the company. There are really no pros or cons other than who has the rights to the IP and who decides what to do with it.
Mr. Durham is right, that only individuals (or in the rare case, a representative of an individual like an estate or conservatorship) are named as inventors. You have to have the patent itself in your name. If you do not have a work for hire agreement with your company that in essence "automatically" assigns it to the company. If others have an ownership interest in the company, and substantial company assets were used to develop the patented concept, the company's other owners would arguably have a claim that the company should have the patent, so that they can enjoy some of the benefits of what was developed using company resources. If you are the only owner of the company, then what is best for you may depend on a lot of factors that should be discussed with your own counsel in a private forum.
You really need to consult with a lawyer about your particular specifics, but in general there are a few issues that you might want to consider that if you assign the patent, it will become a company asset. As a result, although you own the company, later-arising issues like transfer of an interest in company, involuntary or voluntary bankruptcy, someone placing a lien on the company and/or its assets, etc. could wind up divesting you of that patent. An alternative would be that you might want to give a license to the company. In addition, if you later want to transfer the patent back to you from the company, there may be tax implications. On the flip side, if you intend to seek investment, it will be harder if the company only has a license as opposed to the patent, so a potential investor might be less willing to invest.
Just a few (non-exhaustive) things to consider and I am sure my colleagues who add answers will have additional items to add,
There can be some liability, insurance and tax considerations of assigning a patent application and ultimately the patent to a company to "hold" the patent in lieu of the individual inventor.
On the other hand, if the company (hopefully not in your case) ever bankrupts and dissolves, now you have a situation in which a bankruptcy court is deciding where the patent lands (who will own) or if no bankruptcy involved, the patent is in the name of a non-existent company.
It'd be worth spending an hour with a competent intellectual property attorney to discuss these issues.
Your question is very important insofar as ownership and liabilities. It does not pertain to IP per se but to the protection of IP as an asset.
While it is true that the inventor applies for the patent, the issue is not inventorship bu ownership.
I usually recommend keeping IP assets (patents, trademarks, etc) separately from the company, in case there are liabilities, the IP assets cannot be attached.
In that case the IP assets are licensed to the company and the company pays the owner a royalty. That is usually not a problem when the owner is the same as the inventor.
There is a problem when the invention was made with funds of the company and with the expectation that all assets be kept with the company. In that case I will still have a separate company to hold the IP assets, even though the second company may be partially owned by the first.
The key element is to insulate the IP assets from liabilities created by the normal operation of a company.
Ask your IP attorney whether s/he has corporate law experience, otherwise check with a corporate/business attorney, or contact me.
I am neither your attorney, nor my answers or comments in AVVO.com create an attorney-client relationship with you. You may accept or disregard my free advice in AVVO.com at your own risk. I am a Patent Attorney, admitted to the USPTO and to the Florida Bar.
There are lots of issues.
First, if you are not the sole owner of the company, then you should be concerned about transferring your rights in the invention to the company such that you would then lose exclusive control over the patent. Consider your relationship with your co-owners, if there are any. It's much harder to transfer the patent back to you after it is co-owned by others.
Second, consider bankruptcy. If your company doesn't do well and the company has to file bankruptcy, are you willing to lose your patent to your creditors? A license to the company could have a terminate-on-bankruptcy provision.
Third, if you have to sue someone for infringing the patent, the actual owner of the patent has to bring the suit. If you still own the patent as the inventor, then you have to file suit. If the company owns the patent, then the company brings suit. You likely don't want to be personally named in a lawsuit either as a plaintiff or defendant.
Fourth, damages. One of the measures of infringement damages is lost profits. If you own the patent personally, but your company is making the profits off the patented product, then you don't personally have a lost profits damages theory. This is one good reason for the company to own the patent.
There are many other issues and you should really sit down with an actual patent attorney to discuss them.
You've already received some very good and useful information -- which you should take with you to your own intellectual property attorney to discuss.
One other nugget: You live in a community property state. If you're married and invented and applied for the patent while married -- and you have no obligation to assign your invention or patent to the corporation you own -- then your spouse has an ownership interest in the patent when [really, if] it is ever granted. For this reason you should speak with an intellectual property attorney licensed to practice in California [even though most of patent law is, generally, federal law].
A good case to read about this situation is Enovsys LLC v. Nextel Communications, Inc., 614 F. 3d 1333 (Fed.Cir.2010) [see http://goo.gl/rXvVh ]
The above is general information ONLY and is not legal advice, does not form an attorney-client relationship, and should NOT be relied upon to take or refrain from taking any action. I am not your attorney. You should seek the advice of competent counsel before taking any action related to your inquiry.
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