Patent Attorney and Founder
The short answer is, YES!
But, there are nuances. I know, a classic, “yes, but”…
In this article, I’ll explain as clearly as I can, the different ways in which people can have an ownership interest in a patent asset, and more importantly clear up any confusion that arises between inventorship and ownership.
Part One: Inventorship Doesn’t Always Mean Ownership
There are a few things to consider in this step, and it is to make sure that there will not be any other person or entity that contributed to the invention or concept that should be named as a Co-Inventor (see below).
Just because you have brought about the invention by fabricating a prototype, doesn’t mean you are the inventor.
It is the inventor who first conceives of the idea, and is able to relate or explain the invention in words and drawings to someone in the field of art.
Whether through admission, knowledge or through discovery via the inventorship inquiry above, it is critical to identify all co-inventors prior to filing a patent application.
In fact, all co-inventors must be named on patent applications by law. Co-inventors, get equal rights as any of the inventors to have exclusivity to the ENTIRE invention to prevent any (non-inventor) in the applicable jurisdiction from making, using, selling or importing the invention.
That also means that no co-inventor can prohibit another co-inventor from exercising their rights exclude others from making, use, sell, import the invention. These rules are true so long as the inventor has not assigned their invention to another individual or entity (see patent assignments).
So, if you’ve co-developed or think you are unsure about who the inventors are in your project, please book a free consultation and we can provide a Patent Inventorship Opinion.
In some complicated inventions, there are 5 or more inventors. It becomes an important job for the Patent Attorney to make sure everyone is accounted for during the patent application phase.
Once inventorship is handled, the next question moves to patent ownership and depending on how many inventors there are, this can be even more complicated if there are business, contractors, employees or 3rd party vendors involved in the chain of title.
In the most simple example, a single inventor/entrepreneur starts as both the inventor and the owner of the patent application.
Note, that I did specify “application”. This is a point that all Patent Attorneys and Agents will emphasize because most laypersons use the term patent too loosely. Once a patent application has been filed, no rights are bestowed upon the applicant or the inventor.
A quick detour: The “applicant” of an invention is the one that puts forth the effort and is therefore responsible to compile all components of the patent application. If you’re not sure what goes into a patent application, here is a full list, and a link to the blog I wrote about how to file a patent application in 16 easy steps:
- Utility Patent Application Transmittal Form or Transmittal Letter
- Appropriate Fees
- Application Data Sheet (see 37 CFR § 1.76)
- Specification
- Claims
- Drawings
- Executed Oath or Declaration
- Nucleotide and Amino Acid Sequence Listing (when necessary)
- Large Tables or Computer Listings (when necessary)
So, as mentioned above, it’s important to know the difference between owning a patent (a granted/issued patent) and one that is merely patent pending. There is a lot of time/effort/money put forth to “prosecute” a patent application.
“Prosecute” means to navigate through the USPTO after you file, and before it’s granted. Here is a chart showing an example (rather typical) of the communication and steps (yes, there are 17 here) taken from the moment of filing a nonprovisional patent application and patent issuance (grant):
For patent-pending owners, there are no “rights” owned, only the “prospective rights” or the “future right to” the claims that are allowed to issue/grant from the USPTO.
Therefore, there is no way to stop an infringer while the patent is in prosecution (still in the steps 1-16 of the above 17-step process). The key here is that the “infringer” is not really infringing on any rights because there are none.
Just because there are no rights while the patent is pending, doesn’t mean you can’t send nasty letters* informing a potential infringer of your pending rights and that as soon as your patent is granted, you could put them out of business. Yes, these letters do work if done right and can be a persuasive way to commercialize.
Note also, that it IS POSSIBLE to license or sell these prospective rights in the pending patent application, however, the value will be less than the granted patent because it is tenuous, and the potential rights are unofficial *[Of course, by ‘nasty letters’ i do mean a professionally threatening lawyerly written letter].
Now, for those patent-granted owners, there ARE rights associated. For every written claim (for utility and plant patents) and for those drawings (for design patents) any infringer that makes uses, sells, or imports the claimed subject matter is infringing.
Patent owners can more readily transact with their rights because they have been finalized and through the USPTO, made official. Buyers/Licensees are more willing to pay top dollar for granted patents, as opposed to pending patent applications.
Individual inventors that invent together are called co-inventors, and they will own the rights to the patent jointly. This means that each inventor will have the right to fully exploit the invention without needing to get the attention of the other inventor.
Usually, both inventors will work together as part of the same business or will cooperate well (see Part two below), but sometimes they become adverse and have different ways of wanting to use their rights they have as owners.
Each inventor, therefore, has the ability to transfer ownership, also called assignment (see Part three) without the consent of the other co-investors. However, they do this at the risk that the company or individual they are assigning to will not want to take partial ownership, usually, they will want all co-inventors to be on the same page, and assign 100% of the ownership to the assignee.
Things do begin to get more complicated when businesses (entities) get involved with patents. That said, it makes a lot of sense for a company to develop and protect its intellectual property. Knowing how this works will be important no matter your position. Let’s talk about the differences in the next section
As always if you have any questions about patent ownership, book a free consultation today!
Part Two: Ownership as an Individual and as an Entity
In Part one we discussed how inventorship doesn’t always mean ownership and the differences between owning a patent application and a granted patent. Now, we’re going to dive into how ownership (with a pending patent or a granted one) can change dramatically when businesses come into play.
As an individual, you personally own the rights to the invention (once it granted) and have complete control over how and whether you decide to enforce the rights. The easiest way to understand patent rights is to know there is a “bundle of rights”.
You have the ability to exclude anyone in the US from making, using, selling or importing your invention. These rights belong to each inventor and their assignees.
An entity (e.g. an LLC, Corporation, Holding Company, etc.) can own the rights to a patent. The legal contract that rights are transferred from the individual to the company is called an assignment (see Part three for more on that).
Once the assignment is finalized, the company now owns the patent, which means that not one individual owns the patent, unless of course, the company is a sole proprietorship or a company with just one owner as the only shareholder.
In most cases, the company will be controlled by several shareholders or owners, and the decisions with respect to patent prosecution (if it’s a pending patent application) or its enforcement (if it’s a granted patent) will be made up by the owners of the company.
Decisions like this can be streamlined if the company elects one person to be the legal decision-maker and then there is one point of contact for the company to make the decisions. They can choose to use inside or outside Patent Attorneys to help make the best legal decisions.
As mentioned in Part one, there can be scenarios where an entity owns only part of the interest in a patent. This could happen where one or more co-inventors of the patent have not assigned their rights to the company.
This may not matter to the company because they have deeper pockets and are willing to try to beat the other co-inventor(s) to the market, and do not care whether the other co-inventors will be able to compete directly with them. They will out-market them or achieve better sales, etc.
The upside for the co-inventors that haven’t assigned to the company is that they can learn from the (expensive) market testing and look to model the changes made by the company to make a compelling market offering.
Things can get more complicated! Individual inventors owning all or part of a patent as well as entities can transact all or part of their rights in the patent! Read below to learn what this means…
- Blog Article: Work for Hire Agreements
Part Three: Typical Transactions: Assignment, Licensing, and Sale
You’ve got a great understanding of inventorship, co-inventors, and entity patent ownership. Now, you’re ready to fully understand some of the transactions of those rights between individuals and entities alike.
The three major transactions that patent applications and granted patents are assignments (as discussed before), licensing, and sales.
Assignments are the everyday mechanism by which individuals give their rights to entities (and vice versa, although it’s rare). The way this usually occurs is by nature of an employment agreement where the inventor (who is an employee of the company) is contractually obligated to assign their invention(s) developed on the job to the company.
The inventor will be named as the inventor personally, but the ownership will be vested in the company.
Licensing has a lot to it. In fact, I wrote a separate blog article all about patent licensing here. In touch on the 10 part guide to patent licensing:
- Part 1: Determine the Underlying Patent Rights
- Part 2: Due Diligence – Find out What You Don’t Know
- Part 3: Negotiation Strategy – Plan to Make a Solid Deal
- Part 4: The Grant – What is Being Licensed?
- Part 5: Who will it be Licensed To? “Exclusivity and Sublicenses”
- Part 6: The Term – How Long will it be Licensed?
- Part 7: The Geographic Scope – Where will it be Made/Used/Sold/Imported?
- Part 8: The Money – For How Much?
- Part 9: Infringement: Who Enforces Patent Rights?
- Part 10: Termination – When is the License Over?
In short, patent licensing requires a great deal of planning – I highly recommend reading the article linked above. A fundamental thing to understand is that as the owner of a patent, you do not have to license ALL of your rights.
You can license SOME of your rights (the “bundle of rights” as discussed above). Meaning, you can retain your right to use and sell, but allow a manufacturer to make and import your invention.
The big upside to licensing that gets all the attention are the royalties!
Yes, once a solid license agreement is put into place, a common way to structure licensing agreements is to compensate the inventor/patent owner with a royalty payment based on percentages of revenue or net income.
Royalties are just one way to monetize patents. You should check out my other article on ways to make money with patents in this article which has 17 different strategies to make money with patents! Here’s the list from that article:
- Get Your Intellectual Property Portfolio Valuated
- Consult with an Intellectual Property Advisor
- Research Patent Brokers
- Hire an Intellectual Property Lawyer
- Consider Selling Your Patent
- Consider Buying More Intellectual Property
- Research Bridge Financing Options
- Look Into Intellectual Property Venture Investment
- Consider Licensing Your Intellectual Property
- Practice IP Partnership
- Help New Companies with Intellectual Property Development
- Obtain IP Analyses Anytime Your Portfolio Changes
- Secure Anti-Counterfeiting Protections
- Conduct Frequent and In-Depth Intellectual Property Audits
- Look Into “PCT Nationalization”
- Remember to File Working Statements
- Seek Additional Training
Owning patent rights depends on a lot:
- Inventorship
- Patent status (pending or granted)
- Entity ownership or obligations
- Partial rights transfers
I hope you use this knowledge to further your prospective patent rights and get in touch with a Patent Attorney if you’re ready to put it into action!
In Conclusion
There you have It! By covering the important topics below:
Table of Contents
- Part One: Inventorship Doesn’t Always Mean Ownership
- Part Two: Ownership as an Individual and as an Entity
- Part Three: Typical Transactions: Assignment, Licensing, and Sale
It is my hope that I have answered your question: Can multiple people own a patent?
For other great information be sure to check out:
- Blog Article: How to Patent an Idea?
- Blog Article: How Much Does a Patent Cost?
Do you have additional questions? Comment below!
As always you can book a free consultation with us to get the answer you need to make your idea a reality!