Retain Control of Patent Assets

Control Patent Assets

Who controls a Patent? Inventor? Company?

35 United States Code (U.S.C.) 101 reads as follows:

“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore . . . ” and this is the starting point for determining ownership of Patent Assets.

Last month’s blog included illustrations of how a company can lose control of its Patent Assets. This month we will explore steps you can take to retain control of your company’s patents.

Control of Patent Assets

Whenever possible, companies should limit the possibility that statutes and case law will determine the ownership of Patent Assets and other Intellectual Properties. To blindly believe that because the company paid someone to do something for the company, the company owns what was created is not always effective. It’s similar to people assuming that when they die without any estate planning, State law will distribute their property according to their wishes. It seldom works that way.

How to Better Control Company Patent Assets

Use contracts with employees, agents, and independent contractors to ensure the company’s ownership of the invention’s Intellectual Property rights. Some  conditions for control of Intellectual Property rights can include:

1. As a condition of employment, the employee agrees, in writing, that the company is the owner of:

  • all inventions invented by the employee; or
  • the inventions invented by the employee at any workplace provided by the company or with devices, tools, programs, etc. supplied by the company; or
  • the inventions invented by the employee that are associated with the company’s goods or services or the company’s pipeline of goods or services.

2. As a condition of employment, the employee gives the right of first refusal (in writing) to the company as to whether the company will own the invention.

3. Prior to hiring an agent or independent contractor, the company requires that agent/independent contractor to sign a written agreement stating that:

  • all the inventions invented by the agent/independent contractor at any workplace provided by the company or with devices, tools, programs, etc. supplied by the company are owned by the company; and/or
  • all inventions invented by the agent/independent contractor associated with the company’s goods or services or the company’s pipeline of goods or services belong to the company.

Control Your Company’s Patent Assets or Someone Else Will

An assignment document is used to transfer ownership of the invention’s intellectual property rights to the company.

If the employee will not agree to assign Patent Assets to the company as a condition of employment, hire someone who will.

The same approach should be applied to agents and/or independent contractors.

If you have questions about your company’s ownership of Patent assets, please contact Business Patent Law, PLLC and we will discuss possibilities for your business and intellectual properties.

If you would like to stay up-to-date with news that impacts your intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Securities for small businesses

Federal Securities Laws and Your Small Business

Small business is not automatically exempt from the federal securities laws. Depending on the circumstances of the transaction, these laws can apply to any company, partnership or organization.

What is a Security?

The Supreme Court test for determining if something is an investment contract, i.e., security:

If something is an investment contract, it is a security. In the case of Securities and Exchange Commission v. W. J. Howey Co. 328 U.S. 293 (1946), the US Supreme Court defined an investment contract as follows:

  • It is an investment of money
  • There is an expectation of profits from the investment
  • The investment of money is in a common enterprise
  • Any profit comes from the efforts of a promoter or third party

Examples of Securities Utilized by Small Businesses

Securities can include such investment contracts as bonds, derivatives, leaseholds, intellectual property investment syndicates, options, leaseholds, publication syndicates, ownership interests in limited liability companies, corporations and partnerships and stocks.

Is Your Security Exempt?

If a security is associated with your business, it will fall under the registration and reporting requirements of the 1933 and 1934 Securities Acts – unless your business has obtained an exemption from registration.

  • Obtaining an exemption from the 1933 and 1934 Securities Acts is important – most small businesses cannot afford the costs of registering the security
  • Violations of the 1933 and 1934 Securities Acts can bankrupt most small businesses
  • Be cautious in accepting any risk capital investment from a potential investor who is not an “accredited investor” as defined in SEC Rule 501 of Regulation D
  • Be cautious in accepting any risk capital investment from a potential investor where your business has not first provided the potential investor with a private placement memorandum
  • Exempted securities can be an excellent source of capital for your company, partnership or organization

Before your company accepts the at risk investment capital, contact Business Patent Law, PLLC and we will discuss possibilities for your business and intellectual properties.

If you would like to stay up-to-date with news that impacts your intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.