Key Takeaways

  • A patent company holds and licenses patents created by others, often generating revenue through royalties.
  • Patent rights provide inventors or assignees exclusive control over their inventions for a limited period.
  • Ownership assignment of patents must follow specific legal procedures and be recorded with the USPTO.
  • Patent companies may specialize in enforcement, licensing, or acquisition of patents rather than innovation.
  • Types of patents include utility, design, and plant patents, each with specific protections and durations.
  • Patent searches are essential to ensure the novelty of an invention before filing for protection.
  • The top patent firms in the U.S. excel in securing high volumes of utility patents for clients.

Patent companies are those that do not create inventions themselves, but serve as holding companies for patents created by other individuals or entities. A patent company purchases the licensing for the patent, so they can manufacture, market, and sell the investment in question. The original inventor typically receives a royalty payment.

What Are Patent Rights?

The owner of a patent has the exclusive legal right to prevent others from selling, manufacturing, and using the invention covered by that patent for a limited time that varies based on the type of patent. The inventor is usually the initial patent-holder, but he or she may transfer ownership to a patent company or other entity.

Companies that encourage innovation by their employees often want to protect this intellectual property (IP). Strategies that these businesses may employ to do so include:

  • Require employees and service providers to sign both an invention assignment agreement and a confidentiality agreement that automatically assigns patent ownership to the company.
  • Check local laws regarding automatic assignment. In many states, companies are automatically assigned patent rights when inventions are created in the course of an employee's role with the company, when the person was hired specifically to make inventions for the company, and/or when the inventor in question is also a company officer.
  • Even in the presence of laws and contracts that specify automatic assignment, the company should also explicitly seek assignment for every new patent application. These can strengthen your case if the ownership of the patent for that specific invention is ever disputed.

Although a patent can have more than one owner, this can create complexities because all the owners have to be in agreement to file a lawsuit for patent infringement. However, one owner can license his or her patent rights without the consent of the other owner or owners, unless a contract is in place that states otherwise.

What Does a Patent Company Do?

A patent company is an entity that typically acquires, manages, and enforces patent rights rather than inventing technologies itself. These companies fall into various categories, including:

  • Patent Holding Companies (PHCs): These are established solely to own and manage patents, often through licensing or enforcement.
  • Patent Licensing Firms: These firms focus on monetizing patents by granting licenses to other companies in exchange for fees or royalties.
  • Non-Practicing Entities (NPEs): A broader category that includes firms that do not manufacture or sell products but hold patents for litigation or licensing purposes.
  • Patent Assertion Entities (PAEs): A subset of NPEs that focus heavily on enforcing patent rights through legal action.

While some view NPEs and PAEs as “patent trolls” due to their aggressive enforcement tactics, others argue they serve a critical function by ensuring inventors are compensated for their innovations.

Patent companies may also collaborate with inventors, research institutions, or corporations to fund research and development in exchange for rights to resulting patents.

How Does Patent Ownership Assignment Work?

Patent ownership assignment is legally binding as long as certain requirements are met. This type of agreement must:

  • Be made in writing
  • Include the names and addresses of both the original owner and the assignee
  • Clear identification of the patent title, number, and filing date
  • Names of all inventors
  • Include some type of exchange of consideration
  • Be notarized or signed by two witnesses

Legal language is also essential when it comes to the legality of a patent assignment.

Any executed patent assignment must be reported to the United States Patent and Trademark Office (USPTO) within three months or risk being found invalid.

Best Practices for Patent Assignment and Ownership Transfers

When transferring patent ownership, patent companies and inventors should take these best practices into account:

  • Execute a clear and comprehensive assignment agreement specifying the scope of rights transferred, payment terms, and obligations of both parties.
  • Include a clause for future inventions if the assignment is part of an employment or research relationship, ensuring all related patents are covered.
  • Record the assignment promptly with the USPTO to prevent legal issues or claims from third parties.
  • Verify chain of title when buying patents from others to ensure there are no prior claims or disputes.
  • Utilize escrow services for high-value patent transfers to protect both buyer and seller until all terms are met.

Following these steps helps patent companies establish enforceable rights and prevents legal disputes over ownership down the line.

What Are the Different Types of Patents?

Design and utility patents are the most common types of patents. A design patent protects the way an invention looks, while a utility patent protects its structure and function. A design patent is easier to obtain but protects the design for only 14 years, compared with 20 years for the utility patent.

In addition, design patents must have an original appearance with new features that are non-obvious, meaning they don't follow naturally from the appearance of an existing design.

While utility patents provide broader protection, they also require a much more detailed and expensive application process. To be eligible for a utility patent, an invention must:

  • Fall into the category of machine, process, composition, or manufacture, or be a new way to use one of those categories
  • Be useful
  • Have a new feature that does not exist on any previous inventions (called prior art)
  • Not be obvious to an ordinary person

Plant patents are a third type of patent that protects new and distinct plant varieties and hybrids.

Items that cannot be patented include laws of nature, materials that occur in nature, mathematical formulas, abstract ideas, and methods of calculation. However, inventions that use these elements can potentially qualify for patent protection.

Patent Trends and Top Patent Companies

Each year, analytics firms release rankings of the top patent companies and law firms based on the number and quality of patents they secure. These firms assist clients in navigating the complex application process and improving their chances of patent approval.

Top patent companies and firms often distinguish themselves by:

  • Filing a high volume of utility patents for major tech companies.
  • Maintaining a low number of rejected applications due to quality submissions.
  • Offering integrated services such as patent analytics, strategic portfolio management, and licensing advisory.

Examples of industries leading in patent filings include:

  • Technology and Software: Especially artificial intelligence, cloud computing, and semiconductors.
  • Pharmaceuticals and Biotech: Innovations in treatment and genetic research.
  • Automotive and Manufacturing: Particularly in autonomous driving and battery technologies.

Some of the top patent law firms in the U.S. include those that consistently appear in rankings like the “Patent 300®,” highlighting firms that obtain the most utility patents annually​.

What Is a Patent Search?

Because your idea must be totally new to qualify for a patent, you must search all existing patents before filing your application. This can be done on your own or by hiring a specialist or professional service. The USPTO maintains an online database where you can start your search. IBM also maintains its own patent database.

Why Patent Companies Rely on Patent Analytics

Patent analytics helps patent companies assess the value and potential of a patent portfolio. This data-driven approach supports decisions related to acquisition, enforcement, and monetization. Key benefits include:

  • Competitive Benchmarking: Understand how a company’s patent portfolio compares to others in the industry.
  • Technology Landscape Mapping: Identify gaps in innovation or crowded patent spaces.
  • Valuation Analysis: Estimate potential licensing or litigation value based on existing uses, citations, or market demand.
  • Risk Assessment: Detect overlapping patents that might expose a company to infringement claims.

Patent companies often use analytics before purchasing a patent or filing a lawsuit to ensure it has strategic value.

Frequently Asked Questions

  • What is the role of a patent company?
    A patent company manages and monetizes patents through licensing, enforcement, or sale, rather than creating products itself.
  • Can a patent have multiple owners?
    Yes, but this can complicate enforcement or licensing unless agreements outline decision-making procedures.
  • Are all patent companies considered patent trolls?
    No. While some are labeled as such due to aggressive litigation, many operate legitimately to protect inventors’ rights and encourage innovation.
  • Do patent companies file patents themselves?
    Most patent companies acquire patents from inventors or businesses, but some may also file patents through partnerships or acquisitions.
  • How do I find out if my invention is already patented?
    Conduct a search through the USPTO database or hire a patent attorney or search specialist to conduct a comprehensive prior art review.

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