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.

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.

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.

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.

If you need help with patenting an invention, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies such as Google, Menlo Ventures, and Airbnb.