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(Message started by: AC on Jun 20th, 2005, 9:49am)

Title: Multiple assignees, % not specified - default?
Post by AC on Jun 20th, 2005, 9:49am
Suppose there is an assignment of a patent to multiple assignees with just the standard boilerplate language "in consideration of $1 . . ." but the percentage interest to each assignee is not specified (or otherwise provided for in a separate agreement), is the default rule that the assignees will be deemed to take equal shares?  E.g., if 2 assignees, each takes half; if 3 assignees, each takes 1/3, etc.

Title: Re: Multiple assignees, % not specified - default?
Post by Isaac Clark on Jun 20th, 2005, 8:16pm
What do you think half of a patent share would mean?

The result probably depends on the exact language used, but
it's possible that the assignees would be tenants in common
which means that each has a complete right to exploit the
entire patent, but that the right is not exclusive.

Of course that would mean that each individual would need
cooperation from the others to sue someone, but that only one
assignee would be necessary to sign an agreement not to sue.

Sounds to me like a recipe for a disaster.

Title: Re: Multiple assignees, % not specified - default?
Post by eric stasik on Jun 21st, 2005, 3:52am
AC,

If it is a US patent you are asking about:

35 USC 262. Joint owners

"In the absence of any agreement to the contrary, each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States, without the consent of and without accounting to the other owners."

http://www.bitlaw.com/source/35usc/262.html

In other words, absent any agreement between the parties, each assignee owns 100% of the patent and can do with it what they like without the consent of the others.

This is why joint assignments of US patents should always be avoided.

regards,

eric stasik

Title: Re: Multiple assignees, % not specified - default?
Post by AC on Jun 21st, 2005, 9:20am
Thanks for the responses - this definitely appears to be a tricky area.

Regarding my initial post, I was referring to situations where, for instance, Assignor transfers 100% of a US patent to Assignee A and Assignee B without stating the specific interest to each (e.g., 25% to Assignee A and 75% to Assignee B).  

If my memory serves me correctly, I thought I had read somewhere (maybe as a matter of contract or property law) that when no specific interest is stated in an Assignment, the default rule is that the assignees will be deemed to take equal shares (e.g., 50% to A and 50% to B) unless it can be shown that the parties intended otherwise.

Based on your responses, it would seem that the % interest to each assignee would not be particularly significant since it seems that each assignee has an undivided interest in the entire patent.

Anyone know of a situation where the % interest to each assignee would be important?

Thanks
Alex

Title: Re: Multiple assignees, % not specified - default?
Post by Isaac Clark on Jun 21st, 2005, 2:44pm
In order make a per centage interest meaningful, you would have to define what a per centage interest is really all about.

For the reasons that have been presented, by default such an interest would be meaningless.   A patent is a right to stop others from making, using an invention.   By default, half of the right is meaningless.

If the intent is that each party gets some per centage of the licensing fees from granting rights to others, then you would have to define that in your agreement.   Then the ownership per centage would have meaning.

In the case of real estate, the same kind of ownership shares can exist.  If property is held by multiple owners as tennants in common, each owner can use 100% of the property even if the owner has only a 25% share.  But for real property if the owners cannot get along it is possible to go to court and have the property divided up into shares (partitioned).  In that case it would matter whether an owner had a 25%, 50% or a 33.33% share.

Patents and real property are different because part ownership does not completely make sense and becasue as Mr. Stasik pointed out there is a federal statute telling us what the default arrangement is.   Real property is governed by state law, and may be a little different in different states.



Title: Re: Multiple assignees, % not specified - default?
Post by JimIvey on Jun 21st, 2005, 2:55pm
FWIW, I think the best organization for patent ownership is a corporation.  You can allocate shares to funnel the proper shares of royalties/profit in just about any way you like, and the shares can be readily reallocated, transferred, whatever.  

The problems with partnerships and shared ownership of patents have been described well here.  What most people care about is not the shared ownership but the shared profits.  Another concern might be exactly who has authority to negotiate and enter into a license agreement.  That issue is also easily solved in a corporation (officers generally have authority to bind the corporation in contracts).

My informal observations would be that, even for simple innovations and very small numbers of people (even just one person who might later accept money from investors), a corporation is the thing that really ought to own a patent.  Corporations have well-known solutions for most of the who-gets-what problems involved with patents.

Regards.

Title: Re: Multiple assignees, % not specified - default?
Post by JSonnabend on Jun 22nd, 2005, 1:57pm

Quote:
FWIW, I think the best organization for patent ownership is a corporation.  You can allocate shares to funnel the proper shares of royalties/profit in just about any way you like, and the shares can be readily reallocated, transferred, whatever.  

Or better still, in many instances, an LLC.

- Jeff

Title: Re: Multiple assignees, % not specified - default?
Post by Isaac Clark on Jun 22nd, 2005, 8:12pm
Jim and Jeff's advice to pick an appropriate business entity
to own the patent is excellent.  I agree with Jim that a corporation
has the best default arrangment for assigning patent rights,
but there may be business issues that suggest forming some other
entity.  In the case of some of the other entities, it may be
necessary to have a written agreement of how the patent rights
will be exploited and accessed during the life of the entity
and even beyond.  In particular, some of the limited liability
entities act much like partnerships with all of the attendant
issues.  Some states may have funky rules concerning which
entities can and cannot sue, and in some states laws
governing incorporation are either not as friendly or not as
well developed as in others.

I suppose that's enough rambling on about a subject I haven't
dealt with since law school...



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