• Home
  • About Me
    • Client Reviews
    • Patent Samples
    • Accolades
    • About Firm
    • Technologies
    • FAQs
  • Services
    • Patent Prosecution Services
    • Patent Defense Services
    • Patent Enforcement Services
    • Trademark Search Services
    • Trademark Prosecution Services
    • Trademark Enforcement Services
    • Trademark Defense Services
    • Patent and Trademark Licensing Services
    • Worldwide Patent and Trademark Services
  • Learning Resources
    • Invention Agreements
      • What is an NDA and when to use them?
      • How to use a contract to protect your invention?
      • Working with others without losing your IP rights
      • Patent Assignments for Independent Contractors
      • Losing Invention Rights When Hiring or Collaborating with Others
      • Avoid Problems: Get an Invention Assignment Agreement
    • Protect Inventions
      • Do you need to get your patent attorney to sign an NDA?
      • Patent protection benefits and why every inventor should consider getting one
      • Reasons to only market your invention after securing patent pendency
      • 8 tips to successfully protect your idea
      • Four types of intellectual property to protect your idea and how to use them
      • Can a confidentiality agreement protect me like a patent application?
      • Dangers of 1 yr grace period under first-inventor-to-file system
      • File a patent application before telling others about the invention
      • Risks and benefits of securing software patent protection
      • Strategy to overcome patentable subject matter rejection
      • Best uses for design patents
      • Overview of Patents and Intellectual Property
      • Pros and cons of filing a continuation-in-part application
      • Benefits of Patent Protection
      • Continuation patent application and related divisional and continuation in part
      • Misconceptions of Provisional Patent Applications
    • How Patent Applications Work: the Basics
      • How to respond to an office action?
      • Request for non-publication of a patent application
      • Anatomy of a Patent Document
      • How to write a broad patent application?
      • Design patents: pros and cons
    • Patent process
      • Overview of the examination process within the USPTO
      • What is a patent search and How to do it?
      • Patent attorneys, agents and the USPTO can help with the patent process
      • Highs and lows of securing patent protection for your invention
      • Patent Process: Invention to Patent Granted (Comprehensive)
      • Benefits of a Patent Search
      • Overview of Patent Process
      • Patent process timeline and major milestones
      • Patent process, overall steps and procedures
      • What is the Patent Office procedure after filing a patent application?
      • USPTO Website
    • Patent costs
      • How much does it cost to get a utility patent?
      • Provisional Patent Application: Cheap Alternative?
      • Patent Cost Framework and cash flow
      • Provisional patent application: a cheap option?
      • Cheap provisional patent applications
    • Worldwide patents
      • Pros and cons of securing worldwide patent protection and their steps
      • Foreign patent filing to secure protection in other countries
    • Responding to Office Actions
      • Overview of Office Actions
    • Patent infringement
      • Basics of writing a patent claim for a patent application
      • What are the patent marking requirements and its benefits?
      • Avoiding Patent Infringement
      • Can I Copy My Competitor’s Product?
      • Can I Copy My Competitor’s Product? (Design Patent)
    • Trademarks
      • Trademark Registration: common law, state and federal
      • How to obtain a federal trademark registration?
      • How to select a trademark?
        • Protect your idea when pitching to an investor, potential licensee, or buyer
  • Schedule Consultation
  • Contact

Patent Attorney | Orange County | OC Patent Lawyer

Orange County Patent Attorney

(949) 433-0900
You are here: Home / Patent application process / Before filing a patent application / Patent Ownership / Can Multiple People Own a Patent?

Can Multiple People Own a Patent?

April 18, 2020 by James Yang

Patent ownership disagreementPatents allow people and companies to claim ideas and inventions as their own. Nevertheless, it is quite confusing and tricky when multiple entities are involved.  Disagreements can and do arise between the owners.  You need to know how to address these potential pitfalls.

Can multiple people own a patent? Yes, but we do not recommend joint patent ownership.  The patent’s value could be destroyed. Without permission from the other owners, any owner of a patent can dedicate it to the public, sell it, start a competing company, or license it to another company. This possibility leaves the other patent owners at the mercy of a disgruntled patent owner.

Table Of Contents
    • Joint Patent Ownership: How It Usually Happens
      • The Downsides of Joint Patent Ownership
      • How to Safely Share Ownership of a Patent
    • Entering into a Joint Exploitation Agreement
    • Transferring Ownership to a Corporation
    • Other Considerations with a Patent
    • Owning Patents: The Good, The Bad, and The Ugly

While sharing patent ownership may seem like a generous thing to do in the beginning, there are plenty of ways that things can go wrong in the end. This article will explain all the ins and outs of joint patent ownership and how to protect yourself by entering a joint exploitation agreement instead.

Joint Patent Ownership: How It Usually Happens

While it can be precarious, many inventors and investors want to own a patent together. They want to enter into a joint patent ownership situation, albeit innocently. They believe that they are protecting each other’s interest if both own the patent.

Here is how the situation arises.

For example, startups may have two patent owners: the investor and the inventor. For the layperson, it may make sense to put both names on the patent application so that they both own the patent. However, that would be ill-advised because that leaves each owner at the mercy of the other owner. 

In other cases, though, there may be two inventors. An example of this is when friends brainstorm an idea. They may both be inventors because they both came up with the idea.

Before anyone gets into inventing and pursuing a patent, it is essential to know who will be involved and how they will be involved. Most relationships are quite trusting in the beginning, so joint patent ownership makes sense to most people. However, it is not usually a wise choice in the long run.

The Downsides of Joint Patent Ownership

If two or more people or companies apply as owners of the patent, everyone has joint patent ownership. With joint patent ownership, all owners have the full right to do whatever they want with the patent. This unfettered right to do as they please is a big problem.  At the beginning of a patent relationship, this usually does not cause any issues. However, that may change over time as the business pressures work on the owners.

If one owner begins to feel like he or she is pulling more weight launching the product than another owner, he or she may start to feel jaded by the unfair relationship.  If the relationship deteriorates, the disgruntled owner may start to threaten the other patent owner.  They will begin to fight.

 Remember, each of the patent owners can legally sell it, use it for a new company, or dedicate it to the public without needing approval from the other owners. Any of these scenarios can quickly leave the other owners without an income or royalties from their patent.

For these reasons, a joint patent ownership situation without any controls is considered very dangerous for everyone involved.  Joint patent ownership is highly not recommended.

How to Safely Share Ownership of a Patent

The first step to creating a safety net around your patent is to open the lines of communication with the other owners. By discussing the downsides of personally owning the patent with your business partner or co-inventor, you both need to see the potential hazards. When the people involved see the risks, most people will quickly want to figure out how to keep everyone safe moving forward in the long run.

Entering into a Joint Exploitation Agreement

To mitigate problems of joint patent ownership, owners can enter into an agreement known as a joint exploitation agreement. Joint exploitation agreements prohibit owners from destroying the value of the patent or harming the other owners.

It is a simple contract which states that the patent owners won’t do certain things to hurt the other owners.  While it may feel a bit like a prenuptial agreement, it saves both parties from heartache and potential monetary ruin in the future.

Transferring Ownership to a Corporation

If a simple contract does not seem like the way to go, the owners can assign the invention to a corporation so that the corporation owns the patent. If a corporation will own the patent, then the assignment of the patent rights should be done before filing the patent application.

In this scenario, the corporation owns the patent, not the individuals.  The owners would own shares of the corporation. Because the owners and officers of the corporation must be loyal to the corporation, the owners must work towards the success of the corporation. The shareholders or owners can’t just dedicate the patent to the public if the owners have a dispute.

Of course, there may still be disagreements about how the day to day management of the corporation, but discussions and decisions would have to be made within the corporation’s outlined rules and for the best interest of the corporation.

With this option, the operating agreement of the corporation must place limitations on how decisions are made to limit the ability of a rogue owner to destroy the value of the patent. With this in place, the rules of the company will dictate the buyout provisions if a shareholder chooses to leave.

Some benefits of using a corporation as the sole owner of a patent include:

  • Lawsuits: When someone else steals your patented idea or invention, it is called patent infringement. To file this kind of lawsuit, all owners must sign on to the lawsuit. With a company as the owner, it is very straightforward to carry this out. The shareholders don’t have to get involved.
  • Distribution of Funds: When your patent makes money from royalties or sales, it will go directly to your company. Then, each shareholder receives their determined portion directly without a middleman or someone else vying for the funds.
  • Patent Security: With a company owning the patent, it is impossible for a shareholder to secretly sell the patent, as would be possible if they were an owner.

Corporations and businesses are made to withstand the ebb and flow of people and the economy. By securing your patent’s ownership within a corporation, it is much more likely to withstand the downturns. Hopefully, this has shown you the benefits of using a corporation as the owner of your patent.

Other Considerations with a Patent

As the patent ownership is figured out, it is essential to keep in mind all of the players in the patent game. Legally, an inventor is anyone who helped conceive an idea or added to it. Even if the inventor did not physically make the invention, they are still the inventor of it. Often, there are disputes about if someone made a genuine contribution to the patent.

Because of this, both the roles of inventors and owners of a patent are often disputed and fought over. Therefore, it is necessary to make it abundantly clear in legal terms the owner of the intellectual property when it comes to patents.

Owning Patents: The Good, The Bad, and The Ugly

Patents are a fantastic thing. They allow creative and brilliant people to profit from their inventions. But, in business, people often become frustrated, biased, or upset and try to get the upper hand. Disgruntled owners can take advantage of their patent rights and easily deceive their business partners. So, it is essential to know precisely how you will own the patent rights.

If you or someone close to you is considering how they should own a patent, make a wise choice, and form a corporation or enter into a joint exploitation agreement, please do not hesitate to contact me. While it will be more work upfront, it will be the safest bet for everyone in the long run.

  • Facebook
  • Twitter
  • LinkedIn

Filed Under: Before filing a patent application, Invention agreements, Patent Ownership

Author: James Yang

Helping entrepreneurs and mid-size businesses since 2004. Call me at (949) 433-0900 to schedule your free initial consultation. Read More…

Covid-19

Covid-19: We are fully operational.  Due to Covid-19, all meetings are conducted via zoom.

Professional Profile

James Yang Business Patent Attorney

James Yang, Patent Attorney

James Yang is a patent attorney whose practice encompasses all area of intellectual law including patents, trademarks, copyrights and trade secrets. Professional Profile

Popular Posts

  • Patent process overview
  • Patent process explained
  • How much does a patent cost?

New Book Release

Navigating the Patent System - new book by Orange County patent attorney, James Yang

Navigating the Patent System: Learn the patent process and strategies to protect your invention

Read for Free
Buy at Amazon

Peer Recognition

top attorney patent application
client choice patent application
Rated by Super Lawyers
AV Preeminent rating

RECEIVE PATENT UPDATES

Stay up to date on major changes and get tips on patent prosecution.

We respect your privacy.

Popular Posts

Patent process overview
Patent process explained
How much does a patent cost?
Trademark process and costs
Patent process and costs

 

Services

  • Patent Prosecution Services
    Patent Defense Services
    Trademark Prosecution Services
    See All Services

Contact

James Yang
OC Patent Lawyer
2372 Morse Ave., Suite #178
Irvine, CA 92614
Tel: (949) 433-0900

Connect

  • Facebook
  • LinkedIn

Sitemaps

Sitemap: Pages | Sitemap: Posts

Terms of Use

By accessing this blog, you agree that no attorney-client relationship is formed except by a subsequent written retainer agreement. Also, you agree to not send confidential information unless directed by me to do so. The information posted on this blog is legal information and not legal advice.
Complete terms of use

ATTORNEY ADVERTISEMENT

© 2021 · James Yang, Your Entrepreneur and Mid-Size Business Patent Attorney