When you hire an engineer, designer, independent contractor or anyone that will contribute to your idea, they have to assign their invention rights to you or your company. As such, it’s important to understand the basic terminology, including assignments, assignor and assignee. For startups, inventors, and businesses, understanding these terms is key to maintaining ownership and control over their inventions.
What is an Assignment?
An assignment is a legal transfer of ownership from an assignor to an assignee of intellectual property rights. Through an assignment document, the original owner, called the assignor, permanently transfers their rights to another party, called the assignee.
- Permanent Transfer: Once the assignment is complete, the assignor gives up all rights to the IP, and the assignee becomes the new owner.
- Irrevocable: Generally, an assignment cannot be undone. The assignor cannot reclaim their rights unless the agreement specifies when the rights can come back to the assignor.
- Be careful when you execute assignments because of its finality.
The assignment document is the key legal instrument that finalizes this transfer and ensures it is binding.
The assignment document will include a section for a notary. The purpose of a notary is to verify that the person signing the document is indeed the individual they claim to be. Although this step is not required by law to effectuate the assignment, it is highly recommended in situations where there is an uncooperative assignor, such as a disgruntled engineer, independent contractor, or employee. A notarized signature can help prevent disputes and ensure that this issue doesn’t go through costly litigation in the future.
Sample patent assignments and trademark assignment
Here is a sample trademark assignment agreement and a sample patent assignment agreement to illustrate how these documents are structured and what key elements they should include:
Important clauses in an Assignment Agreement
- Parties: Clearly identify the Assignor and Assignee, including their full legal names and addresses.
- Assignment: State that the Assignor hereby assigns all its rights, title, and interest in and to the trademark to the Assignee.
- Consideration: Specify the amount of consideration (payment) for the assignment, if applicable. Typically, it’s $1.
- Signature: Only the assignor need sign the document.
Who is the Assignor?
The assignor is the party transferring ownership of the intellectual property. This could be:
- An inventor transferring rights to a startup or company.
- An independent contractor or consultant who helped develop the invention.
- A company selling its IP assets to another business.
By signing the assignment document, the assignor relinquishes all ownership and control over the intellectual property.
It is essential to obtain an assignment from everyone involved in your business, including co-inventors, independent contractors, investors, and any other contributors. Failing to secure such agreements can result in fractured IP rights, making it difficult to establish clear ownership of your invention. This can subsequently hinder your ability to attract future investments, as potential investors will be wary of any unresolved ownership disputes. By ensuring that all parties agree to assign their rights, you solidify your control over the intellectual property and create a more attractive proposition for investors.
Who is the Assignee?
The assignee is the party receiving the ownership rights. Once the assignment is finalized, the assignee:
- Gains exclusive control over the IP.
- Has the right to license, enforce, or sell the IP.
- Can transfer the rights to another party in the future, becoming an assignor in a new transaction.
Typically, in a startup situation, the company that the inventor sets up to sell the product to the public becomes the primary entity that holds and manages the intellectual property. This startup is often the assignee that receives the IP rights from the inventor and any other contributors involved.
Assignments When Prototyping an Idea
For startups developing a product or service, assignments are crucial when collaborating with third parties such as independent contractors, engineers, prototypers, or consultants. These individuals often contribute valuable ideas and innovations during the development process. To get assignments from these individuals. Not doing so could lead to ownership disputes.
Why Startups Must Secure Assignments:
- Prevent Fractured Ownership: If contributors are not required to assign their IP rights to the startup, the ownership of the invention becomes fragmented. Each contributor may retain rights to the parts they developed, leaving the startup without full control over the invention.
- Protect the Startup’s Core Idea: Without clear assignments, contributors retain ownership of their contributions, meaning the startup might not own the full IP rights to the idea. This can hinder the ability to patent, license, or enforce the IP.
- Avoid Legal and Business Risks: Disputes over ownership can lead to lawsuits or prevent the startup from obtaining funding. Investors often require a clean chain of title showing that the startup owns all rights to its IP.
Best Practices for Startups:
- Require Assignments from All Contributors: Every individual who contributes to the development of the product, including independent contractors, engineers, and prototypers, must sign an assignment document transferring their IP rights to the startup.
- Incorporate Assignments in Contracts: Include assignment clauses in consulting or contractor agreements, ensuring that all IP created during the engagement is automatically assigned to the startup.
- Establish Clear Ownership Early: Address IP ownership at the outset of any collaboration. Waiting until disputes arise can jeopardize the startup’s ability to protect or commercialize its ideas.
Example:
Imagine a startup hires a design company to build a prototype for a new product. If the design company contributes a design improvement to the product but does not sign an assignment document, the design company retains ownership of their improvement. The startup would then need permission to use, patent, or sell the improved product, leading to significant complications and potential costs.
Checking Trademark Ownership
If you are purchasing a company that has patents or trademarks, you need to do your due diligence to see if they truly do own the patent or trademark they say they have. You can do the check by looking up the patent or trademark on the USPTO database. The USPTO maintains a database of trademark assignments that allows you to search for ownership records.
Check Trademark Ownership
- Visit the USPTO Trademark Assignment Search page
- Enter the trademark details:
- Trademark Serial Number: Unique identifier for the trademark application.
- Registration Number: If the trademark has been registered.
- Owner Name: Name of the individual or entity listed as the owner.
Checking Patent Ownership
For patents, the USPTO offers a similar tool to search for recorded assignments and ownership.
Check Patent Ownership
- Visit the USPTO Patent Assignment Search page.
- Enter the patent details:
- Patent Number: If the patent has been granted.
- Application Number: For pending patent applications.
- Owner Name: Name of the assignor or assignee.
Conclusion
Understanding the terms assignments, assignors, and assignees is critical for startups, inventors, and businesses working with collaborators. For startups in particular, securing assignments from everyone involved in prototyping or developing an idea is essential to avoid fragmented ownership and ensure the startup owns the intellectual property outright.
Need Help?
To secure and protect the ownership of your intellectual property, it’s crucial to understand the importance of assignments and ensure proper agreements with all contributors to your idea. Don’t let fragmented ownership or unclear rights hinder your business growth or deter potential investors. We specialize in helping startups, inventors, and businesses establish and maintain strong IP ownership through effective patent assignment strategies.
Learn more about our patent application services to take the next step in safeguarding your innovations. Ready to ensure your IP rights are secure? Schedule a consultation today or give us a call at (949) 433-0900. Let’s protect your vision together!