Tech Transfer & Patent Ownership Issues
The following is part 1 of a transcript from my presentation at the 2018 R&D 100 Conference.
My name is Jack Abid, and I am shareholder at the intellectual property boutique law firm of Allen Dyer Doppelt and Gilchrist. My practice centers on patent procurement and patent portfolio counseling.
As Vicki noted at the beginning, I will be providing some comments on the patent aspect of technology scouting.
So, in essence, tech transfer is finding something cool, and leveraging it into an interesting and hopefully profitable application. At the lawyer part of the transaction, I am basically the cold metaphorical cold splash of water.
Needless to say, patents play a critical part of whether this application is possible, and importantly profitable. Indeed, very few successful tech transfers can be accomplished without addressing patent rights. Some legal concerns in a tech transfer transaction are:
- Who owns the technology?
- Does anyone else have rights to this technology?
- How can one acquire the technology?
Patent Review & Issues
First things first, I would like to provide a brief review of some patent basics. Being a negative right, a patent gives its owner the right to exclude others from making, using, selling, and importing an invention for a limited period of time.
In other words, just because the entity and associated technology are patented, and everything appears to check out, that does not preclude the potential for other operators in the space possessing patents over similar technology. In fact, since most patents are improvements on existing technology, and there is always the potential that the existing technology is patented. In this scenario, you would need to license the earlier technology to apply the improvement.
By default, the owner of the patent is the inventor or inventors. When there is more than one inventor, you will have joint owners. A common understanding is equate each joint owner with divided equal shares. In others word, 2 inventors equate to 50 percent shares, 3 inventors equates to 33 percent shares and so forth.
A more accurate description would be to say that each inventor owns 100% of the patent. As noted by the federal statute, each owner can basically do whatever they want, without any accounting to the other joint owners.
Because of this, if you have an uncooperative inventor, even when he or she is one of several co-inventors, this can create serious problems for the utilization of the under lying technology. Basically, the rogue inventor can off and undercut your attempts to commercialize the technology.
Patent Contracts & Clauses
When you are looking to acquire a technology, don’t trust anything unless you have the written documentation in hand. When the existing owner of technology is ripe for acquisition, there is great incentive to gloss over any issues with regards to ownership of the technology.
Indeed, as with most corporate transactions, you need to perform the necessary due diligence for a potential technology transfer. In the IP realm, due diligence largely equates to chasing documents and making sure HR files are complete. In particular, you want employment agreements with IP clauses in place for all employees.
If you have independent contractors, you want there contracting agreements with similar IP clauses. In short, you want ownership of any new technology borne out of their work to not default to the inventors, but transfer in a controlled manner to the entity be considered for tech transfer.
Although employment agreements are typical in the tech industry, it is also typical to prepare assignment
documents for each new patented technology. Basically, the assignment is a written confirmation of the
inventor’s contractual obligation to assign rights in the developed technology.
Generally, chasing down the assignments is relatively easy exercise as these documents are recorded with the USPTO assignment division, and can be conveniently downloaded from a public online database. Of course, there is an important caveat when checking USPTO records. The USPTO will record anything, and they do not check the validity of the documents being recorded. The onus is on the purchaser of the technology to verify and review the recorded documents.