As objects of
intellectual property
Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, cop ...
or
intangible asset
An intangible asset is an asset that lacks physical substance. Examples are patents, copyright, franchises, goodwill, trademarks, and trade names, as well as software. This is in contrast to physical assets (machinery, buildings, etc.) and finan ...
s, patents and
patent application
A patent application is a request pending at a patent office for the grant of a patent for an invention described in the patent specification and a set of one or more claims stated in a formal document, including necessary official forms and rel ...
s may be transferred. A transfer of
patent
A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an sufficiency of disclosure, enabling disclo ...
or patent application can be the result of a
financial transaction
A financial transaction is an agreement, or communication, between a buyer and seller to exchange goods, services, or assets for payment. Any transaction involves a change in the status of the finances of two or more businesses or individuals. ...
, such as an assignment, a
merger
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
, a
takeover
In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to ...
or a
demerger
A demerger is a form of corporate restructuring in which the entity's business operations are segregated into one or more components. It is the converse of a merger or acquisition.
A demerger can take place through a spin-off by distributed or ...
, or the result of an operation of
law, such as in an
inheritance
Inheritance is the practice of receiving private property, titles, debts, entitlements, privileges, rights, and obligations upon the death of an individual. The rules of inheritance differ among societies and have changed over time. Offici ...
process, or in a
bankruptcy.
Rationale
The rationale behind the transferability of patents and patent applications is that it enables
inventor
An invention is a unique or novel device, method, composition, idea or process. An invention may be an improvement upon a machine, product, or process for increasing efficiency or lowering cost. It may also be an entirely new concept. If an id ...
s to sell their rights and to let other people manage these intellectual property assets both on the valuation and enforcement fronts. As
The Economist
''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econ ...
put it,
:"''Patents are transferable assets, and by the early 20th century they had made it possible to separate the person who makes an
invention
An invention is a unique or novel device, method, composition, idea or process. An invention may be an improvement upon a machine, product, or process for increasing efficiency or lowering cost. It may also be an entirely new concept. If an id ...
from the one who
commercialises it. This recognised the fact that someone who is good at coming up with
idea
In common usage and in philosophy, ideas are the results of thought. Also in philosophy, ideas can also be mental representational images of some object. Many philosophers have considered ideas to be a fundamental ontological category of be ...
s is not necessarily the best person to bring those ideas to
market.''"
United States
In the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., federal district, five ma ...
, assignment of a patent is governed by
statute. Assignment of an interest occurs only by an "instrument in writing". The statute also permits recording an assignment with the
United States Patent and Trademark Office
The United States Patent and Trademark Office (USPTO) is an agency in the U.S. Department of Commerce that serves as the national patent office and trademark registration authority for the United States. The USPTO's headquarters are in Alex ...
, but recording is not required except to protect against "any subsequent purchaser or mortgagee for a valuable consideration, without notice...."
Security agreement
A
security agreement
A security agreement, in the law of the United States, is a contract that governs the relationship between the parties to a kind of financial transaction known as a secured transaction. In a secured transaction, the Grantor (typically a borrower bu ...
is a conditional transfer of patent ownership when patents are used as
collateral
Collateral may refer to:
Business and finance
* Collateral (finance), a borrower's pledge of specific property to a lender, to secure repayment of a loan
* Marketing collateral, in marketing and sales
Arts, entertainment, and media
* ''Collate ...
for a loan. The borrower will agree to transfer ownership of the patents to the lender if the borrow defaults on the loan. Security agreements on patents in the US are registered with the United States Patent and Trademark Office.
Mark Nowotarski, “Getting a Loan with Your Patents”, IP Watchdog, 21 June 2012
/ref>
See also
* Assignor estoppel
References
Patent law
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