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Can Multiple People Own a Patent
August 19, 2020 Patent Ownership

Can Multiple People Own a Patent?

 

Since the start of 2019, over 600,000 patent applications have been filed in the U.S., and that’s just counting utility patent applications. There are thousands of other provisional, design, and plant patent applications being filed as well. Clearly, it’s not impossible to file a patent application for your brilliant ideas. However, what happens when you share those ideas with other creators? If you’re wondering whether it’s possible to own a patent with a partner, the answer is yes, you can, and here’s how.

 

 

Working with Others When You Own a Patent 

 

When there are two or more owners of a patent, everyone involved enters joint patent ownership. Since this agreement ensures equal rights to the original work for each owner, everyone under the agreement has equal access and usage rights to the original work. Unfortunately, this means that each owner has the power to use the patented work however they wish, without any legal restrictions. For example, they can sell the original work, or surrender it back to the public domain if they wish.

 

Joint patents, therefore, can be highly problematic and complex for the owners involved. For this reason, they are not highly recommended. However, they are still a viable option if shared ownership is important to the original work and its creators.

 

 

Key Areas of a Joint Ownership Agreement

 

If you choose to enter a joint ownership agreement, try to define the terms of use and ownership down to specific details so that everyone involved can understand the boundaries. Here’s an example of the basic areas a joint ownership agreement should cover.

Definitions 

This section of the agreement explains what the official term “owner” means in the context of the agreement and legal standards. Definitions can also break down what parts of the work are legally protected, such as the method of production, distribution, or aesthetic design.

Terms of Public Use

State the equal ownership between owners and the prevention of public use without the owners’ express consent. This section may also state that the owners are entitled to certain legal action in the event of unauthorized public use.

Compensation and Royalties 

Indicate the sales produced by the patented work. They will be distributed to each owner, depending on what’s written in this section. Portions for compensation and royalties should be displayed through percentages to show exactly how much each owner is entitled to. If you want to recognize that some owners have seniority over others, you can attribute more compensation to these senior owners. However, this does not change how much of the patented work each owner controls. It only conveys how much each owner receives from a sale. Distribution of the expenses to produce the original work should also be determined. This will ensure that each owner knows exactly how much they’re expected to contribute towards any manufacturing or production costs.

 

 

Timeline for Patent Expiration and Activation 

 

The patent’s timeline is an important part of the agreement, which explains exactly when the patent is active, and when it expires. This can be a short sentence detailing when the patent becomes active and when it is expected to expire. Alternatively, it can also be a whole section discussing all the potential outcomes surrounding activation and expiration. Patents are typically valid from the moment they are allowed, the issue fee is paid, and the patent paperwork is processed. Patents typically expire at the end of their lifetime. However, they can expire earlier if the owner(s) fail to pay their maintenance fees.

 

 

Key Areas of a Joint Ownership Exploitation Agreement

 

Despite the challenges of joint ownership, there is something you can do to maintain an effective joint patent and preserve your relationship with other owners. You and your co-owners can enter into a joint exploitation agreement. This is a legally binding agreement that prevents all owners from compromising the relationship with the other owners and the patented work itself. If you’re considering a joint patent, establishing a joint exploitation agreement is somewhat necessary to ensure accountability between owners.

 

Even if you enter a joint patent with other owners whom you sincerely trust, various circumstances can lead owners to take liberties with a patented work. Should this ever happen, a joint exploitation agreement is like an insurance policy that holds everyone responsible. Here are the areas typically discussed in a joint exploitation agreement.

Patent Infringement 

This section should identify what constitutes a patent infringement and the consequences of those violations. This may include a list of specific penalties that owners are liable to.

Licensing Terms

Licensing terms explain the transfer of rights to the patented content between another party outside of the owners. This section discusses whether or not licensing is permitted or prohibited depending on what the joint owners agree upon.

Assignment Terms 

While licenses transfer specific, individual rights to use the patented work, assignments transfer total ownership and, therefore, all rights to the work. This section should discuss in detail the terms of transferring ownership to another party.

Additional Clauses

You and your co-owners can use this section to outline any terms and conditions specific to the group and the patented work. If you and your co-owners have any other important terms and agreements that aren’t relevant to the other sections, this is the place to include them.

 

 

How Outside Financing Can Lead to Joint Ownership

 

If owners need funding for a work they want to patent, they can consider outside financing. This involves the owners seeking financial support from a party outside of the original group of joint owners. However, this outside party can receive full joint ownership in exchange for funding the original owners’ work. All the terms of joint ownership would then apply to this third party. This can be a mutually beneficial relationship for both parties. Sometimes outside financing is the only way a project can receive the funding and patent it could’ve otherwise missed out on. You should remember that lending ownership in exchange for project funding can further complicate your ownership agreement.

 

Keep in mind that joint ownership indicates full control over the patented work for each owner. So, if you’re considering outside financing, you have even more reason to safeguard your work by securing a joint exploitation agreement.

 

 

How to Proceed When You Own a Patent

 

In addition to establishing the terms of ownership in a contract, you and your co-owners simply need to communicate properly so the joint ownership can be a totally transparent matter. After all, clarity and honesty between owners is the only way that any partnership can last.

 

If you own a patent with others or individually, be sure to keep educating yourself on what patent rights you’re entitled to, and how to best leverage them for success. If you want to know more about Patent Hacks and how we can help you achieve your goals, please visit the Patent Hacks Learning Center.

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