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Patent Assignment Costs

The Costs of Assigning a Patent: Whose Patent Is It Anyway?

Published on 27 May 2019

Like any other form of property, the ownership or proprietorship of a patent, which is an Intellectual Property, can also be transferred from one person to another or from one entity to another. In this article, we discuss the costs that may be incurred during the process of this ownership change, which, in patent parlance, is referred to as "patent assignment", and subsequently recording the ownership change with a National Patent office or National Intellectual Property office.

The Significance of Patent Ownership

Contrary to popular myth that a patent is a positive right, a patent confers on its owner the right to exclude others from making, selling, offering to sell, importing, or using a claimed invention without prior authorization from the owner, for a limited period of time. Since patents are territorial in nature, this right to exclude is confined to the territory or territories within which a patent has been granted or issued.

The world witnessed the power of patent ownership in the 1990's, when Texas Instruments demonstrated the leveraging of patents as a litigation tool for monetization and business growth. This strategy was subsequently taken up by several other companies, including IBM.

Circumstances Under Which a Patent May Be Assigned

There are various circumstances under which a patent may be assigned. The first is when an inventor or an applicant (if different from the inventor) does not have the capacity to market and commercialize an invention. The processes of developing a patentable invention and getting the patent granted are not child's play. They require plenty of investment and man-hours (especially in the biotechnological and pharmaceutical sectors). The costs are escalated several-fold if the services of a patent attorney are enlisted. In light of these factors, the assignment of a patent may be the safest bet for such inventors as they get a guaranteed return on their investment in the form of a lump-sum payment on assignment, while the assignee is entitled to all future benefits, such as royalties.

The second circumstance is the routine assignment by an employee to an employer by way of an employment or assignment agreement. As per the general principles of many patent legislations across the world, an inventor (the employee, in this case) is the first owner of a patent, which, subsequently, has to be assigned to an employer by means of an explicit assignment agreement. Even if an employment agreement contains a general assignment clause, it is advisable for employers to execute specific assignment agreements for each new patent application. Such assignments "can have additional legal weight whenever ownership of a patent is disputed" (Nathan Poulsen; 2016).

The third circumstance arises when an inventor working towards a particular invention accidentally comes up with another invention in which the inventor or the company with which he or she is affiliated to has no business interests. In the world of Research and Development, accidental inventions are fairly commonplace. The smartest strategy for earning from such "accidents" is to sell them off to another person or entity with business interests in the invention.

Other circumstances under which a patent may be assigned include strategic mergers and acquisitions, which are routinely practiced these days by multinational corporations in pursuit of inorganic growth.

The Differences Between Assigning and Licensing a Patent

A related concept to patent assignment is "patent licensing." While licensing a patent, the proprietor of the patent retains ownership of the patent and only authorizes a licensee to commercialize the patent on his/her behalf. In such cases, the proprietor is entitled to receive a royalty payment from the licensee. In assignment, on the other hand, the proprietor transfers ownership of the patent.

Unlike an assignment, a license to commercialize a patent may be exclusive or non-exclusive. Further, "licenses come in many different flavors and pretty much any type of provision can be worked into a license, such as the length of the license and the territory where a license may apply" (Gene Pierson; 2013).

The Costs of Assigning a Patent

Let us now study the costs involved in assigning a patent in the top five patent jurisdictions: China, Germany, Japan, South Korea, and the United States. Typically, there are three categories of costs involved: official fees, attorney charges, and translation costs.

For the purposes of this article, we shall consider the costs involved in the ownership change of a single patent. Further, we shall consider that the application for recording the assignment with the respective National Patent offices is filed electronically.

The total estimated costs that may be incurred during the process of changing the ownership of a single patent range from approximately $235 in the U.S. to $1,549 in Japan (Table 1).

The cost of Patent Assignment
The costs are inclusive of the costs of translating seven pages of a written assignment document into Chinese, Japanese, and Korean, which vary from approximately $500 in China to $800 in Japan.

Unlike the State Intellectual Property Office of China, the Japan Patent Office, and the Korean Intellectual Property Office, no official fees are charged by the German Patent Office and the U.S. Patent and Trademark Office for recording an assignment document.

Patent Cost Calculator

Worried about keeping pace with the dynamic Intellectual Property/patent costs landscape? The Global IP Estimator is a smart, robust, and state-of-the-art Intellectual Property cost calculator from the stables of Quantify IP, which greatly simplifies the arduous and challenging task of Intellectual Property budgeting management. Itis available in desktop and online versions and offers what traditional Intellectual Property docketing software does not - it can instantly and accurately calculate the worldwide costs for a single patent, trademark, design, or utility model. The calculations may be fine-tuned to the level of any particular stage of an Intellectual Property across its lifecycle, such as patent maintenance fees or patent assignment costs.

The addition of the Global IP Estimator has empowered the decision-makers in many Fortune 500 companies and over 70% of the top 100 IP law firms in the U.S to solve diverse challenges in managing Intellectual Property budgets. To see what we can do for you, email us at qipcontact@quantifyip.com or call us at +1-808-891-0099.

Venkatesh Viswanath (Senior Content Strategist, Quantify IP) contributed to this article.
Exchange Rates Used: 1 U.S. Dollar = 6.27 Chinese Renminbi; 0.81 Euros; 105.90 Japanese Yen; and 1,057.38 Korean Won

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