by Mohammed Saleem
Most start-up pharmaceutical, biotechnology, and medical device companies are formed with the intent to eventually be bought out by larger, well-established companies such as Abbott, Sigma Aldrich, or Bayer. However, the option of being bought out only comes to fruition once a start-up has established scientific proof that leads to medical or pharmaceutical advancement. In the course of novel scientific innovation, start-ups and inventors are often quick to get a patent. But, when being bought out, one might find themselves confused about the status of their application or the ownership of the patent. This blog post aims to explain (1) the ownership and assignment of a patent when it is first filed, and (2) how assignment rights can be transferred when a company is bought out.
Utility Applications
Types of Applications
Utility applications and patents are the most common type of filings and are what people often think of when hearing “patent.” Scientific developments will always be utility applications that end in utility patents. However, these filings come in many types including provisional, nonprovisional, divisional, substitute, continuation, and continuation-in-part applications. While the precise differences between these applications and their functions are irrelevant to this post, it is important to note that a nonprovisional application is always a parent application. The remaining types of applications, except provisional applications, stem from the originally filed parent application and are therefore known as child applications. Provisional applications themselves are not a type of application that leads to a patent, but rather, they act to “hold your place in line” at the United States Patent and Trademark Office (“USPTO”).
Assigning a Patent
As far as the USPTO is concerned, patents are personal property for purposes of assignment and ownership. This means that the inventor must agree to the assignment in writing. Once the written assignment is complete, the person or entity receiving ownership (the assignee) is the new owner of the application or patent. Assignments of patents and applications can be done at any point during the course of employment. Employment agreements should include contractual provisions for the automatic assignment of patents to the start-up. This minimizes any chances of employee refusal or in the case of joint inventorship, one joint inventor agreeing to assign rights while the other does not. Managing the patent and its prosecution before the USPTO can become confusing and complicated in a joint inventor scenario, so it is best practice to include patent assignment provisions in employment agreements.
With this in mind, any type of patent application may be assigned. Note, the assignment of a parent nonprovisional application leads to any subsequent child applications automatically being assigned to the entity or individual holding ownership of the parent application. In other words, assignment runs from parent to child applications. No additional filings or recordings need to be submitted to confirm the assignment of a child application.
Recording an Assignment
While not required, it is always best to record an assignment at the USPTO. Recording the assignment provides public notice of the assignment and prevents your company from losing rights if a later transfer occurs to a third party as they will be aware of the original assignment. While that may sound complicated, it simply means that recording the assignment prevents any later transfers to a third party because the first party to record and publicly claim ownership in good faith is given priority in ownership.
Assignment in a Buy-Out Transaction
If Your Company Has a Complete Ownership Interest
Subsequent assignments where a start-up holds a complete ownership interest in an application or patent are relatively straightforward. In this case, the start-up is the rightful and complete owner of the application or patent. Therefore, the start-up has complete and total control of the application or patent and may further assign it by following the previously discussed considerations. The process of transferring rights and ownership from one entity to another is identical to the process of transferring rights and ownership between inventors and employers.
If Your Company Has a Part Ownership Interest
If the start-up only holds partial ownership in an application or patent, the transfer does not provide the assignee with complete ownership but is rather defined as an “assignment of patent rights.” In other words, you can only assign the percentage of rights held by your start-up. This situation is often seen in joint ventures between two companies or where multiple inventors exist and fail to unanimously agree to assign the application or patent. To illustrate this, if four inventors each own a 25% interest in the application or patent, with two refusing to assign to the start-up, the start-up can only obtain 50% ownership, and may only further assign that 50% right to another. The main issue in this scenario is that all owners must act together if the application undergoes prosecution before the USPTO. This can create difficult scenarios where application owners have differing opinions on how to proceed with prosecution, thus slowing down the entire process and ultimately leading to more issues.
Concluding Thoughts
Overall, the process of assigning a patent is fairly simple. However, it is key to record an assignment before the USPTO and provide an assignment provision in employment agreements to avoid any headaches that may arise otherwise. This blog post provides a very high-level overview of the many intricacies of patent law. With that, it is advised that you retain counsel who is well-versed and registered to practice before the USPTO for a full understanding of the assignment process.
This post has been reproduced and updated with the author’s permission. It was originally authored on February 2, 2023 and can be found here.
Sources:
https://www.uspto.gov/web/offices/pac/mpep/mpep-0300.pdf (**Note: This is the Manual of Patent Examining Procedure chapter that deals with assignment and ownership of patents and applications).
https://www.uspto.gov/sites/default/files/documents/pto1595.pdf.
https://patentgc.com/protecting-university-patent-rights/. (Featured Image).
Although solar energy has recently become one of the cheapest forms of generating electricity, the upfront capital cost of solar installation remains high. Large companies like Google, Walmart, Apple, and Amazon have made major investments in solar energy, reaping the benefits of reducing energy costs, promoting a cleaner environment, and taking advantage of climate-friendly policies. Meanwhile, start-up companies and small businesses have shied away from solar installations, causing them to lose out on these benefits. Despite the decreasing prices of solar technology, commercial solar installation costs remain high for small and mid-sized businesses, ranging from $43,000 for a 25-kilowatt (kW) system up to $175,000 for a 100-kW system. However, financing options like Solar Power Purchase Agreements (PPA) provide a vehicle for businesses that lack the capital to invest in solar energy.
While utilizing solar energy is the right move from an environmental and socioeconomic perspective, the upfront costs of investing in solar technology remain costly and the savings may not be recouped until four years after installation. Before entering a solar PPA, small business owners and start-up companies should consider many factors. One factor to consider is the price of electricity specified in the terms of the contract. Although solar PPAs provide predictable rates of electricity pricing, many solar PPAs contain a fixed escalator clause, typically raising the price the customer pays between 2-5% annually. While this rate is often lower than the projected utility price increases, customers risk overpaying for solar energy as retail electricity prices may decline or increase more slowly than the escalator plan. Further, negotiating favorable solar PPAs may be complex and potentially have a higher transaction cost than buying the solar system outright. Nevertheless, solar PPAs provide predictable, predetermined rates allowing businesses to budget accurately.
For many nascent entrepreneurs caught up in the many layers of starting their business, building an intellectual property portfolio is not at the top of their priority list. In light of fundraising capital, navigating the real estate market for the ideal property, and building initial inventory, thinking about intellectual property filings might stay on the back burner. However common this scenario may be, it is a mistake—one of the most critical elements of any business is its name (and subsequent branding!), and ensuring that your preferred name is both available and enforceable should be a main prerogative.
When you think about the marketplace giants that we interact with every day—like Apple, Amazon, and Google—you will notice that their names are concise, unique, and recognizable. Entrepreneurs brainstorming a name for their product or business should try to emulate this blueprint, and not just because it is a smart marketing strategy, but because these names are likely to be more easily trademarked.
These nuances are important to keep in mind as an entrepreneur selecting a name for their new business. If you would like to explore what options might be taken already but have not yet retained an attorney to assist with your start-up, you can go to the USPTO website and use their 
Small business and start-up companies incur a variety of costs to operate their businesses. However, no matter the size of a business, energy consumption ranks among the top five business expenses. The primary use of energy includes operating vehicles, heating and cooling, and operating equipment. The ability to cut down on fixed costs such as utilities may significantly improve cash flow. According to the U.S. Energy Information Administration (EIA), the average monthly utility bill for commercial buildings is $650 per month with the northeast region averaging a higher cost of $727 per month. The cost of electricity and natural gas is only expected to rise in the coming years and remain volatile. Whether your company has been in operation for years or is beginning to get off the ground, managing and saving on energy costs is not only beneficial for the business but also for the environment. With the recent enactment of the Inflation Reduction Act (IRA), small businesses are incentivized to deploy clean energy technology to reap significant cost-saving benefits.
Under the IRA, the ITC enables business owners to receive a one-time 30% tax credit for PV system installation. In contrast, the solar PTC can be claimed every year over the 10-year credit period at the current rate of 2.6 cents/kWh for commercial projects (adjusted for inflation). The size of the system must be under 1 megawatt (MW) to claim an ITC or PTC, and project owners cannot claim both credits for the same property. Projects may qualify for additional bonus credits of 10% if located in a low-income area.
Let’s talk about naming your business. As you would expect, branding can make or break a project. 82% of investors say name recognition is an important factor guiding them in their investment decisions, and brands with poor company branding pay 10% higher salaries. A name is a long-term commitment, and can be a daunting task – it took Warby Parker six months and over 2,000 options to find their brand’s perfect name.
Once you get a short list of names together, you will want to determine whether or not any of the names are taken. You don’t have to trademark your business name to run business activity under it, but you do need to register a business if you start any sort of commercial activity, like promoting goods or services. If that’s the case, your business needs to be registered and you’ll need to receive a Tax ID before you can legally operate business activity.
The U.S. Patent and Trademark Office (USPTO)’s Trademark Electronic Search System is the best way to search for all applied-for and registered trademarks. If the name is available, filing a trademark for a business name with the USPTO costs between $50 and $600, depending on if you’re registering the trademark in one state, multiple states, and the type of trademark being registered. Note that if you’re a foreign-domiciled applicant, you are required to hire a U.S.-licensed attorney to represent you at the USPTO.
Now that you know some of the basic rules around naming your brand, it’s time to get brainstorming! The links below are some great examples of online tools that can help you to come up with the perfect brand name, domain name, and URL. Just remember – your brand name should be memorable, accessible, and evolvable.
Many international entrepreneurs wish to enter the United States to grow their start-up endeavors. Unfortunately, many existing visa or immigration options do not adapt well to the entrepreneurial context. The International Entrepreneur Parole (IEP) program is an attempt to fill this gap by creating a path for international entrepreneurs to enter and live in the United States if their presence would provide a “significant public benefit.” This post will introduce the International Entrepreneur Parole Program, discuss IEP program requirements, and weigh considerations for an entrepreneur who may be exploring this option.
An entrepreneur interested in the IEP program should weigh several aspects of the program. To be admitted to the United States under IEP, the entrepreneur must be entering the United States from abroad. That means that an individual who is currently in the United States in another immigration status—such as a student visa—would have to leave the United States and re-enter the country at an airport or border.
