When more than one person contributes to the conception of an invention, each person contributing will be a co-inventor of that invention on the corresponding patent application. The combination of all of those that contributed to the conception of an idea claimed in a patent is known as the inventorship of the patent or patent application. This article explains steps that can be taken to handle future situations where a disagreement arises between the co-inventors.
Inventorship cannot be negotiated. In other words, you cannot agree that someone that did not contribute to the conception of the invention is an inventor. Likewise, you cannot agree that someone that did contribute to the conception of the invention is not an inventor. If a person contributed to the conception of the invention claim in a patent application, that person must be named as in inventor.
Sometimes workman or engineers are hired to make a prototype of the invention. If the hired person only carries out your instructions for making the invention, then that person might not be considered an inventor depending on the circumstances.
On the other hand, ownership of an invention can be negotiated and transferred. Therefore if one person conceived on the invention, and a second person provided funds to patent and commercialize the invention. The first person would be the inventor, but the second person could not be named as an inventor. Instead the first and second person could form a partnership, corporation, LLC, or other entity, where each person’s ownership interest could be divided in the entity and the entity could own the invention. Further, the first person could sell all of the right in the invention to the second person and then the second person would be the owner and the first person would be the inventor.
If there are two or more inventors, under the patent law, each inventor will own the patent jointly with the other inventors. However, under the law this allows each inventor to make, market, sell, license, or otherwise grant rights in the patent and receive moneys therefrom without splitting the funds with the other inventors. Further, the each inventor does not need to get permission from the other inventors to undertake such activities with respect to the patent.
One problem arises, if all inventors are not in agreement. This can occur when one inventor is engaged with an company that has an interested in licensing or selling the product/service. They may be less likely to do a deal if they know that an uncorperative inventor could sell the same rights to that company’s competitor, in which case they would have to compete with that other company to sell the patented product. That competition would make the deal less valuable to either company than if they had no competition.
This is normally not a problem when all inventors are in agreement. However, it becomes a problem when inventors having a falling out or disagree about how the patent should be utilized. Further it is problem if one inventor wants to proceed forward with commercializing the invention and the other inventor no longer wants to participate. While at the beginning inventors maybe in agreement about how they intend to proceed, it can take between 3 and 5 years to obtain a patent and a lot can change during that time.
Legal Entity for Ownership and Invention Exploitation
Whenever there are more than one inventor it is best to form a legal entity in which the inventors own an interest (e.g. own shares). The ownership of the invention can be transferred to the legal entity. The internal operating documents of the entity can describe (1) the ownership interest of each inventor (and other non-inventors, if desired), (2) how the invention will be commercially exploited, (3) how disputes are resolved between inventors, (4) what happens if one or more inventors wants to proceed but other inventors do not, and (5) many other business considerations.
The legal entity formed can be a written partnership, a corporation, an LLC, or other entity. The legal entity provides the vehicle for owning the patent, making decisions with respect to the patent and its commercial exploitation, and dealing with situations where an inventor wants out of the business. Further the legal entity may be attractive to potential business partners and licensees because they would need to deal with one entity and not multiple inventors.
Therefore, forming a legal entity to own invention rights in an invention having multiple in inventors can lend clarity to the commercialization and decision making processes related to the invention and related patent application or patent.