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WIPO - PCT Applicant's Guide Introduction to the International Phase

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Is it important to record assignments in divisional and continuation cases?

Assume for sake of discussion that a properly worded assignment has been executed and recorded for a US patent application.  By this we mean an assignment that indeed settles ownership of of the subject matter of that patent application to the named applicant (typically a corporation or other legal entity that to which the inventors were obligated to assign the invention).  Now assume that a continuation or divisional application gets filed pursuant to 35 USC § 120 (in this discussion I do  not mean to assume a continuation-in-part).  The question posed is:

Is it important, or even necessary, to record the assignment with respect to the child case?

In this blog article I will discuss factors that I can think of that might influence an applicant’s decision as to whether or not to go to the trouble of recording the assignment in the child case.  I hope you, dear reader, will consider this question, and I hope you will post a comment below with your thoughts about this. 

(I will mention that what prompted me to write this blog article is that a very nice patent firm in China asked me this question.)  

So once again let’s make sure that we have our fact pattern fully set up.  We are assuming for sake of discussion that the assignment that got recorded in the parent case was “good enough”.  We assume that it really did legally serve to convey all rights to the correct entity. 

The alert reader will realize that this is not always as easy as it might seem.  One can imagine a fact pattern where an inventor previously executed some document that conveyed the patent rights, the result being that if the inventor were to execute a purported assignment today, the document signed today would not actually convey any rights.  Another thing to keep in mind is that property law is state law, not federal law.  It means that a particular attorney might not be admitted to practice in the state whose law actually applies to some inventor-and-employer fact pattern.  But anyway, let’s assume for sake of discussion that somehow an appropriate assignment got prepared and signed and recorded and that it really did accomplish its legal goals.

And now there comes a reason to file a child case.  Maybe it is a continuation application, maybe it is a divisional application.

Is it important to record the assignment again in the child case?  Is it necessary to record the assignment in the child case?  Is there some sense in which it might be said that a practitioner would be remiss if the practitioner were to fail to record the assignment in the child case?

A first thing to recall is why anybody records any assignment at the USPTO.  We need to remind ourselves that it is not the recording of an assignment that brings about the change of ownership of the property.  It is the execution of the document itself (or the satisfaction of the terms of the document) that brings about the change of ownership of the property.  If the document was signed on a Monday and was recorded the next day (Tuesday), and later somebody asks “on what day did the invention actually change hands?” the answer is not Tuesday.  The fact that Tuesday was the day that recordation happened does not in any way mean that Tuesday is the day that the change of ownership took place.

There are some countries around the world where if you want to know who owns a patent, the way you get the answer is pretty much by asking the patent office in that country.  The patent office has people who review documents such as assignments.  Part of the reason for filing an assignment with a patent office in such a country is so that the people in that patent office can review the assignment for this purpose.

But that is not at all what happens at the USPTO.  When the USPTO carries out the recordation of an assignment (or a recordation of any other “document pertaining to title”), the USPTO does not actually evaluate the document to arrive at any legal conclusion.  The party submitting the document provides a “recordation cover sheet” which sets forth the purported effect of the document.  The submitter, in other words, represents to the USPTO that the document supposedly is legally effective to transfer the rights from somebody to somebody else.  But there could (to give a silly example) be a “not” in the middle of the document that actually says that the document does not transfer such rights, and if so, there is nobody at the USPTO in the Assignment Branch whose job it is to catch the presence of such a “not” in the middle of the document.  

No, if you want to know who owns a US patent, you cannot find out the answer by asking the USPTO.  There is no USPTO database that contains the results of document reviews carried out by USPTO personnel on the topic of who owns a particular US patent.  Yes, you can obtain what is called an “Abstract of Title” from the USPTO for any US patent.  It will list, one by one, every document relating to title that has been recorded at the USPTO for that US patent.  It will say that Assignor A has assigned to Assignee B in a first document.  It will say that Assignor B has assigned to Assignee C in a second document. 

You might think by paying a few dollars to the USPTO for an Abstract of Title, and by receiving the Abstract of Title from the USPTO, and by looking at the Abstract of Title, and by seeing “A to B” and “B to C” in the Abstract of Title, that this means the USPTO is telling you that the owner is C.  You might think that this that this means you can relax and now you know who the owner is.

Not in the slightest.  For one thing, there might be a “not” in the middle of one of the recorded documents.  Nobody at the USPTO was checking for such things.  

No, to arrive at a legal conclusion as to who owns that US patent, somebody, probably an attorney, would need to study the Abstract of Title and the underlying documents, and would probably need to review the rest of the context.  Only then could the attorney opine as to who actually owns that US patent.

Returning now to why anybody records anything at the USPTO.  The point of recording at the USPTO is basically to put third parties on notice that some document exists.  The document might be an assignment, it might be a lien, it might be a UCC security interest.  But anyway, the point of the recordation is simply to put the world on notice that some document exists.  It is then up to any interested party to review the document and to independently evaluate the document as to its legal import.  (There might, after all, turn out to be a “not” in the middle of the document.)

A chief reason for recording is to comply with 35 US Code § 261.  35 US Code § 261 says, among other things:

An interest that constitutes an assignment, grant or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage.

The alert reader will appreciate that this language means that a practitioner who has his or her hands on a signed assignment should try very hard to get the assignment recorded at the USPTO within three months of the date upon which the assignment was signed.  It is arguably malpractice avoidance to get any assignment recorded well before the expiration of three months from the date that the assignment was signed, because of the language of 35 US Code § 261.

The reality is that any member of the public knows, or should know, that the only way to find out who owns any particular patent is by hiring hiring competent counsel who can then opine as to who owns the patent.  Stating this another way, any member of the public knows, or should know, that it would be a mistake simply to look at an Abstract of Title as a way of supposedly finding out who is the owner of a particular patent.

So let’s talk about what would happen if the patent of interest happens to be a continuation or divisional patent.  One of the first things that competent counsel would notice is indeed that it is a child case of a parent case.  Competent counsel would then among other things order up an Abstract of Title of the parent case.  This would then put competent counsel on notice of the assignment that had been recorded with respect to the parent case.  Probably the wording of the assignment will turn out to cover the invention in the child case as well.  If so, then competent counsel will render an opinion that the owner of the child case is the same as the owner of the parent case.

Note that for this conclusion to work out this way, it is not at all necessary that any recordation have taken place in the child case.

But now let’s change the fact pattern a bit.  Let’s assume that the member of the public fails to hire competent counsel.  Let’s suppose that the member of the public labors under a completely false assumption that one may learn who owns a US patent by ordering up an Abstract of Title from the USPTO for that US patent.   And let’s assume that the particular US patent happens to be a continuation or divisional and the applicant chose to record only in the parent case.

What could happen next is that this member of the public could arrive at an incorrect conclusion as to who owns the US patent.

To the extent that we feel like this is a problem that needs fixing (somebody who should have known enough to hire counsel, but failed to do so), we can avert the problem in advance by … yes … recording the assignment at the USPTO in the child case.  Recording the assignment in the child case means that the assignment will turn up in an Abstract of Title in the child case.  Putting this in colloquial terms, recording the assignment in the child case means that even people who do not know enough to hire competent counsel will be saved from the mistake of having failed to hire competent counsel, and will be put on notice of assignments in situations like this.

But from this discussion we can see a point of view from which it is quite unnecessary to carry out any recordation in a continuation or divisional case, so long as a satisfactory recordation was carried out in the parent case.  After all, any member of the public who is well informed will know to hire counsel when investigating ownership of a patent, and counsel will know to check ownership of a parent case.  

When I was first in practice, any recordation of a patent assignment required payment of a government fee to the USPTO.  It was thus a natural reaction on the part of a practitioner to try to figure out ways to save money for the client in terms of government fees.  So far as recordations of assignments were concerned, in those days what I would do included:

• almost never recording any assignment in any continuation or divisional case (so as to avoid having to pay the associated government fee), and
• saving up recently signed assignments from various inventors to record them all at once in a batch (so as to pay just one government fee instead of several government fees for several distinct recordations).

But about ten years ago, the USPTO stopped charging any government fee for e-filed patent assignments.  So to the extent that a goal of saving money on government fees might once have been a reason for refraining from recording in child cases, that reason no longer applies.

Another factor that cannot be ignored is that if a child recordation is being carried out by a practitioner, then the practitioner will doubtless feel the need to charge a professional fee.  

Consider the client whose point of view is that it is unnecessary to record an assignment in a continuation or divisional case, so long as a satisfactory recordation was carried out in the parent case.  Such a client would likely feel that if US counsel were to carry out an (otherwise unnecessary) recordation in a child case, followed by sending a bill to the client, this might count as “churning” the file to run up the bill.

Consider on the other hand the client whose point of view is that of a small start-up company, for which in the near future a due diligence inquiry might take place.   And suppose the client wants to provide for the possibility that the due diligence person might not understand very much about how to evaluate patent ownership in the US.  The way to be on the safe side is to carry out a recordation in every child case, so that an Abstract of Title for any child case will list the assignment.  This will minimize the risk that a poorly informed due diligence person will labor under a misimpression as to whether client has fully attended to its paperwork burdens about recording assignments.

Having said all of this, we can recognize that as a general matter it will almost always turn out that a continuation or divisional application will get filed much more than three months after the date that the assignment got signed in the parent case.  This means that the recordation date for any recordation of the assignment in the child case will be far later than the three-month date set forth in 35 US Code § 261.  So the three-month period set forth in 35 US Code § 261 will simply almost never play a part in the planning process for recordations in child cases.

Suppose a practitioner is sitting on an assignment that was signed more than three months ago and has not yet been recorded at all.  Is it still worthwhile to get it recorded?  Yes of course!  See this blog article .

Suppose a PCT application was filed at a Receiving Office that is not RO/US.  Can an assignment of that PCT application be recorded at the USPTO?  Yes.  See this blog article .

Now we add one more layer to the discussion.  Many an assignment will be seen to contain boilerplate that recites that the assignment not only covers some particular patent application, but also covers “any and all continuations and divisionals thereof”.  Does the presence or absence of such boilerplate change any of the factors just discussed?  Of course one cannot answer this in a general way without seeing the rest of the language of the document.  But assuming that the document has language that conveys something like “the invention set forth in the document” then I suggest it probably conveys the invention set forth in the continuation or divisional.

It is completely a separate question to talk about, for example, a continuation-in-part.  A CIP contains subject matter not found in the parent.  Barring some surprise about the situation, you are going to want to get a new assignment covering that new matter.

What do you think about all of this?  Do you think it is important to record an assignment in a continuation or divisional case?  Please post a comment below.

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6 replies to “is it important to record assignments in divisional and continuation cases”.

Don’t forget that at least some patent search tools will not pick up on the assignment recorded in a parent – i.e. an assignment-not-recorded child application won’t appear in the results of a search for applications belonging to the Assignee. Furthermore, many companies simply want to see their name on the front page of the publication/patent.

I certainly prefer to have the parent assignment recorded in child applications. I accept that my opinion may be influenced by the fact that many of my clients are small companies – similar to the start-up companies to which you relate in your article. They want to impress – whether or not during due diligence. In the future, I’d much prefer to answer the question “why did you bother to record the parent assignment in the child application?” than the question “why didn’t you record the parent assignment in the child application?”.

Standard practice in the past 10 or so years, ever since the fee requirement was cancelled, with most of the people I work with, has been to record the assignment against any child applications. It takes but a few minutes to do so now, but saves headache and time down the road.

However, I do have a follow-up question. Is it advisable to have a new assignment signed for a child case, even though the assignment in the parent clearly says something along the lines of “… including any and all continuations and divisionals thereof”? Or could that even be harmful? Different people I work with have different views on that.

We like to have the parent assignment filed in all child applications. As noted above, this helps with future sales of IP under any situation (banks, investors, opposing counsel, etc.). But having assignments recorded in all properties also helps resolve doubt when filing terminal disclaimers to ensure that ownership is common to all the properties. Don’t file that TD unless you’re sure!

We do not want new assignments signed for CON/DIV applications because that could be considered an admission that the assignment of the parent (which also clearly assigned any CONs or DIVs) was faulty.

If starting via the US provisional to PCT route, we want both Assignor and Assignee signatures on the documents to comply with Article 72 EPC. If new matter was added before filing the PCT, then we get a new assignment (with both A’or and A’ee signatures). It’s nice to have the signatures notarized, but we get a lot of pushback and it’s not required.

If the application is coming into the US from a foreign application, then we take whatever’s given us; the bar is lower.

At a CLE I attended in 2019, the presenter said that for bankruptcy purposes a security interest in a patent must be recorded with the state under the UCC (Uniform Commercial Code). The presenter noted that the USPTO system alone was sufficient to perfect an ownership interest, but not a security interest for enforcement in the event of a bankruptcy. I usually only record with the Patent Office and I have not been involved with enforcing a security interest in a patent for a bankruptcy. I’d be interested to hear other opinions on recordation.

I realize I’m late to reading this post, but we like recording the assignments from the parent against the child for the same reasons as the other commenters. A question I have is regarding whether “electronic” signatures on patent assignment documents are acceptable. Not all states have embraced online remote notarization, some folks are in other countries – so the jurisdiction issue seems to be a nightmare than just ink signing the document. What’s you’re thought on electronic signatures on assignment documents?

The Assignment Branch does not care at all what kind of signature is used.

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A license is a grant (assignment) to the licensee of various licensed rights.  The situation can be further obscured by the fact that one can assign the licensed rights from one entity to another.  Thus, the first recordation of a license may be recorded as a “license,” while the assignment of those same licensed rights to another entity may be recorded as an “assignment.”  The only way to really understand the situation is to review the actual documents, which are all readily available from the recordation branch of the patent office.

Note that the patent office sometimes refers to licenses as a species of assignment.  That is correct, because one is assigning license rights.

Not necessarily.  Assignments are only needed if you are contractually obligated, by employment or otherwise, to make the assignment.

An important corollary is that an inventor can merely license his patent rights to a company that is exploiting the invention, and keep title to those rights in his own name.  Investors are usually unhappy with that arrangement, but there can be significant advantages.  One major advantage is that the patent holder is a “necessary and indispensable” to any litigation over patent validity.  Any competitor trying to invalidate the patent must file the action in the district where the inventor resides.

Assignments of provisionals have substantially the same pros and cons as assigning formal utility and design applications.  See the previous FAQ.

Since there are costs attending the handling and recording of assignments, many inventors and companies prefer to hold off on assigning provisional applications until filing of the corresponding formal (utility or PCT) applications.  That is a dangerous strategy.  In the interim between filing the provisional and the formal applications, there are all sorts of unfortunate events that can make later assignments difficult or impossible, including death or disability of an inventor, reluctance of an inventor to file an assignment due to a separation from a company, or divorce.

It is not technically necessary to re-file assignments for divisional or straight continuation applications.  A properly worded prior assignment recorded against the original application is automatically effective because the assignment recorded against the parent application gives the assignee rights to the subject matter common to both applications.

In the case of a substitute or continuation-in-part application, a prior assignment of the original application is not applied to the substitute or continuation-in-part application because the assignment recorded against the original application gives the assignee rights to only the subject matter common to both applications.  Substitute or continuation-in-part applications require the recordation of a new assignment if they are to be issued to an assignee.

Absolutely.  Indeed, it is a very common occurrence that an inventor will assign his invention to a company, and then the company will re-assign the rights after the patent issues.

Assignment is technically free, but it costs about $100 ($40 in filing costs and about $60 in paralegal time) to record the assignment at the U.S. patent office.

Note that the office charges US$ 40 for each patent or patent application listed on the recorda­tion form.  Thus, if an assignment references a family of 5 patent applications, the recorda­tion fee is US$ 200.  Of course paralegal charges would also apply, and possibly attorney time.

Under U.S. law, assignments must be recorded to be effective as against third parties who do not have actual knowledge of the assignment.  The statute is similar to recording statutes used for recording real property.  Thus, although there is no requirement to record an assignment, it is foolish not to do so.

Note that absent some unusual circumstance, patent assignments do not have to be notarized for use within the United States.

Preparing assignments is usually a simple matter of filling in the blanks of a form.  Assignment forms (inventor to company and company to company) and guidelines for preparing such forms can be found in  Strategic Patenting .

Note also that it is important to clearly identify whether the document being recorded is an assignment, license, or other document.  The recording branch does not generally read the documents to verify the content.

The Patent office will proceed as if the signature had been procured from the inventor, but only after establishing that the entity pursuing the application has colorable rights, and only after establishing that the inventor cannot be reached.  Thus, the patent office will need a copy of the employee agreement, assignment, or other documentary evidence establishing those rights.

In the case of a deceased inventor, the patent office will insist upon a statement from the executor of the estate, or an heir if probate is finished.  Where the inventor refuses to sign, or cannot be found, the patent office will insist upon seeing the letters, emails and faxes sent to the inventor, and will need a declaration from the person trying to make contact.

One simply records a certificate of name change or other formal document with the USPTO, using the assignment recordation form.

In foreign countries, name changes can be a real problem, and can cost anywhere from several hundred to a thousand dollars (mostly in attorneys fees).

It depends on the wording of the assignment and the recordation laws of the foreign countries.  Most assignments transfer all rights, title, and interest to U.S. patents and applications, and to corresponding foreign patents and applications.  Even so, the assignments might not be legally effective in a given country until the assignment is recorded in that country.

Some countries insist on a specific assignment that expressly lists that country. Canada, for example, typically requires its own assignments.

Patent infringement damages accrue in some countries only from the date the assignment was actually recorded at the relevant patent office.  Thus, delay in registering can cost a patent holder dearly in reduced patent infringement damages.

The main disadvantage to recording assignments is that many countries (including most or all of Europe) consider assignment of a patent or application to be a taxable transfer, and charge VAT (Value Added Tax) on the estimated value of the application or patent.  Since the value is often low in the early days, and can rise considerably during the life of the patent, the disadvantage of recordation can be mitigated by registering early.

Assignments records at the USPTO are available for  public inspection , but only for patents and published applications.  One can search by reel/frame number, patent or publication number, and assignor or assignee name.

The underlying documents are not available for download, but can be ordered from the assignment branch.  Paper mail requests can take months, but faxed requests are usually filled within a day or two.

No.  One should never rely upon the designation of “assignee” as set forth on the face of a patent.  First, the patent office obtains the “assignment” information directly from the issue fee transmittal form, and there is no verification whatsoever that such information is, or even ever was, correct.  The entry could well have been an error on the part of an attorney, paralegal, or secretary, and the issue fee transmittal form even warns that designation of an assignee of that form does not, in and of itself, affect an assignment.  Second, the patent is never altered after it is published.  Information that was correct at one point in time may well be superseded down the road.  Third, even if the “assignee” information is correct, one cannot know from the face of the patent what rights were assigned.  It might well be that only licensed rights were assigned, or that such rights are subject to a reversion.

Yes. But there can be real problems with multiple owners of a patent. Unless there is some other agreement restricting what an entity can do with its ownership interest, a co-owner of any portion of a patent, (whether 99% or 1% or .0001%), can make use of the patent however they want.  For example, a .0001% owner of a patent could license out its rights, and keep 100% of the license fee.  Absent an agreement to the contrary, there is no duty of a co-owner of the patent to share license fees with any of the other co-owners.

One of the big problems with two entities owning portions of a given patent is that the two entities can compete with each other with respect to license fees. For example, if co-owner A offers to license the patent rights for 7%, co-owner B might choose to undercut the previous offer by offering to license the same rights for 5%.  But then co-owner A comes back and offers to license the rights for 2%. Pretty soon the value of the license rights goes to zero.  Also, if co-owner A gets upset with co-owner B, co-owner A could unilaterally abandon the patent, which would make it worthless to everyone.

Even if co-owners agree to share license fees 50-50, there can be problems.  For example, co-owner A could decide to license out its patent rights for one dollar a year to a licensee that co-owner A owns, has an interest in, or perhaps has a relative with an interest in.  Of course co-owner A would be happy to share $0.50 of its annual license fee with co-owner B, but co-owner B would be pretty upset.

Still further, if there is a chain of patents, for example with a parent and a child patent in the same family, the ownership of both patents has to remain to the same at all times.  If, for example, both a parent patent and a child patent are 100% owned by A, assignment of some or all of the child patent to B will immediately invalidate the child patent.  Even if such an assignment is made, and the parties realize the mistake, reassigning the child patent back A would not cure the mistake. The child patent would remain abandoned.

Bottom line, co-ownership of a patent is really problematic.

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