Patents, which safeguard intellectual property (IP) and promote invention-based businesses including medicines, software, biotechnology, and manufacturing output, are crucial to the changing business environment.
Indian government grants innovators 20 years of exclusive patent rights under the Patents Act of 1970, enabling them to use their creations for commercial or licensing reasons.
1. Introduction: Understanding Patent Ownership
A patent’s owner receives all of the rights, title, and interest granted by the patent, which makes patent ownership essential. Until those rights are transferred in a formal Patent Assignment agreement, patent rights are typically held by the inventors. It is important to confirm patent ownership before filing a patent application in order to avoid future problems.
Many individuals are unsure about the distinction between patent inventorship and patent ownership. When someone assigns their patent rights to a third party, for an example, they may be an inventor but not the owner of the patent rights.
Furthermore, if a person or organization was given the patent rights by the inventor, they may be the owner of the rights but not the inventor. A company can never be an inventor.
The process of transferring ownership or the right to use a patented invention from the patentee (the owner) to another individual or organization is known as a patent transfer.
The process of officially transferring ownership or interest in a patent from one party to another is known as transfer of patent rights. This transfer can occur through various mechanisms such as assignments, licences. The original patent holder (assignor) transfers ownership rights to another party (assignee) in an assignment, giving the assignee the authority to enforce the patent.
2. How to Transfer Patent Rights in India
After getting a patent, a patentee may prevent others from creating, using, performing, or selling the invention without his permission.
A patentee can transfer the ownership of the patent to another to use the invention by way of:
- Licenses – This is a temporary transfer of a limited set of rights. A license allows a licensee to make, use, sell, or exercise the patented invention for a specific period, within a particular territory, and under agreed-upon conditions. Licences can be:
- Exclusive – A patent owner transfers ownership of the patent to a licensee when they issue the licensee an exclusive patent license. It grants the licensee exclusive rights to commercialize and use the patent.
- Non –exclusive – A non-exclusive patent license allows the patent owner to grant licenses to anybody besides the licensee. Under such a licensing, the licensee may use the patent’s licensed rights, but the patent’s title stays with the licensor
- Sub-licensable – A licensee may grant a license to third parties under a sub-license. He may grant a sub-license to any number of parties with or without the patent owner’s prior consent, depending on the terms of their agreement.
Licensee receives partnership in the ongoing royalty income.
- Assignment– Patent assignment is the process by which the assignor transfers all or a portion of the patent’s rights to the assignee. Following assignment, the assignee is entitled to summon anyone who uses the invention without permission in violation of the patent.
For more details, you can read our blog titled Can You Guide on Licensing or Selling My Patent?
Difference between Patent Assignment and Licensing
| Aspect | Assignment | Licensing |
|---|---|---|
| Control | Assignee has right to take control | Licensor has also enjoyed rights |
| Ownership | Full transfer of right | Retained by owner |
| Rights | Assignee has permanent rights | Licensor has the right on a temporary or conditional basis |
| Revenue | One-time Payment | Ongoing benefits or share on profits |
3. Selling vs Assigning a Patent
Selling a patent is not like selling a product or business. You are selling a legal monopoly- the exclusive right to prevent others from making, or selling your invention for the remaining life of the patent.
Buyer got the following things by seller
- The ability you commercially exploit the invention
- The ability to sue infringers.
- The ability to license it to others and collect royalties.
The ability to sell it again to someone else.
The Patents Act of 1970 does not establish a precise process for assigning a patent. It should be remembered that if a patent contains many inventors, each of them must agree to the assignment.
The assignee of a patent (by a signed deed) assumes ownership of the invention for all intents and purposes. Now the patent owner and the licensee enter into a licensing agreement, which permits the licensee to create, sell, exercise, or use the invention that has been licensed on an exclusive or non-exclusive basis.
4. Patent Assignment Procedure Step by Step
Here is step by step patent Transfer process:
Legal Process to sell a patent
Patent can be licensed to other businesses or sold directly to the buyer. Although both of these are profitable, their benefits differ.
- If you sell your patent, you give the buyer complete ownership and rights. You won’t have any control over your patent after the sale.
- If you licence someone, and you are the owner of the patent, then it allows another individual or organization to use it on your behalf in order to receive regular money streams.
Make Patent Valuation report –
A person can determine the worth of their patent before selling by the help of patent valuation report. Therefore, accurately evaluating patents allow you to gain a true sense of its value and prevent you from selling it for less than its true value.
It is not an estimation or suggestion, patent valuation report is well structured, evidence based analysis that combine legal cases, technical analysis, and financial modelling to found a true value of patent.
Find Potential Buyer
One of the most crucial things to do when selling your patent is to find the right buyer or licensee. Possible purchasers could be a big businesses purchase patents to diversify their product lines, enter new markets, or drive out competitors.
Negotiation and sale agreement
Once at the negotiating table, define both sale and negotiation to ensure that both sides are satisfied. The parties should sign a formal selling agreement after deciding on the details of the transaction. The conditions of payment, the transfer of rights, and other specifics should all be included.
Transfer the rights at Indian Patent Office
After the sale is completed, the name of the new owner has to be registered at the Indian Patent Office. This would transfer the patent rights.
Hire a professional -
A registered patent agent are able to handle patent prosecution and filling matters. They help you to minimize the possible mistakes.
A patent professional can help you in various ways :
1. A specialised professional combining financial, law and technical expertise who prepare a formal patent valuation report.
- They are able to find potential buyers or licensee fro your patent .
- They help you to draft legally enforceable assignment agreement. Court see disputes arising form poorly drafted assignment agreement on regular basis, these disputes are expensive time- consuming, and entirely avoidable.
- Handling global patent office filings correctly
- Manages post-transfer obligation like Inventor cooperation obligation, tax fillings or payment related issues and coordination across jurisdiction.
Documents required for patent transfer
Here is the list of documents to be used in patent transfer:
- Form 16 – Mandatory application for registering the assignment or license (jointly filed by assignor and assignee).
- Deed of Assignment – A duly executed, stamped, and notarized document detailing the transfer of rights (assignor to assignee).
- Power of Attorney- Form 26 is required if patent agents are used to file the transfer.
- Proof of Right
6. Cost of transferring patent ownership
The cost of transferring patent ownership varies depending on several factors, including government fees, and professional fees:
Government filing fees
| Applicant Category | E-filing | Physical Filing |
|---|---|---|
| Natural Person(s)/ startup (s), Small entity (alone or with natural person/startup) | INR 1600 | INR 1750 |
| Other entities (including large companies) | INR 8000 | INR 8800 |
Professional fees
It varies according to the patent professional. Hire a patent professional to make the transfer process easy.
For international assignments involving multiple jurisdictions, costs multiply — each country where the patent is registered requires a separate recordation, often with separate legal fees.
7. Common Mistakes to avoid
Transfer of patents is simple on the surface but needs a perfect strategy.
- Filing to record the assignment (Especially US)
If you buy a patent but did not record it, the seller could sell the same patent to another buyer. Under US Patent law an unrecorded assignment is void against an assignee who pay valuable consideration and records first.
- Ignoring the foreign counterpart
If the invention is protected in multiple countries, each jurisdiction patent right must be transferred separately.
- Not Addressing Continuation Application
A patent family often includes pending continuation or divisional application. If the agreement only covers issued patents, the assignor may retain rights in future patents that claim the same invention.
8. International Patent Transfer
If your patent is granted in many countries, which his common for commercially significant inventions filed under the PCT (Patent Cooperation Treaty), then each national patent may need to be transferred separately. The rule of making a record of an assignment varies by country, and in some jurisdictions, the transfer is not effective against third parties until it is officially recorded.
Some countries impose restrictions on selling the right of patent in specific industries like (defence technology), require government approval for transfer, that the assignment document be translated into the local language and certified. In that case hiring local patent agent in each relevant jurisdiction is advisable for cross border transfer.
9. Final Thoughts: Making the Right Choice
Transfer of patent is a legal commercial transaction that is done with proper strategy, perfect documentation, and under professional guidance.
For inventor or small business and startup in India, understanding the procedural requirements- such as preparation of documents and form and government fees and stamp duty is crucial for validate transfer. Hiring a patent professional is right choice to make process easy and mitigate risk.
In today’s era patents are powerful assets. Knowing how to transfer them effectively can unlock new opportunities, drive growth and maximise the cost of intellectual property.
Author: Sibgat Ansari
Patent Associate at Intellect Bastion
