When it comes to the world of patents, understanding the difference between licensing and assigning rights is like knowing the rules of the road before getting behind the wheel. Both options have different implications for ownership and control, and choosing the right path can have a significant impact on your invention’s future.

Licensing: Retaining Ownership While Sharing the Wheel

Think of licensing like a car lease. You own the car (in this case, the patent), but you’re giving someone else permission to drive it around for a while. In the patent universe, licensing means that you grant permission to another individual or company to use your invention for a specified period while you retain ownership of the patent.

A license can be:

• Exclusive: You’re handing the keys to one person, and only they can drive your car.
• Non-Exclusive: You’ve got a fleet of cars, and you’re letting multiple people drive different ones.

Assigning: Handing Over the Deed

On the flip side, assigning patent rights is like selling your car. Once you sign over the pink slip, the new owner can repaint, remodel, or even tear it down. It’s theirs, lock, stock, and barrel. In patent terms, assigning rights means you transfer your entire ownership to another person or entity. The assignee becomes the new owner of the patent and acquires all the rights to exclude others from making, using, or selling the invention.

Licensing vs. Assigning: Which Should I Choose?

Licensing can be a strategic move. It allows the inventor to monetize their patent through royalties while maintaining control over the invention’s destiny. It’s a great way to spread your invention across different markets without overextending your resources.
One of the most compelling aspects of patent licenses is that they can be tailored to fit the specific needs and objectives of both the licensor and the licensee. For instance, the agreement can stipulate whether it’s the responsibility of the licensee or the licensor to pursue legal action against potential infringers. This flexibility allows for strategic alignment with business goals and enforcement capabilities. Additionally, licenses can include performance-based clauses, such as a stipulation for cancellation if the licensee fails to sell more than a predetermined number of units. This ensures that the patent’s value is actively being utilized and maximized in the marketplace. Such customizable elements in patent licenses make them a powerful tool for both protecting and leveraging intellectual property effectively.

Alternatively, assigning might be your best bet if you’re looking for an exit strategy, a lump sum payment, or if you simply want to wash your hands of the patent management duties. It’s a clean break, but it also means you’re stepping out of the game completely when it comes to that invention.

Real-World Examples

• Licensing Example: A tech inventor licenses their new smartphone technology to a phone manufacturer, allowing them to include it in their next model. The inventor gets a cut from each sale while still owning the patent.
• Assigning Example: An inventor of a medical device sells the patent to a pharmaceutical company, which then gains all rights to produce and sell the device, and the inventor walks away with a payout.

The Bottom Line

Deciding whether to license or assign your patent rights is a critical decision that should be guided by your long-term strategy and financial goals. When weighing your options, it’s important to consult with a patent attorney to understand the legal and financial implications of every possible scenario.

If you find yourself in this situation, we are here to help you navigate the best path forward. Simply call us at (888) 666-0062 or click here to schedule an Initial Discovery Session online and we’ll meet with you to discuss your next steps.

DISCLAIMER: The information contained in this article is for informational purposes only and is not legal advice or a substitute for obtaining legal advice from an attorney.