Patent Assignment Agreement: Who Signs, When, and Why

A patent assignment agreement is how an invention gets from the person who made it to the company that wants to own it. Most of the templates online treat it as a form to fill in. That misses the real risk. The agreements that fail rarely fail on a missing field. They fail because the wrong person signed, at the wrong time, or in the wrong tense. And the failure usually stays hidden until somebody tries to sell, license or enforce the patent. We see the result on the brokerage desk. A company believes it owns a patent. A buyer's diligence finds that one inventor never assigned, or assigned in words that only promised to. Until that is fixed the patent cannot be sold. This guide covers who signs a patent assignment agreement and when: employees, founders, contractors and sellers. It explains why "hereby assigns" beats "agrees to assign", where US states limit what an employee can give away, and why Germany needs no assignment agreement at all for employee inventions. ## What a patent assignment agreement does, and why you almost always need one Start with the default rule, because everything else is built on it. In the words of the US Supreme Court, since 1790 the patent law has operated on the premise that rights in an invention belong to the inventor. Not the employer who paid the salary. Not the company whose lab was used. The inventor. Moving those rights takes paper. US patents and applications are assignable in law by an instrument in writing. A handshake, an email thread or a cap table entry does not move title. Once the agreement is signed, the assignee can act as owner from the start: a person to whom the inventor has assigned or is under an obligation to assign the invention may make an application for patent, and the patent is granted to the real party in interest. What the agreement can transfer is a separate question: whole title, a percentage, or a US territory, along with the clauses that carry the weight and the three month recording rule. Our guide to the assignment of patent rights agreement covers that. This article is about the people around the document. ## The four situations that call for one ### Employee to employer This is the most common case and the one most often done badly. Well run companies don't wait for an invention before asking for an assignment. They have every new hire sign a pre-invention assignment up front, covering anything invented during employment or with company resources, together with a duty to disclose and an ongoing duty to execute documents related to the IP they created after they leave. The same source recommends a second, specific assignment for each application when it is filed, so the record shows ownership on the filing date. The employment contract side is a topic of its own, covered in our guide to the invention assignment agreement. ### Founder to company Founders often invent before the company exists, or in the months before incorporation. Those inventions belong to the founder personally until assigned. The fix is a founder assignment that names the specific inventions and applications and recites consideration, which can be shares. The trap is assuming the founder's role is enough. It isn't. An investor's lawyer will ask for the document, and so will a buyer. ### Contractor or consultant to client Contractors are where companies get caught out, because they assume "work made for hire" covers everything. It doesn't. Work made for hire is a copyright doctrine with no patent equivalent, so a patentable invention in commissioned work stays with the contractor unless it is separately assigned. For contractors the copyright gap is worse still: software is not one of the categories of commissioned work that can be a work made for hire, so without a written assignment the contractor can own even the code. Get the agreement signed before work begins, not when the invoice arrives. ### Seller to buyer When a patent changes hands for a price, the patent assignment agreement is the closing document. The buyer's real interest is everything upstream of it: is the seller actually the owner, and does every inventor's assignment hold up? That is where the first three situations come back to bite. More on how sales are structured in our guide to how selling a patent works. ## Hereby assigns versus agrees to assign ### Stanford v. Roche in four sentences A Stanford research fellow signed a university agreement saying he "agree[d] to assign" his inventions to Stanford. He then spent time at a company called Cetus and signed its visitor agreement, which said he "will assign and do[es] hereby assign" his rights in inventions made through that access. Working there, he helped develop a PCR-based method for measuring HIV in blood, which Stanford later patented. The courts held that the Cetus words transferred his rights at once and the Stanford words were only a promise, so Roche, which had acquired Cetus's assets, was a co-owner and Stanford lost its infringement case for lack of standing. The lesson is blunt. A present assignment of future inventions takes effect automatically the moment the invention exists. A promise to assign leaves the inventor holding title until a second document is signed. If the inventor signs a present assignment to someone else first, the promise loses. ### Wording courts have accepted and rejected The Federal Circuit says there are no magic words, but it has a clear pattern. Phrases it has treated as automatic assignments include "agrees to and does hereby grant and assign", "hereby conveys, transfers, and assigns" and "the Employee assigns all of his or her right, interest, or title". In Omni MedSci v. Apple (2021), university bylaws saying patents shall be the property of the University were read as a promise of a future assignment, not a transfer. The professor kept title. | Wording | What it does | |---|---| | "hereby assigns" / "does hereby grant and assign" | Present transfer, including future inventions when made | | "agrees to assign" / "will assign" | Promise only; a second document is needed | | "shall be the property of" | Read as a promise in Omni MedSci | | Broad, vague carve-outs | Can make even "hereby assigns" ambiguous | That last row deserves attention. A loosely worded carve-out for prior or unrelated inventions can make an otherwise correct clause ambiguous. Ambiguity sends the question to state law, which varies considerably on what evidence a court will hear. Ironically, some public template pages use "shall transfer and assign" in their own sample clauses. Check the verb before you sign anything. ## Limits on what an employee can be made to assign Present-tense wording does not let an employer take everything. Several US states cap the reach of employee assignment clauses. California's is the best known. Labor Code 2870 says an assignment provision shall not apply to an invention that the employee developed entirely on his or her own time without the employer's equipment, supplies, facilities or trade secrets. The exceptions are inventions that relate to the employer's business or its actual or demonstrably anticipated research, or that result from work done for the employer. A clause that reaches further is unenforceable as against public policy. Reaching past the end of employment is risky too. In Whitewater West v. Alleshouse (2020), an agreement requiring assignment of inventions conceived after the employee left was held void, because it functioned as an unlawful non-compete under California law. The safer drafting is to limit post-employment reach to inventions conceived during employment or built on the former employer's trade secrets. ## Germany works differently: the Employee Inventions Act For a company with engineers in Germany, the US playbook does not carry over. The German Act on Employees' Inventions (ArbnErfG) replaces the assignment agreement with a statutory process for service inventions, meaning those that come out of the employee's job or rest on the company's know-how. The employee must report the invention. The employer then has four months. Under section 6, the claim is deemed to have been declared unless the employer expressly releases the invention in text form within four months of a proper report. Silence means the company takes it. The price is section 9: once the employer has claimed the invention, the employee has a right to reasonable compensation, measured by its commercial applicability, the employee's position, and the company's contribution. Section 22 is why a US-style clause does not work here. The Act's rules cannot be contracted away to the employee's detriment. Agreements about a service invention are only allowed after it has been reported. A pre-invention clause that tries to take title in advance and waive compensation does not override the statute. For a patent family with German inventors, the diligence question is therefore not "where is the assignment?" It is "was the invention reported, was it claimed or released, and has compensation been dealt with?" ## How a buyer tests your assignment chain When a patent comes to our brokerage desk, title is checked before value. Every named inventor needs a document that moved their rights, in present-tense words, to the entity that is now selling. Where inventors sit in different countries, each person's chain is checked against their own law. Only once the chain holds do we get to the technical work: our digital-twin validation of the claims, detectability and validity probability. The breaks we find are the ones described above. A founder assigned an application but not the continuation. An employment agreement says "agrees to assign" and no confirmatory assignment was ever signed. A contractor built the prototype under a services contract that only mentions copyright. A German engineer's invention was never formally reported. Each one can be fixed, usually with a confirmatory assignment while the people involved are still reachable and willing. It is far cheaper to fix before a buyer is at the table. Notarizing the confirmatory documents is optional but useful, as covered in does a patent assignment need to be notarized. Our brokerage is success based, with commission paid by the seller on completion and a minimum fee of EUR 5,000 per completed transaction. A broken chain of title stalls our deal as much as the seller's, which is why we raise it on day one. One caveat, stated plainly. EX-IX is not a firm of patent attorneys. Filings on our drafting side go through an independent licensed patent attorney of record, and any assignment that moves real value, or touches employees in more than one country, deserves the same review. This article explains the mechanics. It is not legal advice for your situation. ## FAQ ### Does a US company automatically own what its employees invent? No. The default is that the inventor owns the invention, even when it is made on company time with company equipment. An employer may have a non-exclusive shop right to use it, or ownership under the narrow hired-to-invent doctrine, but neither replaces a written, present-tense assignment. ### Can a patent assignment agreement cover inventions that do not exist yet? Yes, if it is worded as a present assignment of future inventions, such as "hereby assigns all inventions conceived during employment". Title then passes automatically when the invention is made, with no further signature. A clause that only promises to assign in future does not do this. ### Can a German employer rely on a US-style invention assignment clause? Not for service inventions before they are reported. The Employee Inventions Act cannot be varied to the employee's detriment in advance. The employer secures the invention through the report and claim process, and owes reasonable compensation once it does. ### Who can file the US application after an inventor has assigned the invention? The assignee, or a party to whom the inventor is obliged to assign, can file the application itself. The patent is then granted to the real party in interest, so it issues to the company rather than the individual.