Patent Assignments and MPEP 306

Just like many other forms of property, such as houses, cars, etc. where once you become the owner of the property, you record your ownership rights to put others on notice, for patents, you do the same thing.  Under the patent laws, 35 U.S.C. § 261, one must file an assignment of a patent against that patent in the U.S. Patent and Trademark Office within three months from its purchase (or before a subsequent purchase), else the assignment is void against any subsequent purchaser of the patent who does not have notice of the prior assignment.  The costs for filing are currently $40 per patent, plus any legal costs, but the costs of not filing could be enormous if a dispute arises later about the ownership of the patent.

During the patent application process, for various administrative reasons, one might file a continuation or divisional patent application stemming from a parent patent application.  The Manual of Patent Examining Procedure (“MPEP”), § 306, states that a patent assignment filed against the parent application is considered effective against any such continuation or divisional application.  For many patent practitioners, this is sufficient basis to not file assignments in those situations, as they consider this to be the law.  However, what many patent practitioners do not realize is that the MPEP Forward itself states that the MPEP does not have the force of law.  Therefore, one should not rely on the MPEP and instead rely on the applicable law about patent assignments, which would be contract law and 35 U.S.C. § 261.  One should ensure that the contract or patent assignment includes language assigning any continuation or divisional patent applications stemming from parent patent applications.  And then one should promptly file in accordance with 35 U.S.C. § 261 against such continuation or divisional patent applications to ensure proper notice is given of the ownership rights.  Then one will have satisfied the legal requirements to ensure their ownership of such applications, instead of relying on MPEP 306, which does not have the force of law.

In addition to the legal considerations, there are also logical and practical considerations for prompt filing of assignments against continuations and divisionals.  For instance, if one has to divide a patent application, selling the parent application but retaining the divisional application, if one relied on MPEP 306, then when the buyer of the parent application filed the assignment against it, MPEP 306 would appear to state that the buyer was then effectively the owner of the divisional application.  That would be contrary to the contract and is not logical, so MPEP 306 is flawed and should not be relied on.  Further, practical considerations include that if one does not file against continuations or divisionals, if one tries to license such patents or enter into a secured transaction in which a lien is to be recorded against such patents, then the other parties who will have interests in those patents will have to spend further effort ensuring ownership is accurate and requiring you to file the assignments, causing even further costs than if they had simply been filed in the first place.  Other practical considerations include that sometimes companies have the same sets of inventors enter into and then file contradictory assignments, or retain sold patents on their books and continue to file name changes and other assignments against such patents, etc., perhaps due to the difficulties in managing large portfolios of patents, but filing promptly and properly at the outset against continuations and divisionals can minimize such future issues.  Finally, filing against continuations and divisionals ensures that the patent assignments themselves get reviewed and confirmed to include language assigning continuations and divisionals, which protects companies by ensuring they have proper ownership rights.

In summary, it is a best practice to record assignments against continuations and divisionals in order to comply with legal requirements rather than relying on MPEP 306 which does not have the force of law, and such filing ensures proper chain of title and ownership of one’s patents.

John Slaughter

About John Slaughter

John Slaughter, a registered patent attorney, handles the intellectual property aspects of corporate mergers, acquisitions and credit facilities, specifically concentrating his practice in the areas of: intellectual property due diligence, intellectual property licensing and transactional work, intellectual property litigation and domain name disputes, including adversarial administrative proceedings and commercial transactions.


2 thoughts on “Patent Assignments and MPEP 306

  1. John – Have there been any instances in which failure to record a prior assignment against a continuation or divisional caused the assignment to be void against a subsequent assignment to a bona fide purchaser?

    Posted by Emily Bullis | July 14, 2014, 11:55 am
  2. John Slaughter

    I am not aware of any cases that have been litigated over the matter, nor do I want my matters to chance it! However, I have encountered situations where subsequent assignments have been filed which were counter to the initial assignments against parent applications, and those matters had to be otherwise resolved.

    Posted by John Slaughter | July 14, 2014, 1:52 pm

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