Should I apply for a patent in the name of my company or in my name?

Several start-ups, smaller companies and family owned companies among others, have asked us whether they should apply for a patent in the name of their company or in the founder’s name. Well, even though there is no single correct answer, several factors can be considered, and a decision that suits the situation, can be taken. Some of the factors that can be considered while taking the decision are listed below:

1.      Costs involved in the patenting process
2.      Enforcement of the patent on potential infringers
3.      Investor perspective
4.      Protecting the inventor’s interest 
Now let’s discuss each of the factors in a little more detail:
 
1.      Costs involved in the patenting process 
In India, the government fee applicable to applicants who are legal entities (Ex: Companies) is 4 times the fee applicable to applicants who are natural persons (individuals). However, in the US, the government fee is the same for individuals and small companies (collectively categorized as “small entities”).
The table below provides an overview of some of the costs involved during the patenting process in India:
Sl. No.
Description
Fee (INR)
Natural person(s)
Fee (INR)
Legal entity
1
 Application for grant of patent
1000
4000
2
 Early publication fee (Optional)
2500
10000
3
 Request for examination of patent application
2500
10000
4
 Extra pages
100/Sheet
400/Sheet
5
 Extra claims
200/Claim
800/Claim
 
Further, it shall be noted that, once the patent is granted, yearly renewal fee has to be paid. Even the renewal fee is discounted if the applicant is a natural person.
We have often observed that cost considerations often drive founders of early stage companies to file the patent applications in their name, as opposed to filing under the company’s name.
 
 2.       Enforcement of the patent on potential infringers

The primary objectives for obtaining a patent are to establish monopoly using the patented technology and gain monetary benefits from patent infringers. Both the objectives, if they were to be achieved, may require initiation of patent infringement suits. Hence, we will analyze some of the outcome of such suits from the perspective of patent being owned by individual(s) or company.

In the event of a patent infringement suit, if the court decides that the patent has been infringed, then relief will be provided to the patent owner. The relief can include, granting injunction, and EITHER damages or an account of profits. The relevant section of the Indian Patent Act is reproduced below:
 
108(1) The reliefs which a court may grant in any suit for infringement include an injunction (subject to such terms, if any, as the court thinks fit) and, at the option of the plaintiff, either damages or an account of profits.

If the patent owner prefers “damages” instead of “account of profits”, then it is preferable to have the patent owned by the company, as damages can be relatively easily calculated and the size of the damages can also be substantially large, as compared to a scenario wherein the patent is owned by individuals.

On the other hand, patent owner may prefer “account of profits”, if the infringer is a large company. In this scenario, whether the patent owner should ideally be individuals or a company, may be of little relevance in the context of this discussion.
The dilemma of patent ownership generally occurs when the startup has a potential to grow rapidly and foresees potential infringement of patent.
It shall be noted that, patent is just like any other property. Hence, even if one applies for a patent in the name of individuals, it can be assigned or licensed to the company at a later stage.
 
3.      Investor perspective
If you are going to have your company funded, then the investors would like to have the patent assigned to the company. Even if you have applied for patent in the name of individuals, the investors would insist on transferring the patent application to the company.
Our opinion from the investor perspective is very clear. At the time of investment, the investor would like to have the Intellectual Property assigned to the company.
 
4.      Protecting inventor’s  and company’s interest  
There can be a scenario wherein one of the founders is an inventor. In such a scenario, the inventor would like to apply for a patent in his name, as it gives him immense control over the technology, thereby also giving control over commercial aspects of the company. On the other hand, the company would ideally like have the patent application assigned to them, thereby preventing a situation wherein, the inventor is in a position to dictate terms.
 
In addition to this, please note that, any invention which has been conceived by an employee during the course of his work for the company and relates to his field of work in the company, may always belong to the company, in light of the employment agreement that might be in place.
We hope that, this article will help you in deciding the applicant of your patent application.
We hope you found this article useful. You can download the article here
If you have any queries, you can reach us at contact@invntree.com
Regards,
Team InvnTree

 

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