InventorEd, Inc

Coinvention
By Ronald J. Riley

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Some invention promoters, agents, and product developers are asking for a piece of inventions, sometimes just joint ownership, and less often to be named coinventors. I agree that partnerships between marketing people and inventors can be good for both.  But such partnerships are much like being married, except that making up is not anywhere near as much fun.

Also, many companies who start out buying your invention will at some point try to con the inventor into naming one of their staff a coinventor. It is not wise to ever allow staff of a licensee to become coinventors. Generally once they get coinventor status they will use such to avoid paying the real inventor a dime.

It is very important that legally binding agreements specify exactly what the duties are and compensation is for each coinventor.  Any other approach is an invitation for disaster, and in my experience it is the inventor who is had in situations where there are no suitable contracts in place.  There is little I or anyone else can do to help them after the fact.

I am confident that the marketing people, the wheelers and dealers, can protect their interests - I consider it my duty to tell the less savvy inventors what the pitfalls are.  If they chose to ignore the advice than that is their problem.

In most cases it is not wise to make any invention promoter a partner. For an example of an invention promoter who has raised the hackles of many experienced inventor advocates see www.InventorEd.org/caution/agentandy/. Agent Andy argued beligerently that he should have free reign to to use information a client discloses in confidence as he sees fit.

Even more interesting was the fact that Tom Kruer vigorously defended Agent Andy's conduct. Kruer is a product developer who holds several patents, many of which have coinventors. Kruer has repeatedly claimed that he is an inventor ??? and not selling services to inventors but he also has commented on having clients and selling his services to develop products. I also have reports that he tells inventors who come to him for help that he will be a coinventor. That is most certainly better than the way Agent Andy operates. Still, a reasonable person can not help but wonder if Kruer really invents himself or if he just talks client inventors who come to him for design services into listing him as a coinventor.

In any event both Kruer's and Agent Andy's failure to understand the ethical problems with the way Agent Andy operates is deeply troubling. One good thing that comes from this is that their conduct serves as a poignant reminder that inventors must constantly be on guard when dealing with service providers.

Most independent inventors are not qualified to know if a service provider is really a coinventor or just supplying engineering services which do not qualify as inventing. But if several people go to a patent practitioner and say they are coinventors the person drafting the patent is likely to just take their word for this (they are not going to go out of their way to alienate any of the clients).

What does an inventor do to protect themselves from this problem? First, do not do business with any service provider who has not signed a contract assigning all patent rights to you and do not disclose an unpatented invention to any party who has not signed a Non Disclosure Agreement (NDA). See http://www.inventored.org/forms/.

Second, hire a patent practitioner who does not have a relationship with any of your service providers. DO NOT hire a patent practitioner whom a service provider has an existing relationship. Present the service providers contributions to the patent practitioner and ask their opinion about rather or not the service provider has really contributed to the "invention" or simply provided non invention support services. It is best for an inventor to not have coinventors unless those people really did invent. But some service providers egos, or worse their desire to scam the real inventor, drive them to try to get coinventor status when such is not justified.

Remember, the invention is your baby, and the last thing you need is a messy custody battle. Why share custody when you may not need to?

A serious problem with co-inventorship deals is that in the absence of a contract that any party listed as inventor on a patent can enter into an agreement with a third party to license the patent without approval of the coinventor(s).  So when you make someone a coinventor you are giving them rights to do whatever they want with the invention! 

You need to execute an agreement, one that is fair to all parties, which does not allow anyone to dispose of the joint invention without the express approval of all the co-inventors. The agreement must mandate that the funds from such a sale be escrowed by an attorney and said attorney distribute the shares to the appropriate parties. I.E., this protects all the parties from one person selling rights to the patent and keeping all the money.  Leaving any other inventors with an (likely losing) uphill battle to get their share. See David Pressman's Patent It Yourself for a Joint Owners Agreement.

In other words, if an inventor is induced to make someone a co-inventor then they have effectively signed away their exclusive rights.  Any listed inventor may sell the patent rights.  Now, would anyone care to guess who would prevail in the race to market, the inventor - or the marketing person / corporate interest? History is replete with examples of inventors who are shafted while their business partners go on to make fortunes.

Also, remember that bankrupcy or the death of a co-inventor can lead to the property being transfered to a new party. This is much like a shootgun wedding.

For those interested in the specific CAFC decision in regards to this issue see: http://www.ipo.org/YOON.html.  A reminder that IPO members are behind so called "patent reform", legislation which is very detrimental to independent inventors interests.

Mr. Bergquist <DBergquist@aol.com> supplied the following reference on the Patent-L forum in response to my query.

Sent: Wednesday, July 28, 1999 2:18 PM
Subject: Re: Joint inventors

From the MPEP:
CHAPTER 26 - OWNERSHIP AND ASSIGNMENT

Sec.
261     Ownership; assignment.
262     Joint owners.

35 U.S.C. 261   Ownership; assignment.

        Subject to the provisions of this title, patents shall have the attributes  of personal property.

        Applications for patent, patents, or any interest therein, shall be assignable  in law by an instrument in writing. The applicant, patentee, or his assigns  or legal representatives may in like manner grant and convey an exclusive right  under his application for patent, or patents, to the whole or any specified  part of the United States.

        A certificate of acknowledgment under the hand and official seal of a  person authorized to administer oaths within the United States, or, in a foreign  country, of a diplomatic or consular officer of the United States or an officer  authorized to administer oaths whose authority is proved by a certificate of  a diplomatic or consular officer of the United States, or apostille of an official  designated by a foreign country which, by treaty or convention, accords like  effect to apostilles of designated officials in the United States, shall be  prima facie evidence of the execution of an assignment, grant, or conveyance  of a patent or application for patent.

        An assignment, grant, or conveyance shall be void as against any subsequent  purchaser or mortgagee for a valuable consideration, without notice, unless  it is recorded in the Patent and Trademark Office within three months from  its date or prior to the date of such subsequent purchase or mortgage.

(Amended Jan. 2, 1975, Public Law 93-596, sec. 1, 88 Stat. 1949; Aug.  27, 1982, Public Law 97-247, sec. 14(b), 96 Stat. 321.)

35 U.S.C. 262   Joint owners.

        In the absence of any agreement to the contrary, each of the joint owners  of a patent may make, use, offer to sell, or sell the patented invention within  the United States, or import the patented invention into the United States,  without the consent of and without accounting to the other owners.
(Amended Dec. 8, 1994, Public Law 103-465 sec. 533, 108 Stat. 4809, effective  Jan. 1, 1996.)

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