Structuring Present Assignment Clauses and Power of Attorney in Hardware PIIA Agreements
Present assignment clauses and irrevocable powers of attorney in hardware PIIAs secure immediate IP ownership and enable unilateral patent filings.
Patent Ownership Cloud
Meaning
Uncertainty or defect in the chain of title that jeopardizes the legal claim to an invention. A patent ownership cloud often arises from a missing signature in a series of assignments or a conflict in an employment contract. This defect makes it difficult for a company to sell its assets or secure professional investment.
Clearing the title is a high priority during the due diligence phase of a transaction.
Chain Interruption
The most common cause of a patent ownership cloud is an interruption in the historical record of transfers from the inventor to the current holder. If one link in the chain is broken, the subsequent owners may not have the legal right to enforce the patent. This can happen if a founder worked at a university or another company while developing the technology.
Lawyers must trace every transfer back to the original filing to ensure the title is clean.
Due Diligence
Investors perform a thorough review to identify any potential patent ownership cloud before committing capital to a technology firm. They look for signed agreements from every individual listed as an inventor on the patent applications. Any discrepancy between the internal records and the patent office filings is a red flag.
A clean report is often a condition for closing a funding round.
Corrective Action
Resolving a patent ownership cloud may require obtaining confirmatory assignments from former employees or settling claims with previous employers. In some cases, the company may need to file a lawsuit to quiet the title. This process can be expensive and time consuming, especially if the missing parties are difficult to locate.
Proactive management of assignment documents prevents these issues from developing.