Best practice for recording US patent assignments

I’ll share my notion of the Best Practice for recordation of US patent assignments.  Please post comments below.

As a starting point to this discussion, I will remind the reader that if we receive a signed assignment and if we sit on it too long, we eventually come out on the wrong side of the 3-month period set forth in 35 USC § 261:

An interest that constitutes 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.

So we will take as our starting point that whatever else we do about recording an assignment or postponing the recording of an assignment, we ought to try extremely hard to avoid getting on the wrong side of this three-month period.  (There are similar statutory three-month periods for trademark assignments and copyright assignments.)

Old-timers (or at least, practitioners who were in practice prior to January 1, 2014) will recall the days when it was necessary to pay a government fee to record a patent assignment. In those old days, practitioners would go to great lengths to try to avoid paying two fees if there was a way to squeeze two recordations into a single recordation (so as to pay only one fee).  A practitioner having encountered a problem with an existing recordation filing would go to great lengths to try to salvage the filing so as to avoid having to pony up a second government fee.  If there were two inventors, each of whom was supposed to sign an assignment, and if the signed assignments showed up on different days, most folks would carefully save up the first one and postpone e-filing it until the second signed assignment arrived.  This way, the filer could bunch them together and e-file them all in the same package.

As I say, the overarching goal for most practitioners in those old days was to try as hard as possible to get away with paying only one government fee for multiple assignments.

But the US eliminated the fee on January 1, 2014.  So that is no longer a reason to drag our feet on e-filing a signed assignment if we have it in hand.

A first drawback to intentionally postponing recording a signed assignment is that one might inadvertently permit the three-month period to pass (which I will call a “recordation failure”). By this I mean that to avoid a recordation failure, one needs to aggressively docket the three-month period. The docket steps would be (a) receive the signed assignment from the client; (b) note the date of execution (which might not be the same as the date that we received the signed assignment from the client); (c) add three months to the date of execution to arrive at a drop-dead recordation date, and (d) docket the drop-dead date and one or two warning dates.

If there were a docket failure (failing to set the drop-dead date, or failing to blow whistles loudly enough toward the end of the three-month period) then this would lead to a recordation failure (failing to record the signed assignment within the three-month period set forth in 35 USC § 261).

In our office, we estimate that the internal cost to set and clear a docket is around $50.  So if we can simply do something and get it done, rather than dragging our feet on the task, we don’t need to docket to remember to do whatever it is.  And then we save $50.

So to emphasize the above point, if we record each signed assignment promptly after receiving it, this also avoids having to do the above-mentioned fuss of docketing the three-month period under 35 USC § 261. Once we record the signed assignment, we can stop worrying about setting and clearing dockets to remember to record the signed assignment.

The practitioner who makes a decision to postpone recording an assignment is creating a second risk.  Whenever we sit on a signed assignment without recording it, we create the risk of misplacing the signed assignment. What if the document falls behind a desk?  What if the breeze catches the document and it flies out the window?  What if the file server where we store the PDF document crashes?  What if the file server does not crash, but through some bad luck the PDF document gets stored in the wrong folder?

The USPTO’s assignment recordation system may thus be thought of as an offsite backup for signed assignments. Saying this a different way, the sooner the signed assignment is recorded, the sooner that one may stop worrying about the risk of misplacing it.

A nay-sayer might ask “yes but if I record each inventor’s assignment when it arrives, I will have to fill in the twenty or so fields of the EPAS system twice instead of once!”  The answer to this, of course, is that when we are recording the first assignment, we should save a template.  When the second assignment shows up, we can use the template to auto-populate nearly all of the fields of the EPAS system for that second recordation.

Do you think that what I have described is a Best Practice?  Please post your comment below.


8 Replies to “Best practice for recording US patent assignments”

  1. Fully agree! And file the 373. I docket neither of these, however I do have my own reminder system. Any new file opened automatically asks several questions in red, such as IDS filed? PoA filed? Assignment recorded? 373 filed? When done I turn each green. Because of 261, I treat newly received executed assignments as “drop everything and record this”. It is engrained.

  2. So what happens if you record it beyond the 3 month execution date? Is it just not enforceable later during any potential litigation?
    Don’t we record assignments in divisional and cons, when one is recorded already in parent case? Aren’t those going to be more than 3 months from execution date?

    1. The statute quoted in Carl’s post answers the “what if” Missing the three month deadline is almost always no big deal — not recording at all can turn into a HUGE problem! If you miss the three-month deadline for recording, the assignment is

      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.

      The three-month deadline is just a “relation back” type rule.

  3. Is the order of recordation important? If ownership flowed from inventors to Company A then to Company B, could there be a problem (perhaps later in litigation) with recording the assignment from Company A to Company B first then later recording the assignment from the inventors to Company A?

    1. The order of the recordation is, generally speaking, not important.

      A person rendering an opinion as to title will not (or, at least, should not) pay much attention to the sequence in which the recordations took place.

      The one limited area where a date of recordation might make some difference is that under 35 U.S. Code § 261 a filer who dawdles for too long (a filer who permits more than three months to pass after the date of execution of an assignment) could possibly end up on the wrong end of a document signed by a second second purchaser or mortgagee.

  4. Question: In the following the statement, “for a patent to issue to an assignee, the assignment must have been recorded or filed for recordation in accordance with 37 CFR 3.1.” does “assignee” refer only to assignees who are not the original Applicants, or does it refer to Assignee-Applicants as well?

    In other words, if GIZOMOCO was listed on the ADS as the original Applicant and the 373 was submitted at filing along with a copy of the document assigning the rights from the inventor(s)s to GIZMOCO but the assignment to GIZMOCO wasn’t recorded, will the patent issue to the GIZMOCO or to the inventor(s)?

    1. First, there is no need to file a 3.73 if you list GIZOMOCO as the Applicant on the ADS.

      Second, as Carl explains above, there is no reason to fail to record the assignment.

      To answer your question: the issued patent will list as Assignee whomever is listed in Box 3 of the Issue Fee Transmittal, regardless of who is Applicant. But the Issue Fee Transmittal reminds you of the 37 C.F.R. 3.81 requirement you quote: to list an Assignee on the Issue Fee Transmittal, you must have recorded the chain of assignments from the inventors to that Assignee.

Leave a Reply

Your email address will not be published. Required fields are marked *