35 U.S.C. 261: Patent Assignment, Recording, and Employee Inventions

Under federal law, a U.S. patent is personal property, and the rules for patent ownership and assignment are set out in 35 U.S.C. 261. That statute lets you sell, license, mortgage, or bequeath a patent, but it requires every transfer of ownership to be in writing, and it protects later buyers who record their purchase at the U.S. Patent and Trademark Office ahead of an earlier buyer who did not. Getting the paperwork right, and recording it on time, is what separates a secure transaction from one that can be wiped out by someone else’s later purchase.

What You Actually Own

The statute says patents “shall have the attributes of personal property.”¹ That single line puts patents in the same legal category as physical goods for purposes of buying, selling, pledging, and inheriting. The patent grant runs to “the patentee, his heirs or assigns,” so patent rights survive the original owner and pass through a will or intestate succession like any other asset.²

What the owner actually holds is a right to exclude. A patent lets you stop others from making, using, offering for sale, selling, or importing the invention in the United States.² It does not guarantee you the right to practice the invention yourself, because other patents or regulations might block you. The exclusionary right is what has commercial value, and clean ownership records are what make that value transferable.

Assignment or License

Owners transfer patent rights in one of two ways, and confusing them causes real problems. An assignment moves ownership to someone else. The new owner steps into the seller’s position, holds the same rights, and can sue infringers. A license is a promise not to sue. The licensor keeps ownership and gives the licensee permission to do things that would otherwise infringe.

This matters most for enforcement. A party that receives all substantial rights through an assignment can sue on its own. A nonexclusive licensee generally cannot. An exclusive licensee sits somewhere between and may or may not have standing depending on how the agreement is written. If you are buying patent rights because you plan to enforce them, the paperwork has to reflect an assignment, not a license.

Partial transfers are also allowed. Section 261 permits assignment of the whole patent or an exclusive right “to the whole or any specified part of the United States,” so a seller can carve out territorial rights and retain the rest.¹

What Makes an Assignment Legally Valid

An assignment must be in writing. Section 261 says patents “shall be assignable in law by an instrument in writing,” and a verbal agreement to transfer a patent is unenforceable under federal law regardless of what witnesses heard.¹

The document has to be signed by the assignor or their authorized legal representative. When the assignor is a corporation, an officer such as CEO, president, vice president, secretary, or treasurer is presumed to have signing authority. Other employees can sign only if the submission states they are authorized or a corporate resolution grants that authority.³ Someone from the IP department who has no documented authority cannot bind the company.

Notarization

Notarization is not required, but it helps. A certificate of acknowledgment from a person authorized to administer oaths is treated as presumptive evidence that the assignment was properly executed.¹ If someone later challenges the signature, the notarization shifts the burden to the challenger. Without it, the person relying on the assignment has to prove the signature is genuine. For documents signed abroad, the acknowledgment has to come from a U.S. diplomatic or consular officer, or through an apostille from a country that participates in the Hague Apostille Convention.

Foreign-Language Documents

The USPTO will record an assignment in a language other than English if the submission includes an English translation signed by the translator.⁴ The translator’s signed attestation is enough; certification by a professional agency is not required.

The Three-Month Recording Rule

Recording is not what makes an assignment valid between buyer and seller. It is what protects the buyer against later purchasers. Under Section 261, an unrecorded assignment is “void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice” unless it is recorded at the USPTO within three months of its execution date, or before the later transaction takes place.¹

The scenario the statute is guarding against: Company A buys a patent from the inventor and does nothing to record it. The inventor then sells the same patent to Company B, which pays fair value, has no idea about the earlier sale, and records promptly with the USPTO. If Company A missed the three-month window, Company B wins the patent. Company A is left with a fraud claim against the inventor and no patent.

Two conditions have to be met for a later buyer to take priority. The subsequent purchaser must have paid valuable consideration, not received the patent as a gift, and must have had no notice of the earlier transfer. Recording at the USPTO gives constructive notice to the world. Once your assignment is in the USPTO records, a future buyer cannot claim ignorance.

How to Record and Fix Mistakes

Assignments are submitted through the USPTO’s Assignment Center, the electronic system that replaced the older Electronic Patent Assignment System.⁵ Electronic filings are free. Paper submissions cost $54 per property recorded.⁶

Every submission needs a cover sheet identifying the conveying party, the receiving party and its address, the type of interest being conveyed (assignment, security interest, merger, and so on), each affected patent or application number, the execution date of the underlying document, a correspondence address, and the signature of the person submitting the sheet, either handwritten or in the electronic format /First Last/. Every field must match the underlying document exactly.⁷ A misspelled name or wrong patent number breaks the chain of title and forces a corrective filing.

The correction path depends on where the error sits. If the mistake is on the cover sheet and is apparent when the sheet is compared against the underlying document, submit a corrected cover sheet with a copy of the original document and the recording fee. If the error is in the assignment document itself, the assignor should create a corrected version, or initial and date corrections on the original, and re-record it with a new cover sheet; if the assignor cannot be reached, the assignee can submit an affidavit identifying the error and asking for correction. If someone else improperly recorded a document against your patent, contact them first and ask for a correction, and if that fails, file an affidavit with the Assignment Recordation Branch identifying yourself as the true owner, explaining the error, and giving the reel and frame number of the bad recording. Each corrective filing needs a new cover sheet and the standard recording fee for every patent or application involved.⁸

When Patents Are Co-Owned

Joint ownership rules are generous to individual co-owners and rough on the group. Unless a written agreement says otherwise, each joint owner can independently make, use, sell, or import the invention anywhere in the United States without asking the other owners and without sharing any of the profits.⁹

The “no duty to account” default surprises people. If you and a co-inventor each own half of a patent and your co-inventor licenses it for millions, the statute entitles you to nothing from that deal. Co-ownership arrangements fall apart here most often because the parties assumed the law built in some kind of fair split. It does not.

Each co-owner can also grant nonexclusive licenses on their own. What no single co-owner can do, without consent from every other co-owner, is grant an exclusive license or assign their interest. An exclusive license by definition strips the other co-owners of their right to practice or license the patent, and one co-owner cannot make that call alone.⁹ If your plans depend on exclusive licensing or on splitting revenue, put a written co-ownership agreement in place before the patent issues.

Who Owns Employee Inventions

Employee inventions are not governed by Section 261 directly. Ownership turns on contract law and a couple of equitable doctrines. The starting point is that the inventor owns the patent. An employer gets ownership only through a contract, an implied obligation, or a specific doctrine.

Invention Assignment Clauses

Most employers handle this with a clause in the employment agreement. The wording matters. A clause saying the employee “does hereby assign” future inventions creates an automatic transfer the moment the invention is conceived and applied for. A clause saying inventions “will be assigned” or “shall be assigned” creates only a promise to assign later, which leaves the employer with equitable title rather than full legal title. That distinction can affect whether the employer can enforce the patent without additional paperwork.

Hired to Invent

Even with no written agreement, an employer may own an invention if the employee was specifically hired to solve the problem the invention addresses. The test is whether inventing was the precise subject of the employment, not merely incidental to it. An engineer hired to develop new battery chemistry who patents new battery chemistry is bound to assign. A janitor at the same company who tinkers after hours is not.

Shop Rights

When neither a contract nor the hired-to-invent doctrine applies, the employer may still hold shop rights. Shop rights give the employer a royalty-free, nonexclusive license to use the invention internally, and they typically arise when the employee developed the invention during working hours using the employer’s equipment, materials, or facilities. Shop rights are a defense to infringement, not an ownership interest. They generally cover internal use rather than commercial sales to third parties, and they cannot be transferred or licensed to others.

Pledging a Patent as Collateral

Because patents are personal property, lenders can take a security interest in them the same way they would in equipment or inventory. The complication is that two legal systems overlap. State law under Article 9 of the Uniform Commercial Code governs perfection against lien creditors, including a bankruptcy trustee, and that side is handled by filing a UCC-1 financing statement in the appropriate state office. Federal patent law controls priority against a later buyer or mortgagee who records with the USPTO.

The practical consequence is that filing only a UCC-1 leaves the lender protected in bankruptcy but potentially exposed to a bona fide purchaser who records at the USPTO. Recording only at the USPTO gives constructive notice in the patent chain of title but may not perfect the interest against state-law lien creditors. Careful lenders do both. The USPTO accepts security interest documents for recording, though it does not determine their legal effect on the chain of title.¹⁰

Some lenders structure the deal as a conditional assignment, transferring title back to the owner once the debt is paid, rather than as a traditional lien. That structure gives stronger protection under the patent recording statute but can expose the lender to being treated as the patent owner for purposes like infringement liability. It is worth working through with counsel familiar with both UCC and patent law before choosing between the two structures.

1
Office of the Law Revision Counsel. 35 USC 261 – Ownership; Assignment
2
Office of the Law Revision Counsel. 35 USC 154 – Contents and Term of Patent; Provisional Rights
3
United States Patent and Trademark Office. MPEP Section 325 – Establishing Right of Assignee To Take Action
4
eCFR. 37 CFR 3.26 – English Language Requirement
5
United States Patent and Trademark Office. Assignment Center Fully Replaces EPAS and ETAS for Patent and Trademark
6
United States Patent and Trademark Office. USPTO Fee Schedule
7
eCFR. 37 CFR 3.31 – Cover Sheet Content
8
United States Patent and Trademark Office. MPEP Section 323 – Correction of Assignment Records
9
Office of the Law Revision Counsel. 35 USC 262 – Joint Owners
10
United States Patent and Trademark Office. MPEP Section 313 – Recording of Licenses, Security Interests, and Documents Other Than Assignments