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What is the difference between filing a patent as an individual (outside of a corporation or LLC), and filing a patent under your name as part of a corporation or LLC that you create for this sole purpose? What are the advantages/disadvantages?

Something that I am particularly worried about is legal/liability/bankruptcy protections: If I file a patent solely under my name, and it is challenged in court (I am sued, etc.), then what are the risks to myself, compared to if I had created some "shell" C-corp or LLC, and then filed it under my name under such a legal entity?

How do individual inventors (inventors who aren't necessarily filing patents under the company that they work for in their "day job") deal with this?

I would greatly appreciate it if people would please take the time to explain this.

  • I don't think this is a common concern. It's not wrong though. – DonQuiKong Aug 6 at 21:23
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There is a big difference in the case of more than a single inventor. But it is not what you seem to be concerned about. Filing, prosecuting and obtaining a patent grant are not going to directly lead to liability for the inventor(s). Liability would come from actually making, selling, etc. an actual product that might be based on a patent. A patent doesn't infringe anyone else's patent, products do. A patent doesn't set someone's house on fire or blow up in their hands when used.

Regarding it being challenged in court - there are two ways that can happen in the U.S. One is you accuse someone of in fringment and they call your bluff and preemptively sue you. As an individual or as a company you would give some thought before threatening. The other is via an IPR which occurs at the patent office. You can chose not to participate and your patent might be invalidated. Again, merely trying to get a patent and getting it are not going to generate liability exposure, you can just walk away.

Starting with the basics, in the U.S. inventorship is key and the true inventors, as individuals, are the initial default owners of the patent rights. Patent applicants can be the inventors or can be a person or organization authorized to apply by the inventors.

The big issue with multiple inventors is that they each own the whole of the patent rights with no need to consult each other or account with each other over any money they make from the patent unless they have an agreement between them. If a company wanted to license the invention, any of the inventors, separately, could offer to sign a license agreement and could try to undercut each other. None could offer an exclusive license.

If the inventors form a corporation or LLC and they all assign their rights to the company then it is the company who can pursure the patent and solely can grant a license or undertake to make, sell, import, etc. How the ownership of the company is divided up between them is up to them.

If the company later goes into business making the invention, then its ability to shield individuals from liability becomes relevant. It is the actions taken to exploit the invention, not the getting of the patent that is the issue.

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