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I am filing a pro se patent application and am wondering whether it is a good idea to assign it to an LLC that I own or to just keep it under my name. I'm assuming here for this question that it will get approved. The main con with the LLC is that if it goes under, I'm afraid I will lose ownership of the patent. On the other hand, I'm not sure if having a patent under my name exposes me to some liability.

Specifically, can an individual get sued for owning a patent on something and then somehow be forced to pay fines? Both in the case where he has licensed the patent and in the case where the patent is just sitting there.

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  • Will you be looking for investments? Taking on partners? Doing further inventing possibly with co- inventors ? – George White Feb 16 '13 at 23:43
  • Thanks for the follow-up questions. Let's assume that I have no co-inventors and don't plan on taking on investors/partners for this idea. I just came up with this new idea, patented it and want to either own it or put it in an LLC. The goal would be to eventually sell or license the invention to a manufacturer. The question is, prior to licensing (i.e. while I'm holding the patent as an individual), do I have any personal liability from that patent on the line and if so, where from? How about after licensing? – aed Feb 17 '13 at 2:13
  • It seem hard to imagine any liability you might have just by being a patent owner. Someone could challenge the validity your patent in a way that could be expensive to defend. You could just fold. In any case that would not be affected one way or the other by the LLC. If you license it then you are in business and that business might have potential liabilies. – George White Feb 17 '13 at 5:15
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The answer is it depends. If you expect to do business, then as one commenter suggested above, you should consider assigning it to your company. The road to successfully monetizing a patent is probably a bit more complicated than is readily apparent. There are many sources of liability. Given the choice, most individuals would prefer to have these liabilities compartmentalized in a corporate structure. To illustrate this, legal fees to enforce a patent are potentially a huge liabilty. Patentees can be sued for a variety of reasons. As a licensor, you would have even more potential for liability arising from explicit and implied duties as the patent holder. You might prefer that your company shoulder this exposure.

However, there are reasons to keep a patent as a personal asset. Maybe as a vehicle for control in a closely held company, maybe because the transactional costs (incorporation, assignment, and maintenance of corporate formalities) outweigh the benefit of limiting liability. The fact you are prosecuting your patent pro se suggests this may be the case for you.

Also, consider consulting an accountant with expertise in IP. You may discover that the most important factor here is a tax consequence.

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I assume that keeping patent under inventor's name with intent to sell/license it and in meantime not collecting any revenues related to the invention won't result in any liabilities. Of course putting the patent to work changes everything but it still make sense to keep it under your name as a leverage against partners and investors.

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