In the pharmaceutical startup space, patents are often the foundation upon which companies are built. However, when it comes to ownership (and inventorship), early-stage companies, particularly those emerging from academic environments or involving multiple collaborators, frequently encounter complications. These issues can be highly disruptive, affecting not only the enforceability of patents but also the company’s ability to raise funds, enter partnerships, or secure licensing deals.
Why is patent ownership so complex for startups?
Ownership disputes are surprisingly common in the early stages of company formation. Founders or researchers may fail to formally assign their rights to the company, leaving gaps in the chain of title. Collaborators, contractors, or academic partners may contribute to inventions without clear agreements in place, creating ambiguity over who owns what.
Joint development arrangements with universities or other companies can further complicate matters. Without clear contractual terms, these collaborations may result in joint ownership, which in many jurisdictions (e.g., in the UK) allows each party to work the invention independently. This can undermine the company’s ability to control or commercialise its own technology.
Administrative oversights can also cause problems. For example, assignments may not be properly recorded with patent offices, or inventorship may not be updated when claims are amended during prosecution. These issues often go unnoticed until due diligence is underway, at which point they can cause delay or derail transactions.
What are 5 strategic solutions to patent ownership challenges?
1) Establish clear patent assignment agreements. Startups should ensure that all founders, employees, and contractors assign their patent rights to the company. This is best done through employment and consultancy contracts that include present-tense assignment language (e.g., “I hereby assign…”). Founders should also sign patent assignment agreements at the time of incorporation to avoid ambiguity later.
2) Determine inventorship accurately. Inventorship is a legal determination based on contribution to the invention. Startups should work with patent counsel to assess inventorship at the time of filing and again during prosecution if claims are amended. Keeping detailed records of contributions (such as lab notebooks and meeting notes) can help support these assessments.
3) Clarify patent rights in academic collaborations. When working with universities or academic researchers, it is important to understand the institution’s patent policies and to negotiate clear terms for licensing or ownership. Universities can retain rights to inventions developed using their resources, and failing to address this early can lead to disputes.
4) Be aware of the issues surrounding joint ownership. Joint ownership can create significant complications, as each party may have the right to license or use the patent independently. Where collaboration is necessary, it is often preferable to structure agreements so that one party owns the patent and the other receives a license. If join ownership cannot be avoided, the rights and responsibilities of each party should be clearly defined in a written agreement.
5) Ensure proper recordation at patent offices. The UK Intellectual Property Office (UKIPO) requires that any transfer of patent ownership be recorded within six months from the date of the transfer of ownership. However, it is strongly advised to record the transfer as soon as possible as failure to do so can limit the recovery of legal costs in litigation.
How can startups avoid costly patent ownership pitfalls?
Patent ownership is fundamental to the value of a startup’s intellectual property. For companies in the drug discovery space, addressing ownership issues early and proactively can prevent costly disputes, support fundraising efforts, and lay the groundwork for successful partnerships and exits. With the right agreements and processes in place, startups can protect their innovations and build a strong foundation for growth.
