Question
A colleague and I want to start a company around what I will call Product X.
Product X has a provisional patent filed on it with my colleague as the lead inventor, with several other people listed as inventors too, who are not committed to founding the company itself. However, should the startup succeed, I guess those other inventors would be wanting some sort of reimbursement.
What are the risks for my co-founder and I here? What should we do about it?
Answers: 1 public & 1 private
Assuming the provisional is eventually converted into a non-provisional, and a patent issues, each inventor can grant licenses under the patent without sharing the royalties with the others, and each can practice the invention without seeking permission from, or paying royalties to, the other(s).
So if you form a company with the lead inventor selling a product covering the patent, the other inventors would be entitled to grant a license under the patent to a competitor or to make and use a product that would otherwise infringe the patent. To remove this uncertainty, you should have the other inventors assign their interest in the patent application to the company.
Co-inventors are typically unwilling to make such an assignment without proper compensation (e.g., money, interest in the company, future stock holdings, etc.). However, it can be difficult to assign a value to a patent application, especially one that may never ripen into a patent.
For example, if there are 3 other inventors, and you value assignment of the patent application as worthy of a 10% stake in your company to each (i.e., you give away 30% of the company), and the patent ends up being responsible for only 2% of your total revenue, you have given away a lot of your company for a very small return. Once the amount and type of compensation has been determined, a contract/assignment can be drafted to enable the other inventors to assign their interest for the stated compensation.
-The above is for informational purposes only and is not for the purposed of providing legal advice-
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