Benefits & Limitations of USPTO Patent Ownership Records
April 20, 2021
To evaluate a patent's legitimacy, whether it relates to litigation or a deal, one must first determine who owns the patent. This inquiry requires a visit to a far corner of the U.S. Patent and Trademark Office (PTO) known as the Assignment Recordation Branch—the patent world's version of a local county's recorder of deeds. The Assignment Recordation Branch keeps records of ownership of U.S. patents and applications, as it has done since Thomas Jefferson's days, except now the records are easily accessible through the internet.
The PTO Assignment Recordation Branch database is an important repository of patent records that should be reviewed by all parties that have or seek any interest in a patent. Interested parties should understand that the records filed with PTO are not vetted by the PTO, are not necessarily reliable, authentic, or complete, but are important evidence of ownership
These records are best viewed as a starting point and might be followed by additional actions to clarify ownership, such as through representations in deal documents or additional discovery in litigation. In sum, a party searching for patent ownership records at the PTO can gather valuable information searching the assignment database, but its search of the assignment database should be a start, not the end of the inquiry.
This article explores the value of and the significant limitations of the database.
The PTO allows for the filing of assignments and other records that evidence current ownership, and it maintains records of prior owners. The PTO permits filing of records to fix flaws in ownership records. The PTO also allows the filing of other records that do not evidence present ownership but instead relate to potential future ownership rights or licensed patent rights.
The PTO's assignment database contains millions of records. It is a veritable social and business history of patent owners’ lives, often including records of birth and marriage, divorce and death of individuals; and mergers, acquisitions, sales, and dissolutions of corporate parties, and name changes. The records also reflect potential future ownership or limits on transferability, such as security agreements, notices of litigation, IRS tax liens, gifts, inheritances, and court orders. Records are filed by parties from virtually every country globally, and some non-countries, like Antarctica.
The patent assignment recordation statute, section 261 of the Patent Laws, provides some protection for current assignees against claims of other purchasers who fail to diligently record ownership records. In 2012, the section was amended to permit recordation of interests that are less than a present ownership interest. This amendment, however, did not provide any additional rights, benefits, or priorities for recording these lesser interests. The PTO noted that its database allows for “notification of equitable interests or other matters relevant to the ownership of a patent or application.”
Many records filed with the PTO seem to protect important rights but often fall short of expectations. For example, many technology companies pledge patents as collateral to secure funding. The lending bank obtains security interests in the patents and then files a security agreement with the PTO to attempt to enhance its security interests. While the filing of the security agreement with the PTO might give notice to others, it does not perfect the security interests. Only by filing a UCC-1 financing statement with a state regulator (not with the PTO) is a security interest perfected.
Another type of filing that often provides little value are nunc pro tunc agreements used to attempt to repair errors in the chain of title. A purchaser of a patent may realize that there is a flaw in the chain of title and seek to correct title by filing a “nunc pro tunc” assignment to retroactively fix the mistake. Courts have noted that a nunc pro tunc correction can operate to govern the relationship between the parties to the agreement, but such efforts are ineffective as attempts to rewrite history as to third parties. This approach echoes U.S. Supreme Court Justice Anthony Kennedy's comment in a related context that “the charming utility of the nunc pro tunc device cannot obscure its outright fiction.” Thus, traditional nunc pro tunc patent assignments may only act to signal that there is a flaw in patent ownership.
In 2020, the U.S. Court of Appeals for the Federal Circuit in Schwendimann v. Arkwright, created confusion about nunc pro tunc agreements. The court held that if a technically faulty assignment is repaired, but not replaced, under state laws under the doctrine of contract reformation, then by “virtue of the reformation, the written instrument was corrected nunc pro tunc to the point of assignment.” In other words, an assignment agreement that is reformed can have a retroactive effect, but a new nunc pro tunc assignment agreement cannot be retroactive. The likely result of the confusing decision may be the birth of a new PTO filing: “Assignment by Reformation.”
Further, all the records are not original records but are electronic copies that may or may not be authentic. The records are created by interested parties, not the PTO, and the PTO does not validate or verify any of the records. The PTO considers its act of adding records to the database to be “ministerial” and not a substantive review of rights. The party submitting the records does not sign an oath, attestation, or otherwise vouch for the validity of the records.
Also, no party has any legal obligation to file ownership records with the PTO assignment database. There are many ownership records filed with the PTO that are not filed in its assignment database, but instead are filed as part of the PTO's Patent Application Information Retrieval (PAIR) system that stores the records of the patent prosecution process. There are also patent owners who choose not to publicly file ownership records or who simply overlook the matter.
In addition, no one has any legal obligation to even review patent ownership records, with the exception of certain assignees who are charged with constructive knowledge of the current patent assignments. Thus, the PTO records in the assignment database are not necessarily complete, valid, or authentic. At best, courts presume the ownership records are valid and operable but are subject to challenge to overcome the presumption.
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