Should tech start ups with a sole owner/founder/inventor (patent pending) filing an LLC License or Assign patent rights into the newly formed LLC?

Currently I am in the process of having an attorney file a single disregarded entity LLC for my company. I am the sole owner and inventor of a patent (pending) which I am not sure to License the rights of the patent to the LLC or simply Assign all patent rights to the LLC. I would like to know which typically investors like to see and why.


Simple answer. Assign the ownership of the patent prior to closing any investment that is sufficient to market validate your invention. Investors will require an absolute assignment of ownership of any intellectual property. Given that you don't actually have a patent yet, you will be doing a general assignment that will include all assets and rights around the idea.

I would also caution you not to over-emphasize the value of a provisional patent or patent application in-process. There is *zero* value to a provisional patent or patent in-process so don't let this distract you from operating your business and building out your product/service.

Answered 8 years ago

As a general practice, it is advisable to license the patent rights instead of assigning the complete patent. This way, you will have control over the invention (technology) and in case anything does not go the way it was expected to go with investors, you will retain the patent rights and corresponding license rights can be revoked.

Obviously, such licensing will require a suitable patent licensing agreement, including provisions related to scope, term, royalty, and the like.

In case you wish to discuss this further, feel free to get in touch.

Best Regards,

Rahul Dev

Answered 8 years ago

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