These are very slippery concepts.
It is important to first conceive of property rights in a patent as a "bundle" of separate and distinct individual property rights. That is to say, a United States patent grants the patent holder with these specific rights; 1.) the right to exclude others from making the invention within the United States; 2) the right to exclude others from using the invention within the United States; 3) the right to exclude others from selling the invention within the United States; 4) the right to exclude others from offering the invention for sale within the United States; and 5) the right to exclude others from importing the claimed invention into the United States.
An "assignment of a patent" is a transfer of all of an entity's undivided interest in the whole of the patent (i.e., the entire bundle of rights) to another individual or entity. By stark contrast, in a "license of a patent," only some of the rights in the entire bundle of rights are transferred, but not all of them. In an exemplary license, a patent holder (Company A) might permit Company B to exclude all others from making the invention within the United States, but not permit Company B to exclude all others from selling the invention within the United States.
It is also worth mentioning: Any time a patent holder retains any rights in the patent or otherwise holds a reversionary interest in any rights in the patent, the transfer will be considered a license of the patent rather than an assignment of the patent. For example, if Company A made an agreement with Company B that Company B is free to exercise "all rights in the patent for 19 years from the date of filing the patent application" that may on its face seem like an assignment of a patent, because the language of the agreement specifically states that "all rights in the patent" are being transferred. In actuality, however, this is a license. It is a license because a patent term lasts 20 years from the date of filing, not 19 years. Because all rights in the patent are being transferred for only 19 years, rather than for the full term of the patent--which is 20 years--then at the end of year 19, the patent rights will revert back to the original patent holder. It is therefore a license.
You must also be careful to distinguish between "assignment of a patent" with "an assignment of patent rights" (and conversely, a "license of a patent" with a "license of patent rights"). An "assignment of patent rights" is just a full transfer of the entirety of one or more specific rights in the patent. For example, Company A may assign to Company B the exclusive right to make the patented product within the United States for the entire term of the patent. If this was the only right transferred to Company B, this would be a "license" of the patent (because not all rights in the bundle of rights were transferred to company B -- company A did not allow Company B to sell the manufactured goods within the United States). However, it would also be be considered an assignment of a single patent right -- namely, the right to exclude others from making the invention within the United States. It is an assignment of a right because the entirety of this specific right has been transferred to Company B; it is a license of the patent because something less than all rights in the patent were transferred to Company B.
What would be an example of a "license of a patent right"? Suppose Company B entered into an agreement with Company C, granting to Company C the exclusive right to manufacture the patented goods within all states west of the Mississippi. That agreement would be considered a license of a patent right, i.e., a license of the specific patent right to exclude others from making the invention within the United States. It is a license of a right, rather than an assignment of a patent right, because something less then the entire right to exclude parties from making the goods within the US was transferred to Company C. In this case, Company C could only exclude others from making the goods in a limited geographic region, rather than within the entirety of the United States.
In my next post, I will explain what a "partial assignee" which often adds another layer of confusion to an already complex issue.
It is important to first conceive of property rights in a patent as a "bundle" of separate and distinct individual property rights. That is to say, a United States patent grants the patent holder with these specific rights; 1.) the right to exclude others from making the invention within the United States; 2) the right to exclude others from using the invention within the United States; 3) the right to exclude others from selling the invention within the United States; 4) the right to exclude others from offering the invention for sale within the United States; and 5) the right to exclude others from importing the claimed invention into the United States.
An "assignment of a patent" is a transfer of all of an entity's undivided interest in the whole of the patent (i.e., the entire bundle of rights) to another individual or entity. By stark contrast, in a "license of a patent," only some of the rights in the entire bundle of rights are transferred, but not all of them. In an exemplary license, a patent holder (Company A) might permit Company B to exclude all others from making the invention within the United States, but not permit Company B to exclude all others from selling the invention within the United States.
It is also worth mentioning: Any time a patent holder retains any rights in the patent or otherwise holds a reversionary interest in any rights in the patent, the transfer will be considered a license of the patent rather than an assignment of the patent. For example, if Company A made an agreement with Company B that Company B is free to exercise "all rights in the patent for 19 years from the date of filing the patent application" that may on its face seem like an assignment of a patent, because the language of the agreement specifically states that "all rights in the patent" are being transferred. In actuality, however, this is a license. It is a license because a patent term lasts 20 years from the date of filing, not 19 years. Because all rights in the patent are being transferred for only 19 years, rather than for the full term of the patent--which is 20 years--then at the end of year 19, the patent rights will revert back to the original patent holder. It is therefore a license.
You must also be careful to distinguish between "assignment of a patent" with "an assignment of patent rights" (and conversely, a "license of a patent" with a "license of patent rights"). An "assignment of patent rights" is just a full transfer of the entirety of one or more specific rights in the patent. For example, Company A may assign to Company B the exclusive right to make the patented product within the United States for the entire term of the patent. If this was the only right transferred to Company B, this would be a "license" of the patent (because not all rights in the bundle of rights were transferred to company B -- company A did not allow Company B to sell the manufactured goods within the United States). However, it would also be be considered an assignment of a single patent right -- namely, the right to exclude others from making the invention within the United States. It is an assignment of a right because the entirety of this specific right has been transferred to Company B; it is a license of the patent because something less than all rights in the patent were transferred to Company B.
What would be an example of a "license of a patent right"? Suppose Company B entered into an agreement with Company C, granting to Company C the exclusive right to manufacture the patented goods within all states west of the Mississippi. That agreement would be considered a license of a patent right, i.e., a license of the specific patent right to exclude others from making the invention within the United States. It is a license of a right, rather than an assignment of a patent right, because something less then the entire right to exclude parties from making the goods within the US was transferred to Company C. In this case, Company C could only exclude others from making the goods in a limited geographic region, rather than within the entirety of the United States.
In my next post, I will explain what a "partial assignee" which often adds another layer of confusion to an already complex issue.
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