Attributable ownership and family law March 27, 2014Posted by Brian Schar in USPTO.
Tags: family law, patent attorney
If you’re a patent person, you’re almost certainly an engineer or scientist first. With a background like that, it would be almost inconceivable that you’d get into something all touchy-feely like family law, where you might have to reassure someone or even figure out their feelings. Yeah, no. Maybe some of you would be good at that, but that’s just not me.
Well, guess what? With the proposed attributable ownership rules, you will get to dive head first into the morass of family law.
Why? Because spouses, kids, and heirs have property rights under the proposed rules.
An inventor or shareholder, as an individual, is not the “ultimate parent entity” of his or her ownership rights of IP. That’s because spouses have rights to marital property, either through community property or similar doctrines in non-community-property states. You own a patent (as a solo inventor) or shares in a privately-held startup that owns IP? If you die, that spouse will often get the entirety of your interest in the IP – meaning that he/she is an attributable owner.
What’s that? Your spouse gets nothing when you die, because you’re giving it all to your kids? Well, you’re a terrible person. And you’ve just made your kids attributable owners as well. Does your will establish a trust or give any interest in your estate to some kind of organization, whether for-profit or not? They are attributable owners as well.
Now imagine that ex-spouses have property rights via a divorce settlement. You’ll need to get a copy of that too! And people love giving a total stranger a copy of their divorce settlement – especially a patent attorney.
So imagine the fun of prying the shareholder list out of the hands of your CFO. Then imagine the order of magnitude greater pain when you have to contact each and every individual shareholder, find out if they’re married, get their spouse’s name, find out if they’re divorced, get a copy of the divorce settlement, find out if they have a will, and get a copy of the will.
Do you think you’ll be able to do that, successfully, for each and every one of the hundreds of individual shareholders of your privately-held venture-backed startup? Me either. Or, do you think that every single one of the investors you call is going to tell you what to do with your request for their personal information, slam down the phone, and then call your CFO and insist he/she fires you? This is why the proposed rules are a machine for destroying startups that depend on IP.
The further you go down this rabbit hole, the more awful it is.