Patent Ownership: To Assign or To License?

27 Mar 2025

You have spent hours and expended much of your resources in R&D. After finalizing your invention, you engaged a Patent Attorney to draft and file a patent application and a few years later, you celebrate your win with a granted patent in Singapore and elsewhere.

The patent now grants you exclusive rights, among other acts, to manufacture and sell the product in Singapore (or other countries where you have also obtained a granted patent). At some point, you realize that your invention is successful and has received widespread recognition and interest.

This brings you to a crossroad as you seek significant investment or market reach for your invention. Should you assign your patent to a third party and cash out; or should you grant an exclusive license to a third party?
In general, an assignment is a transfer of ownership, while a license is in essence, permission to do what would otherwise constitute as infringement. The following summarizes some of the benefits and disadvantages of both, an assignment and an exclusive license.

Benefits of Assignment
Annuities have to be paid yearly during the life span of the patent, in order to keep the patent in force. Once you have assigned (fully) the patent to a third party (Assignee), you are no longer responsible to maintain the patent. This could provide cost savings for you.

Additionally, depending on the terms and considerations of the assignment agreement, an assignment typically yields a lump sum payment. This could be particularly beneficial if you are in need of funds.

Furthermore, an assignor is no longer liable for legal issues related to the patent, once the patent has been assigned.

With the assignment of the patent, you may now free your resources and time on other aspects of the business.

Disadvantages of Assignment
Once a patent is assigned, the transfer of title is considered irrevocable. This means that once the original owner assigns their patent rights to a third party, they can no longer reclaim ownership of that patent and the transfer is complete and final.

Moreover, assigning your patent does not facilitate a long term revenue strategy through steady royalty payments. Even if an assignment is agreed to be paid for via installment over a long term, a failure to make payment does not entitle you to recover intellectual property rights which have already been transferred.

Additionally, there is a loss of entitlement to enforce rights in the patent once the patent has been assigned.

Benefits of exclusive license
An exclusive license is more suited to obtaining a steady stream of income. The licensee is obliged to pay royalties continuously or else lose his licensed rights. Additionally, performance obligations can be imposed on your licensee. Targets can be set for exploitation and hence royalties.

A lack of a lump sum payment (which is the case for Assignment) in favour of a spread out income (via royalties) will attract less tax upfront.

Disadvantages of exclusive license
Generally, once you have granted an exclusive license to a third party, you lose the entitlement to work the invention and/or commercialise it. Further, time and effort are needed to administer the license agreement, ensure that obligations are met by licensee and payments are timely made. Moreover, in general, you will also not have control over infringement proceedings because an exclusive licensee can bring proceedings in its own name.

Summary
The above sums up in general, the pros and cons of a typical assignment agreement and an exclusive license agreement. There may be instances where clauses are included in such agreements. For example, “royalty-free grant back license" may be included in conjunction with the assignment and/or exclusive license transactions, which could provide the assignor or the licensor with continued right to use the patent for their business. 

With the above comparisons between assignment and exclusive licenses, you should consider all short term and long term factors before deciding on whether to assign the patent to a third party, or grant them an exclusive licensee. Should you require assistance or would like a discussion, do reach out to the writer.