Brooklyn Law Review


When patents subject to a license agreement are transferred, to what extent do the benefits and burdens of the license agreement run with the patent? Courts have stated that those aspects of the agreement relating to “actual use” of the patent or invention are encumbrances running with the transferred patent. But this doctrinal test is not consistently applied and is not up to the task of clearly and consistently delineating the extent to which patent license agreements run with transferred patents. Conceptualizing the patent as a bundle of Hohfeldian Rights to exclude, this article proposes a more coherent framework for analyzing the extent to which actions by a prior patent owner run with a transferred patent to affect the rights of subsequent owners. The patent owner, through a license agreement or other actions such as selling a patented article, may exchange sticks in the bundle for other forms of value, thus diminishing the size of the in rem bundle of rights. When a patent is transferred, what is transferred is whatever remains in the in rem patent bundle, while the in personam contract remains between the two signatories. Conceptualizing patent transfers in this way could add some degree of precision and clarity to the analysis of the effect of prior license agreements on transferred patents, and hopefully facilitate more coherent development of the law.