Searching for a Lien on a Patent

Does someone have a checklist that they could share with me on the due diligence that you may go through in the process of purchasing a patent? In particular, I’m thinking about the title search to ensure that the seller is in fact the owner and that there are no liens on the patent – e.g., that the patent is not currently being used as a security interest. How do you go about doing those searches? – Dennis

49 thoughts on “Searching for a Lien on a Patent

  1. 11

    There are only so many ways to search for liens or security interests on patents (same issue with all other IP rights). In a lot of cases, the patents would be subject to security interests because it’s an asset that falls under a GSA (General Security Agreement). You typically would review the security interests searches (that are done for other assets) and then ask to see if those agreements actually encumber the patents.

    This is the reason why purchasers usually make the seller give rep’s and warranties around the patent (including a rep and warranty that there are no encumbrances on the patent). In the purchase agreement, the purchaser would also add language so that the purchaser can get money back from the seller (either through retaining money in escrow or explicitly requiring money be paid back) if it was discovered later that there was an encumbrance. It’s not perfect, but that’s how most transactional lawyers deal with this issue.

  2. 10

    OT, but geeky neat stuff: link to

    Of possible relevance to the patent world and the notion of “transitory” as a definition:

    The Hubble image, released Thursday (April 17), is a 14-hour exposure that shows objects about 1 billion times fainter than the naked eye can make out, researchers said. Most of the galaxies visible in the photo lie less than 5 billion light-years away, but some objects are much more distant.

    So some of these things that people want to call transitory in patent law are of the same nature as things that have been around (and are now getting to us here on planet Earth) for 9 billion years (in the example of a waveform from a distant quasar)…

    Yup, “Nuitjen, ” is a real winner of case when it comes to denying reality.

  3. 9

    Still waiting for those March 2014 patent litigation stats … A bunch of people were doing cannonballs in the pool after the “sudden decline” based on the January numbers. Then there was some dust-kicking over the February numbers (which contradicted the hasty conclusions drawn from the January blip). And then complete silence. It couldn’t possibly be that some folks are waiting for another “blip” like January’s blip so they can make a big deal out of another “sudden decline”, could it?

    Nah. They aren’t that clever.

    1. 9.1

      As I recall the dust-kicking was by you Malcolm and your rather odd view that year-over year analysis was somehow not correct, but that you wanted to ‘adjust” month to month (Jan to Feb) numbers.

      As to actual numbers, I have not seen any yet – have you? Is your “waiting for a big deal” mere conjecture, or do you know something?

      1. 9.1.1

        year-over year analysis was somehow not correct

        They just keep digging.

        Maybe next the patent teabaggers will compare day 102 in 2014 to day 102 in 2013 and note the “infinitely lower filings compared to the previous year — clearly these reforms are unnecessary!”

        As to actual numbers, I have not seen any yet – have you?

        Nope. That’s what’s odd. The numbers were oh-so-very-important when the big “January dip” was reported. After that … not so much.


          Digging? They?

          Um, no. Pretty much a standard type of analysis, and the only odd thing here is your seemingly deliberate attempt to not understand just how common the type of analysis is, at the same time trying to use an even more odd type of analysis given your views.

          As to numbers not being seen – let me know when you have something actual to talk about.


            Pretty much a standard type of analysis

            Maybe if you’re preparing an almanac.

            Is there a “patent filing season”? Maybe folks like you who spend a lot of time screaming at the sky know something the rest of us don’t.

            Here’s the graph:

            link to

            Other than the historical tendency for January filings to be low (noted by Lex Machina), I don’t see any seasonal trends. Do you?


              (and a minor nit for you to consider – given your point of “no season” why is the data gathered in month buckets? Maybe you should scream at the sky and demand that Lex Machina change what they have given)

              Curious too, have you bothered asking Lex Machina for fresh data? Why not? You have asked this board over and over and over again.


              Your failed attempt to salvage your hero Gene’s pathetic spin of the February data is noted, as are your non-responsive insults.

              Keep digging.


              have you bothered asking Lex Machina for fresh data? Why not?

              I’m not the one who went off to the races based on the January numbers. That was your boy Gene and his fellow self-serving propagandists. It’s up to them to clean up. I’m just watching them fail.

              You know, like I watch you fail all the time right here in these comments. Like you did just now.

              Keep the hits coming, Tr0llb0y.


              Your failed attempt to salvage your hero Gene’s pathetic spin of the February data is noted, as are your non-responsive insults.

              LOL – wow, your obsession is something fierce. Gene was not involved here at all.


              Gene was not involved here at all.

              Great to know that you’re deeply committed to watching his back. He needs great footsoldiers like you! He must be so proud of you.

              In any event, if you’re hoping to rest your assertion on the word “here”, that’s pretty funny. Gene’s lame attempt at IP Suckdog to spin the February numbers was widely cited. It was cited here, in fact. It’s your home turf, Tr0llb0y, so I know you can find it real easily. Have lots of fun, mkay?


              In case you have not yet noticed Malcolm, this is not IPWatchdog.

              You seem to think that it is, commenting as you do as if Gene was present.

              For some still unexplained reason, you think that your constant talking about someone not even here is of interest to anyone (you are projecting some odd interest that runs rampant in your own head).

              I think that maybe you should start posting over there to obtain the ‘fix’ that you appear desperate to get.

  4. 8

    Who wants to draft me a Patent Application for

    This is a cite where the motivated party (e.g., the Lien holder) can register their lien on any property, including a patent or patent application, for free and interested parties (e.g., potential purchasers) can search the database by identifying information, such as address, VIN, Patent Number etc. for a small fee. Fees could be arranged based on time (day), one-search fee, weekly, monthly or yearly contracts…

    1. 8.1

      …and what are you going to do Les when the “motivated party” is not the party that has a lien to register?

      You seem to quite miss the nuance of the Professor’s question (as that nuance also aligned with the same type of “gee-I-not-the-patent-holder-want-it-easier-to-track-someone-else’s-personal-property stance).

      Avenues for any current motivated party – one that has a lien – ALREADY EXIST. See post 1.

      1. 8.1.1

        I gave the lien holder as an example (that’s what “e.g., ” means…. it refers to a Latin phrase, I believe). Anyone is free to provide the information (with documentation of course). We want to encourage that. That’s why we don’t charge for it.

        I didn’t miss any nuances, I assure you.

        So what if Avenues already exist? This is Amerika where we believe in a little thing called competition and the free market.


          competition and free market Les…?

          Nice phrases – but so are “mom” and “apple pie.”

          Yes, you gave a single example, and you rather neglected that a solution already exists for that single example. Maybe you do not recognize what a question is, as I was asking more of you. If you do not have more, simply say so.


            I answered your question. If someone other than a lien holder provides documented information about a lien, we will add it to the data base.

            What part of that didn’t you understand?


            Yes I do. And accordingly, my post at answered your question. Do you understand that?

    2. 8.2

      Who wants to draft me a Patent Application for

      You already drafted it. You need someone to help you draw the rectangles for your flow chart?

  5. 6


    As the comments on this thread suggest, you’ve hit on a subject that’s of interest, but not well known. An article post on the impact of UCC 9 and similar state security interest statutes would be in order. One issue I vaguely remember coming up on security interests is where do you record them for notice purposes: the state, the USPTO (they do allow recording such interests), or both? I recall seeing a law review article (AIPLA or JPTOS possibly) on this subject.

  6. 5

    Check for bankruptcies. An owner of an assignment or other interest in the IP may have filed for bankruptcy without listing it in the bankruptcy schedules.

  7. 4

    While not technically a lien, most companies now require their employees to enter into employment agreements requiring either the present assignment of all future inventions either made while employed, or related to the company’s business, etc., or imposes on the employee an obligation to assign. These employment agreements are not recorded, but are effective.

    Thus anyone who was a named inventor on a patent who is employed, or recently employed, by a company not listed on the patent or in the assignment records, raises the question of whether his employer or previous employer owns or has rights in the patent.

    My practice when approached by such an individual was to require them to go back to their employer, and to get a formal waiver of patent ownership in writing.

    Stanford v. Roche also illustrates what happens when an employee works at two different employers on related research.

    1. 4.1


      Do we want to bring up the issue of those states that enforce ‘marriage rights’ to personal property (you know, the hodge podge of state by state implications as noted in Chisum Chapter 22)?

      1. 4.1.1

        Why, of course, anon.

        Life IS complicated. Trying to regulate the ownership of patents is going to be a mess. Let’s point that out, shall we?

  8. 3

    Some professors at the University of New Hampshire have been working on a pilot program to access publicly available data on patent ownership and encumbrances. Check out the link below or search PIPR New Hampshire

    link to

  9. 2

    I think if you check the assignments on the PTO and you appear to have a good chain and then you buy it and register it at the PTO, then your title will stand up against someone that did not register at the PTO.

    1. 2.1

      This is not necessarily the case. See In re Cybernetic Services, Inc., 252 F.3d 1039, 1058-59 (9th Cir. 2001):

      “it is clear that the Patent Act is outside the scope of [California UCC] § 9302(3)(a). As we have explained, a transaction that grants a party a security interest in a patent but does not effect a transfer of title is not the type of “assignment, grant or conveyance” that is referred to in 35 U.S.C. § 261. The transaction in this case did not transfer an ownership interest. Therefore, § 9302(3)(a) did not require that Petitioners record their security interest with the PTO.

      Because 35 U.S.C. § 261 concerns only transactions that effect a transfer of an ownership interest in a patent, the Patent Act does not preempt Article 9, and neither California Commercial Code § 9104(a) nor § 9302(3) applies. Consequently, Petitioners perfected their security interest in Debtor’s patent by recording it with the California Secretary of State.”

      See also In re Pasteurized Eggs Corp., 296 B.R. 283, 291 (Bankr. D.N.H. 2003) (summarizing Cybernetic as holding that “the Patent Act does not preempt the UCC with respect to perfection of security interests, because the Patent Act addresses filings only with respect to transfers in ownership but not with regard to security interests”).

      See also In re Coldwave Systems, LLC, 368 B.R. 91, 97 (Bankr. D.Mass. 2007) (“The Federal statute does not protect holders of security interests.”)


          Thanks for the astute observation, James. James is quite correct about impact of UCC 9 (Security Interests) on patent ownership that 35 USC 261 does not address. I was fortunate to have taken a course in law school on security interests (including UCC 9), something us IP/patent attorneys need to be aware of.


            Yeah, but this is a comment thread on a blog, so I don’t need the precision that I might employ in an appeal brief. “Valid against a subsequent bona fide purchaser for value” is how they might say it in a hornbook.
            I was just commending James Daily for providing solid citations that addressed an issue raised earlier.


              DC, I think the added nuance is required..

              What the cases seem to say is that UCC filings in states are sufficient notice so that one cannot be a BFP.

              That certainly complicates life quite a bit, but I am not sure congress with act to overturn these cases and require security interests to be recorded in the USPTO to be effective. I think the states may raise some hue and cry on this score, making “reform” here a bit difficult.

  10. 1

    Since actually filing with the USPTO is voluntary, and any two people (inventor-any one else) can strike private deals., there is no universal ‘correct’ and full-proof answer to your question.

    You might as well be asking the same question as to any government tracking of any other piece of private and personal property. (how many sticks of gum do I have in my pocket… ?)

    But at a start, this is a good place: link to

    1. 1.1

      Right, will also need to search UCC filings in the various state-based secretary of state offices. That is something that I don’t really know how to do.

      1. 1.1.1

        The UCC searches may only yield results if the holder of the personal property has decided to do something with that personal property in relation to that person’s running of a registered business.

        Since patent law does not require that (the “no use” item), even knowing how to run UCC searches will not give you a full answer to your question.

        A private person (inventor) may still make a private deal pledging his personal property without a UCC filing.

      2. 1.1.2

        It depends on the state. They all have their own system, most if not all are online now. Missouri’s is here: link to

        Finnegan has a nice article on security interests in IP here: link to

        It’s from 2003, so a little outdated, but the basic ideas are sound. Certainly it is a good idea to search both the PTO records and state records. Unfortunately you generally can’t narrow your search by the type of property, so a clearance search can mean wading through a lot of chaff.

      3. 1.1.3

        I am sure it cannot be done with any certainty. UCC liens might only recite “all tangible and intangible property” and need not list patent numbers. You have to search for all recorded liens against the patent owner in every state, and read every one to see if it might expressly or implicitly cover patents. I think most people settle for a warranty against encumbrances.
        Recordation of assignments in patents operate like recordation of real property deeds: If you don’t record your assignment, you cannot enforce it against subsequent purchasers. Maybe 35 U.S.C. 261 does not apply to security interests?


          At least in the Ninth Circuit 35 U.S.C. 261 does not apply to security interests.

          “In summary, the statute’s text, context, and structure, when read in the light of Supreme Court precedent, compel the conclusion that a security interest in a patent that does not involve a transfer of the rights of ownership is a “mere license” and is not an “assignment, grant or conveyance” within the meaning of 35 U.S.C. § 261. And because § 261 provides that only an “assignment, grant or conveyance shall be void” as against subsequent purchasers and mortgagees, only transfers of ownership interests need to be recorded with the PTO.”

          In re Cybernetic Services, Inc., 252 F.3d 1039, 1052 (9th Cir. 2001)

      4. 1.1.4

        I fear that UCC recordation is somewhat hit-or-miss. In Ohio, I believe that the UCC statement can be filed in the Secretary of State’s office and that there are county-based filing systems as well (but I’m going back a bit in my practice area). Most (small) businesses will have some sort of line of credit that will indicate that it attaches all personal property generally. For most lenders, if they do a specific loan for the purchase of a particular piece of machinery (think car loan), they’ll be almost certain to file (it’s a Purchase Money Security Interest — PMSI), and is a first in line creditor in the event of the debtor’s default or bankruptcy. But later creditors may or may not file. I just searched Ohio for a particular company and I know not all their creditors showed up.

      5. 1.1.5

        Dennis, I have a book called something like “due diligence in IP transactions.” You want me to look to see? I’d bet a dollar it’s there…

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