A patent is an asset, like any other asset. It is not a whole lot different than a truck used in your business, or a computer. It is just a lot fancier. Would you consider putting the truck or the computer in your own name, or in the LLC? Odds are that you want to keep the patent in the LLC. It is primarily a tax issue. If the patent makes money from any source, whether from being sold, or licensed, then the owner of the patent is liable for the taxes on the income. Should you opt to sell it or license it, you will usually have a cleaner transaction having your LLC sign. Business is business, and you are you. Which brings me to another issue: You want to keep your business as business, or risk breaching the corporate veil that protects your company. All in all, I can't think of a single reason to keep it in your own name unless you personally developed it, and it has nothing to do with the business of the LLC. MaryAnnBusiness Plan MasterBusiness Plans for Financing Your Business ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

My two cents - I would keep the patent in your name and license its use to the LLC - with limitations and a time frame. Thus, if something goes wrong with the LLC or investors - you still hold your patent. Also, if investors come along - they must then hold you in esteem and keep you in the loop as you hold the IP. Just my two cents

I would agree with the above poster; however I would consider doing a C Corp instead of an LLC. Tax wise you'll be in a better situation and be able to recieve dividends and not be required to pay self employement tax on them. You'll also find it easier to give portions or shares of your company to an investor(s) in the future. Yes, they do require a little more work to maintain, but with your situation you're better off with a C Corp.

Thank you so much for your feedbacks!   My dilemma is if a VC wants to create a joint partnership (let's say 50/50) since they're providing the capital to start the business, and I filed the patent through the LLC or Corporation, wouldn't they now own 50% of the patent (idea)?   Currently, my business plan reads as I'm the owner/inventor of the idea and licensed to 2cre8.   Any thoughts to that approach?

I would definitely go with an LLC. One for the tax reasons as stated above and two for the potential investment that you mentioned. The benefits of putting it in the LLC's name are more than the putting it in yours.

2cre8 - Thanks for your interesting question. Whichever route you decide to go, I would recommend that the final decision is well-documented and understood by all parties, especially if any research was conducted at an educational facility or another type of research institution. Best of luck and please keep us posted on your progress.

Thank you Nicole and to everyone who generously provided feedback and recommendations. I truly appreciate it!   Kindest regards, 2cre8

This is a good question. First of all, you have to understand that the process of transferring the patent from yourself to the LLC is not that difficult at all. The process of assigning the patent to the LLC will take less than 15 seconds: get out a piece of paper, a napkin, perhaps and write the following words: I (your name here) hereby assign all the rights in Patent XYZ to ABC LLC. Sign it and you're good to go. Now, the more important concern, I gather, is making sure that the VC can verify that the patent is in your name. Fortunately, the process of assigning the patent to the LLC is not that difficult either. You can simply record your assignment with the USPTO (preferably not written on a napkin). Now, I cannot speak to the tax implications of whether it is better off in the name of the LLC or yourself, but from a liability standpoint it might be better if you had it in the name of the LLC. This way, you may be in a better position from an appearances standpoint to say with a straight face that you were operating the LLC as a separate entity, and for this reason it would not be just to pierce the corporate veil. Just as a side note: it may also be possible to keep the patent in your name, and license the rights of the patent to the LLC. This is probably not what you had in mind, but that's another possibility. For more information, you can visit my websites at www.ideastolegacies.com/intellectualpropertylawyer.html and www.socalpatent.com/losangelespatentlawyer.html Message Edited by NicoleD on 06-16-2009 01:30 PM

No problem. Good luck with everything! Sacramento Solar Installation Fresno Solar Installation