IP Assignment and Licensing

IP rights have essentially transformed intangibles (knowledge, creativity) into valuable assets that you can put to strategic use in your business. You can do this by directly integrating the IP in the production or marketing of your products and services, thereby strengthening their competitiveness. With IP assignement and IP licensing, IP owners can also use your IP rights to create additional revenue streams by selling them out, giving others a permission to use them, and establishing joint ventures or other collaboration agreements with others who have complementary assets.

  Expert tip: Assignment, license and franchising agreements are flexible documents that can be adapted to the needs of the parties. Nevertheless, most countries establish specific requirements for these agreements, e.g. written form, registration with a national IP office or other authority, etc. For more information, consult your IP office .

IP rights assignment

You can sell your IP asset to another person or legal entity.

When all the exclusive rights to a patented invention, registered trademark, design or copyrighted work are transferred by the owner to another person or legal entity, it is said that an assignment of such rights has taken place.

Assignment is the sale of an IP asset. It means that you transfer ownership of an IP asset to another person or legal entity.

Infographic showing innovation stages from idea generation to market as an illustration for the IP for Business Guides

IP for Business Guides

Learn more about the commercialization of patents, trademarks, industrial designs, copyright.

Read IP for Business Guides

IP licensing

You can authorize someone else to use your IP, while maintaining your ownership, by granting a license in exchange for something of value, such as a monetary lump sum, recurrent payments (royalties), or a combination of these.

Licensing provides you with the valuable opportunity to expand into new markets, add revenue streams through royalties, develop partnerships etc.

If you own a patent, know-how, or other IP assets, but cannot or do not want to be involved in all the commercialization activities (e.g. technology development, manufacturing, market expansion, etc.) you can benefit from the licensing of your IP assets by relying on the capacity, know-how, and management expertise of your partner.

  Expert tip: Licensing can generally be sole, exclusive or non-exclusive, depending on whether the IP owner retains some rights, or on whether the IP rights can be licensed to one or multiple parties.

Technology licensing agreements

Trademark licensing agreements, copyright licensing agreements, franchising agreements, merchande licensing, joint venture agreements, find out more.

  • Learn more about Technology Transfer .

assignment of ip licenses

Intellectual property assignment: What it is and how to make one

Find out more about business management

assignment of ip licenses

by   LegalZoom staff

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Updated on: January 22, 2024 · 9min read

What is an intellectual property assignment?

Ip assignment pros and cons, how to complete an intellectual property assignment, intellectual property assignment faq.

Just as with buying and selling physical property, transferring the ownership of intellectual property is an important part of doing business. Whether you're starting a new business, buying product rights, or purchasing a company, an intellectual property assignment can help you smoothly transfer IP ownership rights.

A man seated at a desk writes in a notebook while considering the elements of intellectual property assignment.

An intellectual property assignment is the transfer of an owner's rights in copyrights, trademarks, patents,  trade secrets , or other intangible creations. These transfers may take place on their own or as part of a larger transaction.

assignment of ip licenses

An intellectual property assignment provides records of ownership and transfer while also  protecting the rights  of all parties involved in buying or selling IP. This essential documentation helps establish a clear record of the title for intellectual property.

By having an intellectual property assignment in place, you can help keep your intellectual property safe from illegal use, distribution, and more.

What should an intellectual property assignment include?

An intellectual property assignment includes important details about the transfer of intellectual property and the parties involved. The contents of an IP assignment can be laid out in 17 different sections.

What does an intellectual property assignment include?

In the intellectual property assignment, you will find:

  • Who is involved in the transfer
  • What IP is being transferred
  • How much the IP costs
  • Why the transfer is valid

When done correctly, an intellectual property assignment provides a written acknowledgment of the rights and responsibilities transferred in the sale.

Intellectual property assignments have many advantages, but before transferring your IP in this way, it's important to consider the limitations of IP assignments as well.

Checklist comparing the pros and cons of intellectual property assignment. Pros are the price is agreed upon in advance and there are no lingering responsibilities. Cons are the payment is one-time-only, and the owner loses ownership rights.

Pro: Guaranteed payment at the price negotiated

If a seller decides to give up the ownership rights of their intellectual property using an IP assignment, they can be sure that they will receive the exact compensation stated in the agreement. An IP assignment agreement will also state a strict payment deadline for the buyer, ensuring that the seller is paid by the agreed-upon date.

Pro: No lingering responsibilities

Once an IP assignment agreement goes into effect after being signed by both parties, the seller may no longer have any responsibilities related to the intellectual property involved in the sale. Because of this, the seller can remove themselves from being responsible for any future obligations related to the intellectual property once the agreement has been signed.

Con: One-time payment

Unlike with an IP licensing agreement, the use of an IP assignment transfers all ownership rights of the sellers' intellectual property for a set price. If a seller uses an IP licensing agreement, they will still retain ownership rights, which allows them to control how their intellectual property is used while still receiving income via fees and/or royalties (think renting vs. selling).

Con: Loss of ownership rights

Using an IP assignment agreement, sellers surrender all ownership rights to the intellectual property and no longer have any say over how the IP is used. This gives the buyer complete control and ownership rights of the intellectual property involved.

IP assignments aren't inherently complicated, but it's important to include the right information. The following is how an IP assignment agreement can be crafted. Learn about each section in more detail.

1. Introduction of parties

This section identifies the document as an intellectual property assignment. It should include:

  • Each of the parties involved
  • The date the document will be signed

Each party is given a name (usually “Assignor" or something similar) that will be used throughout the entire document. The assignor is the party giving up its ownership interest and the assignee is the party receiving it.

2. Recitals

Recitals offer up key background information about the parties involved. This section is known as the whereas clause because it explains the intent to transfer intellectual property rights.

3. Assignment of intellectual property

This section covers the agreement and acceptance of the intellectual property assignment. It's important to note that the intellectual property is not described in the agreement itself but in the addendum Exhibit A, which is referenced throughout the assignment.

4. Consideration

This section should cover:

  • The amount to be paid for the intellectual property
  • The time period in which the payment must be made

The payment's due date and price are only enforceable after both parties have signed the agreement.

5. Assignor's representations and warranties

Here is where you will find the assignor's promises about the property that is being sold. There are often at least seven subsections, each addressing a specific promise made by the assignor.

The assignor swears that:

  • They are the owner of the IP.
  • They have not sold the IP to any third party.
  • They have the authority to enter the agreement.
  • They have no knowledge that the IP has been plagiarized or taken from any third party without authorization.
  • They do not know of any permissions that must be obtained to complete the IP assignment.
  • If the IP involved includes a patent , they are unaware of any existing challenges to the validity of the patent. If the IP doesn't include a patent,  patent application , or other patent-related materials, you can delete this provision from the representations and warranties.
  • The property was not created while the creator was working on behalf of a third party.

If either party would like to include additional promises and warranties, they may do so here.

6. Assignee's representations and warranties

Here is where you will find the assignee's promises about the transaction.

The assignee swears that:

  • They have enough funds to pay for the assignment.

If any additional representations or warranties are required, they may be added here.

7. Documentation

This section states the assignor's promise to help with any paperwork needed to complete the assignment. Typical documentation can include:

  • Filing information about the assignment with a registry office
  • The transfer of document titles

If applicable, the assignor may also promise to help with transfer paperwork for filings outside of the country. This information is only needed if it is relevant to your agreement.

8. Indemnification

Protecting intellectual property  is crucial to IP ownership. This section includes each party's future obligations if the intellectual property is found to infringe on a third party's rights.

There are two options provided, and you should choose whichever one works best for your situation.

  • The assignor takes all responsibility for the infringement, agreeing to pay all related expenses and costs.
  • The assignor makes its responsibilities conditional, greatly limiting their obligations if a claim is brought.

The assignor can't make both promises at once, so only one of these promises should be included in the final agreement.

9. Successors and assigns

If applicable, you may list a successor organization. In the event that a successor is involved, this section will state:

  • Who will inherit the IP ownership rights
  • Who will be responsible for any ongoing obligations

This section will also state any organizations to which rights and obligations have been permissibly assigned.

10. No implied waiver

In the agreement, one party may allow the other to break an existing commitment in the assignment—for example, if the assignor allows the assignee to make a late payment without penalty.

An attempt to waive a previously agreed-upon commitment is only valid if:

  • The waiver is in writing
  • The waiver has been signed by the waiving party

If one party allows the other to break a commitment, it does not mean that any other existing commitments are also invalidated.

Here you will list the addresses to which all official and legal correspondence should be delivered.

You will also need to list the mailing address for:

  • The assignor
  • The assignee

For any digital correspondence, the parties involved may include their email addresses.

12. Governing law

This section grants the parties the option to choose the state laws that will interpret the document. Note that the included language will not affect where a potential claim can be brought.

13. Counterparts and electronic signatures

Both parties may agree to sign the agreement  using electronic signatures .

14. Severability

This section allows the agreement to stay valid, even if a part of it is invalidated in the future. For example, if a state law is passed that affects a section of your agreement, only that section will be invalidated.

This will leave the rest of your agreement intact and enforceable.

15. Entire agreement

This section of the document states that the document each party is signing is:

  • The official agreement
  • Directly related to the issues and IP involved

Even though a party could argue in the future that other enforceable promises may exist, this will provide some protection from those claims.

16. Headings

Here you will find that the headings at the beginning of each section are for organization and should not be interpreted as operational parts of the agreement.

17. Description of intellectual property

Referenced in Section 1, Exhibit A provides a detailed description of all intellectual property involved in the sale. If the description is too vague, the seller may end up giving up more than they intended or vice versa. When completing this section, be sure to be as specific and detailed as possible.

In addition to a detailed description of the intellectual property, note the  goodwill  that is being sold with the property. Goodwill is the intangible value of the property being sold, often including:

  • Reputation with customers
  • Relationship with the community
  • Brand value that's not tied to a trademark

Don't worry about making the descriptions sound lawyerly—simple, succinct, and complete descriptions should suffice. Attach any relevant registrations or samples (for example, “*See attached drawing").

Consider these common questions and answers when completing an intellectual property assignment.

What's the difference between an intellectual property assignment and a license?

The use of a license allows the licensor to maintain ownership of the intellectual property rights. When using an intellectual property assignment, the assignor is giving up all of their ownership rights to the assignee.

It is always a good idea to have someone witness the assignor and assignee signing and dating the document.

What's the difference between an intellectual property assignment and a lease?

When obtaining the use of intellectual property using a lease, the assignee does not receive any ownership rights. Because of this, the assignor retains all ownership and control of the intellectual property and can dictate how it is used. Depending on the specifics of the lease, the assignor may be compensated via royalties and/or fees.

What is a quitclaim assignment?

A  quitclaim assignment  is an agreement that transfers all of the seller's rights to the intellectual property without any guarantees that the seller has the right to do so. If a third party is to claim ownership of the intellectual property down the road, the buyer will be on their own to defend the claim.

Do copyright assignments need to be notarized?

While  copyright assignments  must be done in writing to be valid, notarization isn't required. But it is always a good idea to have someone witness the assignor and assignee signing and dating the document.

assignment of ip licenses

Ready to get started? Use this form to  create an intellectual property assignment in minutes . If you aren't looking to give up ownership rights of your intellectual property,  keep it protected .

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assignment of ip licenses

Contracts and IP ownership

For most companies — especially small businesses, startups, and partnerships — intellectual property (IP) is either the crown jewel of the business or a key asset. For in-house counsel, this means that extra care is needed when preparing any contract that touches on IP ownership. While it seems scary, the basic concepts of IP ownership are relatively straightforward and there is much in-house counsel can do without always resorting to the use of outside counsel — if that’s even an option.

There are, however, certainly times when experienced IP counsel is helpful and necessary. With Practical Law, however, you can learn the basics of IP and IP ownership and have access to a huge library of contract templates, clauses, checklists, practice notes, drafting notes, and toolkits. And, all for far less than the cost of outsourcing all of your intellectual property contracts issues to outside counsel.

What is intellectual property and IP ownership?

There are four types of IP that in-house counsel are concerned about when drafting or reviewing agreements:

  • Trade secrets

When preparing or reviewing a contract involving IP ownership, the parties are generally trying to set out the key issues — namely, “who owns what” (ownership) and “how can the IP be used” (license). More about these concepts is laid out below, but without a contract in place stating otherwise, here are the general rules for IP ownership.

Copyrights, or original works of art, are owned by the author who created the work; if multiple authors are involved, they are joint owners with an indivisible interest in the work. Patents — also known as inventions — are owned by the inventor. Trademarks are the marks used in commerce and are owned by the person or business using them to identify their goods or services. Trade secrets, also known as confidential information, are owned by the creator — mostly businesses through their employees. With trade secrets, care must be taken to keep them confidential or they lose their status as trade secrets.

IP contracts establish ownership

Of course, it’s pretty rare that a lawyer will rely on things just working themselves out based on the common law. Instead  and rightfully so, they want to lay out IP ownership in a written agreement that spells out the rights and obligations of each party. This is where the hundreds of IP contract templates in Practical Law can really cut your time, effort, and cost way down. To start, you need to get familiar with the three types of intellectual property agreements: the creation of IP, the licensing of IP, and the purchase/assignment of IP.

How to create intellectual property

You can create intellectual property in a number of ways. For the purposes of most businesses, IP is created by its employees or by third parties, such as contractors hired to create IP based on specifications and direction provided by the business. While businesses own IP created by their employees — if it is part of their job to create such IP — it is not wise to leave ownership to chance.

The typical solution is an invention assignment agreement signed by the employee when they first join the company. Such an agreement covers a range of IP ownership issues, from confidentiality of company trade secrets to the assignment of any intellectual property created on the job or using company resources to the company. These agreements also require employees to disclose any inventions they claim to have invented prior to joining the company so there is no dispute down the road.

When it comes to contractors, their agreements usually contain a “work-for-hire” provision which states that any work product they turn out for the company under the contract belongs to the company. The only exceptions involve IP the contractor brings to the relationship. It continues to belong to the contractor but, if necessary, the contractor provides a license for the company to use that IP to make the work product function properly. These agreements also contain confidentiality and non-disclosure provisions to ensure that neither party reveals the confidential information of the other party.

See the Practical Law practice note  Intellectual Property – Employees and Independent Contractors

Lastly, companies sometimes partner and enter into a joint development agreement to create IP that neither party could easily create on their own. Each party contributes something to the development and then the ownership and use rights are spelled out in the terms of the agreement.

How to license the IP

IP ownership also comes up in the context of licensing the IP. Many companies’ entire business comprises licensing software or other IP they have developed. To do this successfully, they must enter into software/IP licensing agreements with customers. These agreements set out, among other things:

  • Ownership of the IP and any modifications or derivatives
  • Who may use the licensed IP, in what manner, and is there exclusivity?
  • The ability to sublicense
  • Where the IP may be used
  • The period of time the licensee may use the IP
  • Warranties about the software
  • Indemnities, primarily from the licensor against IP infringement
  • Obligations not to reverse engineer the software or allow unauthorized access
  • Permitted uses and prohibited uses of the IP
  • How the agreement ends and what happens to the licensee’s ability to use the IP after termination

While software agreements are the obvious IP licensing contracts, intellectual property licensing arises in franchise agreements; entertainment such as movies, music, and art; NFT; and many other contexts. That is, any type of IP is subject to a licensing agreement.

How to purchase or assign intellectual property

Lastly, IP ownership can be purchased or assigned — that is, the inventor or owner of the IP can transfer it to a new owner. Note that the assignment of IP is different than licensing IP. Under an assignment, ownership and all rights are transferred. With a license , there is no transfer of ownership and only limited rights to use the IP are given.

Some common situations involving buying IP include mergers and acquisitions of the company that owns the IP or just a straightforward purchase of the IP asset alone. For example, owners can sell copyrights and trademarks, including web addresses — many so-called patent trolls buy patents out of the bankruptcy estate of a failed business. Here are three things to keep in mind when buying IP:

  •   Define the IP properly. What, exactly, are you buying or selling? Words will matter here.
  • Representations and warranties. Drafting properly is important, especially representations around ownership of the IP being sold, warranties around non-infringement, and an indemnity if something goes wrong.
  • Residual use. Does the seller have any rights to continue to use the IP? If so, what is the scope? What is the price?

Assignment of IP typically takes place when a party is contributing their IP to a joint venture or partnership , or when the founder of a technology business transfers their invention to the new business, which is generally a requirement to attract new investors. Intellectual property may be transferred to satisfy debts or a judgment, or when a subsidiary or division is “spun out” of a parent company and provided with certain IP assets to start their separate business. When assigning IP, consider these three key points in addition to those above:

  • Broad assignment rights. Define what is being assigned and ensure you are getting what you think you are getting.
  • Power of attorney. Generally, there will be an obligation on the part of the assignor to cooperate in taking any steps necessary to perfect the assigned rights. A power of attorney gives the assignee the ability to perfect those rights even without the assignor’s assistance.
  • Dissolution . If the company folds or the joint venture fails, what happens to the IP that was contributed? You need to think this through at the beginning as it is too late to think about it when the problem hits.

Given the importance of IP to businesses — especially small business and partnerships — in-house counsel should be well versed in the contracts that govern its ownership, assignment, and licensing. It may seem daunting at first, but it is a skill you can hone relatively quickly, especially with a resource like Practical Law to back you up.

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What You Should Know about Intellectual Property Licences and Transfers

The parties to a licence or transfer, licensor vs licensee, assignor vs assignee, types of licences and transfers, transferring different types of intellectual property, further considerations.

Transfers and licences of intellectual property should not be taken lightly. Before committing to a written licence or assignment, make sure to evaluate all the pros and cons of the transfer and determine whether what you are receiving in exchange for your intangible asset is commensurate with its value . Evaluate all contracts with which you are presented, including employment and freelancing agreements, thoroughly to be aware of any transfers or licences to which your work will be subject. Where possible, get a legal review of the contracts governing the transfer to obtain a better understanding of them.

If you need help with a transfer or licence, contact us for a complimentary and confidential initial telephone appointment with a member of our team.

Related resources:

The Importance of Registering Intellectual Property Transfers

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IP Licenses: Restrictions on Assignment and Change of Control | Practical Law

assignment of ip licenses

IP Licenses: Restrictions on Assignment and Change of Control

Practical law practice note 3-517-3249  (approx. 38 pages).

Michelson IP

IP 101: The Fundamentals of IP Licensing

Apr 29, 2020 | Blog , Hot Topics , News

ip 101: ip license

Intellectual property can be just as valuable as (or more valuable than) physical property. This is because intellectual property (IP) can be shared with others (in the form of an IP license) in exchange for royalty fees – producing a valuable source of passive income for IP owners. 

What is an IP license & how does it work?​

Any form of intellectual property – from trademarks to patents to copyrights – can be licensed to third parties. Through licensing, an IP owner grants third parties the right to use their IP, while retaining their ownership. Usually, the IP owner (the licensor) receives payment in the form of royalties for granting another person (the licensee) the right to use their IP. 

Another way to think of IP licensing, is the “leasing” of intellectual property for a fee. Unlike IP assignments which transfers all ownership of IP, licenses provide only limited use – enabling licensees to benefit from IP while protecting the ownership rights of the licensor. IP owners can receive royalties for their licensed IP for their lifetime and 70 years after passing (such that even the families of IP holders can benefit from license agreements). 

assignment of ip licenses

Different Forms of IP Licensing

There are 3 primary forms of licensing agreements – each providing slightly different rights, advantages, and disadvantages. 

  • Exclusive Licenses: grant a third party the exclusive right to use the intellectual property. The IP owner cannot use the IP or grant any other third parties the right to use the IP. 
  • Sole Licenses: grant a third party the right to use intellectual property, while prohibiting the owner from allowing other third parties to use the IP. The IP owner may still use the intellectual property themselves, however. 
  • Non-exclusive Licenses: grant others the right to use intellectual property, without restricting the owner from using the IP themselves or granting licenses to other third parties. 

You can also combine elements of each of these types of licensing agreements, creating your own custom form of licensing. For instance, some licensing agreements may be non-exclusive country-wide, but provide exclusive licenses within a certain geographic area.

What are the advantages & disadvantages of an IP license?

There are a number of pros and cons of licensing intellectual property.

On the positive side, licensing IP can:

  • create passive income for the IP owner
  • enable a licensor to tap into local markets, a licensee’s productive capacity or unique marketing strategy
  • create new business opportunities for both licensor and licensee
  • enable businesses to enter new markets or industries

As with every commercial endeavor, licensing agreements aren’t without their drawbacks. Here are a few disadvantages of licensing intellectual property: 

  • The licensor may lose some control of their intellectual property, particularly with exclusive licenses
  • People abuse some licensing agreements which can lead to IP infringement
  • Depending on the nature of the licensing agreement, some licensors may be fully dependent on the licensee’s ability to generate revenue with the IP
  • A licensee’s actions could damage the reputation of the brand or product

How do I license my intellectual property?

assignment of ip licenses

What is a typical licensing fee?

“Typical” licensing fees vary based on the IP that is being licensed. Also, the percentage of sales a licensor retains depends on negotiating skills (and the industry). For instance, “royalty rates” for consumer products may vary between 2-10% of the product’s sale value. Franchises, on the other hand, may require royalty payments of anywhere from 1-50% of total volume. 

If you’re interested in licensing your IP (or licensing someone else’s IP) it will be important to work with a seasoned professional who can help you negotiate a licensing agreement that works for you. 

Disclaimer: Nothing in this article shall be construed as legal advice, or as creating an attorney/client relationship.

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Continue on to  Part 9  of this blog series. For more in-depth information on trademarks, check out the free online course Intellectual Property: Inventors, Entrepreneurs, Creators .

assignment of ip licenses

The Michelson Institute for Intellectual Property, an initiative of the Michelson 20MM Foundation, provides access to empowering IP education for budding inventors and entrepreneurs. Michelson 20MM was founded thanks to the generous support of renowned spinal surgeon Dr. Gary K. Michelson and Alya Michelson. To learn more, visit 20mm.org .

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assignment of ip licenses

Intellectual Property Licensing and Assignments

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Intellectual property (IP) owners have the exclusive right to exploit and sell their works. However, they may prefer to give someone else all or some of those rights. An IP licensing agreement allows an IP owner (the licensor) to lend or temporarily grant certain IP rights to another party (the licensee) in exchange for money. Owners can also assign or sell their intellectual property rights to another party, giving up their rights completely. In either case, an experienced attorney should be consulted to negotiate and draft the terms of the license or assignment to help ensure an advantageous arrangement.

What Types of IP Licenses Exist?

An IP license can enable a licensor to monetize and exploit their intellectual property more effectively by utilizing third parties. However, the best type of license to use depends on the nature of the IP and the owner’s goals. There are several types of licenses:

  • The licensee is granted the sole right to use the specified IP rights as provided in the contract, so neither the licensor nor other parties can use them.
  • Non-Exclusive. The licensor grants the licensee certain rights but can also continue to use the IP itself or license it to other parties.
  • Sole. Only the licensor and licensee have the right to use the IP.
  • Limited. The licensee is granted either exclusive or non-exclusive rights, but they are subject to certain limitations such as a specific timeframe, geographic area or other restriction.

What Are Common Provisions in a License?

The licensing agreement dictates what rights the licensor is granting to the licensee and under what terms. The contract will also set forth each party’s rights and responsibilities. Common licensing provisions include:

  • The agreement should state whether it is exclusive, meaning that the licensor cannot grant a similar license to another party during the term of the agreement.
  • Term and termination. The agreement may be for a specified period or perpetual. Rights to terminate the agreement should also be set forth in the contract, including the grounds and conditions which must be met.
  • Licensors may want to restrict the geographical location where the licensee may exploit the IP. For example, the licensee may only be granted rights in certain countries.
  • Royalties and Fees. Typically, licensing agreements provide for a flat fee, an ongoing royalty, a percentage of profits or a combination of all three. Where payments are based on sales or profits, there should be a means for auditing figures.
  • Licensee Obligations. The agreement should set forth any obligations of the licensee, such as achieving specified sales or revenue targets, providing reports or other duties.
  • Maintenance/Improvements. The licensee may be obligated to take steps to protect and maintain the IP. Where the licensee makes improvements to a licensed product, the contract should specify who owns the improvements.
  • Sublicenses/Assignability/Transferability. Whether or when the licensee has the right to sublicense, assign or transfer their rights to the IP to third parties should be clearly stated.
  • Confidential information exchanged by the parties should be protected.
  • Representations, Warranties and Indemnification. Licensees should require licensors to represent and warrant that they are the sole owner of the work or they have the unrestricted right to convey the license granted. Further, the licensor should indemnify the licensee for any breach of the representations and warranties.

How Is an Assignment Different than a License?

An assignment of IP rights is an outright sale of those rights. The owner relinquishes his or her rights to the IP and permanently transfers them to another party for money. Not all the owner’s rights in the IP must be assigned, but those that are assigned are no longer controlled by the owner. This is different than a license agreement, where the licensor still retains ownership of the IP licensed but permits another party to temporarily obtain the rights to use the IP.

A licensing agreement is more beneficial where the licensor wants to maintain control over the IP, including the right to end an agreement with a licensee, negotiate better terms in the future or license to multiple parties. Assignment is typically used when the owner does not have the ability or desire to exploit the rights or in connection with the sale of a business.

IP licenses and assignments are potentially very lucrative transactions for both parties.  However, these agreements can be complex.  An attorney should always be consulted to advise regarding the best type of arrangement as well what terms are needed to protect the party’s rights and maximize the revenue potential.

Romano Law can provide guidance on intellectual property clearance for film and television productions in New York, California and  Florida .

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Drafting Intellectual Property Rights Transfer Agreements - Part II

assignment of ip licenses

Home | Knowledge Center | Thought Papers Drafting Intellectual Property Rights Transfer Agreements - Part II

06th Aug, 2020

  • Corporate and M&A

In the first part of this series on intellectual property (“ IP ”) transfers available here , we discussed the legal provisions governing assignment and license of IP. In this second part, we will discuss the various transfer related clauses in IP assignment and license agreements and the manner in which these clauses must be drafted.

As discussed in the first paper of this series, IP can either be assigned or licensed by the owner, allowing the commercial use of the asset in various forms. Apart from this, various other commercial arrangements also lead to the creation of IP. For instance, IP can be created under an employment agreement, a collaboration among multiple persons, a commissioning agreement or a consulting agreement. These are just a few examples. In all the above circumstances, it is important to have an effective contract that clearly establishes the rights held by the parties concerned. In this paper we cover two issues. First, we will look at certain crucial clauses that are an integral part of IP transfer agreements, and broadly discuss the structure and framing of these clauses. Second, we will look at some specific types of agreements dealing with IP creation and transfer, and also cover some of the key commercial and legal aspects of these agreements.

Generally, in agreements concerning the use and/or transfer of IP, the following clauses are important:

1. Assignment:

In any IP assignment, there is a clause specifically assigning/transferring the title in the IP from the assignor to the assignee. This clause must clearly state the extent of the rights that are being granted to the assignee. Assignments must contain express language such as “hereby assigns”, which indicates that the assignor is assigning rights in an existing or a future work in the present. [1]

Example: “Rights granted– X hereby grants, conveys and assigns to Y all the rights in the [Work], including without limitation the following exclusive rights throughout the Territory (as defined in clause [•]) for the Term (as defined in clause [•]) –

- insert a list of all rights in relation to the [Work] that are being assigned -"

Points to remember:

1.1. Work/invention/mark/property: It is advisable for the agreement to have a specific definition for the work or the invention or other IP that is being assigned. In this way, the assignment clause can be short and precise without having to define the work/invention that is being assigned.

1.2. Indicative list of rights: The assignment clause must contain an indicative list of rights, i.e., a list of ways in which the assignee may use the work/invention. These words are normally borrowed from the statute but drafted in a manner that is consistent with the intent of the parties. For instance, in the case of a cinematograph film, one of the rights assigned would be the right to make, sell, distribute copies of the film and communicate the film to the public.

2. License:

In an agreement where IP is licensed, there is no transfer of title. Therefore, the agreement must contain a clause demarcating the specific rights of use granted to the licensee. It is advisable to use clear terms such as “hereby grants a license”.

Example: “Grant of License– The Licensor hereby grants to the Licensee a non-exclusive, non-transferable, non-sub-licensable, non-delegable and conditional license to use in the manner agreed hereinbelow, the Trademark, solely in relation to the business operations of the Licensee, within the Territory and for the Term:

- insert a list of all rights in relation to the trademark that are being licensed -"

2.1. Intellectual Property: The IP, whether it is a work/invention or trademark, that is being licensed must be specifically defined in a separate clause. As stated in 1.1 above, it makes for easier and cleaner drafting of the license clause.

2.2. Exclusive/non-exclusive: This is the most important part of the license grant which must clearly indicate whether the license is exclusive or non-exclusive.

2.3. Sublicense/further transfers: If the intention of the parties is that the license remains with the licensee alone, the clause must specify that the licensee does not have the authority to sub-license or further transfer the rights granted under the license.

2.4. Indicative list of rights: Given that a license can be far more limited than an assignment in its scope, it is advisable to include a list of specific uses that are permissible under the license. Further, the licensor may also clarify that the licensee is not permitted to do anything other than what is stated in the license.

2.5. The ownership of any IP must be mentioned, and the licensor must have the right to immediately know when there is a possibility that the IP may have been infringed by a third-party.

3. Term and termination:

The assignment or license agreement must contain separate clauses defining the term and instances when the agreement can be terminated.

a. “The rights assigned herein shall be irrevocable and shall be vested in the assignee for perpetuity including without limitation, for the full term of copyright protection everywhere in the world and any and all renewals, extensions and revivals thereof.”

b. “This License shall come into effect on the Effective Date and shall remain valid and binding on the Parties until such time that it is terminated in accordance with clause [•] of this Agreement.”

c. “This License shall come into effect on the Effective Date and shall remain valid for a period of 5 (five) years from the effective date unless it is terminated in accordance with clause [•] of this Agreement.”

Termination:

“This Agreement may be terminated: a) by mutual agreement of the Parties; or b) on a material breach of any provision of this Agreement by the other Party, provided however that in case of a breach capable of remedy, only if the breach is not remedied by the other Party within the Notice Period. Upon termination: a) either Party shall forthwith hand over to the other Party all documents, material and any other property belonging to the other Party that may be in the possession of the Party or any of its employees or agents; b) each Party shall immediately pay all pending fees or other amounts due to the other Party under this Agreement.”

3.1. Term: The term of the assignment or license can be anything that the parties choose. However, the outer limit of the grant is determined by the term specified in the statute for the IP. For instance, the term of a patent is 25 (twenty- five) years from the date of the application beyond which period the invention enters the public domain.

3.2. Termination: This clause must be drafted with care and caution bearing in mind the agreement between the parties. Further, if the agreement involves promises that can only be performed by a specific individual, termination by such party must not be permitted. In any event, if the assignment is irrevocable in nature, termination must not be permitted unless there is a material breach and terminating party must be required to serve adequate notice. Once the agreement is terminated, the IP will revert to the assignor or the licensor, as the case may be. Any IP that still remains with the transferee must be returned to the transferor or destroyed (when appropriate) upon termination.

4. Territory:

The territory for which the IP is assigned is crucial to be specified in the agreement. The same IP can be assigned or licensed to two or more separate entities for use and exploitation in different territories. If this is not clearly specified in the agreement, the territory might be deemed to be India as a whole. This would render any subsequent assignment or license impossible to carry out.

Example: “The assignment/license granted herein shall be exercisable within the territory of India (“Territory”).”

5. Consideration:

The agreement must contain a clause on consideration or fees/payment to be made for transfer of the IP. This clause must define the manner in which payments will be made by the assignee or licensee. There are several ways in which payment terms can be structured; some of the most common modes are discussed below:

5.1.  Lumpsum payments: IP rights can be granted in exchange for a lumpsum payment where the grantee can pay a specific sum of money in the manner prescribed under the agreement. This amount can be paid either as a single payment or in instalments.

a. “In consideration of Licensor granting a license to use the Intellectual Property in terms of this Agreement, the Licensee shall pay a monthly fee of Rs. [•] ([•]) to the Licensor (“License Fee”).

The Licensee shall pay the License Fee to the Licensor by way of wire transfer, no later than [7 (seven) days] prior to the commencement of each month.”

b. “As consideration for all the rights granted and assigned in the Intellectual Property by the Assignor, the Assignee agrees to pay a sum of Rs. [•] ([•]) to the Assignor in the following manner:

i. Rs. [•] ([•]) via -insert mode of payment-  on the Execution Date;

ii. The remaining sum of Rs. [•] ([•]) via -insert mode of payment-  no later than -insert date- ”

5.1.1. In the event the parties agree on payment in instalments, the agreement must clearly specify the schedule.

5.1.2. The mode of payments which are acceptable to both parties must be specified.

5.1.3. The agreement must also provide for consequences of delay in payment, if any.

5.1.4. The payments clause must specify the taxes, if any, that are deductible.

5.2. Royalty: In consideration for the rights granted, the assignor or licensor may also require that royalty be paid. Typically, royalty payments will be a portion of the sales revenue earned by the use/exploitation of the IP rights granted.

a. “In consideration of the rights granted in clause [•], the Licensee shall pay to Licensor a royalty (the “Royalty”) equal to [•]% of Net Sales occurring during the Royalty Term. The royalty under this clause shall be payable no later than 5 (five) business days after the last day of every quarter.”

b. “Royalty will accrue upon distribution of any copy of [software] delivered or sold in the manner specified in clause [•]. Rs. [•]/[•]% of the sale price of any copy of [software] shall be payable as royalty on each copy sold. All accrued Royalty shall be paid to the Licensor within [•] days after the end of each fiscal quarter, which ends on the last day of each of March, June, September and December. Payments shall be accompanied by a report stating the number of units of [software] sold/distributed in the relevant quarter, and the calculation of the royalty payment.

5.2.1. While royalty is typically represented as a percentage portion of the net sales revenue, it can be structured in any manner as the parties deem fit.

5.2.2. Royalty must be payable for the royalty term, which can either be for the whole term of the agreement or only a part of the term.

5.2.3. The schedule for payment must be specific and must always be accompanied by proper accounts for the relevant period showing the manner in which royalty payments have been calculated.

5.2.4. The agreement must also provide for consequences of delay in payment, if any.

5.2.5. The payments clause must specify the taxes, if any, that are deductible.

5.2.6. The method and frequency of invoicing must also be included.

6. Representations, warranties and covenants:

Apart from the representations and warranties that are usually included in agreements, including in relation to capacity and execution, there are certain specific warranties that should be included in IP related agreements.

6.1. The person granting the rights must represent that he has the sole and absolute ownership of the IP and is therefore entitled to grant rights either by way of assignment or license.

6.2. The person granting the rights must also represent that the IP in which the rights are being granted does not infringe any third party’s IP rights.

7. Indemnity

The person granting the rights must ordinarily indemnify the other party from any legal proceedings or costs arising as a result of defective title in the IP or any third-party claims of infringement. The person granting the rights, especially in a license, must be indemnified against all illegal and improper uses of the IP including indemnification against any legal proceedings that may arise as a result of such actions of the grantee.

8. Further assignments:

Depending on the rights being granted and the discussions between parties, the rights that are being transferred may be further assigned by the parties. Note however, there must be a clear bar on further assignment of rights and obligations especially when the promises made by the parties concerned are personal in nature.

9. Standard form clauses:

Other than the specific terms detailed above, all the standard form clauses that find their place in other agreements must also be included in IP assignments and licenses.

In this part we will discuss certain specific types of agreements and clauses in relation to copyrights, patents and trademarks.

1. Copyright:

1.1.  Film-related agreements: The producer of a film is the author of a film. [2] The producer enters into several agreements including with writers, composers of music, etc. in order to create various works which will be included in the film. An effective contract between the producer and other authors such as the music composer, writer, etc. would help avoid any disputes as to the ownership of the film and the use of other content in the making of the film. The producer also enters into agreements with financiers to finance the making of the film, and with distributors and digital partners. Some aspects of these agreements have been discussed below:

1.1.1. Agreement with composer of music: It is industry practice for the producer of a film to engage the music composer to compose the music and the background score for the film. Under the Copyright Act, 1957 (“ Copyright Act ”), the composer is the author of the musical work. It is often the case that until the release of the film the producer retains the copyrights in all the musical works by entering into a contract of service with the music composer. [3]

The producer, as the owner of the copyright in the musical works under a contract of service, can either retain all the copyrights or assign the rights to a music label. Usually, when the producer assigns the rights in the musical works to a music label, the producer, who is the owner of the film, retains the right to use the sound recording as a part of the film, and the music label would then hold the rights in the sound recordings and the underlying musical works, and can commercialize such music through sales or further licenses. The basic goal here is for the producer to leverage the rights in the music in a profitable manner.

While this is generally the industry practice, it is legally possible for a composer to retain the rights in his works. Such an agreement would encompass a limited license from the composer allowing the use of the musical works in the film by the producer.

1.1.2. Agreement with lyricist: Similar to the composer, the lyricist is also engaged by the producer to write the lyrics for various songs that are usually part of Indian films. Copyrights in lyrics, which are literary works as per the Copyright Act, will be retained by the producer or transferred by him to the music label. The lyricist is also eligible to receive unassignable royalty from the use of the lyrics.

i. To protect the interests of the producer, the agreement with the composer and lyricist must contain a clause that clearly states that all the IP in the musical and literary works will belong to the producer.

ii. In appropriate circumstances, it is also prudent to include a clause giving creative control over the final product to the producer.

iii. As discussed in Section 1.2.2 of the first paper in this series, composers and lyricists continue to retain unassignable royalty rights in the musical works.

iv. These agreements must contain a clause with specific timelines within which the composer must deliver the musical works.

1.1.3. Agreement with writers: The producer of a film usually engages more than one writer to write the story, script, screenplay, dialogues, etc. These works amount to literary works under the Copyright Act. It has been held by the Madras High Court in Thiagarajan Kumararaja v. Capital Film Works, [4] that the producer of a film has the rights to dub the film into any number of languages and this right is part of her copyright under Section 14(d) of the Copyright Act. On the other hand, it has also been held that the producer can remake the film in any number of languages only if she owns the script because remaking a film would require changes being made to the underlying script. Therefore, where a producer proposes to remake the film in various languages, apart from permission to use the script for the making of the film itself, the producer needs to entirely retain the copyrights in the script in order to be able to remake the film. [5]

i. If it is the intention of the producer to make remakes or sequels of the film, it is advisable for her to ensure that she owns the script. Whether the agreement is a contract of service or otherwise, it is prudent to have an IP clause specifically stating that the producer seeks to own the script.

ii. On the other hand, if the writer owns the script, any remake can only be made with a license from the writer.

iii. The contract must specify the degree of creative control each party has over the script or story.

iv. If the producer seeks to own the script in its entirety, she must also ensure this includes the characters and other distinctive elements of the script. [6]

v. This agreement must contain a clause with specific timelines within which the writers must deliver the scripts.

1.1.4. Agreements engaging principal director, actors and other individuals: Under Indian law, a director of a film does not have any copyrights in any aspect of the film. Therefore, producers in India can enter into a regular contract of service with the director. There will be certain circumstances where the director is also the scriptwriter, in which cases there can be a common agreement which includes the terms in 1.1.3 above and the contain clauses covering her directorial responsibilities. The director will be remunerated for her services.

Additionally, there are agreements that the producer enters with actors and other artists. These agreements will define the roles and responsibilities of the actor and her remuneration. The actor or other artists typically do not own any of the copyrights in the content or the character.

1.1.5. Credits clauses under 1.1.1 to 1.1.4: The parties to these agreements must also approve the manner in which each of these persons is credited in the film.

Example: “The Parties agree that the Composer shall be credited in the film as “Music by ______” by the Producer. The Composer shall have no copyrights in the sound recordings or the Musical Works in the film by way of such credits.”

1.1.6. Financing agreement/film investment agreement: The producer can enter into agreements with various persons for raising funds to make a film. These agreements can be structured in many ways and might in certain cases result in transfer of ownership of IP. Some types of investment agreements are discussed below:

i. Film investment agreement: The producer and the third-party investor can agree to co-produce the film. In these cases, the parties must arrive at a revenue sharing arrangement. The co-producer will also have a share in the IP that is consequential to the extent of investment.

ii. Rights agreement: The producer can, in exchange for money, grant the financier some right in the IP. For instance, if the producer seeks an investment of Rupees Fifty Lakhs, he can grant the dubbing rights, or overseas distribution rights in exchange for the same. Such agreements work just like assignments or exclusive licenses but are a useful way in which producers can raise funds.

1.1.7. Theatrical distribution agreement: Producers must also enter into various distribution agreements with several distributors for distributing the film in theatres in various territories. Essentially, what the distributor receives under these agreements is a limited license or assignment to communicate the film to the public through theatrical distribution. The term of these agreements is limited to the period during which the film would be distributed in theatres.

Example: “In consideration of the mutual promises, payments and other terms contained herein, Producer hereby exclusively [assigns/licenses] to the Distributor the right to communicate the Film to the public only via theatrical distribution in the Territory for the Term.”

1.1.8.  Production of television/web-series/other shows/online content: For the production of any other content, all the agreements described in 1.1.1 to 1.1.8 will be used. However, the manner in which the IP is shared and owned may differ depending upon the facts and circumstances of each case. For example, let us say XYZ Pvt. Ltd. is producing a stand-up comedy special with a prominent comedian Mr. P. The parties can agree that the content will be written, performed and, therefore, owned by Mr. P, and where XYZ Pvt. Ltd. only takes a commission and a share of the revenue.

1.2. Album production:

1.2.1. Agreements with music composers and lyricists: These agreements are similar to the agreements described in 1.1.1 and 1.1.2 above. The producer of the sound recording may engage composers and lyricists and seek to retain the copyrights in the underlying works along with the sound recording he produces and owns.

1.2.2. Agreement with the singers/other artists: The singers and other artists are usually engaged under a contract of service to sing in a studio, which performance is recorded, edited and produced into a sound recording at the instance of the producer. The singer does not own the copyright in the musical work, literary work or the sound recording itself.

1.3.  Digital distribution of copyrighted works: Songs, films or any other copyrighted content can be distributed and communicated to the public through a variety of digital platforms. Today, most popular among these are OTT platforms such as Netflix, Prime Video, etc. Typically, these entities enter into either an exclusive license with the owner of the content for a particular term and for a specific territory. Since these entities are able to geo-block the content, they avail territory specific licenses for various titles. Therefore, a TV series that is available in the United States of America on X OTT service, may instead be available on Y OTT service in India. These entities do not seek a complete transfer of title typically but restrict themselves to a license for a specified term.

i. The agreements must contain a schedule detaining the timeline for delivery of prints and materials to the platform along with the technical specifications for such materials.

ii. Clauses must specify the manner of use of any trademarks and other artwork belonging to either party.

iii. The consideration or license fee can pe paid in a single lumpsum payment or be divided into instalments.

1.4. Book publishing agreements: These agreements are entered between the authors of books and publishers. Under the Copyright Act, the author of a literary work has the right to make copies of her work and sell them. However, such rights are normally transferred to publishing houses that have the means to mass produce the book and aid in the distribution of the work. This may also include various formats in physical or digital form. The rights granted could also include the right to translate the books into various languages. Typically, the author retains the right to make film/television adaptations of the book.

Example: “The Author grants the Publisher the exclusive right during the Term to reproduce, print, publish, distribute, translate, display and transmit the Work, in whole and in part, in the Territory, in such languages and formats as agreed to between the Parties. It is clarified that no film, motion picture, television, radio, dramatic or other adaptation rights are granted to the Publisher and the Author can exploit such rights.”

i. Publishing agreements must contain detailed clauses on when the author will deliver the work to the publisher.

ii. The acceptance of the work for publication is usually left to the discretion of the publisher.

iii. The author gives the publisher the sole and exclusive right to publish and distribute the work. The author, however, may retain other rights such as the right to translate the work, the right to make adaptations, the right to make films, etc.

iv. The author is usually paid a certain advance amount on the date of signing of the agreement. Additionally, royalties may be paid to the author for the sale of each copy of the work payable as a percentage portion of the net sales revenue earned by the publisher.

v. The onus of receiving any prior approvals for copyrighted works to be included in the book usually lies with the author.

1.4.1. Option Purchase agreements: Such agreements are typically entered into between the author of the book and a producer. The agreement grants an option to a purchaser to avail an assignment or a license at a future date to make film/television/digital adaptations of the book. For example, A, the author of a book, can enter into an option-purchase agreement with B who wants to make a film-adaptation of the book. The option purchase agreement will give B a specific timeframe for some groundwork such as testing the viability of the project, raising funds, etc. At the end of the option period, B can exercise the option and have the adaption rights assigned or licensed to her. The author is usually offered an option-fee for the period during which the grantee-purchaser holds on to the option. Once the option is exercised, the parties can enter into an assignment or a license agreement as the case may be.

1.4.2. Adaptation agreement: If the film is based on a story or book written by a third-party upon which the producer seeks to rely, then the producer may avail an adaptation license from the author of the literary work.

1.5.  Software license: In India, software is a subject matter of copyright law. The person writing and creating the program holds a copyright over it. The software can therefore be licensed by the owner for use by another entity. Software licenses are normally granted by companies to their users usually based on a subscription fee model.

Example: “Entity hereby grants the customer a non-exclusive, non-sublicensable, non-assignable, world-wide license to use the Service solely for the internal business operations of the customer in accordance with the terms of use specified herein.”

1.5.1. Platform licenses for user-generated content: If the software is such that it allows the creation, storage and dissemination of user-generated content, the entity licensing the software must also take a license from each user to store and disseminate the user-generated content. For instance, with applications such as YouTube or TikTok, such a license would be required from the user. The clause must clarify that the user agrees to a non-exclusive, non-sublicensable, non-assignable, royalty-free license to be granted to the entity for the use of the content while the user continues to retain all the copyrights in the content.

1.5.2. Software as a service: Typically, in these agreements, there is an entity that has developed a software and provides services that aid in the productive use of such software. The entity enters into an agreement with the customer granting a customer a license to use the software for its business operations while the entity retains the IP in the software.

Example: “The Company agrees to license and grant access and right to use the Application to the Subscriber and provide to the Subscriber all other services necessary for the productive use of the Application, including, initial setup and installation, user identification, user account and password change management, data import/export, remote technical support, maintenance, training, backup and recovery, and change management ("Services") as further set forth in Schedule [•] of this Agreement.”

i. These agreements must contain a clause preventing any reverse engineering of the software and controlling security breaches. This would also include clauses pertaining to data security and data protection.

ii. The data that belongs to the customer will continue to belong to her while the licensor/service provider will continue to own the software.

1.5.3.  Software development agreement: In certain cases, one may choose to engage the services of a third-party software developer to develop a software or product under a contract of service. For instance, A may have a concept or idea but may not have the expertise to engineer the product. A can engage the services of B, third-party developer, to develop the product. B will be remunerated for his services. But A, whose resources (typically monetary resources as A would bear the operational costs) were expended on developing the product, will be the owner of the IP in the product.

Example: “The Service Provider agrees that all original works that are made by the Service Provider (solely or jointly with others) using the Company’s resources, or any other assistance that may be provided by the Company, pursuant to this Agreement, are protectable by copyright as “works made under a contract of service” under the Copyright Act, 1957.

The Service Provider hereby agrees to transfer and assign all intellectual property rights that may be developed or created by it pursuant to this Agreement without any claim over any such work, and waives any other right that the Service Provider may have in law.”

1.5.4.  Application programming interface (“API”) integration agreement: APIs are tools that permit interaction between various software intermediaries. In API integration agreements, (i) a party licenses its API (either on an exclusive basis or on a non-exclusive basis) to another party for integration of its API into the software (in the form of an app or website), or (ii) two parties propose to integrate their software to create a new product.

i. In these agreements, there must be a two-way obligation to keep the licensee’s tool/programme and the licensor’s API fully functional and usable at all times.

ii. These agreements would also contain clauses on data security, data protection and covenants on the basis that security breaches will be controlled and monitored.

iii. It must be specified that the integration agreement will not result in any transfer of IP and each party will continue to hold their IP rights. However, a limited right to use the tool and the API will be licensed to the other party for the duration of the agreement. In case a new product is created both parties hold rights in the IP jointly.

2. Trademark:

Trademarks can be assigned or licensed irrespective of whether they are registered or unregistered trademarks. Generally, all assignments and licenses of trademarks must be in conformity with the principles and rules under the Trademarks Act, 1999.

Apart from what is covered in Part I of this article, the following must be noted while drafting clauses on assignments and licenses of trademarks.

Assignment:

i. The grant clause in an assignment agreement must clearly specify whether the mark is being assigned together with the goodwill of the business or not.

ii. Assignment agreements must contain a clause/schedule describing all the trademarks that are being assigned, and details pertaining to their registration.

iii. The assignor must agree to execute all necessary documents in order to record the assignment with the Registrar of trademarks under Section 45 of the Trademarks Act.

i. Prevention of naked licensing: While licensing a trademark, the terms of use need to be specific and clear. If a license permits the unbridled use of a trademark without any quality assurance measures in place, such a license amounts to ‘naked licensing’. The clause must also state that the mark can only be used in relation to the goods and services specified in the agreement. Quality control is essential to protect the interests of both the licensor and the end-user of the product.

ii. There must be a separate clause defining the uses of the mark by the licensee that are permitted and uses that are strictly disallowed and not within the ambit of the license.

iii. The agreement must also include a clause stating that no rights in and to the trademarks are being transferred or assigned by virtue of the license.

iv. The more control the licensor would like to exercise over the use of the mark, the stronger must be the quality, use and termination clauses of the agreement.

v. It must be specified that the licensee shall not have the right to further assign or license the mark to any third-party.

Apart from these issues, transfer of trademarks through assignment and license might involve larger commercial arrangements that impact the creation, use and transfer of trademarks. Some of these are discussed below:

2.1.  Transfer of trademark under a franchise agreement: Franchisors typically have proprietary methods of doing business and own trademarks which consumers come to solely associate with the business of the franchisor. Internationally renowned brands such as McDonalds or Krispy Kreme follow this business model where their businesses have proprietary elements which they license to local businesses all over the world. The businesses which acquire a license of this kind under a franchise agreement will have the right to set up a local unit of the franchisors business and run it as per the terms of the franchise agreement.

2.1.1. Use of the franchisor’s trademark: The main condition as to the use of the franchisor’s trademark is that the franchisee will be permitted to use the franchisor’s trademark in accordance with the terms specified in the franchise agreement. Please note that the agreement must clarify that this is a limited use license granted to the licensee and does not result in transfer of ownership. Further, in relation to the franchisor’s business, the franchisee shall not have the right to any mark other than the ones that it is authorized to use under the franchise agreement.

Example: “The Franchisee agrees that the Franchisor is the sole and exclusive owner of the TRADEMARKS and has the absolute right to control the Franchisee’s use of the TRADEMARKS. For removal of doubts, the Franchisee agrees and affirms that it has not acquired any right, title or interest in the TRADEMARKS and that its limited right to use the TRADEMARKS is governed by the terms of this agreement. Further, the Franchisee agrees that it shall not register, in its name or in the name of any associated entity or person, any trademark, logo or domain name that is identical or similar to the TRADEMARKS.”

i. The franchisee must not be permitted to take any action against any infringer without the prior consent of the franchisor. It is best for the franchisor to initiate any legal action as the sole and absolute owner of the mark.

ii. If the agreement is terminated, any action taken by the franchisee in respect of the trademarks must revert to the benefit of the franchisor and the franchisee must stop associating itself with the trademarks of the franchisor.

iii. There must be a clause allowing the franchisor to terminate the agreement if the trademark is used in a manner that would bring disrepute to the business of the franchisor.

iv. There must be clauses controlling the use of the trademark by the franchisee in advertising and marketing literature.

1.2.  Marketing Agreement: A marketing agreement allows a third-party a limited right to display the trademarks of the licensor while marketing, advertising and selling products that belong to the licensor.

i. This agreement has to specify that the licensor continues to own the trademark and this agreement does not result in any transfer of ownership.

ii. Such a license must specify the manner in which the trademark is permitted to be used. Any contravention of such use restriction would amount to a material breach of the agreement.

Patents can be assigned or licensed for specific purposes meaning that patent rights can be granted to make, sell or import the subject matter of a patent.

Some specific agreements pertaining to patentable subject matter are discussed below:

3.1.  Technology transfer agreement: Technology transfer agreements (“ TTA ”) involve the licensor transferring its IP and know-how to the transferee for a specific period of time and for a specific purpose. A large part of arrangements of this nature would depend on the specific facts and circumstances of each case. Not everything that is transferable under a TTA will be IP. One part of the transfer may relate to the licensing of IP such as patents or software for specific purposes, while the other would include information and know-how. Clauses in relation to the sharing of information and other know-how are strictly contractual and are secured by having strong confidentiality clauses in the agreement.

i. The agreement must define the IP or the technical know-how to be transferred clearly. The definition must be tightly worded so as to cover only what is necessary, failing which, the licensee will secure access to more than what was intended by the parties.

ii. The territory within which these rights can be exercised must be specific, and the term must also be specified. The term must be agreed upon based on prevailing norms of the Reserve Bank of India and other regulations in this regard. The termination clause must specify the consequences of early termination, reversion of the IP to the licensor, and, to the extent possible, destruction of any confidential material or information within the possession of the licensor.

iii. Consideration including royalty payments must be structured properly.

iv. As far as the know-how is concerned, the confidentiality clause matters the most. The confidential information must be clearly identified as such. If the information is highly technical, this clause must be drafted in an industry specific manner. The consequences for any breach must be clearly identified.

v. The tax liability under TTAs varies based on whether the parties are Indian or would include foreign collaborators. The tax liability clause must identify the manner in which all taxes must be paid.

vi. TTAs involve heavy obligations on both parties. The licensor must ensure that the technology is used properly and for that ensure that the licensee, at all times, has the technical capabilities that are required to achieve it. This may include training, testing, quality control and other measures. The licensee will have the responsibility to use the technology to the fullest, make all payments on time and to maintain confidentiality throughout the duration of the agreement.

vii. Use of other IP, i.e., brand names or other literature, must be carved out through separate clauses defining all permissible uses.

4. Employment agreement:

Employment agreements must typically contain a blanket clause allowing the use and transfer of all IP created by the employee, during the course of employment, by and to the employer, especially where the employee is a senior member of the team. The clause also grants exclusive rights in all such IP to the employer.

Example: “The Employee agrees that all and any work executed and performed in the course of employment, whether or not conducted on the premises of the Company but related to the business of the Company, is being done on behalf of the Company. In this regard any discoveries, inventions, work created, data produced, concepts, ideas, creations and discoveries belong to the Company. The Employee hereby agrees to transfer and assign all intellectual property rights that may be developed or created by her without any claim over any such work, and waives any other right that she may have in law.

The Employee further agrees to execute, upon the request of the Company all necessary papers and otherwise provide proper assistance to enable the Company to obtain for itself (and to vest legal title in the Company), patents, copyrights, or other legal protection for such inventions, discoveries, innovations, improvements, original works of authorship, trade secrets and technical or business information in any and all countries.”

In this article, which is the second of the two-part series on transfer of IP, we have discussed the manner in which various clauses in an IP transfer agreement must be drafted. There are several ways in which these agreements can be structured, but it is important to keep in mind the intention of the parties and the extent of rights that are to be granted. Similarly, rights must be granted in such a manner that would allow the full and proper use of the IP. Note that the example clauses given in this article are only indicative, and in any agreement, these clauses must be drafted to suit the relevant purpose and context.

This paper has been written by Suchita Ambadipudi (Partner) and Sheetal Srikanth (Associate).

[1] In Waterman v. MacKenzie et.al , 138 US 252, the Supreme Court of the United States held that to determine whether an agreement is an assignment or a license, the legal effect of the clauses and the grant must be considered and not the mere nomenclature of the agreement or the headings for various clauses.

[2] Section 2(d) and 2(uu), Copyright Act, 1957.

[3] Section 17, Copyright Act, 1957.

[4] 2018 (73) PTC 365 (Mad).

[5] For similar issues arising out of making a sequel of a film, see, Ian Eagles “Copyright and the Sequel: What Happens Next?” in F MacMillan (ed), New Directions in Copyright Law, Vol 6, (Edward Elgar Publishing, UK, 2007) pp. 35-65. See also, Zee Entertainment Enterprises Limited v. Ameya Vinod Khopkar Entertainment and Ors. , MANU/MH/0512/2020.

[6] For an overview of issues arising out of character- related rights, see, Arbaaz Khan Production Private Limited v. Northstar Entertainment Private Limited and Ors. , 2016 (67) PTC 525 (Bom).

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assignment of ip licenses

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IP Law Bulletin

Intellectual property rights broadly encompass patents, trade secrets, know-how, proprietary data, registered designs, copyrights and trademarks, among other things. Most often, such rights originate with a commercial entity and the owner retains the rights throughout their lifetimes as legal leverage against competitors.

However, there are times when an owner of intellectual property (IP) may want to transfer some or all of its IP but an outright sale is not an attractive option. For example, the owner may be a non-practicing entity (NPE) – a term that encompasses (1) individual inventors who, for one reason or another, may not be able to commercialize their IP, (2) universities and other research institutions that seek to transfer technology as part of their mission, (3) commercial entities whose business plans change and find themselves with surplus IP or (4) so-called “trolls” that accumulate patents and other IP as middle-men and then seek to license the rights to the highest bidders.

Even when the owner practices the IP, there can be advantages to sharing IP with others, e.g., as part of a settlement of litigation or a cross-license that may resolve a stalemate where two or more parties may have mutually blocking IP.

Licensing, as opposed to complete transfer or assignment of IP, provides the owner with several advantages. By retaining ownership, the seller (licensor) retains title and typically has an easier time reversing the transfer of rights if the buyer (licensee) doesn’t live up to its end of the bargain. In many instances, the party seeking to acquire the IP rights does not have sufficient financial resources to pay the full value upfront – or may perceive the IP as highly speculative but be willing to pay more if the technology can be successfully commercialized. A well-drafted license agreement therefore not only gives the licensor an opportunity to more readily terminate the agreement if future payments are not made but also allows the parties to “share in the upside.” License agreements can also delineate the responsibilities of each party for maintaining or enforcing the patent rights.

Thus, licensing allows greater flexibility and reduces the risk that the IP will be over or undervalued. If the desired revenue strategy is a stream of income, i.e., royalties or contingent payments, then licensing is often the most appropriate choice.

What are the components of a license?

A typical patent license will specify the rights granted, the term of the grant, the consideration in exchange for the grant, records and reporting, representations and warranties regarding the patent, how infringement issues will be handled, tort liability for products or services covered by the license, and other factors.

Grant clause

The grant clause sets forth what patent rights are being conveyed. The grant can be exclusive (i.e., only the licensee has the right to exploit the patent rights) or non-exclusive (i.e., the licensor can grant similar rights to other parties). The grant can be limited by geography (such as U.S., worldwide), and field of use (such as for cellphones but not laptops).

Improvements

A patent license can also define each party’s rights to improvements of the patented technology. Depending on the negotiation, improvements might be solely owned by the licensor, licensee, or jointly owned by both. The party with more bargaining power often insists on controlling the rights to improvements.

Consideration

The payment of consideration can be structured in many ways. The license agreement typically requires a licensee to pay an upfront license fee as well as ongoing royalties based on a percentage of sales or on a per-unit basis. The license can also require minimum annual royalties or minimum annual product sales to be sure the licensee is diligently marketing the products or services covered in the patent. The license agreement can also require that the licensee provide reports to the licensor, e.g., of sales or revenue, to ensure accurate royalty payments.

Milestone payments are a particularly useful way to deal with the speculative nature of IP rights and ensure that the licensor shares in the success of commercialization. For example, milestone payments upon capitalization of the licensee or FDA approval of a product that embodies the IP are common provisions.

Shifting the financial responsibility for the ongoing pursuit of patent rights or maintenance of such rights is another form of consideration that a licensor may seek as part of the agreement.

Infringement

A patent license can also control each party’s responsibilities for enforcing the patent rights along with apportioning liability if the licensee is sued for infringement. Generally, each party wants to have control of any infringement litigation but also wants to avoid being required to defend or indemnify the other party.

Depending on the terms of the agreement, an exclusive licensee can have the right to sue for infringement. The license agreement can determine how the costs of litigation are apportioned between licensor and licensee. For example, the license can provide a licensee the right to withhold all or part of royalties to offset costs of litigation. The license agreement can also define how the proceeds of successful litigation are divided. Damages can first be allocated to cover litigation costs and then divided between the parties according to predetermined percentages, for example.

Due diligence

License agreements can require due diligence by the licensee to develop and/or commercialize the IP. Such terms are typical in university license agreements to ensure that the IP is used and not just put on the shelf. For example, the licensee can be required to use reasonable efforts to develop and commercialize products covered by the license. License agreements will also typically include milestones that must be met in order for the licensee to maintain the license. The license can also require submission of periodic reports regarding the licensee's activities related to the development and testing of the products covered by the licensed IP.

Indemnities and product liability

Licensors and licensees can provide various indemnifications to each other in a license agreement. The license can include representations and warranties concerning the IP and can require indemnification against any inaccuracy or loss arising from those representations and warranties. For example, the license can include representations by the licensor that they own clear title to the IP, that the IP is valid and enforceable, and/or that none of the products produced under the IP are known to infringe other IP held by third parties. In turn, the licensor can require the licensee’s compliance with applicable laws, such as export controls, tax codes, etc.

The license agreement can also include indemnification terms ensuring that liability for defective products produced by the licensee does not extend to the licensor, who likely has limited if any control over the actions of the licensee. Alternatively or in addition, the licensor can require that the licensee carry sufficient liability insurance.

Dispute resolution

License agreements can require the parties to provide notice of any breach of the agreement and can specify periods during which any such breach can be cured. The license agreement can also be drafted so as to provide in advance for arbitration or mediation of disputes. For example, the agreement can require binding arbitration rather than litigation.

Transferability

License agreements can provide the licensee a right to sublicense or assign the IP. The licensor can require approval of any such sublicense or assignment. For example, the licensor may wish to prevent a competitor from obtaining license to the IP. However, it can be important for the licensee to have the ability to assign the license without restriction as part of the transfer of the business.

Termination

License agreements can include negotiated provisions that establish how and for what reasons the agreement can be terminated. For example, the agreement can specifically provide for termination upon breach of certain terms of the agreement. Note, however, that clauses that provide for automatic termination of the license agreement if one or the other party seeks or is placed under bankruptcy protection may not be enforceable. On the other hand, clauses that provide for termination for failure to pay royalties may be enforceable regardless of bankruptcy.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.

Maximizing the protection and value of intellectual property assets is often the cornerstone of a business's success and even survival. In this blog, Nutter's Intellectual Property attorneys provide news updates and practical tips in patent portfolio development, IP litigation, trademarks, copyrights, trade secrets and licensing.

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assignment of ip licenses

Three Differences Between an IP Licence and Assignment

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By Christopher Parker Lawyer

Updated on January 14, 2021 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

The Interest Vested in the IP

Assignment of ip must be in writing, notification of ip licence vs. assignment ip, key takeaways.

Intellectual property (IP) is a vital part of every business’ assets. IP can include trade marks, trade secrets, copyright or patents. Like any asset, you can commercialise, license or sell your IP for profit. It is important to consolidate these assets and ensure that you assign or license your IP appropriately. This article will outline the three major differences between licensing your IP through an IP licence and assignment agreement .

One of the major differences between an IP licence and assignment is the interest in (or right to use) the IP.

Licensing IP

When licensing IP to another (the licensee), you are granting permission for them to use your IP under certain conditions. You retain the interest in the IP you are licensing. These sorts of arrangements are outlined in a licence agreement which articulate both parties’ rights in the licence agreement.

The IP licence agreement will address:

  • territory restrictions;
  • the period that the agreement will last;
  • whether the licence is exclusive or non-exclusive;
  • the right of inspections;
  • the nature of the IP (i.e trade mark or patent);
  • confidentiality; and
  • termination and dispute resolution for a breach.

Assigning IP

Assignment is different from licensing because it is a permanent transfer of ownership from one owner to another. Therefore, as the original owner of the IP, your interest in the IP will cease once you have assigned it.

For some IP, like trade marks , you can transfer the right to use partially or in full. 

For example, a trade mark is registered for a certain number of classes for specific goods or services. Partial transfer of ownership may not include all of these goods and services. When assigning IP, it is important to ensure that you have appropriately covered all rights for exploitation.

An IP licence agreement does not necessarily need to be formalised in a written document. A licence agreement may exist if all parties involved behave such that a licence could be implied. The law has certain provisions that facilitate the existence of these relationships without the existence of a written agreement. Even though a licence agreement can exist without written documentation, we would recommend formalising licence agreements in writing to avoid confusion or disputes further down the track. 

In contrast, an assignment of IP is permanent and irrevocable. On this basis, a transfer of ownership must be in writing. If it is not, the transfer will not be recognised. Furthermore, for certain IP that requires registration (e.g. trade marks and patents), you must also file the transfer through IP Australia.

When you licence your IP, you do not need to notify IP Australia of the licence. It is a private agreement between you and the licensee. Because of this, the onus is on you to keep track of: 

  • every licence that you are a party to; and 
  • the rights conferred by each agreement.

Assignment IP

When you assign IP to another owner, the assignee will need to file an application for transfer of ownership through IP Australia. Next, the Registrar at IP Australia will review the application and update the register accordingly. Once the Registrar at IP Australia receives the form with the records of assignment, the assignee is officially the owner of the IP. Once the assignment is published by IP Australia, the Registrar is obliged to notify any other relevant person.

However, not all IP appears on the Register. As such, not all IP assigned in an agreement needs to be reported to IP Australia. You must report the assignment of the following types of IP to IP Australia:

  • trade marks;
  • designs; and
  • plant breeders’ rights.

As indicated above, there are a number of differences between an IP licence and an assignment. These differences are important to remember if you want to make the most out of your hard-earned goodwill and brand recognition. The major difference between a licence and an assignment is that you will generally not have any interest in your IP if it is assigned to another party. A licence will ensure that you retain some interest in your IP and that it is used according to the terms you have set. If you have questions about licensing or assigning your IP, contact LegalVision’s IP lawyers on 1300 544 755 or fill out the form on this page. 

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IP Licensing: Everything You Need to Know

An IP licensing agreement is a partnership between an intellectual property rights owner and another party who is authorized to use those rights in exchange for an agreed upon payment. 3 min read updated on February 01, 2023

An IP licensing agreement is a partnership between an intellectual property rights owner and another party who is authorized to use those rights in exchange for an agreed upon payment.

What Is a License?

A license is an agreement to not sue the other party. For example, in the Hollywood movie "007," British spy James Bond was given a "license to kill." In effect, the British government promised not to prosecute him for any murders he may commit in the process of saving the world.

A license fundamentally requires the licensor to provide assurance that they will not sue the licensee. In return for the assurance, the licensor usually receives a royalty payment, and the licensee is allowed some sort of intellectual property (IP).

What Is an IP Licensing Agreement?

Intellectual property licensing agreements materialize from the need of one party (the licensee) to use the IP of another party (the licensor). In exchange for the IP, the licensee will pay the licensor a fee or a royalty. The parties involved in the agreement will usually be able to negotiate the conditions and terms of use.

The licensor is the owner/holder of the licensed IP. One license may cover:

  • Design and patent rights
  • Trademark(s)

The licensor may be allowed to monitor the actions of the licensee while they use their IP. Monitoring a client's actions may help to continually build the overall knowledge of the IP.

Purchasing an IP license has many benefits, including:

  • Increasing the capability of getting services or products faster to market
  • Allowing shared risk
  • Increasing revenue
  • Increasing market penetration
  • Reducing costs and time
  • Accessing specialized knowledge or expertise
  • Providing a competitive advantage
  • Opportunities to collaborate
  • Minimizing capital investment

A vast array of IP licenses are available. The following are the three main groups:

  • Trademark and franchising

Generally, in these types of agreements, more than one type of IP is transferred between parties. Therefore, one single contract may contain the transfer of many different rights of use. Licensing agreements may also be used during mergers and acquisitions, or during the negotiation of a joint venture.

What Can Be Subject to an IP Licensing Agreement?

Intellectual property that may qualify to be licensed includes:

  • Product designs
  • Confidential knowledge protecting the IP

The ABCs of Licensing Intellectual Property: Introduction

At a bare minimum, the various types of IP rights include:

  • Trade secrets
  • Registered designs
  • Proprietary data

Intellectual property rights usually originate with the owner or creator of the technology. Most of the time, the owner will keep the rights of the IP as a competitive advantage against their competitors. Occasionally, the owner or creator will want to sell a part or all of the IP outright, but they may have put themselves in a peculiar situation.

For example, if the owner or creator is part of a non-practicing entity (NPE), a term that is made up of:

  • Any inventor who's not able to market their IP
  • Research institutions or universities that plan on transferring their knowledge
  • Businesses who accidentally find themselves with too much IP
  • Middle-men who accumulate IP with the intention of selling it at a later date

There are occasions when it makes sense to share IP, such as during a litigation, a settlement, or to resolve a stalemate during a negotiation process.

Licensing provides the licensor with a number of advantages including:

  • Retaining title or ownership over the IP
  • Reversing the transfer of IP if the licensee doesn't live up to their end of the bargain
  • Bringing in a steady stream of income
  • Creating a partnership where both parties share in the upside
  • Controlling how the IP can be used
  • Increasing flexibility while also reducing risk that IP will be undervalued

The ABCs of Licensing Intellectual Property: What Are the Components of a License?

The components of a license include:

  • Specification regarding all rights granted
  • Terms of the license
  • Financial consideration exchanged
  • Reporting and records
  • Warranties and representations
  • Infringement process
  • Liability disclosure

The ABCs of Licensing Intellectual Property: Grant Clause

The grant clause explicitly states which patent rights will be granted to the licensor. The rights granted to the licensee can be exclusive or non-exclusive, or limited by a geographic area. The licensor needs to make sure not to grant "all right, title and interest in and to the intellectual property" to the licensee. Such a clause would constitute an "assignment" of the intellectual property, possibly making the licensee the new owner of the IP.

If you need help with IP licensing, you can  post your job  on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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  • Types of Licensing Agreements

Difference Between an IP Licence vs an Assignment in England

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By Rachel King

Updated on 7 November 2022 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

Intellectual Property Rights

  • Licensing Your IP 
  • Assigning Your IP 

Which Option is Best for Your Business?

Key takeaways, frequently asked questions.

Your business has valuable intangible assets that you can benefit from financially. Most companies have intellectual property (IP) assets such as copyrighted materials, trade marks, design rights, and patents. You may wish to licence or sell these assets to other businesses or people. This article will explain the difference between an IP licence and an assignment in England.

Your IP assets may include your:

  • copyrighted materials, for example, product descriptions and graphics;
  • design rights;
  • trade marks, for example, your business name and any branding elements associated with your company; or
  • patents on any inventions. 

As with any other business asset, you can sell your intellectual property or allow someone else to use it. You can do this with a licence or an assignment. 

Licensing Your IP 

Intellectual property licensing is where you give someone else the right to use your IP asset, but you want to maintain ownership of the asset and continue to use it yourself. The licence agreement will provide the licensee with specific rights to use your IP.  You can grant:

  • a non-exclusive licence where you also want to continue to use the IP; or 
  • an exclusive licence to give exclusive rights to use the IP for the duration of the licence agreement.

You might want to licence your IP rights to another party for several reasons, for example: 

  • you are developing a product you hold patents on or need consultancy advice; or
  • you have obtained a patent for a product but would prefer someone else to make it. 

Licensing your IP rights to others can expand your business into new areas or markets.  

Licences for Patents

A ‘licence of right’ is a specific licence related only to patent rights. It means the patent owner is willing to allow anyone to licence that particular patent upon request. The patent holder would still be able to negotiate the terms of that licence, such as the cost and how long the licence will be for and any limitations on the use, but cannot outright refuse to licence the patent. 

There is a benefit to the patent holder as the IPO halves the annual renewal fees for patents with a licence of right. Also, it is clear to others that you are willing to licence your patent for use by others.

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LegalVision’s Trade Mark Essentials Guide provides valuable information for any business looking to register or enforce a trade mark.

Assigning Your IP 

If you want to permanently sell or transfer your IP interests to another party, you do this through an assignment. You assign your IP rights in that asset to the other person or business. This means they will now own it, and you will have no right to use that IP. 

You can assign registered and unregistered IP, including copyrights, patents, design rights and trade marks. You should inform the Intellectual Property Office (UK IPO) that you have transferred the rights to a new owner for registered IP, such as patents, design rights, and trade marks.

Whether licensing or assigning your IP rights is best for you and your business depends on whether you want to retain ownership of the IP asset in question and why you want to allow someone else to use it. 

For example, if you are considering licensing or assignment to provide business income, you can potentially use a licence to provide ongoing regular income. If you decide on an outright transfer of ownership, it will provide one lump sum. This may be appropriate if you are no longer interested in using the IP asset.

If you have valuable business IP assets such as trade marks, patents, design rights or copyrighted materials, you can raise income for your business by licensing or assigning your IP to another party. A licence allows you to grant permission for someone else to use your IP whilst retaining the right to use it yourself. If you no longer want to use your IP at all, you can transfer ownership to someone else through an assignment of your IP.  

If you need help with assigning or licensing your IP rights, our experienced intellectual property lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page .

You use an IP licence to grant permission to someone else to use your IP, but you still retain ownership of it and the right to use that IP yourself.  

An assignment of IP transfers ownership of a particular IP asset to another party. The new owner of the IP will be able to use it and benefit from it as if they were the original owner of that particular IP asset. You will no longer have the right to use the IP asset unless the new owner permits you to use it.

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  • Dec 12, 2016

IP Assignment and Licensing

While speaking with a colleague of mine a few weeks ago, he asked me if I knew how to assign a patent from his name in to his company.  In going over the details with him, he explained that he had originally patented his product in his own name, then later created his company, and is now seeking a way to acquire investors for his (patented) product.  The obvious problem is that so long as the patented product is registered in his name and not his company's, his company does not itself hold any rights to the patent and is therefore devoid of any value relating to the patent. In order to entice investors in to investing in his company, he wants to transfer the patent to the company thereby providing it with the valuable intellectual property asset.

Realizing that my colleague could benefit from a brief explanation of the methods for transferring intellectual property (IP), and knowing that there are likely many IP owners out in the world that likely have similar questions, I thought it a good idea to make IP Assignment and Licensing the subject of this next post. Please note that in registering IP, licensing IP, or in assigning IP, it is always best to consult and utilize the services of an attorney; Nowakowski Legal PLLC is of course always available to assist with any legal needs that you might have.

All major intellectual properties such as a copyright, trademark and patents can be licensed and/or assigned to other individuals or entities.  The major difference between an assignment and a license is that an assignment is generally a more permanent transfer, whereas a license is a limited transfer generally associated with restrictions and the ability to revoke or terminate.  The best way to think about the difference between a license and an assignment is to associate a license with a "lease" on the IP, whereas an assignment is more of a permanent transfer of the IP.  A more detailed explanation of both are as follows:

Assignment - an assignment is a transfer of all the rights and liabilities in the subject IP.  That being said, you can provide an assignment of less than your entire ownership in an IP, so long as whatever "piece" is transferred is given away in its entirety.  For example, you can provide another entity with an assignment of co-ownership in a patent, so long as the co-ownership is given in its entirety and without restriction (i.e. you can not reserve a right to remove his/her co-ownership).

Major uses of assignments are to transfer an IP in to a company for purposes of enticing investors, for the sale of the IP directly to a purchaser, or to transfer or include ownership of the IP to others that have some contractual ownership in the IP.  Several vehicles are in place for some IPs which will cause them to automatically transfer via assignment in certain circumstances by operation of law (i.e. death of the owner, acquisition of a company by another, etc.).

License  - a license is the authorization of use of an IP for a specific purpose and is generally limited by term, territory, and renewal provisions.  In contrast to an assignment, a license is not a transfer of ownership and is not a permanent provision of rights in the IP.  Instead, a licensing agreement will contain specific terms stipulating the specific rights and usages the licensee may have in regards to utilizing the IP.  For example, a standard licensing agreement might give a licensee the exclusive right to use the IP in in the sale of its product in the Southern half of a state for the next 3 years.

Major uses of a license are to acquire compensation in exchange for the right to a limited use of the intellectual property. Licenses that are less restrictive and provide more exclusivity to the purchaser tend to be more expensive than licenses that are more restrictive and less exclusive; this is because being the only person able to utilize the IP for a variety of purposes is much more valuable than being one of many entities that can use the IP for a select few reasons.  The payment to the license holder generally takes the form of a standard payment for the license itself, and then payment of royalties for each exercised use of the IP.  For these reasons, licensing is one of the primary vehicles utilized by IP holders for purposes of profiting off of their IP.

It should be noted that neither assignments nor licenses of IPs need to be recorded to be considered effective. However, for purposes of providing appropriate notice to any interested parties (and to avoid potential confusion and litigation), it is generally best practice to always record your transfers of IP (especially for assignments).  In order to record an assignment or license of a registered IP, you can go to the appropriate government entity and file with them; for a patent or trademark go to The United States Patent and Trademark Office ( www.uspto.gov ) or for a copyright go to The United States Copyright Office ( www.copyright.gov ).

If you or anyone you know has any questions regarding the assignment or licensing of Intellectual Property, then contact Nowakowski Legal PLLC today to learn how we can be of assistance.

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Assignments and Licensing of Intellectual Property

Intellectual property rights such as patents and copyrights are often transferred in whole or part so that a third party can make use of them. Some common examples of assignments and licensing of intellectual property include an author who licenses her copyrighted novel to a publisher for a time or a software developer that purchases the right to incorporate code created and owned by another into one of its products.

Licenses and Assignments as Options

Licenses and assignments are both ways of granting rights in intellectual property to a third party, but the two alternatives are quite a bit different, and it is important that a person or organization transferring intellectual property rights understand the difference and the ramifications of each. It is equally important that a party seeking to purchase intellectual property rights enters into the type of agreement that will allow the intended use on the intended terms.

Working with an experienced intellectual property lawyer when you are considering entering into a licensing or assignment agreement will ensure that you have the information you need to make the best decision. The attorney can also draft or review the agreement to ensure that the language accurately reflects your intentions and there are no unanticipated obligations or limitations.

Intellectual Property Licensing

Licensing a patent or copyright to a third party means granting that person or organization permission to exercise some or all of your rights. When you grant a license, you still own the intellectual property rights, although the terms of the license may place some limitations on your use of those rights. A license may be exclusive or non-exclusive.

Non-Exclusive Licensing

A non-exclusive license grants a third party the right to use your intellectual property but does not prohibit you from using those rights yourself, or from granting licenses to others. A simple example would be a software platform provider such as Salesforce. Salesforce licenses a customer the right to use its protected intellectual property to manage customer contacts and prospects–the software can even be integrated with other platforms or tweaked to serve the customer’s needs. However, the company’s business model requires that it have the freedom to license that software again and again, to thousands of clients at a time. Thus, the licenses it grants are non-exclusive.

Exclusive Licensing

An exclusive license grants the purchaser the sole right to use the intellectual property, or some portion of it, for either the duration of the licensing period or a portion of the licensing period. For example, when a magazine or other publication purchases an article from a writer, the publication typically takes an exclusive license for a specified period of time, such as 90 days. That short period of exclusivity allows the publication the benefit of being the first to publish and the only source for a period of time. The agreement may also include a non-exclusive license that lasts longer so that the publication can include the piece in anthologies or keep it in an online archive.

Limited Licensing

A license, whether exclusive or non-exclusive, may be limited in various ways. One of the most common is that the license may be time-limited: a license may be granted for a specific time period or in perpetuity. Another is that the license may apply to fewer than all the rights associated with the copyright or patent. For example, a novelist may license book rights to a publisher, but retain movie rights for herself or to license to another party.

Assignment of Intellectual Property Rights

The key difference between a license and an assignment is that an assignment transfers rights away from the original copyright or patent holder. Whereas the licensor retains ownership of the intellectual property rights, the assignor gives up the rights entirely. In simplest terms, licensing is akin to rental, whereas an assignment operates as an outright sale. A copyright or patent holder who has assigned his rights retains no interest in the intellectual property, just as a person who sells a car no longer has a legal interest in that vehicle.

Obviously, a patent or copyright holder who is considering an assignment must think carefully about the legal ramifications and the impact on existing products and systems, and must ensure that the compensation is commensurate with the rights transferred.

Talk to an Intellectual Property Lawyer Before Licensing or Assigning Your Rights

The decision as to whether to license or assign your rights as the holder of intellectual property rights or to pursue a license or assignment as a purchaser, can be a complex one. A miscalculation could mean serious complications and costs. Protect yourself before you start by getting knowledgeable guidance from an experienced attorney at KPPB LAW who can ensure that your agreement protects your interests.

Intellectual Property Attorneys at KPPB LAW

KPPB LAW - Sonjui Kumar 1x1

[email protected]

One Lakeside Commons Suite 800 990 Hammond Drive Atlanta, GA 30328 678-443-2244 [Corporate Office]

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161 Kings Hwy E / First Floor Fairfield, CT 06825 203-576-9211

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COMMENTS

  1. IP Assignment and Licensing

    Assignment is the sale of an IP asset. It means that you transfer ownership of an IP asset to another person or legal entity. (Image: iStock/Getty Plus/marrio31) IP for Business Guides Learn more about the commercialization of patents, trademarks, industrial designs, copyright. IP licensing

  2. Intellectual property assignment: What it is and how to make one

    An intellectual property assignment is the transfer of an owner's rights in copyrights, trademarks, patents, trade secrets, or other intangible creations. These transfers may take place on their own or as part of a larger transaction.

  3. PDF IP Licenses: Restrictions on Assignment and Change of Control

    Where an IP license is silent on assignability by the licensor, the licensor can generally assign its rights, subject to the same considerations as other types of contracts. Absent special circumstances, the licensed IP, not the licensor's identity, is the main attraction of the license to the licensee.

  4. Intellectual Property Assignment Agreements & Licenses

    Because you have the right to confer your intellectual property rights to other parties, intellectual property agreements can take one of two basic form: assignment agreements and IP license agreements. About Assignment Agreements

  5. Contracts and intellectual property ownership

    The typical solution is an invention assignment agreement signed by the employee when they first join the company. Such an agreement covers a range of IP ownership issues, from confidentiality of company trade secrets to the assignment of any intellectual property created on the job or using company resources to the company.

  6. Assigning & Licensing Your Intellectual Property

    Assignments and licensing are two types of agreements used to sell intellectual property. Both have serious consequences and should be carefully reviewed. What you'll learn: What to Watch for When You Assign IP Things You Need to Consider When You License IP Don't Forget That Scale Is Irrelevant

  7. What You Should Know About IP Licences And IP Transfers

    To register an assignment or licence of copyright, evidence of the same is required irrespective of whether the assignee/licensee or assignor/licensor makes the request. A nominal fee of $100.00 ($65.00 for copyright) must also accompany any request for the registration of a transfer of intellectual property.

  8. IP Licenses: Restrictions on Assignment and Change of Control

    It includes guidance on evaluating assignability, dealing with non-assignable licenses in M&A transactions, and drafting tips for assignment provisions in favor of a licensor or licensee. It also considers issues relating to the transferability of IP licenses in the context of bankruptcy and secured transactions, and change-of-control provisions.

  9. IP License: Learn the Basics of IP Licensing

    Unlike IP assignments which transfers all ownership of IP, licenses provide only limited use - enabling licensees to benefit from IP while protecting the ownership rights of the licensor.

  10. Intellectual Property Licensing and Assignments

    Conclusion. IP licenses and assignments are potentially very lucrative transactions for both parties. However, these agreements can be complex. An attorney should always be consulted to advise regarding the best type of arrangement as well what terms are needed to protect the party's rights and maximize the revenue potential. Romano Law can ...

  11. Drafting Intellectual Property Rights Transfer Agreements

    In the first part of this series on intellectual property ("IP") transfers available here, we discussed the legal provisions governing assignment and license of IP. In this second part, we will discuss the various transfer related clauses in IP assignment and license agreements and the manner in which these clauses must be drafted. As discussed in the first paper of this series, IP can ...

  12. The ABCs of Licensing Intellectual Property: IP Law Bulletin

    Licensing, as opposed to complete transfer or assignment of IP, provides the owner with several advantages. By retaining ownership, the seller (licensor) retains title and typically has an easier time reversing the transfer of rights if the buyer (licensee) doesn't live up to its end of the bargain.

  13. IP Licence vs Assignment: What's the Difference?

    Unlike a licence, an IP assignment is a permanent transfer of IP. This transfer is irrevocable and generally occurs as a sale or transfer from an owner (assignor) to the purchaser (assignee). If you are looking to transfer IP ownership, you should ensure that this transfer is in writing by way of a deed or other written agreement.

  14. Exclusive and Non-exclusive IP Licenses and Executory Contract ...

    The cases that discuss these issues also frequently discuss whether there is a federal common law as to IP license assignments. Ordinarily, common law is a creature of state law. See Erie RR Co. v. Tompkins, 304 U.S. 64 (1938) (the law of a state applies in federal court because there is no such thing as federal common law).

  15. Checklist: Drafting a limited intellectual property license (USA)

    This is an important point to clarify, as the IP license may restrict or prevent assignment, and if so, any assignment could carry a risk of being in breach of the license terms. 2.8 Are ownership ...

  16. Part I

    1.2.2 Geographic Expansion . Like market expansion, IP licensing enables IP owners to expand the territorial reach of their IP rights. Footnote 8 Many products and services have international appeal, but local markets are often difficult to enter without assistance. Depending on the product and the market, significant regulatory approvals and clearances may be required, advertising and ...

  17. Three Differences Between an IP Licence and Assignment

    Assignment of IP Must Be in Writing Licensing IP An IP licence agreement does not necessarily need to be formalised in a written document. A licence agreement may exist if all parties involved behave such that a licence could be implied.

  18. IP Licensing: Everything You Need to Know

    An IP licensing agreement is a partnership between an intellectual property rights owner and another party who is authorized to use those rights in exchange for an agreed upon payment. 3 min ... title and interest in and to the intellectual property" to the licensee. Such a clause would constitute an "assignment" of the intellectual property ...

  19. Difference Between IP Licence vs Assignment

    You can do this with a licence or an assignment. Licensing Your IP Intellectual property licensing is where you give someone else the right to use your IP asset, but you want to maintain ownership of the asset and continue to use it yourself. The licence agreement will provide the licensee with specific rights to use your IP. You can grant:

  20. IP Assignment and Licensing

    Assignment - an assignment is a transfer of all the rights and liabilities in the subject IP. That being said, you can provide an assignment of less than your entire ownership in an IP, so long as whatever "piece" is transferred is given away in its entirety.

  21. Assignments and Licensing of Intellectual Property

    The key difference between a license and an assignment is that an assignment transfers rights away from the original copyright or patent holder. Whereas the licensor retains ownership of the intellectual property rights, the assignor gives up the rights entirely.

  22. Difference between licensing and assignment in IP

    An IP license arrangement is basically a contract between the owners of an IP and a third party that allows the third party (licensee) to access, utilize, or appreciate certain rights associated with the protected innovation, in return for a royalty or co-licensing of IPs.

  23. Managing MDTI Premium licenses in Microsoft Entra Admin Center

    Instructions to assign MDTI Premium Licenses . As mentioned above, global administrators or identity governance administrators are responsible for assigning MDTI premium licenses to users, and should review the following Microsoft Learn resources for best practices for assigning licenses to users within Microsoft Entra Admin Center:

  24. ConnectWise ScreenConnect 23.9.8 security fix

    As part of this release, ConnectWise has removed license restrictions, so partners no longer under maintenance can upgrade to the latest version of ScreenConnect. February 20, 2024 update: ... The following IP addresses were used by threat actors. We are making them available for protection and defense. IOCs: 155.133.5.15; 155.133.5.14;