licensing and assignment of intellectual property rights

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.

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 .

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licensing and assignment of intellectual property rights

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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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

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Intellectual Property Assignment Agreements & Licenses

Intellectual property (IP) can be just as valuable as—or even more valuable than—tangible property. Many companies make money exclusively through marketing products based on intellectual property rights. That’s why it is so important to protect your intellectual property through patents, trademarks, copyrights, and other legal devices that keep your intellectual property safe.

However, once you have secured your intellectual property rights, it is sometimes more convenient or valuable to let someone else use them in exchange for a fee, which is why intellectual property agreements and intellectual property contracts exist. These documents are complex agreements that determine the manner in which third parties can use your intellectual property. Intellectual property agreements and intellectual property contracts require careful negotiation, and owners of intellectual property should conduct these negotiations with the support of an experienced intellectual property lawyer. Through Priori, you can connect with a vetted a lawyer who can help you draft and negotiate an intellectual property agreement or an intellectual property contract.

Understanding Intellectual Property Agreements & Intellectual Property Contracts

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

Under an intellectual property assignment agreement, you permanently transfer some or all IP rights to the assignee in exchange for a specified sum. Essentially, you sell the rights to a third party the same way that you could sell physical property for a permanent transfer. Generally, you relinquish all control, involvement, and claim on the intellectual property rights transferred.

About Intellectual Property Licensing

Under an intellectual property licensing agreement (also known as an intellectual property license or an intellectual property license agreement), you retain ownership of your patent, copyright, or trademark, but you give another party permission to use some or all of your intellectual property rights for a specific amount of time for a fee or royalty. These intellectual property contracts typically specify termination dates and procedures.

There are several types of intellectual property licenses embodied in a typical intellectual property agreement. The following three are the most common:

Exclusive License. You agree not to grant any other licenses of the invention and rights concerned, as well as not to use the technology yourself.
Sole License . You agree not to grant any other licenses of the invention and rights concerned, but you can use such rights yourself.
Non-Exclusive License . You agree to give the licensee certain rights, but you also reserve the right to grant licenses of the invention and rights concerned to third parties or to use them yourself.

You can also combine elements of these three types of intellectual property agreements, such as by giving an intellectual property license for exclusive rights in certain geographic areas. You can review a sample patent license agreement in Priori's Document and Form Learning Center . You can also learn more about software licenses here .

Intellectual Property Assignment Agreement vs. Intellectual Property License

Which is better, an intellectual property assignment agreement or an intellectual property license? The reality is that there are pros and cons to each choice, depending on your needs and interests. Most of the time, IP holders want to maintain control of their IP, and they choose intellectual property licensing. This is advantageous because you can determine the manner in which your IP is used and change partners if a partnership isn’t advantageous. Also, intellectual property licensing allows you to produce a steady income from your IP over a particular time period and possibly confer the same rights to multiple users.

Intellectual property assignment agreements can also have its advantages, however. If you assign intellectual property to a third party, you no longer have any responsibility towards the product. That means you cannot generally be sued for problems relating to your IP and you are not responsible for any maintenance fees. Intellectual property assignment is generally more appropriate when you are selling your business or leaving a field entirely.

Priori Pricing

Depending on the complexity of your needs, the cost of drafting intellectual property licensing or intellectual property assignment agreements may vary. Priori attorneys typically create flat-rate packages ranging from $400 to $1,500 for relatively straightforward intellectual property agreements. In order to get a better sense of cost for your particular situation, put in a request to schedule a complimentary consultation and receive a free price quote from one of our lawyers.

How does an exclusive license differ from an assignment?

While both exclusive intellectual property licenses and intellectual property assignment agreements give exclusive exercise of that right to another person in exchange for monetary compensation, an exclusive license is much more limited than an assignment. If you assign an IP right to another person, you permanently transfer that right and would have to repurchase it in order to use it again.

An IP license is generally subject to a certain term and possible renewal. For that reason, you generally get more money upfront with an assignment. In addition, unless otherwise stated in the contract, an exclusive license cannot generally be handed off to a third party without your permission, but if you assign that right to someone else, they can then license or sell it as they see fit.

What is an implied license?

In certain circumstances, an implied IP license arises without the existence of a formal licensing agreement if the conduct of the parties indicates that the IP right holder intended to license certain rights to the other party. Often, courts grant implied licenses in cases where one party created a copyrighted work at the request of another under a contract that did not explicitly confer the copyright to the purchaser after payment and completion of the work.

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Licensing Intellectual Property 101: What Every Entrepreneur and Business Owner Should Know

Licensing intellectual property increases a company’s ability to grow its business, launch new products and services, and expand into a wider range of geographic markets. Companies are willing to pay substantial sums of money to use another company’s intellectual property in their own products and services. Licensing can therefore serve as an additional source of revenue for many companies.

Patents, trademarks, and copyrights are all forms of intellectual property that can be licensed. For example, patent licenses can be used for mechanical devices and systems, healthcare products and services, electronic hardware, computer software, chemical compositions, and business methods. Trademark and servicemark licenses can be used in merchandising various products and services that a company offers. Many of these licenses also incorporate rights of publicity. Copyright licenses can be used for artwork, books, music, photography, games, and software, among other matters. In the following sections, we will go through how to recognize and create an intellectual property license that your clients will ultimately thank you for.

Recognizing The Intellectual Property License

If a company is thinking of licensing its intellectual property, there are many considerations to keep in mind. First and foremost, a license is a contract. It is an agreement between the licensor (the person or company owning the intellectual property) and the licensee (the person or company wanting to use the intellectual property). The agreement outlines the appropriate actions each party is supposed to take with respect to the intellectual property and further summarizes what kind of legal action might be taken in the event that the licensee infringes on the licensor’s intellectual property. The license agreement is written in such a manner that an objective third party would be able to reasonably interpret and recognize the respective rights and obligations of the parties to the agreement.

Creating The Intellectual Property License

Prior to engaging in an intellectual property license with a potential licensee, a licensor must conduct due diligence to ensure that he is the true and sole owner of the intellectual property. Assistance from experienced counsel comes in particularly helpful here. Counsel can uncover, for example, whether there is another party which already or jointly owns the intellectual property and/or whether the proposed licensor has the applicable permissions to sublicense.

License agreements should be in written form, signed by both the licensor and the licensee. To create an intellectual property license, both parties must be open to negotiation, because it is unlikely that both parties will immediately see eye to eye on all aspects of the agreement. Keep in mind that the goal in entering a license agreement is for both parties to succeed and to continue to thrive in their respective business ventures, not for the parties to later sue each other, battling it out in court. The following are ten (10) top considerations licensors must bear in mind when proceeding through the negotiation phase:

Costs (ex. Lump sum fee vs. recurring fees vs. royalties)
Term (ex. Indefinitely vs. annually)
Territory (ex. International vs. national vs. regional)
Type (ex. Exclusive vs. non-exclusive)
Rights (ex. Reproduction, distribution, adaptations)
Assignment of rights
Infringement
Indemnification
Governing laws
Dispute resolution

This is not an all-inclusive list of provisions and each of the above are modifiable in their own rights. The licensing of intellectual property is a delicate process and must be treated as such. Because license agreements are usually long-term business partnerships, the licensor and licensee should also consider whether it is appropriate to enter into a non-disclosure agreement to protect and not misuse information it considers valuable, confidential, and not of the public domain.

Creating a respectable license agreement sets the initial boundaries for both the licensor and the licensee. Ultimately, licensors are responsible for enforcing their own license agreements and must pay attention to the licensee’s use (and a third party’s use) of intellectual property so as to not wreak havoc in the future. It cannot be overstated that license agreements are long-term relationships, so both sides must be flexible and understanding through the negotiation process in order to get a fair deal. Working with an intellectual property professional to review the license agreement and thoroughly spell out which party is responsible for what will diminish the potential for a lawsuit and burned bridges.

Heather Bowen, Esq. serves as Intellectual Property & Licensing Counsel to an international healthcare technology company headquartered in New York. There, she has helped grow and protect the company's intellectual property & licensing portfolio, negotiated and reviewed domestic licensing agreements with large health information and service firms, and strategically counseled internal legal, finance, sales, and marketing teams on monetizing intellectual property while expanding company offerings. All the while, Heather has continued to stay abreast of developments in intellectual property law through publications as well as her effective leadership and involvement in committees of the American Bar Association, the Hispanic National Bar Association, the International Trademark Association, and the New York Intellectual Property Law Association.

This intellectual property agreement is between , an individual a(n) (the " Assignor ") and , an individual a(n) (the " Assignee ").

The Assignor has full interest in the intellectual property listed in Exhibit A and described in section 1 below.

The Assignor wishes to transfer to the Assignee, and the Assignee wishes to purchase and receive from the Assignor, all of its interest in the Intellectual Property.

The parties therefore agree as follows:

1. ASSIGNMENT OF INTELLECTUAL PROPERTY.

The Assignor assigns to the Assignee, and the Assignee accepts the assignment of, all of the Assignor's interest in the following in the United States and its territories and throughout the world:

(a) the intellectual property rights related to the intellectual property listed in Exhibit A ;
(b) all precursors, portions, and works in progress with respect to that intellectual property and all inventions, works of authorship, mask works, technology, information, know-how, materials, and tools relating to those or to the development, support, or maintenance of those;
(c) all copyrights, patent rights, trade dress, trade names, business names, other indicia of origin, trade secret rights, trademark rights, mask works rights, and all other intellectual property rights and all business, contract rights, and goodwill in, incorporated, or embodied in, used to develop, or related to any of those; and
(d) the registrations and applications for registrations of the foregoing (collectively, the" Intellectual Property ").

2. PURCHASE PRICE.

The Assignee shall pay the Assignor a flat fee of $ as full payment for all rights granted under this agreement. The Assignee shall complete this payment no later than .

3. RECORDATION.

In order to record this assignment with all relevant government agencies, within hours of the effective date of this assignment, the parties shall sign the form of intellectual property assignment agreement attached as Exhibit B . The is solely responsible for filing the assignment and paying any associated fees of the transfer.

4. NO EARLY ASSIGNMENT.

The Assignee shall not assign or otherwise encumber its interest in the Intellectual Property or any associated registrations until it has paid to the Assignor the full consideration provided for in this assignment. Any assignment or encumbrance contrary to this provision shall be void.

5. ASSIGNOR'S REPRESENTATIONS.

The Assignor hereby represents and warrants to the Assignee that it:

(a) is the sole owner of all interest in the Intellectual Property;
(b) has not transferred, exclusively licensed, or encumbered any Intellectual Property or agreed to do so;
(c) is not aware of any violation, infringement, or misappropriation of any third party's rights (or any claim of those) by the Intellectual Property;
(d) is not aware of any third-party consents, assignments, or licenses that are necessary to perform under this assignment;
(e) was not acting within the scope of employment of any third party when conceiving, creating, or otherwise performing any activity with respect to any item of Intellectual Property.

The Assignor shall immediately notify the Assignee in writing if any facts or circumstances arise that would make any of the representations in this assignment inaccurate.

6. INDEMNIFICATION. The Assignor shall indemnify the Assignee against:

(a) any claim by a third party that the Intellectual Property or its use, manufacture, sale, distribution, or reproduction infringes on or misappropriates any copyrights, trade secrets, patents, or other intellectual property;
(b) any claim by a third party that this assignment conflicts with, violates, or breaches any contract, assignment, license, sublicense, security interest, encumbrance, or other obligation to which the Assignor is a party or of which it has knowledge;
(c) any claim relating to any past, present, or future use, licensing, sublicensing, distribution, marketing, disclosure, or commercialization of any of the Intellectual Property by the Assignor; and
(i) the Assignee promptly notifies the Assignor of that claim;
(ii) the Assignor controls the defense and settlement of that claim;
(iii) the Assignee fully cooperates with the Assignor in connection with its defense and settlement of that claim; and
(iv) the Assignee stops all sales, distribution, and public use of the infringing Intellectual Property, if requested by the Assignor.
(i) obtain the right for the Assignee to continue to use the infringing Intellectual Property;
(ii) modify the infringing Intellectual Property to eliminate the infringement;
(iii) provide substitute noninfringing intellectual property to the Assignee pursuant to this assignment; or
(iv) refund to the Assignee the amount paid under this assignment for the infringing Intellectual Property.
(c) No Other Obligations. The Assignor shall have no other obligations or liability if infringement occurs, and shall have no other obligation of indemnification or to defend relating to infringement. The Assignor shall not be liable for any costs or expenses incurred without its prior written authorization and shall have no obligation of indemnification or any liability if the infringement is based on (i) any modified form of the Intellectual Property not made by the Assignor, (ii) any finding or ruling after the effective date of this assignment, or (iii) the laws of any country other than the United States of America or its states.

7. GOVERNING LAW.

(a) Choice of Law. The laws of the state of govern this agreement (without giving effect to its conflicts of law principles).
(b) Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in County, .

8. AMENDMENTS.

No amendment to this assignment will be effective unless it is in writing and signed by a party or its authorized representative.

9. ASSIGNMENT AND DELEGATION.

(a) No Assignment. Neither party may assign any of its rights under this assignment, except with the prior written consent of the other party. All voluntary assignments of rights are limited by this subsection.
(b) No Delegation. Neither party may delegate any performance under this assignment, except with the prior written consent of the other party.
(c) Enforceability of an Assignment or Delegation. If a purported assignment or purported delegation is made in violation of this section, it is void.

10. COUNTERPARTS; ELECTRONIC SIGNATURES.

(a) Counterparts. The parties may execute this assignment in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
(b) Electronic Signatures. This assignment, agreements ancillary to this assignment, and related documents entered into in connection with this assignment are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.

11. SEVERABILITY.

If any one or more of the provisions contained in this assignment is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this assignment, but this assignment will be construed as if those invalid, illegal, or unenforceable provisions had never been contained in it, unless the deletion of those provisions would result in such a material change so as to cause completion of the transactions contemplated by this assignment to be unreasonable.

12. NOTICES.

(a) Writing; Permitted Delivery Methods. Each party giving or making any notice, request, demand, or other communication required or permitted by this agreement shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this agreement: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), facsimile, or email.
(b) Addresses. A party shall address notices under this section to a party at the following addresses:
If to the Assignor:
If to the Assignee:
(c) Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.

13. WAIVER.

No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this assignment will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.

14. ENTIRE AGREEMENT.

This assignment constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement about the subject matter of this assignment. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this assignment are expressly merged into and superseded by this assignment. The provisions of this assignment may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this assignment by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this assignment. Except as set forth expressly in this assignment, there are no conditions precedent to this assignment's effectiveness.

15. HEADINGS.

The descriptive headings of the sections and subsections of this assignment are for convenience only, and do not affect this assignment's construction or interpretation.

16. EFFECTIVENESS.

This assignment will become effective when all parties have signed it. The date this assignment is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this assignment.

17. NECESSARY ACTS; FURTHER ASSURANCES.

Each party shall use all reasonable efforts to take, or cause to betaken, all actions necessary or desirable to consummate and make effective the transactions this assignment contemplates or to evidence or carry out the intent and purposes of this assignment.

[SIGNATURE PAGE FOLLOWS]

Each party is signing this agreement on the date stated opposite that party's signature.

[PAGE BREAK HERE] EXHIBIT A LIST OF INTELLECTUAL PROPERTY

[PAGE BREAK HERE] EXHIBIT B FORM OF RECORDABLE INTELLECTUAL PROPERTY ASSIGNMENT For good and valuable consideration, the receipt of which is hereby acknowledged, an individual a(n) (the " Assignor ") hereby assigns to an individual a(n) (the " Assignee ") all of the Assignor's interest in the Intellectual Property identified in Attachment A to this assignment, and the Assignee accepts this assignment.

Each party is signing this agreement on the date stated opposite that party's signature.

[PAGE BREAK HERE]

ATTACHMENT A INTELLECTUAL PROPERTY

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Intellectual Property: Assignment & Licensing

Intellectual property can be just as valuable as—or even more valuable than—tangible property. Many companies make money exclusively through marketing products based on intellectual property rights. That’s why it is so important to protect your intellectual property through patents, trademarks, copyrights, and other legal devices that keep your intellectual property safe.

However, once you have secured your intellectual property rights, it is sometimes more convenient or valuable to let someone else use them in exchange for a fee, which is why intellectual property agreements and intellectual property contracts exist. These documents are complex agreements that determine the manner in which third parties can use your intellectual property. Intellectual property agreements require careful negotiation, and owners of intellectual property should conduct these negotiations with the support of an experienced intellectual property lawyer. Allied Legal’s lawyers can assist in this regard.

Assignment of Intellectual Property

Broadly, under an intellectual property assignment agreement, you permanently transfer some or all IP rights to the assignee in exchange for a specified sum. You sell the rights to a third party the same way that you could sell physical property for a permanent transfer. Generally, you relinquish all control, involvement, and claim on the intellectual property rights transferred.

Intellectual Property Licensing

Under an intellectual property licensing agreement (also known as an intellectual property license or an intellectual property license agreement), you retain ownership of your intellectual property, but you give another party permission to use some or all of your intellectual property rights for a specific amount of time for a fee or royalty. These intellectual property contracts typically specify termination dates and procedures.

There are several types of intellectual property licenses embodied in a typical intellectual property agreement. Licenses can be exclusive or non-exclusive:

Exclusive: You agree not to grant any other licenses of the invention and rights concerned, as well as not to use the technology yourself.
Non-Exclusive: You agree to give the licensee certain rights, but you also reserve the right to grant licenses of the invention and rights concerned to third parties or to use them yourself.

Assignment Vs. Licensing

Which is better, an intellectual property assignment agreement or an intellectual property license? The reality is that there are pros and cons to each choice, depending on your needs and interests. Most of the time, IP holders want to maintain control of their IP, and they choose intellectual property licensing. This is advantageous because you can determine the manner in which your IP is used. Also, intellectual property licensing allows you to produce a steady income from your IP over a particular time period and possibly confer the same rights to multiple users.

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The Difference between Assignment and License of IP Rights

Intellectual property (IP) - whether in the form of a patent, copyright or trademark – grants the owner control over how the property is used and by whom. The owner may choose to commercialise the IP by granting licenses to other companies giving them the right of usage. Alternatively, they may decide to assign – or effectively sell - the IP to another company in exchange for a large sum.

The primary difference between assignment and license in IP rights is in the transference of ownership. An assignment transfers ownership and title to the assignee, whereas a licence grants the licensee permission to use the IP – usually for a limited time period - whilst ownership of the patent remains with the licensor.

One other significant difference between assignment and license in IP rights is that while an assignment must be in writing, a license is not legally required to be.

What is an IP Licence ?

Obtaining a patent or copyright over a piece of IP gives the holder exclusive ownership over that property. This could be a song, piece of software, an invention or a physical object. Without obtaining a license, it would be unlawful for any third party to use that property. However, the owner of the property is entitled to license out its use to third parties as they choose.

For example, if a software developer designs a new app, they may allow certain companies to integrate the app into their software for an ongoing fee. However, the developer still holds the controlling interest in the app and can choose to grant licenses to other companies too, depending on the conditions agreed in the license.

The exact terms of the license are at the owner’s discretion. It may for example include territorial restrictions, a time frame, or particular restrictions on how the property can be used. The license will typically outline confidentiality agreements as well as the terms of termination of the license. Although licenses are not required to be in writing in order to be valid, all parties may well prefer to have a written agreement for clarity.

What is an IP Assignment?

In the case of an assignment, the assignor transfers the full title and ownership of the copyright or trademark to the assignee. Assignment is comparable to the sale of real estate in that the sale - once made - is final and cannot be revoked. The assignor loses all their previous rights to the IP since they are no longer the legal owners. For this reason an assignment would generally be a lot more expensive than the acquisition of a licence.

Assignments are commonly used to purchase the IP of commissioned creative work, such as a logo designed by a graphic designer, or a piece of software designed by a software developer for a client. Whilst most assignments will cover international IP rights, some IP may have territorial restrictions which are worth considering before entering into the contract.

Under UK IP law, an assignment is always required to be in writing and signed by the assignor. The assignment is usually written in the form of a deed and will need to precisely detail the IP being assigned.

Registering an Assignment or License

Not all IP requires registration, although some types do. Copyright exists automatically upon the creation of the work and lasts for the lifetime of the owner, whether or not registered. Trademarks, on the other hand, must be registered. Patents also have strict registration requirements, whilst design rights are more flexible.

Neither assignments nor licences are required to be registered, although it is advisable to do so. The assignment or licence will still be legally binding without registration, but if there is a later dispute, the original licence or assignment will not necessarily protect the assignee if it remains unregistered. Before purchasing a license or assignment, it is also important to ensure that the IP itself has been properly registered, to ensure your rights are properly covered.

Effect of Brexit

Prior to Brexit – and for the remainder of the implementation period – the UK is subject to European IP law. It is as yet unconfirmed how IP rights may be affected in the future, although it is likely that protection and enforcement for registered IP owners will remain largely unchanged. Due to the uncertainty of the situation, ensuring your rights are clarified and that any transactions are properly registered now could help to avoid any potential doubt post-Brexit.

Get in touch for help with your assignment or licence

Although the fundamental difference between Assignment and License of IP Rights is a clear cut one, each process can be highly technical and vary widely, depending on the requirements of both parties. If you would like help or advice on either an assignment or licence of IP rights, please do get in touch with one of our lawyers for expert, affordable legal advice .

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Intellectual Property Assignment

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What is intellectual property assignment.

Intellectual property assignment is a process in which the ownership of a work product created for an entity by an employee or consultant is transferred to the entity.

Typically, an employee or consultant will sign an agreement that explicitly assigns any intellectual property created during service with the company. For the employee, this is called either a Confidentiality and Inventions Assignment Agreement (CIIAA) or Proprietary Information and Inventions Assignment Agreement (PIIAA).

4 Types of Intellectual Property

You should consider 4 of the main kinds of valuable assets under an intellectual property assignment:

A trademark
A copyright
Trade secrets

These are all considered valuable assets of a company, and knowing how they work and how they’re created can help protect them.

Here is an article to learn more about intellectual property.

A patent is granted by the government and gives the owner of the patent unlimited ability to build, sell or use their invention while at the same time preventing others from doing so.

Typically, patents issued have a 20-year life span, but some expire in 14. After this period, anyone else can copy, build, or sell the invention. Any attempt to circumvent this time allowance would result in a patent infringement .

To receive exclusive rights to build, sell or use your invention, you have to provide details about your invention that would allow someone who is “practiced in the arts” to recreate it. Also, there are four requirements for a patent to be issued:

The subject matter must be “patentable” (as defined by Congress and the courts).
Your idea must be “new.”
The idea must be “useful.”
Your idea must be “non-obvious.”

Additionally, you can file for three different types of patents:

Utility Patent : Utility patents are granted for inventions or discoveries of useful processes, machines, articles manufactured, the composition of matter, or any new and useful improvements to the above.
Design Patent : Design patents are granted for any new, original, or ornamental design. This type is valid for 14 years after it is issued.
Plant Patent : Plant patents are granted to persons who invent, discover, and reproduce any distinct or new variety of plant, asexually. This type is valid for 20 years after it is issued.

Here is an article to learn more about patents.

A trademark is any word, phrase, symbol, design, or combination that identifies goods or services. The term “trademark” is used for both trademarks and service marks. Still, a service mark is reserved for those services related to the company.

Owning a trademark doesn’t automatically mean you own the words or the phrasing, but rather that you own the rights to how to use that word or phrase concerning specific goods or services. A great example is an online store that tries to use the Nike swoosh mark for their own t-shirts or shoes. This is trademark infringement .

To obtain trademark protection, you must first choose the specific category of goods or services the trademark will cover. This also means the company looking to obtain the trademark must already produce the category of goods/services to be trademarked or have a demonstrative or good faith intent to provide them.

Here is an article to learn more about trademarks.

Copyright infringement is probably one of the most well-known areas of IP protection. Copyrights are obtained to protect original authored works such as:

Photographs
Audio recordings
Computer programs
Architectural works

Things like titles, names, short phrases, slogans, familiar symbols or designs, lettering, coloring, or a list of ingredients or contents, are not considered creative . Still, they are also included as items that can be copyrighted. In general, copyrights can protect the way you convey a message or expression, but not ideas, procedures, systems, concepts, processes, and discoveries.

Companies can have a record of ownership over copyrights, as the law allows for ownership through “ works made for hire ” or works created by an employee within the scope of their employment.

Here is an article to learn more about copyrights.

Trade Secrets

Businesses have a wide range of confidential information, but not everything is considered a trade secret. Typically, a trade secret refers to information that is not publicly known and involves a reasonable effort to keep it confidential.

It also has to offer some form of economic value to the information holder that would only be beneficial if the information was not known by anyone else. States and even countries have varying laws regarding trade secrets. An excellent way to consider what constitutes trade secrets is to consider what information you wouldn’t want your competitors to get ahold of.

Think about pricing information, marketing strategy, or specific processes used to manufacture your goods.

Here is an article to learn more about trade secrets.

ContractsCounsel Intellectual Property Assignment Image

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Does IP Assignment Need Consideration?

An enforceable and valid intellectual property assignment needs to have a valid contract. A contract requires:

Acceptance of the offer
Proper consideration

Now, what is considered valid consideration could vary. Still, generally consideration “must be ‘bargained for’ and not "illusory’” (Restatement (Second) of Contracts, § 77).

In some cases, small monetary considerations, as well as non-monetary considerations, are enough to create a binding contract, as long as there is an exchange of value between parties.

What is an Intellectual Property Assignment Agreement?

The intellectual property assignment agreement is the document that binds everything together. Companies traditionally use IP agreements to protect their inventions. However, in this arrangement, they are still free to transfer ownership of IP on a case-by-case basis.

It is sometimes called an IP transfer agreement. It ensures that if an employee helps to develop an intangible creation while employed with the company, the company still owns the rights and responsibilities to the creation.

An IP Property Assignment Agreement usually includes the following sections:

Definition of Intellectual Property
Future Intellectual Property Assignment
Representations and Warranties
Indemnification
Assumption of Liabilities
Severability
Confidentiality
Termination; Survival of Certain Provisions
Governing Law and Venue
Entire Agreement; Counterparts

Who Uses an Intellectual Property Assignment Agreement?

Any entity or person can use an intellectual property assignment to protect their original inventions. Still, they can safely transfer ownership of IP when needed.

Example of an Intellectual Property Assignment

Some examples of intellectual property assignments include:

A New Software Company: A software company working on brand-new proprietary software may assign a technology assignment agreement. This type of assignment protects startup companies before they create the company. The developers may keep certain IP rights in some cases.
An Existing Manufacturing Company: An existing company involved in manufacturing technology could institute an Invention Assignment agreement for their employees to sign. This gives the company ownership over any relevant intellectual property created by the signing employees.
New Sub-Contracted Employees: Newly contracted employees could be hired by a company to conduct research or work on new product development. In these roles, a company may ask that they sign an IP Assignment Agreement that assigns back to the company any ideas, work, a product of work, or inventions related to the business created during employment.

Intellectual property assignments are not for the faint of heart. Oftentimes these are multi-layered and complex arrangements that require careful negotiation.

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Need help with an Intellectual Property Assignment?

Meet some of our intellectual property assignment lawyers.

Corporate Attorney that represents startups, businesses, investors, VC/PE doing business throughout the country. Representing in a range of matters from formation to regulatory compliance to financings to exit. Have a practice that represents both domestic and foreign startups, businesses, and entrepreneurs. Along with VC, Private Equity, and investors.

I love contracts - and especially technology-related contracts written in PLAIN ENGLISH! I've worked extensively with intellectual property contracts, and specifically with IT contracts (SaaS, Master Subscriptions Agreements, Terms of Service, Privacy Policies, License Agreements, etc.), and I have built my own technology solutions that help to quickly and thoroughly draft, review and customize complex contracts.

Hi, my name is O.T. and I own The Walker Collective, a law firm that caters to the contractual, intellectual property, and business formation needs of creative entrepreneurs and small business owners. I am licensed to practice in Maryland and New York.

I graduated from Wayne State University in 1992 and was admitted to practice in Michigan the same year. I've been practicing in Traverse City since 1993. My goal is for clients to feel that I am accessible and prompt, while providing quality and affordable legal services.

With more than twenty years of experience, Attorney Paul Petrillo has written contracts, business agreements, wills, trusts and the like. Licensed in both New Hampshire and Massachusetts, Attorney Petrillo is regular user of remote and virtual communications and document exchanges, such as DocuSign, Adobe e-sign, as well as virtual meetings using Zoom and Webex, to make drafting contracts and communicating with clients quick and easy.

Stephen is a graduate of Nova Southeastern University - Shepard Broad College of Law, Stephen is licensed to practice in New Jersey and New York. He focuses on Morris, Passaic, and Bergen County, New Jersey, but services all of New Jersey. Before graduating, Stephen did an externship in Denver, Colorado with a focus on land use and development. Upon returning to New Jersey, he focused on Condominium and Home Owner Association. He also worked with Residential Real Estate Transactions and Estate Planning clients.

Admitted in NC in 1994. Law degrees from English and US law schools. Civil and criminal litigation experience as well as in house corporate attorney. Recipient of the highest civilian honors from 14 states, the Ellis Island Medal of Honor, a papally blessed knighthood and listed in NLJ as a recipient of on of their Pro Bono Attorney of the Year Award winners and the NLJ top 40 trial lawyers in the USA under 40 years old.

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Licensing & Assignment

“An invention is something that was impossible up to then ― that’s why governments grant patents.” ― Robert A. Heinlein

Licensing & Assignment

Intellectual property rights are independent assets that can be sold (assigned) or licensed to third parties. This not only includes patents, trade marks and designs, but also non-registered rights such as copyrighted works, know-how, confidential information and trade secrets.

2. There are various types of intellectual property licenses, for example:

Sole license – is where only the proprietor of the intellectual property, as well as the sole licensee, is authorised to enter the market.
Exclusive license – is where only one licensee has the right to enter the market to the exclusion of all others, including the proprietor of the intellectual property.
Non-exclusive license – is where multiple licensees have the right to enter the market, as well as the proprietor of the intellectual property.
Cross-license – is where proprietors of different technologies or intellectual property rights cross-licence each other.

3. A proprietor can derive remuneration from a licence in a number of ways, for example:

A once-off licence fee/royalty.
Periodical licence fee/royalty (e.g. annual, quarterly or monthly).
A running royalty based on sales/turnover etc.

4. Please be aware that when South African intellectual property rights are assigned or licensed offshore, the South African Exchange Control Authorities must approve the value of the agreement before it is signed.

5. In view of the potential value of intellectual property rights, it is advisable to sell or license such rights under cover of proper legal agreements. An assignment of or license in respect of registered intellectual property rights (i.e. patents, trade marks and/or designs) should be recorded on the official records at the Companies and Intellectual Property Commission (CIPC – i.e. the South African patent and trade mark office). We can assist you with the following non-exhaustive intellectual property agreements, tailored to your particular industry:

Confidential Disclosure agreements
Licensing agreements
Assignments (sale agreements)
Joint Development and Strategic Alliance agreements
Research and Development agreements
Manufacturing, Supply and Distribution agreements
Software Development and Licensing agreements

6. We strongly recommend that formal licence agreements be entered into to regulate the rights and obligations of the contracting parties. Important considerations to be addressed in such agreements include, without limitation, licensing and payment options and accompanying auditing obligations, geographical limitations, industry-specific limitations, time periods, supply and distribution channels, minimum performance requirements, obligations regarding enforcement of IP rights in case of third-party infringements, marking of products or services with official intellectual property numbers, ownership and assignment of improvements upon registered intellectual property, limitations regarding reverse engineering and unlawful competition, etc.

Please contact us if you require more information on the various considerations and technicalities applicable to IP license and assignment agreements.

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Drafting Intellectual Property Rights Transfer Agreements - Part II

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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Difference Between Licensing and Assignment Agreements

Introduction

An agreement can be defined as a meeting of the mind with the understanding and recognition of shared legal rights and responsibilities as to the precise acts or obligations which the parties agree to exchange; a mutual consent to do or refrain from doing anything; a deal. The arrangement is not necessarily compatible with the contract, since it can neglect the basic aspect of the contract, such as concern. Under Section 2(e) of the Indian Contract Act, 1872, the word “Agreement” is specified as every promise and every set of promises to be considered for each other is an agreement.” And an agreement enforceable by statute is a contract. The term “lease” is defined in accordance with Section 52 of the Indian Easement Act, 1882 as “Where a person grants to another person, or to a certain number of other persons, the right to do or to continue to do, in or on the immovable property of the grantor, anything which in the absence of that right, would be unlawful and that right does not amount to servitude or interest in the property, right i. Thus a Licensing Arrangement is a formal document between two parties, the Licensor and the Licensee, where one party (the Licensor) grants permission or authorization to use its property/intellectual property/brand name or trademark/patent technology to another party (the Licensee) under a specified set of terms and conditions.

Licensing Agreements

A licence arrangement is a written agreement between two parties in which the owner of the land allows another party to use the property in compliance with a particular set of conditions. Licensing arrangements or licensing agreements normally include the licensor and the licensee. Licensing agreements set out the conditions by which one party can use land owned by another party. Although the assets in question which include a variety of products, including land interests and personal belongings, licence arrangements are most commonly used for intellectual property purposes, such as patents and trademarks, as well as copyrights for printed materials and graphic arts. For eg, Nestle and Starbucks entered into a $7.15 billion coffee licencing agreement in May 2018. Nestle (the licensee) agreed to pay $7.15 billion in cash to Starbucks (the licensor) for exclusive rights to market Starbucks products (single-serve coffee, teas, bagged beans, etc.) around the world through Nestle’s worldwide distribution network. In addition, Starbucks can earn revenue from bottled coffees and teas offered by Nestle. The licence arrangement provided Starbucks with the opportunity to push brand awareness beyond its North American operations via Nestle’s distribution networks. For Nestle, the company acquired access to Starbucks products and a good brand reputation.

Types of Licensing Agreements

1. Exclusive Licensing Agreement – This form of arrangement establishes a special partnership between the licensor and the licensor. In such arrangements, no one except the designated licensee is entitled to exploit or use the licensed property within the duration of the agreement. The special characteristic of this form of arrangement is that even the licensor is exempt from the use or misuse of the approved property within the duration of the agreement. Copyright, patents and patent licences are the best examples of an exclusive licensing arrangement.

2. Non- Exclusive Licensing Agreement – In this form of arrangement, the licensor may issue a licence for the licensed property to any number of licensees and may also use the licensed property within the duration of the agreement.

3. Co- Exclusive Licensing Agreement – This form of arrangement requires more than one licensee to use and manage the licensed property, except this time the number of licensees is limited and their number is set at the time of entering into the agreement.

4. Sole Licensing Agreement – This form of the arrangement is somewhat similar to an exclusive licensing agreement, but the only exception is that the licensor retains the right to use the licensed property for the duration of the agreement.

Assignment Agreements

Contract assignment means that the contract and the property rights or responsibilities within the contract can be delegated to another party. As a general concept, a contract assignment may be included in a business contract. This form of provision is typical in negotiations with manufacturers or suppliers and in deals on intellectual property. Contract assignment is also used in contracts that give either side the option to pass its share of the contract to someone else in the future. Many assignment clauses enable all sides to commit to the assignment. An assignment can be made to anyone but is normally made to a subsidiary or a successor. A division is a company that is purchased by another business, while a descendant is a business that accompanies a transaction, takeover or merger.

Specifications in IP Assignment Agreement

1. Identification of the Parties -identifies the contract as an arrangement for the assignment of intellectual property and identifies the Assignor and the Assignor. The party transferring (‘assigning’) ownership interest shall be referred to as the Assignor, while the party obtaining it shall be referred to as the Delegated.

2. Obligations of the Parties -It is necessary to explicitly specify the obligations of the Parties in order to prevent any subsequent dispute as to the nature of those obligations; the precise meaning and extent of the obligations of the Parties depends on the form of intellectual property transferred; however, the principal duty of the Assignor is to transfer the rights of intellectual property.

3. Liability and warranty provisions -refers to the right of the assignor and the authority to enter into such an agreement; for example, to promise that he is the sole owner of all rights, title and equity in the IP and that the IP is legitimate and valid; that the transferred IP does not infringe the rights of third parties.

4. Compensation -A summary of the potential duties of each party if intellectual property is found to infringe the interests of a third party.

5. Applicable law and jurisdiction -The national law may prevail in the case of a conflict; it is also necessary to specify the appropriate court or the arbitration/mediation process to which the issue can be referred.

Licensing and Assignment Agreements

1. Interest Vested : One can licence the IP to another person or business to use as the owner of the IP. One and the other party negotiate on the terms of this usage. This is known as a licensing arrangement, and in this case, one is the licensor and the other party is the licensor. The terms of usage outlined in this Document should be agreed between oneself and the other party in order to protect the best interests. These terms govern the arrangement which includes: the limitation of the licensee’s usage to a single geographical location; and the payment of rights in the form of royalty.

In relation to a licence, an assignment agreement is a permanent transition of the IP. This transition is irrevocable and usually takes place as a sale or transfer from the owner (assignor) to the purchaser (assignee). If one is trying to pass control of the IP, he can ensure that this transfer is made in writing by means of an act or other formal agreement. These documents can pass current or potential IP rights in exchange for a lump-sum payment.

2. Method of Assignment : There is no requirement to do so in writing in licencing IP. Involved licences can often be invoked by the application of the rule. Example commissioned to produce patent content, and no formal arrangement is in effect. In this case, it is generally presumed that a tacit licence has been issued to the person who commissioned the material to be produced. There is a tacit licence on the payment that the commissioned party has an implicit licence for the copyrighted piece. It would then be implied that they will use it for the purposes of an unwritten arrangement.

The designation to an IP shall be permanent and irrevocable in the assignment agreement. Therefore in order to do this correctly, the task must be in writing.

3 . Notification: There is no notification mechanism for one IP licence. It is actually a private arrangement between the licensor and the licensee.

When the IP owner transfers an IP to the assignee, the assignee would have to file an application for transfer of ownership. If the Registrar collects the form with the assignment information, the assignee is legally the owner of the IP. Once this phase has been finished. The Registrar is then obligated to inform any other person involved.

4. Cost: Although the assignment gives the assignee sole ownership of the piece of land, the purchase of the assignment would normally cost more than the acquisition of the licence.

5. Enforceability – Another significant difference between the two of them is in the requirement to make them enforceable. It is a signatory that the assignment agreement is required to be recorded and filed in The United States Patent and trademark office assignment recordation branch. It is observed that the license is less stringent and thus it can be granted orally. The best-suited method is to have a negotiated and signed licensed, unlike assignment a record of the agreement is not mandatory.

1. Ashley Duggar, study: Contract Agreement, study.com, available at https://study.com/academy/lesson/assignment-of-rights-definition-and-involved-parties.html

2. Richard Sim, study: What is the assignment of Contracts, Nolo, available at https://www.nolo.com/legal-encyclopedia/assignment-of-contract-basics-32643.html

3. Gene Pierson, study: the difference between assignment and a license, Pierson Intellectual Property, available at http://piersonpatentlaw.com/what-is-the-difference-between-assignment-and-a-license/

4. Study: Assignment Agreement, Thrive IP, (31 st October 2017), available at https://thrive-ip.com/assignment-agreement-vs-license-agreement-ip-tool-box-series/

5. Gordon Haris, study: Basics of Patent Law, Lexology, (19 th April 2017), available at https://www.lexology.com/library/detail.aspx?g=c4f8c628-3d98-4bb9-966c-c9cf96679957

6. David Szostek, study: Difference between Assignments and licenses, Edward Allen Attorney of law, (8 th April , 2015), available at https://www.edwardallenlaw.com/difference-between-copyright-assignments-and-licenses/

7. Andrew Bloomenthal, study: Licensing Agreements, Investopedia,(3 rd September 2019), available at https://www.investopedia.com/terms/l/licensing-agreement.asp

Hegelian approach to intellectual property, what is arbitration: a beginner’s guide, types of awards in an arbitration, what is the salary of a partner: legal landscapes in the usa, uk, uae, and singapore, crafting an effective employee non-compete agreement: key clauses to keep in mind.

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Licensing of Intellectual Property in India: A Detailed Study of its Working

Licensing provisions, licensing v. assignment, licensing under copyrights act, 1957, the act further mentions 7 different types of license:, licensing under trademarks act, 1999, section 49 lays down the following:, licensing under patents act, 1970, advantages of licensing for licensor, advantages of licensing for the licensee, disadvantages of licensing for the licensor, disadvantages of licensing for the licensee, law article in india, please drop your comments, you may like.

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IP Assignment and Licensing
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 ...
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An assignment of intellectual property is the transfer of intellectual property rights from one party to another, usually in exchange for monetary compensation. The transfer is complete, which means that once another party owns the rights to your intellectual property, you will no longer be able to use it. This makes paying attention to the ...
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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.
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Intellectual property rights are often conveyed as part of a larger corporate merger or acquisition transaction. In order to avoid filing the entire transaction agreement with the Patent and Trademark Office for recording purposes, the parties often execute a short-form assignment document that pertains only to the assigned patents or trademarks.
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. In simplest terms, licensing is akin to rental, whereas an assignment operates as ...
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Depending on the complexity of your needs, the cost of drafting intellectual property licensing or intellectual property assignment agreements may vary. Priori attorneys typically create flat-rate packages ranging from $400 to $1,500 for relatively straightforward intellectual property agreements. In order to get a better sense of cost for your ...
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Intellectual property rights are often conveyed as part of a larger corporate merger or acquisition transaction. In order to avoid filing the entire transaction agreement with the Patent and Trademark Office for recording purposes, the parties often execute a short-form assignment document that pertains only to the assigned patents or ...
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Licensing Intellectual Property 101: ... Assignment of rights; Infringement; Indemnification; Governing laws; Dispute resolution; This is not an all-inclusive list of provisions and each of the above are modifiable in their own rights. The licensing of intellectual property is a delicate process and must be treated as such. Because license ...
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Intellectual Property Licensing and Transactions - June 2022. ... in an assignment the original rights owner tends to divest itself of rights in the subject matter, while in a license the transferor ("licensor") retains more rights in the subject matter of the license. It can do this not only because the parties have agreed to a transaction ...
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1. ASSIGNMENT OF INTELLECTUAL PROPERTY. The Assignor assigns to the Assignee, and the Assignee accepts the assignment of, all of the Assignor's interest in the following in the United States and its territories and throughout the world: (a) the intellectual property rights related to the intellectual property listed in Exhibit A; (b) all ...
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This transfer of rights, either through a license or an assignment of rights, is a common way for an IP owner to financially benefit from the fruits of his/her/its creativity, ingenuity, and hard work through the commercialization efforts of the licensee or assignee, whichever the case may be. Licensors retain the legal title to the IP, and IP ...
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