assignment on 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 .

Understanding a deed of assignment for intellectual property

A deed of transfer is used to change the ownership of intellectual property, a common occurrence in business. Explore how and when to use one.

Find out more about intellectual property basics

assignment on intellectual property rights

by Brette Sember, J.D.

Brette is a former attorney and has been a writer and editor for more than 25 years. She is the author of more than 4...

Understanding intellectual property in business

How to transfer intellectual property rights in business, what to include in a deed of assignment, registering new ownership, restrictions on intellectual property transfers.

Most companies have intellectual property as part of their assets, including software, product design, or copyright to white papers. Buying or selling such property is done using a document called a deed of assignment.

Illustrations and graphics surrounding the words "Intellectual Property"

A large part of what a business consists of may be tied to intellectual property . It's easy to see physical property a company owns, such as a building, office furniture, or inventory, but intellectual property can be more challenging to identify.

Most businesses have intellectual property, or works created by human minds or, in some cases, by computers. Some examples of intellectual property include architectural drawings, ad campaigns, company or product names, inventions, and source code.

Examples of when transfers of intellectual property might happen include when a company is buying another company, when you are setting up an LLC and want to transfer your intellectual property into the company, or when a business buys product rights from another company or individual.

A deed of assignment can be done in one transaction, instead of one transaction for each item of intellectual property, by transferring all ownership rights of all intellectual property detailed in the deed. The document is signed by both the buyer and seller. No payment is required for it to be valid.

A deed of assignment must be in writing and should include:

The names and addresses of the assignor and assignee
A description of the program or product for which the rights are being transferred
A statement that all intellectual property rights to the property are being transferred
Signatures of the parties and the date of the agreement execution

The deed could also include the following sections, where applicable:

Consideration, or payment, to be made to the original owner.
Warranties, or promises that the intellectual property rights being assigned don't infringe on anyone else's intellectual property rights . For example, in a deed regarding the transfer of a copyright, this section could state that the copyrighted work is original and not owned by someone else.
Indemnification, or promise by the seller to reimburse the assignee if there is some problem with title to the property.
Future assignments. For example, the agreement could be ongoing, so that anything the assignor creates in the future for this product or program is also transferred to the buyer.

Although a deed of assignment transfers ownership in intellectual property , it does not change the registration of the ownership. The assignee is responsible for handling all registration requirements.

For example, if a patent is transferred via a deed of assignment, the new owner must record the change in ownership with the U.S. Patent and Trademark Office. Similarly, the transfer of a copyright is recorded with the U.S. Copyright Office.

Transfers of intellectual property must comply with U.S. laws. One obvious caveat is that you can't transfer property you don't own. Transfers must also comply with antitrust laws, which are set up to prevent one company from completely dominating an industry.

If intellectual property rights are being transferred overseas, the transfer must comply with Export Administration Regulations and the International Traffic in Arms Regulations , which are designed to protect national security and trade.

The deed of assignment can be a crucial part of a business deal or transaction. You can create a deed of assignment yourself, or you can work with an attorney .

Assignment Of Intellectual Property Agreement

Jump to section, what is an assignment of intellectual property agreement.

An assignment of intellectual property agreement is a contract that transfers the intellectual property rights (For example, patents, trademarks, industrial designs, or copyrights.) from the creator to another entity. The intellectual property rights holder may transfer all or part of their rights. The transfer of intellectual property rights is made upon a payment of a lump sum or royalties.

Employees hired for research and development roles or other technical areas sign intellectual property assignment agreements to assign to the company any ideas, work products, or inventions related to the company business that they may create during their employment.

Common Sections in Assignment Of Intellectual Property Agreements

Below is a list of common sections included in Assignment Of Intellectual Property Agreements. These sections are linked to the below sample agreement for you to explore.

Assignment Of Intellectual Property Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.2 5 gabriel_ex1002.htm ASSIGNMENT OF INTELLECTUAL PROPERTY , Viewed October 21, 2021, View Source on SEC .

Who Helps With Assignment Of Intellectual Property Agreements?

Lawyers with backgrounds working on assignment of intellectual property agreements work with clients to help. Do you need help with an assignment of intellectual property agreement?

Post a project in ContractsCounsel's marketplace to get free bids from lawyers to draft, review, or negotiate assignment of intellectual property agreements. All lawyers are vetted by our team and peer reviewed by our customers for you to explore before hiring.

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Meet some of our assignment of intellectual property agreement lawyers.

Jeremiah C.

Creative, results driven business & technology executive with 24 years of experience (15+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.

Equity Investments, Agreements & Transactions | Securities & Lending | Corporate Governance | Complex Commercial Contracts | Outside General Counsel & Compliance

I am a startup veteran with a demonstrated history of execution with companies from formation through growth stage and acquisition. A collaborative and data-driven manager, I love to build and lead successful teams, and enjoy working full-stack across all aspects of the business.

I am a New Jersey licensed attorney and I have been in practice for over nineteen years. My practice mainly consists of representing public entities (municipalities, school boards, etc) and businesses, both small and large. In that capacity, much of work consists of drafting, reviewing and revising contracts.

I am a corporate lawyer with expertise working with small businesses, venture capital and healthcare. Previously, I worked at large law firms, as well as head attorney for companies. I graduated from Harvard College and University of Pennsylvania Law School. I speak 5 languages (Spanish, French, Italian and Russian, plus English), visited over 60 countries, and used to compete in salsa dancing!

Accomplished and results-driven business attorney with extensive experience in commercial real estate / project finance, commercial transactions, and entity formations, that possesses a winning blend of subject matter expertise, skill in client relationship management, and practical experience. Leverages a unique mix of legal, strategic, and analytical expertise that consistently meets and surpasses client expectations. Specialties: Commercial Real Estate Law, Contract Negotiation, Entity Formation, Joint Ventures, Procurement, Lease/Buy/Sell Transactions, Business Consultations, Team Leadership, and Economic Development

Jonathan D.

Miami-based duly licensed attorney and customs broker with significant experience in various types of supply chain business agreements, as well as experience in entertainment law.

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Location: california, turnaround: less than a week, service: contract review, doc type: ip assignment agreement, page count: 8, number of bids: 3, bid range: $490 - $850, ip protection for product development, location: florida, service: drafting, number of bids: 5, bid range: $250 - $750, related contracts.

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Assignment of Copyrights & Legal Implications

Copyright gives authors a bundle of personal property or economic rights in an original work of authorship. These rights include the rights to reproduce, create derivative works, distribute work to the public, publicly perform a work, publicly display visual works, and digitally transmit sound records. They belong exclusively to a copyright holder.

Usually, the copyright holder is the person who created the work. However, any of these economic rights, or any part of these economic rights, can be transferred. Under the Visual Artists Rights Act (VARA), an artist’s moral rights in a work of fine art can be waived but not assigned.

An original owner who assigns their copyright to someone else will not retain any right to control how the work is used.

The transfer of economic rights may be on an exclusive basis, which requires a written agreement, or a non-exclusive basis, which does not require a written agreement. Most commonly, this transfer is accomplished by assignment or license. Unlike a license in which the copyright owner maintains their ownership, an assignment is similar to a sale. The original copyright owner sells the rights to a third party and cannot control how the rights are used, just as they would not be able to control how personal property that they sold was used once it was transferred.

Generally, a license is preferable if a copyright holder expects to continue exercising interests and control over the work. For example, if you assign your copyright in a song to a music producer, the decision about whether to allow a film studio to use your song in a film will belong to the producer, not to you. If you license your copyright in a song in a limited capacity to a music producer, however, you will continue to be able to license your copyright in the song to a film producer.

Assignments can be used for many different purposes, such as security for debt, as an asset passed to heirs, or as part of the distribution of assets after a bankruptcy proceeding. Once you assign your rights to somebody else, however, you are permanently giving away your right to control the work. That means if you try to exercise any of the rights you have assigned, you are committing copyright infringement even though you created the work. If you assign your copyright to somebody else and regret the loss, you may be able to buy your copyright back from that person, but whether or not to sell it back to you is up to the assignee.

How Is Copyright Assigned?

Under Section 204 , a transfer of ownership is only valid if the instrument, note, or memorandum of transfer is in writing, signed by the copyright owner or their duly authorized agent. Generally, a certificate of acknowledgment is not required for the transfer to be valid, but it can be used as prima facie evidence that a transfer was executed if it is issued by someone authorized to administer oaths in the United States or, if the transfer is executed abroad, if the certificate is issued by a United States diplomatic or consular official, or a person authorized to administer oaths who also provides a certificate.

Formally recording an assignment with the Copyright Office is not required but can be advantageous.

You do not have to record an assignment in order to assign the interest. However, there are advantages to recording the assignment, such as creating a public record of the transfer details, giving constructive notice to members of the public, establishing priority of rights when there are conflicting transfers of ownership, validating the transfer of the copyright against a third party, or in some cases perfecting a security interest.

Last reviewed October 2023

Intellectual Property Law Center Contents

Intellectual Property Law Center
Copyright Infringement & Related Lawsuits
Copyright Ownership Under the Law
Assignment of Copyrights & Legal Implications
Copyright Licensing Under the Law
Copyright Registration Under the Law
Safe Harbors for Online Service Providers Under Copyright Law
Criminal Copyright Infringement Laws
Enforcement of Copyrights Through Lawsuits & Criminal Charges
Fair Use Defense to Copyright Infringement Lawsuits
Software Development Agreements & Related Legal Concerns
End-User License Agreements Imposing Legal Restrictions on Software
Lists, Directories, and Databases Under Copyright Law
Photos of Buildings and Architecture Under Copyright Law
Photos of Copyrighted or Trademarked Works & the Fair Use Defense to Infringement Lawsuits
Works in the Public Domain After Copyrights Legally Expire
Copyrights and Credits for Songwriters Under the Law
Music Samples and Copyright Infringement Lawsuits
Playing Music in Stores or Restaurants — How to Avoid Copyright Infringement Lawsuits
Consignment Sales by Artists to Stores & Legal Protections
Destruction of Copyrighted Works & Limited Legal Protections
Copyright Legal Forms
Trademark Law
Trade Secret Law
Choosing Among Patent, Copyright, and Trademark for Legal Protection
Intellectual Property Law FAQs
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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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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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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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Intellectual Property Assignment Agreement: A Comprehensive Guide for Your Business

LegalGPS : August 2, 2023 at 8:43 AM

Hello there, entrepreneur friend! Today let’s have that coffee chat about Intellectual Property Assignment Agreements. If you're thinking "what's that?" or "why do I need it?" then this is the perfect starting point for you. In today's competitive business world, protecting your intellectual property (IP) is more crucial than ever.

What is An Intellectual Property Assignment Agreement?

An Intellectual Property Assignment Agreement is a legal document that ensures the transfer of an inventor or creator's rights to another person or company. Essentially, it’s a legal way of saying "what’s mine is now yours". These agreements are often used in situations involving startups, company buyouts, or employees creating new works or inventions during their jobs - situations a lot of entrepreneurs find themselves in.

Let's break that down a touch more:

Defining the Purpose

The IP assignment agreement's primary purpose is to help your business prevent future disputes regarding IP ownership. When all parties are clear on who owns the intellectual property, it prevents a whole host of potential issues.

Believe me, the last thing you need or want as an entrepreneur is a legal dispute over who owns an idea, an invention, or any creative output.

And that's where this agreement steps in: it provides legal proof that the ownership has been transferred. So, if ever challenged, you can show the agreement and say "See, it’s mine!" .

Key Elements to Consider for a Properly Drafted Agreement

When it comes to IP assignment agreements, not just any generic contract will do. It's crucial to understand and include some key elements to ensure you're fully protected.

1. Clarity of Transfer

The agreement must clearly define the scope and extent of the transferred rights. To do this, use precise language that leaves no room for confusion. For example, specify whether the IP rights being transferred are exclusive or non-exclusive and if there are any limitations on how the Assignee can use or sublicense the IP. Here's a suggested format:

"The Assignor hereby assigns to the Assignee, its successors and assigns, [exclusive/non-exclusive] rights, title, and interest in and to the Intellectual Property, subject to the following limitations [if any]:"

2. Definition of Transferred Intellectual Property

This section is where you identify the specific Intellectual Property being assigned. Start by describing the IP type (e.g., copyright, patent, trademark), then provide the necessary details:

For a copyright, include the work title and a brief description.

For a patent, mention the patent number and summarize the invention.

For a trademark, provide the trademark name, registration number, and design details.

Remember, the key is to be as detailed and transparent as possible.

3. Compensation and Payment Terms

Just as with any deal, it's important to be crystal clear about the compensation for transferring IP rights. Make sure you consider the following in your agreement:

The total amount payable

The currency

The payment method (e.g., check, wire transfer)

The payment schedule (e.g., lump-sum, installments)

For example: "In consideration for the assignment of rights, the Assignee shall pay the Assignor a total sum of [Amount] in [Currency], through [Payment Method], payable as follows:"

4. Warranties and Representations

Including warranties and representations in the agreement helps provide confidence to both parties. The Assignor should explicitly declare that they:

Are the sole and true owner of the IP

Have the complete right to assign the IP to the Assignee

The IP does not infringe on any third-party rights

A sample clause might look like this:

"The Assignor warrants and represents that they are the true and lawful owner of the Intellectual Property, have full right and authority to enter into this Agreement, and that the Intellectual Property does not infringe upon any third-party rights."

5. Confidentiality Agreements

A crucial aspect of a well-drafted IP Assignment Agreement is protecting sensitive information about the business and the IP itself. Incorporate confidentiality clauses to maintain a secure environment.

Try a clause similar to this one: "The parties agree to treat all confidential information related to this Agreement as strictly confidential, and to take all necessary precautions to prevent unauthorized disclosure or use of such information."

6. Governing Law and Dispute Resolution

Last but not least, outline which jurisdiction's laws will govern the agreement. Furthermore, state how any disputes will be resolved, such as through arbitration, mediation, or litigation.

A model clause could be: "This Agreement shall be governed by the laws of the State of [State]. Any dispute arising out of or in connection with this Agreement shall be resolved by [method of dispute resolution]."

Drafting Your IP Assignment Agreement

Let's move on to the most crucial part of our discussion: Creating your Intellectual Property Assignment Agreement. This section intends to make it much clearer and more action-oriented. Your aim? To walk away with enough information to begin drafting your agreement. Let's dive in.

Step 1 - Identify the Parties Involved

Start by clearly naming the parties involved in the agreement.

Who is the 'Assignor' (the party transferring the rights)?

Who is the 'Assignee' (the individual or business entity receiving the rights)? Clearly outline their legal names and any other relevant identifying information, like addresses or official business names. It would typically look like this: "[Full Legal Name], referred to as the "Assignor," and [Full Legal Name], referred to as the "Assignee."

Step 2 - Specify the Assigned Intellectual Property

Here, you need to provide a full and exhaustive description of the intellectual property being transferred. Please don't leave room for vagueness or ambiguity - the more specific, the better. For instance, if it's a patent, include the patent number and a detailed summary of what the patent covers. If it's a copyrighted work, offer the title, the form of the work (e.g., a book, software, music), and a short description of it.

Your entry here might read: "The "Intellectual Property" includes, but is not limited to, [detailed description]."

Step 3 - Describe the Transfer of Rights

This section is all about clearly laying out what you're giving up and what you're gaining. Highlight all rights, titles, and interests being assigned from the Assignor to the Assignee. You could list them out just to ensure nothing falls between the cracks.

It’s vital to be as clear and detailed as possible here. You're specifying the extent of the rights transferred. It could be exclusive, non-exclusive, permanent, temporary, how it can be used, if it can be sold, and more.

Here's an example:

"The Assignor hereby assigns to the Assignee, its successors and assigns, all rights, title, and interest in and to the Intellectual Property, including, without limitation, the right to sue and recover for past, present, and future violations."

Step 4 - Detail Compensation and Payment Terms

Now, let's talk about money. In this step, you need to fully detail the financial exchanges. Include the amount of payment, payment format, and schedule (upfront, lump sum, installments). It wouldn't hurt to clearly lay out what conditions, if any, would lead to a return of the compensation.

This clause might look something like:

"For the assignment of rights under this Agreement, the Assignee shall provide compensation to the Assignor in the amount of [Amount], payable [insert payment method and schedule]".

Step 5 - Include Confidentiality Clauses

Especially with IP, you'll want to build in some safety nets. You can include a confidentiality clause that prevents the involved parties from disclosing sensitive information about the IP.

A basic confidentiality clause may read: "The Assignor agrees to keep confidential all non-public information that the Assignee designates as being confidential, not to disclose it to any other people, and not to use it for any purpose other than the discharge of the Assignor's obligations under this Agreement."

Step 6 - Determine Governing Law and Dispute Resolution Process

Finally, specify which state or country's laws will govern the agreement. This is crucial in the case of any future legal disputes. Additionally, include how disputes over the agreement will be resolved - arbitration, mediation, litigation, etc.

Here is an example:

"This Agreement will be governed by and construed in accordance with the laws of the State of [State]. Any disputes under this Agreement shall be resolved by [method of dispute resolution]."

Tips for Avoiding Common Mistakes and Pitfalls

You're now equipped with all you need to draft an agreement. But before you get started, here are some quick tips to avoid any missteps:

Ensure the agreement is detailed and described correctly

Work with a knowledgeable attorney

Review the final agreement carefully before signing

With these, you're set to protect your business's most valuable assets!

In today's competitive business environment, it's imperative to protect your inventions, your creations - your Intellectual Property. If you're still unsure where to start, check out our professional template for Intellectual Property Assignments!

With an Intellectual Property Assignment Agreement in hand, you're ensuring that ownership of these is well established to prevent future disputes. So here's to smoother operations and peace of mind!

Always remember, we're in this together - as you navigate the business world, consider us your legal co-pilot, happy to guide you on your journey.

Deed of Assignment (for Intellectual Property)

In the realm of intellectual property, a Deed of Assignment is a formal legal document used to transfer all rights, title, and interest in intellectual property from the assignor (original owner) to the assignee (new owner). This is crucial for the correct transfer of patents, copyrights, trademarks, and other IP rights. The deed typically requires specific legal formalities, sometimes notarization, to ensure it is legally enforceable.

To be legally effective a deed of assignment must contain:

Title of the Document : It should clearly be labeled as a "Deed of Assignment" to identify the nature of the document.
Date : The date on which the deed is executed should be clearly mentioned.
Parties Involved : Full names and addresses of both the assignor (the party transferring the rights) and the assignee (the party receiving the rights). This identifies the parties to the agreement.
Recitals : This section provides the background of the transaction. It typically includes details about the ownership of the assignor and the intention behind the assignment.
Definition and Interpretation : Any terms used within the deed that have specific meanings should be clearly defined in this section.
Description of the Property or Rights : A detailed description of the property or rights being assigned. For intellectual property, this would include details like patent numbers, trademark registrations , or descriptions of the copyrighted material.
Terms of Assignment : This should include the extent of the rights being transferred, any conditions or limitations on the assignment, and any obligations the assignor or assignee must fulfill as part of the agreement.
Warranties and Representations : The assignor typically makes certain warranties regarding their ownership of the property and the absence of encumbrances or third-party claims against it.
Governing Law : The deed should specify which jurisdiction's laws govern the interpretation and enforcement of the agreement.
Execution and Witnesses : The deed must be signed by both parties, and depending on jurisdictional requirements, it may also need to be witnessed and possibly notarized.
Schedules or Annexures : If there are detailed lists or descriptions (like a list of patent numbers or property descriptions), these are often attached as schedules to the main body of the deed.

Letter of Assignment (for Trademarks and Patents)

This is a less formal document compared to the Deed of Assignment and is often used to record the assignment of rights or licensing of intellectual property on a temporary or limited basis. While it can outline the terms of the assignment, it may not be sufficient for the full transfer of legal title of IP rights. It's more commonly used in situations like assigning the rights to use a copyrighted work or a trademark license.

For example, company X allows company Y to use their trademark for specific products in a specific country for a specific period.

At the same time, company X can use a Letter of Assignment to transfer a trademark to someone. In this case, it will be similar to the Deed of Assignment.

Intellectual Property Sales Agreement

An IP Sales Agreement is a detailed contract that stipulates the terms and conditions of the sale of intellectual property. It covers aspects such as the specific rights being sold, payment terms, warranties regarding the ownership and validity of the IP, and any limitations or conditions on the use of the IP. This document is essential in transactions involving the sale of IP assets.

However, clients usually prefer to keep this document confidential and prepare special deeds of assignment or letter of assignment for different countries.

IP Transfer Declaration

In the context of intellectual property, a Declaration is often used to assert ownership or the originality of an IP asset. For example, inventors may use declarations in patent applications to declare their invention is original, or authors may use it to assert copyright ownership. It's a formal statement, sometimes required by IP offices or courts.

When assigning a trademark, the Declaration can be a valid document to function as a proof of the transfer. For example, a director of company X declares that the company had sold its Intellectual Property to company Y.

Merger Document

When companies or entities with significant IP assets merge, an IP Merger Document is used. This document outlines how the intellectual property owned by the merging entities will be combined or managed. It includes details about the transfer, integration, or handling of patents, copyrights, trademarks, and any other intellectual property affected by the merger.

In all these cases, the precise drafting of documents is critical to ensure that IP rights are adequately protected and transferred. Legal advice is often necessary to navigate the complexities of intellectual property laws.

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Practical Law

Assignment of intellectual property rights (pro-assignee)

Practical law uk standard document 0-500-7124 (approx. 29 pages).

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