assignment and license agreement

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.

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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 .

Intellectual Property Attorneys - Thrive IP

Assignment Agreement vs. License Agreement : IP Tool Box Series

In this ‘IP Tool Box Series,’ I’ll be discussing the differences between an Assignment Agreement and a License Agreement .  I’ll explain what they are, what their differences are, and why they are important tools.

What an Assignment Agreement is:

An Assignment Agreement is a contractual Agreement that Assigns or transfers Intellectual Property (IP) rights from one person or entity to another. This type of agreement is used to transfer rights held in any intangible property, e.g. Trademarks, Patents, Copyrights, Trade Secrets, Trade Names. An Assignment Agreement is also a legal record that certifies the transfer of ownership of Intellectual Property rights.  In an Assignment document, there are two parties, one party is the Assignor (giving party) and the second party is the Assignee (receiving party).

What a License Agreement is:

A License Agreement is a contractual Agreement that Licenses or authorizes another person or entity to use the rights to a protected IP.  This type of agreement is used to license rights held in any intangible property, e.g. Trademarks, Patents, Copyrights, Trade Secrets, Trade Names. At its base, a License is a legal contract that simply certifies the shared use of IP rights. In a License, there are two parties, one party is the Licensor (giving party) and the second party is the Licensee (receiving party).

Assignment Agreement vs. License Agreement:

The primary difference between the two agreements is that a License allows the Licensor to maintain their rights and interest in their IP, whereas an Assignment transfers all of the Assignors rights to their IP and assigns it to the Assignee.  With regards to payment, an Assignment involves a one time, guaranteed payment to the Assignor, at an agreed upon price.  A License involves a long term payout to the Licensor, but with an unsure price payment.  A license allows for potentially unlimited future income.

Another significant difference between the two agreements is in the requirements to make them enforceable.  Specifically, an Assignment Agreement is required to be filed and recorded with the United States Patent and Trademark Office Assignment Recordation Branch. A License is less stringent and can be granted orally.  The best practice would be to have a negotiated and signed License, but unlike the Assignment, a record of the agreement it is not required for enforceability.

A License can be an alternative to an Assignment, if an interested party doesn’t have resources up front. A License can allow for long term payment, instead of the upfront payment expected with an Assignment. A License is also a good option if an interested party is unsure of the marketability, because it can be adjusted to allow for royalties based on performance/sales. Another great advantage of a License is the ability to reverse the transfer of rights if the buyer doesn’t keep up with the bargain.

Why These Agreements Are Important:

These agreements allow for the establishment of trust and are key building blocks towards developing Intellectual Property.  With that in mind, both types of agreements should detail the responsibilities of each party for maintaining IP rights and include provisions for indemnification. One can find and download either of these forms and complete them with limited guidance, but an experienced attorney could prove invaluable. Depending on how an agreement is written and what legal jargon is used, a badly written agreement could end up costing you rights to your hard earned property.  An Attorney can ensure all expectations and responsibilities are laid out so that all pertinent terms are understood and agreed to, with no room for assumptions.

Don’t leave a matter as important as your intellectual property to an online form.  Willing help in the form of an experienced legal team is here and is just a call away.  Please contact us if you have been presented with a License Agreement and/or Assignment Agreement , or need one of these Agreements to protect your intellectual property.

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Home of the Litigation Quality Patent

The main difference between assigning your intellectual property rights to another person or entity vs. licensing them to use your intellectual property is that in an assignment, ownership does not stay with the original owner, but goes to the assignee. In a licensing agreement, the licensee is granted the use of the intellectual property, but the ownership stays with the original holder of the property rights, whether a copyright, a trademark, or a patent. Which arrangement is better for your particular situation can be complicated to figure out. Let one of our experienced patent attorneys at Thompson Patent Law help you make the decision and draw up the kind of agreement that will work best for you. Call our office today at (512) 649-1046.

What is an Assignment Agreement?

An assignment agreement is a legal contract that transfers the ownership of intellectual property rights—usually a copyright, patent, or trademark—to another person or entity. The original owner of the rights does not retain any interest in the intellectual property in question. Assignments must be registered with the United States Patent and Trademark Office (USPTO) in most cases. Assignments carry a one-time, lump-sum payment at the time the agreement is signed and recorded. The original owner does not get any ongoing income from the intellectual property that they have assigned to another party. Assignments agreements are enforceable in court if they have been executed and recorded properly.

What is a Licensing Agreement?

In a licensing agreement, the original owner of the intellectual property rights does retain an interest in the intellectual property in question. The agreement may include a time limit on the licensee’s use of the product or idea, and usually includes some kind of ongoing payments to the owner of the rights (the licensor). Profits are generally not guaranteed at any particular level but may be set out as a percentage of the recipient licensee’s profits. In some licensing agreements, the licensor retains the right to use the property simultaneously, and in other agreements, the licensee is granted exclusive rights for a period of time.

Am I Better Off with a Licensing Agreement or an Assignment?

Each situation, each business, and each intellectual property rights owner is different. The best way to determine what the right course for you might be is to talk with an experienced professional intellectual property attorney . The lead attorney at Thomson Patent Law, Craige Thompson, has over 20 years of experience dealing with intellectual property rights issues and can give you the solid legal advice you need to decide whether to license or assign your hard-won intellectual property rights. Call us today to get your questions answered at (512) 649-1046.

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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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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

Free Intellectual Property Assignment Agreement Template

Safeguard the sale or purchase of assets with an intellectual property assignment agreement. transfer the ownership of patents, trademarks, software, and other critical assets easily..

Complete your document with ease

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Intellectual property assignment agreement: How-to guide

In the dynamic realm of commerce and innovation, the notion of property extends far beyond physical boundaries. Just as one might transfer ownership of a house or a car, the exchange of intellectual property (IP) rights is a critical component of modern business transactions. For instance, if you're launching a startup, acquiring product rights, or even purchasing an entire company, in each scenario, the seamless transfer of intellectual property ownership is essential for ensuring a smooth transition and protecting your interests.

So what constitutes intellectual property? Intellectual property encompasses creations of the mind, such as inventions, software, and hardware programs, literary and artistic works, designs, symbols, names, and images. As businesses grow and evolve, the need to manage and protect these valuable assets becomes increasingly important. One crucial aspect of managing intellectual property is through intellectual property assignment agreement, otherwise known as IP assignment agreement. These agreements facilitate the transfer of IP rights from one part to another.

In this article, we’ll explore the nuances of intellectual property assignment agreements, including their definitions, benefits, types, and considerations.

What is an intellectual property assignment agreement?

An intellectual property assignment agreement, also known as an IP assignment agreement, is a written contract that transfers intellectual property rights from one party (the assignor) to another (the assignee). Intellectual property covers a broad spectrum of intangible assets, including patents, copyrights, trademarks, trade secrets, and more.

For instance, a software developer might have created a groundbreaking algorithm while employed at the company. Through an IP assignment agreement, the developer transfers the rights to this algorithm to the employer, ensuring that the company has exclusive ownership and control over its use and commercialization.

Benefits of IP assignment agreement

IP assignment agreements are crucial in a company’s business and provide multiple benefits for the assignor and assignee.

Clear ownership

By executing an IP assignment agreement, the assignor unequivocally transfers all rights and interests in the intellectual property to the assignee. This clarity of ownership and proprietary rights helps to avoid disputes and potential litigation over the ownership of the IP in the future.

Legal protection

By formally transferring the IP rights through a written agreement, both parties are legally protected. This protection can be essential in case of any infringement or misuse of intellectual property.

Assured compensation or price guarantee

When transferring IP ownership rights for patents, trademarks, copyrights, etc., the original owner gets compensated by the party buying the ownership. The buyer will also pay the IP owner an agreed-upon price for the IP, which will be paid on the date as decided by the involved parties. 

No future obligations

The party selling the IP won’t be responsible for meeting any future obligations. For instance, if there is an existing trademark that requires constant monitoring to know whether the trademark is used by any other competitors, the seller won't bear the charges incurred for  trademark monitoring . The buyer has to bear these and any future trademark maintenance costs.

Commercialization opportunities

Assigning intellectual property rights can enable businesses to commercialize the intellectual property more effectively. This could involve licensing the IP to third parties, selling it outright, or using it as collateral for financing.

Facilitates collaboration

In cases where multiple parties are involved in creating intellectual property, an assignment agreement can facilitate collaboration by clearly defining each party's rights and responsibilities.

Risk mitigation

For businesses acquiring ownership rights to intellectual property, an assignment agreement mitigates the risk of third parties claiming rights to the IP. It provides a legal basis for defending against infringement claims and protects the assignee's investment in the IP.

Enhanced value

Clear ownership of intellectual property assets can enhance the value of a business, especially during mergers, acquisitions, or fundraising activities. Investors and stakeholders are more likely to perceive a business positively when it has secure ownership of valuable IP assets. For example, let’s say your start-up company holds sole intellectual property rights to an automatic house-locking system. When your company gets acquired by another company, the new company will also evaluate the value of the IP owned.

Understanding IP assignment agreements: Considerations for sellers

While intellectual property assignment agreements offer various benefits, as a seller of the IP you need to keep in mind what it entails for you when you sell your IP.

Choosing between an IP assignment and a licensing agreement

In an IP assignment agreement, the seller transfers all ownership rights to the intellectual property for a predetermined fee. Here the seller gets a fair market value for their IP as a one-time payment. However, if they had opted for an  IP licensing arrangement , they could have retained the ownership of their IP while giving certain usage rights to the interested party. For instance, let’s say you have written and composed a song. A music company wants your song under their label. Here you have two options. You can sell your song completely to the music label, where they’ll have the right to use or alter your song as they deem fit. Or you can license your creation for an agreed-upon fee or price and set the terms and conditions for using your song. Here you’re getting paid for your creation while retaining ownership of your creation. Whichever option works best for you can be opted and respective agreements can be drawn.  

Value uncertainty

The value of intellectual property can fluctuate over time due to changes in market demand, technological advancements, or legal developments. Sometimes an intellectual property’s future value can increase tremendously, impacting the fairness of the negotiated price. Hence, while deciding the price of such assets, the seller should calculate the future valuation and decide the price of IP.

Limited future opportunities

Once intellectual property rights are assigned, the assignor may be restricted from using or further developing the intellectual property in the future. This limitation could hinder the assignor's ability to explore new business ventures or pivot their existing strategies.

In conclusion, while an intellectual property assignment agreement offers significant benefits in terms of clarity, protection, and commercialization of intellectual property assets, parties must carefully weigh these advantages against the limitations. Consulting with legal professionals experienced in intellectual property law is essential to navigate these considerations effectively.

What are the types of IP assignment agreements?

Intellectual property assignment agreements are comprehensive in nature, outlining the terms and conditions under which the transfer of IP ownership occurs. Here's an overview of the types of IP assignment agreements:

Patent assignment agreement or assignment of patents

A  patent assignment agreement is a written agreement whereby the owner of a patent transfers or assigns their ownership rights to the other party. This agreement ensures that the assignee gains full legal rights to the patent, including the right to exclude others from making, using, or selling the patented invention, innovations, and processes. Patent assignment agreements typically include details about the patented invention, including patent numbers, descriptions, and any related rights or obligations. 

Copyright assignment agreement or assignment of copyrights

Copyright assignment agreements transfer ownership of creative works, such as literary works, music, art, and other creative expressions. By signing a copyright assignment agreement, the creator relinquishes their rights to reproduce, distribute, and display the copyrighted work to the assignee.

Trademark assignment agreement or assignment of trademarks

Trademark assignment agreements transfer ownership of trademarks, which are used to identify and distinguish goods or services in the marketplace. Through this agreement, the assignor relinquishes their exclusive rights to use the trademark in commerce, allowing the assignee to use and enforce the mark for their business or products.

Trade secret assignment agreement or assignment of trade secrets

Trade secret assignment agreements are used to transfer ownership of confidential information or trade secrets from one party to another. These agreements outline the specific trade secrets being transferred and impose obligations of confidentiality on the assignee to protect the secrecy of the information. 

By signing such an agreement, the assignee gains the rights to use and protect the trade secrets for their own benefit. It can be any proprietary information like formulas, processes, customer lists, and business strategies. These agreements typically include provisions to maintain confidentiality and prevent unauthorized disclosure or use of trade secrets.

Design assignment agreement or assignment of design

An assignment of design agreement involves the transfer of ownership rights related to industrial designs or product designs. It ensures that the assignee gains exclusive rights to reproduce, distribute, and modify the design according to their business needs. This agreement is crucial for companies involved in product development and manufacturing.

Employee or contractor IP assignment agreement

These agreements transfer ownership of intellectual property created by employees or contractors during their employment or engagement. They are essential for employers to secure ownership of IP developed by their personnel. They often include provisions related to confidentiality, non-competition, and non-disclosure, which are mostly included in an employment agreement. Sometimes, employers even ask employees to sign separate non-disclosure agreements whenever an employee comes up with an invention.  

Assignment of IP in a joint venture  

In cases where multiple parties jointly create intellectual property, a joint ownership agreement may establish each party's rights and responsibilities. These agreements detail the terms of joint ownership, including each party's share of the IP, decision-making authority, and rights to exploit the IP.

It's essential to choose the appropriate type of IP assignment agreement based on the specific intellectual property rights being transferred and the circumstances of the transaction. Consulting with legal professionals knowledgeable in intellectual property law can help ensure that the agreement adequately protects the interests of all parties involved.

Who uses intellectual property assignment agreements?

IP assignment agreements are utilized across a spectrum of industries and scenarios. These agreements are crucial tools for businesses and individuals seeking to define and transfer intellectual property rights.

Corporations and businesses

Employment agreement : Companies frequently incorporate IP assignment clauses into their employment contracts. This ensures that any intellectual property created by employees during the course of their employment is automatically assigned to the company.

Consulting agreement : Similar to employment agreements, consulting contracts may include provisions requiring consultants to transfer any intellectual property they develop while working for the company.

Transactions contemplated : In mergers, acquisitions, or other business transactions, IP assignment agreements are employed to transfer ownership of intellectual property assets between parties.

Joint ventures : Partners in joint ventures often use these agreements to clarify ownership rights and facilitate the sharing or licensing of intellectual property developed during the collaboration.

Individuals and inventors

Prior inventions : An individual with a prior invention may use IP assignment agreements to transfer ownership rights to a new employer or business partner.

Consultants and contractors : Freelancers, consultants, and independent contractors may be required to sign an IP or invention assignment agreement as part of their contractual arrangement with clients.

Startups : Startup founders commonly use these agreements to consolidate ownership of intellectual property created before or during the company's establishment.

In essence, assignment agreements are utilized by parties across various sectors and contexts to facilitate the transfer of valuable intellectual property rights, ensuring legal protection and compliance while fostering innovation and business growth.

Key provisions of an intellectual property assignment agreement

Introduction.

Begin the agreement by formally introducing the parties involved to the agreement. In an intellectual property assignment agreement, the party selling the IP is called the “assignor,” and the other party who buys it is called the “assignee.” Here, along with providing the details of the intellectual property, the assignor explicitly agrees to transfer intellectual property rights to the assignee according to the agreed-upon terms of the agreement.

Assignment of IP

This section specifies the intellectual property being transferred. It identifies the specific patents, trademarks, copyrights, trade secrets, or other intellectual property referenced in the agreement. Additionally, it outlines the scope of the transfer and any limitations on the assigned IP rights.

Purchase price

The agreement details any monetary compensation involved in the transfer of intellectual property rights. In this section, clearly outline the payment terms of the agreement. Detail whether the parties hereto agree to pay the assignor as a lump sum or in installments. If the payment is made in installments, you must also provide the schedule for such payment.

Recordation

To formalize the transfer of intellectual property rights, recordation with relevant authorities may be necessary. This provision addresses the requirement and process for recording the assignment with the appropriate governmental authority, ensuring compliance with legal formalities. 

No early assignment

This clause states that the assignment of IP rights cannot occur before certain conditions are met, such as before the completion of a project or the fulfillment of payment obligations. This section prevents premature transfers of IP.

Assignor’s representations

In this part, the assignor provides assurance that they have the sole right to the IP created and it hasn’t been licensed to any third-parties. They also affirm that they have the legal authority to transfer ownership of the IP and there are no undisclosed encumbrances or infringements.

Indemnification

This provision outlines the parties' obligations to indemnify each other against any losses, damages, or liabilities arising from a breach of the agreement or the assertion of third-party claims related to the transferred IP.

Governing law

This section specifies the jurisdiction whose laws will govern and interpret the agreement. It provides clarity in the event of legal disputes.

This clause outlines the procedures for making changes or modifications to the intellectual property assignment agreement. To make any changes pertaining to the terms of the agreement requires written consent from both parties.

Assignment and delegation

This provision addresses the transferability of rights and obligations under the IP assignment agreement. They stipulate whether parties can assign their rights or delegate their duties to third parties.

Counterparts; electronic signatures

This section permits the IP assignment agreement to be executed in multiple counterparts, facilitating convenience in signing. It also recognizes the legal validity of electronic signatures, ensuring compliance with modern technological practices.

Severability

The severability clause states that if any provision of the agreement is found to be invalid or unenforceable, the remaining provisions will remain in full force and effect. This ensures that the invalidity of one provision does not invalidate the entire agreement.

This provision details the methods and addresses for official communication between the parties regarding the intellectual property assignment agreement. They ensure that important correspondence is properly delivered and acknowledged.

Waiver provision addresses instances where a party chooses not to enforce its rights under the agreement. For instance, if certain provisions are waived off on a one-time basis regarding the agreement, this doesn’t mean that the provision is waived for the entire term of the agreement. Take the case where the assignee is paying for the IP in installments. If the assignee is not able to pay the installment for a month, then the assignor can waive that default and continue the agreement upon prior written consent.

Entire agreement

This part of an intellectual property assignment agreement explains that the parties agree to the specific terms and conditions mentioned in the agreement. Any verbal negotiations or other terms that are even stated via email or otherwise are not part of this agreement.

This section states that the headings used in the agreement are for convenience only and do not affect the interpretation of the provisions.

Effectiveness

The effectiveness provision specifies the date on which the agreement becomes effective. This ensures clarity regarding when the rights and obligations outlined in the agreement take effect.

Necessary acts; further assurances

Requires the parties to take any additional actions necessary to carry out the terms of the agreement fully. This may include signing additional documents or cooperating with each other as needed.

How does an online template facilitate drafting intellectual property assignment agreements?

There are various advantages of using an online template for IP such as.

Simplified drafting process

Online templates streamline the drafting process of IP assignment agreements. By providing a structured framework, these templates guide users through the essential elements required for such agreements. Users can efficiently input pertinent details specific to their arrangement, ensuring comprehensive coverage of the subject matter assigned.

Ease of customization

Some  online template providers, like LegalZoom , allow you to easily customize the templates to suit specific circumstances. With editing options available, users can modify clauses and provisions to reflect their agreed-upon terms and conditions of the arrangement

Clarity and consistency

These templates offer clear and standardized language, enhancing understanding and minimizing ambiguity. Consistent formatting and terminology throughout the agreement contribute to its readability and effectiveness.

Time and cost efficiency

Utilizing an online template can minimize the need for extensive document research and costly legal consultations. It allows parties to draft a comprehensive IP assignment agreement efficiently and affordably, saving valuable time and resources.

Accessibility and convenience

Online templates are readily accessible from anywhere with an internet connection, enabling parties to initiate and complete the drafting process conveniently. This accessibility promotes collaboration and facilitates the timely execution of agreements.

As you can see, using online templates provides numerous benefits. Since there are a multitude of templates available online, choosing the right template is key. To streamline this process, LegalZoom offers a comprehensive intellectual property assignment agreement template that is simple and easy to use. Just answer the guided questions, complete the form, and download the document for free.

Frequently asked questions

What's an intellectual property assignment agreement.

When your business needs to sell or buy intangible assets, use an intellectual property assignment agreement to protect both parties. It enables the transfer of ownership of intangible items legally. Intellectual property includes everything from patents to trademarks to software and more.

What key details are required to complete your assignment agreement?

Here's the information you'll need to complete your intellectual property assignment agreement:

• Who owns the intellectual property : Keep the information of the assignor ready while drafting your agreements 
• Who's buying the intellectual property : Have the name and contact details of the assignee ready
• How much it costs : Know what the buyer pays for the intellectual property

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Patent Application Assignment

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Patent Assignment

Simplify the process of transferring patent rights for both buyers and sellers with a patent assignment agreement. Document the ownership transfer clearly and efficiently.

Trademark Assignment

Simplify the buying and selling of trademarks with a trademark assignment agreement. Transfer intellectual property rights and ensure a fair and smooth transaction.

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Assignment Agreement

Jump to section.

An assignment agreement is a contract that authorizes a person to transfer their rights, obligations, or interests in a contract or property to another person. It serves as a means for the assignor to delegate duties and advantages to a third party while the assignee assumes those privileges and obligations. This blog post will discuss assignment agreement, its purpose, essential elements, and implementation practices.

Key Functions of an Assignment Agreement

Below are some key functions of an assignment agreement.

• Facilitating Clear Transfer of Rights and Obligations: Assignment agreement plays a vital role in diverse industries and business transactions by facilitating a transparent transfer of rights and obligations between parties. These agreements encompass intellectual property rights, contractual duties, asset ownership, and other legal entitlements. By clearly defining the assignment's scope and nature, both parties can ensure a smooth transition without any uncertainties.
• Ensuring Protection of Interest: Another important objective of the assignment agreement is safeguarding the assignor and assignee's interests. These agreements provide a legal framework that protects the assignee's rights while relieving the assignor of responsibilities and liabilities associated with the assigned asset or contract. This protection ensures that neither party faces unexpected consequences or disputes during or after the assignment.
• Outlining Consensus on Terms and Conditions : Assignments often involve intricate terms and conditions, necessitating mutual understanding between the assignor and assignee. Assignment agreement serves as binding documents that outline the assignment's terms and conditions, including payment terms, timelines, performance expectations, and specific requirements. By reaching a consensus on these details, both parties can minimize potential conflicts and align their expectations.
• Complying with Legal Laws: Ensuring legal compliance and enforceability is an important objective of the assignment agreement. Also, it is prudent to create these documents according to the relevant rules, regulations, and industry requirements. By adhering to legal guidelines, the assignment agreement becomes a robust legal instrument that provides a solid foundation for potential legal action in case of breaches or disputes.
• Maintaining Confidentiality and Non-Disclosure: Many assignments involve confidential information, proprietary knowledge, or trade secrets that require protection. An objective of the assignment agreement is to establish clear guidelines regarding the confidentiality and non-disclosure of such information. These guidelines define the scope of confidential information, specify restrictions on its use or disclosure, and outline the consequences of any breaches. By ensuring clarity in these aspects, the agreement protects the interests of both parties and fosters a sense of trust .

Best Practices for Crafting an Assignment Agreement

Assignment agreements are vital in different business transactions, transferring rights and obligations from one person to another. Whether it's a merger, acquisition, or contract assignment, implementing an assignment agreement needs thorough consideration and adherence to best practices to ensure a seamless and lawfully sound process. Below are some key practices to follow when implementing an assignment agreement.

• Identifying the Parties Involved: The initial step in implementing an assignment agreement is to identify the parties participating in the assignment agreement. It is vital to accurately define the assignor, who will transfer the rights, and the assignee, who will receive them. The assignment agreement should include precise details of both parties' names and contact information.
• Defining the Scope and Extent of Assignment: It is imperative to define the assignment's scope and extent clearly to prevent potential disputes or ambiguity in the future. It specifies the rights, benefits, and obligations transferred from the assignor to the assignee. In addition, specific details such as intellectual property rights, contractual obligations, and any relevant limitations or conditions should be explicitly outlined.
• Reviewing and Understanding Existing Contracts or Agreements: Assignment agreements often transfer rights and obligations from preexisting contracts or agreements. It is essential to thoroughly review and comprehend these existing contracts to facilitate a seamless transfer. Identifying any provisions restricting or prohibiting assignment is important and should be addressed accordingly. Seeking legal advice is advisable to ensure compliance with contractual obligations.
• Obtaining Consent from Relevant Parties: In some cases, obtaining consent from third parties directly affected by the transfer of rights and obligations may be necessary. Also, it is important to identify these parties and obtain their consent in writing if required. Failure to get permission may lead to legal complications and a potential breach of contract .
• Crafting a Comprehensive Assignment Agreement: Upon collecting all relevant data, it is time to create a comprehensive assignment agreement. This agreement should utilize unambiguous language to define the rights and obligations transferred, specify the effective date of the assignment, and outline any other relevant terms and conditions. Engaging legal professionals specializing in contract law is highly recommended to ensure the agreement's legal validity and enforceability.
• Seeking Legal Advice and Performing Review: It is important to seek legal advice and conduct a thorough review before finalizing the assignment agreement. Experienced attorneys can provide valuable insights, identify potential risks, and ensure compliance with applicable laws and regulations. The legal review helps minimize the likelihood of errors or oversights that could result in future disputes or legal challenges.
• Executing and Recording the Assignment Agreement: Once the assignment agreement has been reviewed and approved, both parties should implement the document by signing it. Also, to enhance its enforceability, it is advisable to have the assignment agreement witnessed or notarized, depending on the jurisdiction's legal requirements. Additionally, maintaining a record of the executed contract is essential for future reference and as evidence of the assignment.
• Communicating the Assignment: Effective communication of the assignment to all relevant parties is important after executing the assignment agreement. Stakeholders, such as employees, clients, suppliers, and contractors, should be notified about the transfer of rights and obligations. It ensures a smooth transition and minimizes potential disruptions or misunderstandings.
• Documenting and Ensuring Compliance: Lastly, it is imperative to maintain proper documentation and ensure ongoing compliance with the assignment agreement's terms. Keeping copies of all relevant documents, including the assignment agreement, consent, and communications related to the assignment, is important. Regularly reviewing and monitoring compliance with the assignment agreement allows for prompt resolution of any issues and helps maintain a transparent and accountable process.

Benjamin W.

Key terms for assignment agreements.

• Assignor: The individual or entity that transfers their rights, responsibilities, or interests to another party using an assignment agreement. And by doing so, the assignor relinquishes any claims and duties associated with the assigned property, contract, or legal entitlements.
• Assignee: The individual or entity that receives the rights, interests, or obligations through an assignment agreement. The assignee assumes the transferred rights and responsibilities, essentially taking on the role of the assignor.
• Obligor: Refers to the party bound by a duty or obligation under a contractual or legal agreement. In an assignment agreement, the obligor is the party whose performance or obligations are assigned to the assignee.
• Assignable Rights: These are the specific rights or interests that can be transferred from the assignor to the assignee via an assignment agreement. These include intellectual property rights, contractual rights, real estate interests, royalties, and other lawful entitlements.
• Consideration: The value or benefit exchanged between the parties in an assignment agreement. Also, consideration is commonly paid in monetary payment, goods, services, or promises. It represents what each party gains or sacrifices as part of the assignment.
• Notice of Assignment: A formal written notification provided by the assignor to the obligor, serving as a communication of the assignment of rights, interests, or obligations to the assignee. This notice establishes the assignee's rights and enables the obligor to fulfill their duties to the correct party.

Final Thoughts on Assignment Agreements

In a nutshell, assignment agreement plays an important role in business transactions, allowing for transferring of rights, duties, and interests between parties. Moreover, by understanding these objectives and addressing them through well-drafted assignment agreement, businesses and individuals can engage in assignments with confidence and clarity. Also, since an assignment agreement includes several legal complexities, it is rational to consult a professional attorney who can guide you through the process.

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

Meet some of our Assignment Agreement Lawyers

Born and raised in St. Louis, MO. Bachelors Degree from the University of Iowa. Masters Degree from the University of Melbourne. J.D. from the University of Kansas. Licensed to practice law in Missouri and Kansas. Tennessee currently pending.

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.

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Hello! I have been working in commercial real estate for about 20 years. My experience is mainly in-house with real estate developers. I enjoy doing commercial real estate transactional work, including leasing, acquisitions and dispositions. I can also lead due diligence efforts for a potential purchase of a real estate asset and review and resolve title issues.

I'm a Chicago native and Kansas City transplant that has made regulatory compliance and civil administrative litigation for heavily regulated industries my niche for the past decade.

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Licensing Agreement: Everything You Need to Know

A licensing agreement is a deal between the owner of a patent, brand, or trademark and someone who wants to use the patented or trademarked goods and services. 13 min read updated on January 01, 2024

Updated June 28, 2020:

What Is a Licensing Agreement?

A licensing agreement, or license agreement, is a deal between the owner of a patent, brand, or trademark and someone who wants to use the patented or trademarked goods and services. The license grants permission to the licensee and includes stipulations. The licensee must honor these guidelines. One of the rules in the licensing agreement is usually a financial arrangement to pay for use of the license.

What Are the Elements of a Standard Licensing Agreement?

Most licensing agreements have standard clauses to cover the issues that arise most often in licensing negotiations. These clauses include the following:

• Contract length : A licensing agreement has a start date and an end date. One party usually prefers a longer contract than the other. Thus, renewal rules are also included.
• Dispute resolution: This is a standard clause that discusses terms in the event of disagreement between two parties. These resolutions frequently spell out whether the parties will settle a disagreement in a court or in arbitration. Arbitration is growing more popular because it's faster and cheaper.
• Exclusivity: Some licenses have more value when only one organization can use the innovation. Licensees will pay more for an exclusive license. The licensor must decide whether the innovation will make more money with one exclusive license or several non-exclusive ones.
• Inventory issues: The licensor may demand that the licensee stock a set volume of products in exchange for the licensing agreement. The contract should include explicit language to address inventory issues.
• Minimum sales requirements: The licensing agreement may require the licensee to meet certain sales goals in order to keep the license. The reverse can also be true. In that case, a vendor can get out of the agreement if sales fail to match the minimum terms of the agreement.
• Oversight: A licensor must protect its brands, trademarks, and innovations. Giving a license to other parties is dangerous because their actions could damage the brand. To guard against this, the agreement can call for oversight of products. A lack of quality control would be cause to break the agreement.
• Quality control: As a second aspect of oversight, the licensing agreement might call for the licensee to prove that their facilities and products honor the standards of the contract.
• Patent applications: In the fast-moving technology field, many companies arrange licensing agreements without formal patents in place. A provisional patent application is enough to get a license. In such cases, the licensee will pay significantly less until the United States Patent and Trademark Office (USPTO) grants an official patent. Sometimes this never happens.
• Payment amount: This is the most important part of a licensing agreement. The vendor agrees to pay a set amount in exchange for access to the license. The payment amount is what gives value to the innovation.
• Payment schedule: Rather than make a single payment, most licensees agree to pay a fixed or variable amount at set dates. The payment may depend on sales criteria, causing fluctuation in the payment amounts. Any failure by the licensee to provide a scheduled payment is a breach of the agreement.
• Renewal rules: The agreement will include language about the steps each party must take for a timely extension of the contract. To streamline future negotiations, many licensing agreements include language that will extend the length of the deal by default.
• Returns and allowances: Many licensing agreements involve physical products. The language must account for customer returns and damage to products during the delivery process.
• Royalty rates: Some licensing agreements include a revenue split agreement. A licensee will pay a percentage of the revenue from each sale of the licensed product(s).
• Royalty calculations: The agreement must explicitly state the royalty rate. It also must show how the licensee will make the royalty calculations and which products are eligible for licensing. Without this language, the parties could wind up in court or in front of an arbitrator . Someone almost always feels like the money isn't split fairly.
• Sub-licensing: A licensee often wants the right to sub-license the innovation to additional parties. The licensor generally agrees to this, since they get additional payments thanks to the other licenses. The licensing agreement should state the revenue shares for these situations. Note that a licensor may refuse sub-licenses because they want to maintain the exclusivity of the innovation.
• Territorial agreements: With more than 100 countries participating in global commerce, licensing is complex. A licensee must decide whether a product will have the same or more value in other countries. If the answer is yes, the licensee will ask for access to the license in multiple territories. Licensors obviously charge more for multi-territory licenses.

The USPTO is the federal agency in charge of intellectual property. Along with the United States Copyright Office, they create and manage all intellectual property laws and rules.

Some of these laws give automatic coverage to the owner of the intellectual property. In other instances, such as patents, the process to earn protection is complex and requires specific actions from the inventor. A person must know their intellectual property rights before creating any licensing agreements.

What Are the Checklist Items for a Licensing Agreement?

• Arbitration : Many businesses choose not to sue over disagreements. Instead, the licensor and licensee agree to settle disputes via arbitration. This section of the agreement states the rules about how arbitration will work. It settles matters such as the location and type of arbitration.
• Assignment provision : In many licensing agreements, the licensor asks for the right to assign licenses to other parties. This happens in non-exclusive license agreements. The language of this section spells out what rights the licensor and licensee have with the license in question.
• Auditing : Many licensing agreements base payments on royalties. With a financial incentive in play, one party may not act honestly about sales. The auditing section prevents this issue. It states how an unhappy party can audit the books.
• Confidentiality : Most companies use some sort of non-disclosure agreement (NDA) these days. When they don't, the licensing agreement needs this clause. The confidentiality section must say which parts of the license are secret. This clause is also a good place to strengthen an NDA if it's weak.
• Considerations : This section covers payment issues. Factors such as royalty calculations and annual payments need inclusion. This section is important in exclusive licenses in particular. Otherwise, the licensor may get less money than expected.
• Definitions : Basic agreements rarely use definitions since they're short and simple. Complex agreements need more language. Some of it gets confusing. The definitions section clarifies the terms in the licensing agreement.
• Diligence : Getting an exclusive license is a big deal. The inventor only makes money from one source. As such, the inventor is taking a risk. This section makes sure that the licensee does everything possible to earn money, too. That way, the licensing of the intellectual property will lead to royalty money for the licensor. Basically, the diligence section guarantees that the licensee tries hard.
• Export rules : Some licensees import and export licensed products and intellectual property across borders. This clause must state how the licensee should follow the rules of the applicable countries in question. Export rules are especially important in military contracts.
• Favored nation status : Licensees don't want to overpay. This clause protects them against paying more than other parties for the same license. The language usually states that the licensee only pays what the party paying the smallest amount pays. Still, other factors like upfront fees and royalty schedules make comparisons difficult. The only way to know for sure whether a party pays more is through a pure cash transaction.
• Force majeure : Sometimes, an unexpected event ruins the basic understanding of a licensing agreement. For example, a building fire could ruin a manufacturing business. This clause states what happens in such extreme situations.
• Improvements : An innovation is fluid. Someone might notice a way to make it better. When that happens, the licensing agreement should say what the rules are. Both the licensor and licensee are capable of improving the innovation. The licensee could feasibly change the invention enough that the new version is worthy of a patent. The licensing agreement must say who has the rights in such situations. Other factors along these lines also need precise language.
• Infringement : This section has to address several potential issues. A previous licensee could infringe on the intellectual property. The current party also could after the licensing agreement expires. The infringement section lists how to handle such problems. It also shows how penalty payments work. If the licensor and licensee are both victims of infringement, the clause should list the percentage split on penalties.
• Inspection rights : Some inventions are processes and products. The use of these licenses comes with expectations of standards. The licensor should write an inspection clause into the agreement. That way, the licensor can check to see that the licensee is using the license the right way.
• Intellectual property : Many licensing agreements cover more than one piece of intellectual property. This clause must say which properties are okay to use. It also must list the specific types of intellectual property involved in the agreement. An inventor may own a patent on something that includes additional intellectual property. The agreement should state whether the licensee has the right to use this property.
• License restrictions : Inventors are understandably protective of their licenses. When they sell the rights to these innovations, they want to keep some control. The restrictions section lists what rights the licensor maintains. It also discusses how past and future licensees will impact the current agreement. Nonprofits and universities should also reserve rights. That way, they can still use a license even if they sign an agreement with a licensee.
• Parties involved : The licensor and licensee add information such as legal names, contact details, and addresses.
• Rights and privileges : The granting of a license is a risk for both parties. The licensing agreement should explain what the licensee can do with the license. It should say whether the license is exclusive or not. It should also discuss whether the licensor gets to use the license or cedes all rights to the licensee. The territory of the operating license and terms of the agreement also need clarification. Finally, the agreement should note whether the licensee can sub-license the invention. The contract must include all of these details. Otherwise, a dispute is likely.
• Schedules : This is the master list of all sections that the licensing agreement covers. A person can read the schedules section to find information easily. Doing so is quicker than reading through the full document. When an agreement needs changes, people find that it's easier to modify the schedules section than the rest of the document.
• Termination : This part of the agreement states the terms that will end the contract. Each party should have the right to end the agreement in some situations. This section should spell out what those are. It should also list explanations as to why a party would want to terminate in such situations. The termination clause also must cover whether a party must pay penalties for ending the agreement.
• Warranty : This is similar to any other warranty that you'd get with a purchase.

A few other issues fall into the category of basic boilerplate language. Examples are:

• Country of Law : This clause simply states which country's laws will act as the basis of the licensing agreement.
• Integration: This section proves that the current agreement is the primary one for the license.
• Language : Some agreements involve multiple languages. The document shows whether one language is enough. If not, the language must have the same translation in all others. Incorrect translations can lead to misunderstandings and lawsuits.
• Modifications : This clause states the rules about agreement changes. The parties may have the right to alter it verbally. Alternatively, the contract can require that they make any changes in writing. The modifications section should cover individual sections if some but not all changes require written proof.
• Notices : This part is the payment section. It lists the schedule and any rules about payment. It also covers notices about payment changes.
• Signatures : This section is where both parties type and sign their names. It should include the typed section since many personal signatures are hard to read.

What Are the Types of Licensing Agreements ?

Intellectual property licensors use three main types of licensing agreements. They are:

• Exclusive license : A licensee who gets this license is the only one who can use the intellectual property. Even the licensor cedes rights to the license during the length of the agreement. This type of license costs the licensee much more.
• Non-exclusive license : A licensee has the rights to use the intellectual property. The licensor also has the option to sell it to others, though. Non-exclusive licenses have the greatest number of licensees. That's because many licensees have the right to use the same intellectual property.
• Sole license : The licensee has the sole right to the licensing of the intellectual property. The licensor also keeps the right to use it. This is similar to an exclusive license. It's more favorable to the licensor, though. This type of license usually costs more than a non-exclusive one but is cheaper than an exclusive license.

What Issues Does a Licensing Agreement Cover?

A licensing agreement can cover any or all of the following issues:

• Service mark
• Trade secret

Which Parts of a Licensing Agreement Are Most Important?

From a business perspective, the licensor has almost all the power in a licensing agreement negotiation. This party owns the brand, trademark, or invention that someone else wants. The licensor has control over usage of the innovation. Anyone who wants it must agree to the licensor's terms.

During the negotiation, the licensor should focus on the following:

• Price : The main purpose of innovation in the business world is to make money. The licensor can and should hold out for the highest possible financial agreement. Many licensees will want to add a mechanism to base the license cost on actual sales, which is reasonable.
• Exclusivity : Having the only license to an innovation is a major competition advantage. For example, think about a wireless innovation that increased download speeds by a factor of ten. The wireless service that purchased an exclusive license for this technology would dominate the market. The licensor could probably make more money by licensing the technology to everyone, though.
• Rights : In most instances, a licensee will ask for full rights to a license. Whether the licensor grants this privilege or not depends on the situation. A licensee could use the rights to do research internally that could lead to further innovation. This advance would negate the value of the licensor's innovation. For this reason, the licensor should limit license rights as much as possible.

The royalties from a licensing agreement are usually 6-10 percent. It does vary depending on factors like the quality of the intellectual property and the licensee's experience and need.

Some licensors don't expect royalty guarantees in contracts. Others demand them. A licensor should always try to get the most money possible at the start of the licensing agreement.

Another form of protection is to base extensions on royalties. A licensor will expect the licensee to pay a set amount over time. If that happens, the licensee gets to renew the agreement. If it doesn't, the agreement automatically ends.

What Are the Largest Areas of Concern With a Licensing Agreement?

With so many areas of negotiation for a licensing agreement, anything can cause problems. That's especially true if the attorney who writes the licensing agreement uses language that's too broad. Still, four areas are the most likely causes of a licensing agreement dispute:

• Net sales : Since money is what matters the most in a licensing agreement, it's often the biggest sticking point. Many agreements focus on a percentage of gross revenue. The language matters, though. A licensee should want concessions for returns and allowances. These sales should come out of the gross revenue calculations.
• Royalties: Any royalty calculations must have transparency. Both parties should have the ability to calculate expected royalties over time. Then, the language of the agreement should include contingencies if the sales aren't as strong as expected. A mechanism must exist to protect the spirit of the agreement about royalties.
• Guaranteed payments : Most licensing agreements include minimums. The licensor will get at least this much on the scheduled date regardless of sales figures. Since different accounting practices can impact the registered date of a sale, the language must specify how to calculate revenue above the minimum. An unhappy licensee could also sue over guaranteed payments, claiming that the licensing agreement payments are too expensive .
• Quality control: The licensing agreement must state expectations for products and services. It should also detail methods to verify that the licensee honors the agreement at all times. Even a single quality control failure can do massive damage to a brand.

What Are the Dangers of Not Making a Licensing Agreement?

The main areas of concern are the same for licensor and licensee. With an agreement, both parties have an understanding of how to approach intellectual property. Without one, the parties face the danger of lost time and money plus the frustration of a failed business negotiation.

When Would Someone Use a Licensing Agreement?

Think of the situation from the perspective of a clothing manufacturer. Brands like professional sports teams, music artists, and movies all add value to a shirt.

A licensor would want to manufacture goods that use these brands. The licensor would want payment for the license. The license agreement is how the two parties work out a deal that benefits both parties.

What Is an End User Licensing Agreement?

The End User License Agreement (EULA) is one of the most important documents for a software developer. This agreement gives the user the ability to use the product. In exchange, the user agrees to honor any restrictions listed in the EULA.

The reason for the EULA is that a piece of software is effectively a rental. Even a permanent purchase of the product doesn't give the user ownership of the product — just unlimited usage of it. Without the EULA, the user could take the ideas of the software and use them in ways that would damage the licensor.

An EULA has interesting acceptance terms. Legally, a person accepts an EULA by breaking the plastic surrounding the software product. To avoid accepting the EULA, the person must return the unopened package to the licensor. In the digital era, licensees must agree to terms online before downloading digital products for personal usage.

How Can a Person Create a License Agreement?

Hiring an attorney is the best way to handle any type of contract. A person or organization can create a general purpose license agreement by following a few steps, though. Just keep in mind that a broad agreement can cause problems in court cases and arbitration hearings.

The steps for making a license agreement are as follows:

• Download a template for a licensing agreement.
• Choose your role as the licensor or licensee.
• Define the license(s) in the agreement.
• Decide whether the license is exclusive or not.
• Settle the matter of fees and payment schedule.
• Add a renewal date and rules.
• Fill in the appropriate blanks in the licensing agreement.

Given the details above, anyone can see that licensing agreements are complex. The safest strategy is to post your legal need in the UpCounsel marketplace. The attorneys at this site have plenty of experience writing licensing agreements that fit anyone's need. Whether you're a new inventor or represent a growing business, UpCounsel's lawyers can protect your interests and help you grow your brand.

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Corporate Law Firm

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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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

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Original text

What Are Patent Assignments? Patent Licensing?

A patent is a form of Intellectual Property.  It may be sold (assigned) or licensed to somebody else.

What Is A Patent Assignment?

Patent law provides for the transfer or sale of a patent by a written agreement called an " assignment " that can transfer the entire ownership interest in the patent. The assignee , when the patent is assigned to him or her, becomes the owner of the patent and has the same rights that the original patentee had.

Patent law also provides for the assignment of a part interest, that is, a half interest, a fourth interest, etc., in a patent.

You can also grant an assignment that is only for a particularly specified part of the United States.

Use a Notary Public

An assignment, grant, or conveyance of any patent or application for patent should be acknowledged before a notary public or officer authorized to administer oaths or perform notarial acts. The certificate of such acknowledgment constitutes undisputable evidence of the execution of the assignment, grant, or conveyance.

Recording of Assignments

The US Patent Office records assignments, grants, and similar instruments sent to it for recording, and the recording serves as notice. If an assignment, grant, or conveyance of a patent or an interest in a patent (or an application for patent) is not recorded in the US Patent Office within three months from its date, there can be no subsequent purchaser(s).

Assignments - Correct Style

Any written document should identify the patent by number and date. The name of the inventor and title of the invention as stated in the patent should also be given. An written document relating to a patent application should identify the application by its application number and date of filing, the name of the inventor, and title of the invention as stated in the application should also be given.

Sometimes an assignment of an application is executed at the same time that the application is prepared and before it has been filed in the Office. Such assignment should adequately identify the application, as by its date of execution and name of the inventor and title of the invention, so that there can be no mistake as to the application intended.

Assignee - Listed on Patent

If an application has been assigned and the assignment is recorded, on or before the date the issue fee is paid, the patent will be issued to the assignee as owner. If the assignment is of a part interest only, the patent will be issued to the inventor and assignee as joint owners.

Joint Ownership - Patent Licensing

Patents may be owned jointly by two or more persons as in the case of a patent granted to joint inventors, or in the case of the assignment of a part interest in a patent. Any joint owner of a patent, no matter how small the part interest, may make, use, offer for sale and sell and import the invention for his or her own profit provided they do not infringe another’s patent rights, without regard to the other owners, and may sell the interest or any part of it, or grant patent licensing to others, without regard to the other joint owner, unless the joint owners have made a contract governing their relation to each other. It is accordingly dangerous to assign a part interest without a definite agreement between the parties as to the extent of their respective rights and their obligations to each other if the above result is to be avoided.

Patent Licensing

The owner of a patent may grant licenses to others. Since the patentee has the right to exclude others from making, using, offering for sale or selling or importing the invention, no one else may do any of these things without his/her permission. A patent licensing agreement is in essence nothing more than a promise by the licensor not to sue the licensee. No particular form of license is required; a license is a written contract and may include whatever provisions the parties agree upon, including the payment of royalties, etc.

The drawing up of a license agreement (as well as assignments) is within the field of an attorney at law familiar with patent matters and/or Intellectual Property. A few States have prescribed certain formalities to be observed in connection with the sale of patent rights.

If you have a patent you can attempt to license your patent rights.  A license  gives permission to the Licensee to use the patent in return for a fee, or royalties.

Create a list of potential manufacturers who may be interested in your product.

Find manufacturers by looking in stores and magazines for similar products. Visit product related tradeshows. Your local library should have great reference material on manufacturers. Use online manufacturer databases such as the Thomas Register to search for companies that make a product like yours. You can do an Internet search for manufacturers by using the keywords of your product.

Send a Marketing Letter

First, the owner of the patent (licensor) must determine if it will grant an exclusive or non-exclusive license. A patent license is a waiver by the licensor of the right to exclude the licensee from practicing under the patent rights. Licensees would prefer to obtain an exclusive license if possible. In addition to the commercial disadvantages of a non-exclusive license, a non-exclusive licensee acquires no affirmative rights with respect to the enforcement of the licensed patents. Unless the non-exclusive license specifically provides some protections, the licensor has no duty to protect the non-exclusive licensee’s interests in the event of patent infringement, abandonment of the patent, or other licensee’s with better terms. The licensor may want to preserve the ability to license to several licensees in order to ensure that the patent rights are fully utilized, instead of tying the patent rights to just one entity. One of the biggest fears of a licensor is that the licensee will not fully commercialize the intellectual property and the licensor is left with nothing to show for its patent efforts. As discussed below, the licensee can address these fears by including certain provisions, such as minimum royalties or milestones that the licensee must meet, or by limiting the license to a particular field of use. An exclusive license provides the licensee the promise that the licensor will not practice under the patent, and that the licensor will not grant licenses to any other parties. No reservation of rights in the licensor is implied in an unequivocal exclusive license, although many licensees may wish to specifically state that no such rights are reserved for the licensor to practice under the patent rights. There are some authors who believe that an exclusive license does not in and of itself preclude the patent owner from issuing any more licenses and they feel that the license should expressly state this fact. An exclusive license does not imply, however, that the licensor has not granted any non-exclusive licenses prior to this grant of an exclusive license, and the license agreement should specifically provide a representation that the licensor has not issued any prior licenses. In addition, an exclusive license does not alone grant a right to sublicense. This right must be separately granted. In order to obtain an exclusive license, the licensee may have to agree to a minimum annual royalty provision. The licensee may expect to commercialize the patent rights in the very first year of the license, or more likely, after a period of time. A minimum royalty provision typically provides that if the royalties do not total a set minimum amount after an agreed upon commercialization period, the licensor may terminate the license agreement or the licensee must pay the difference in what the actual royalties paid and the set minimum annual royalty amount. The alternative to the termination provision, which is extremely severe to a new company trying to commercialize under the patent rights, is to convert the license agreement to a non-exclusive license, unless the licensee pays the minimum royalty amount. The licensor may also attempt to ensure that the exclusive licensee commercializes the patent rights by a general "best efforts" clause. Both parties should avoid this clause in favor of more objective standards. The courts may interpret such a clause to require the dedication of all of the licensee’s resources towards exploitation of the licensed patents, when realistically most licensees will have a number of other significant business endeavors to support. Instead, the parties may rely on the minimum annual royalty provision to ensure commercialization efforts or strive to place objective milestones that the licensee will have to meet. The milestones can be anything definitive that the licensee feels it can realistically meet in the stated time frame. For example, the licensee may be required to obtain an approved New Drug Application with the Food and Drug Administration by a certain date. Licensees should be aware that there is an implied obligation to exploit the licensed patent on the part of an exclusive licensee. An exclusive license may also be limited to a field of use as a way to limit the licensor’s risk of licensee non-exploitation. Under this approach, a licensor can grant exclusive rights to different licensees in distinct markets or application areas. Care must be taken in defining the field of use in these arrangements. The licensor may want to retain rights to practice the patent rights and insert a reservation of rights in grantor clause in the license agreement. Generally such rights are limited to noncommercial research uses, allowing the exclusive licensee the ability to fully commercialize under the patent rights. Or the licensor may have granted prior non-exclusive licenses to other parties and therefore it needs to reserve some rights in recognition of these licensees. It is also important in patent license agreements to address the issue of improvements. Improvements can be broadly defined as anything that does the same function as the licensed invention in a better or cheaper way; or a modification of a part or process in the invention; or anything that would perform a similar function as the licensed patent and that would infringe one or more of the claims of the licensed patent. Either the licensor or the licensee may be capable of creating an improvement and the parties should carefully consider if they want the benefit of the improvement. If so, then there should be a grant of the improvement to the other party, similar in scope to the grant of the main patent rights. The issue of royalties tends to be the most contentious in the patent licensing negotiation process. The licensee wants to be sure that the costs in the commercialization effort are recouped, while the licensor wants to recover its patent costs and reap the rewards of the invention. Both parties try to look into the crystal ball to see what the market will bear, what the costs to produce will be, and set a realistic royalty rate that allows for a reasonable profit margin. The parties should look to the market place and what other royalty rates have been negotiated for similar products to be able to set some reasonable rate for their invention. The base for royalty calculations should reflect the licensee’s use of the patent rights and also be easily subject to accounting and reporting. Sometimes licensors desire to use the licensee’s profit on the licensed product as the royalty base, while licensees are usually reluctant to open their books to such inspection. The costs of raw materials may also be considered but as these costs tend to fluctuate, without regard to the value of the licensed product, they may not be appropriate as a base. Usually the net sales price is used as the base, after deduction for trade and quantity discounts, but before deductions of such other costs such as freight and commissions. Payment of royalties on the use of licensed products that are not sold but otherwise disposed (such as used by affiliates of the licensee) should also be addressed in the agreement. When considering the method of calculating royalties and royalty rates, it is important not to overlook the mechanics of reporting and payment due date obligations. The agreement should clearly specify when reports are required to be made and when royalty payments are due. Payment needs to be made in conjunction with a quarterly or semi-annual accounting report on the royalties received by licensee. Licensors usually reserve the right to annually audit the records, at their expense, to be sure they are receiving the proper amount of royalties. Licensors are advised to also include a provision to audit for a period of time after termination of the license to be sure they have received all the royalties that are due and owing to them. Most license agreements provide that licensee shall pay for the audit if there is an underpayment of a certain percentage.

The US Patent Office will publish in its official gazette a notice that your patent is available for licensing or sale for a fee.

For additional information about patents, visit the website of the Patent and Trademark Office, www.uspto.gov .

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The Difference Between Copyright Assignments and Licenses

The Difference Between Copyright Assignments And Licenses

There are two ways that a copyright owner can transfer some or all of his or her copyright rights: through a license or an assignment.

In an assignment of copyright rights, the owner sells his or her ownership rights to another party and has no control over how the third party uses those rights. A copyright assignment is sometimes referred to as a sales agreement for copyright.

The buyer (assignee) can then use the copyrighted work or do whatever he or she wants with it. He or she all of the assigned rights that the original owner had.

A valid assignment of copyright must be in writing and signed by, or on behalf of, the copyright owner/assignor. The subject of the assignment must be clear as to what copyright is being assigned in which work(s).

In a license of copyright rights, the owner maintains his or her copyright ownership rights, but allows another party (the licensee) to exercise some of those rights without the licensee’s actions being considered copyright infringement. A license is often preferred over an assignment when the copyright holder wishes to maintain and exercise some ownership control over the rights and how the licensee uses the copyright holder’s rights.

For example, a typical software license agreement is a copyright license agreement. The software copyright owner grants the user/licensee the right to use the software in a specified, restricted manner. In return, the user/licensee may agree to limit his or her use of the software in various ways and to pay the copyright owner a license fee.

Unlike a copyright assignment, a copyright license does not have to be in a signed writing. A license can be oral or arise by implication when considering all of the facts and circumstances surrounding the transaction between the copyright owner and the purported licensee.

If you own a copyright in a work that you are thinking about assigning, you should consider whether to license your copyright instead, thus allowing you to retain ownership, and license only certain rights to the other party.

For additional information about the difference between copyright assignments and license, please  contact us .

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Standard Test Method for Assignment of a Glass Transition Temperature Using Thermomechanical Analysis: Tension Method

Significance and Use

5.1  The glass transition is dependent on the thermal history, softening agents or additives of the material to be tested. For amorphous and semicrystalline materials the assignment of a glass transition temperature may lead to important information about thermal history, processing conditions, stability, progress of chemical reactions, and mechanical and electrical behavior.

5.2  Thermomechanical analysis provides a rapid means of detecting changes in hardness or linear dimensional change associated with the glass transition. Dimensional changes measured as a specimen is heated over the glass transition region may include the interaction of several effects: an increase in the coefficient of expansion, a decrease in the modulus, which under a constant stress leads to increased extension, stress relief leading to irreversible dimensional change (shrinkage in one dimension, expansion in another dimension), and physical aging effects which change the kinetics of the dimensional change.

5.3  This test method is useful for research and development, quality control, and specification acceptance testing; particularly of films and fibers.

1.1  This test method describes a procedure for the assignment of a glass transition temperature ( T g ) in tension of materials on heating using thermomechanical measurements.

1.2  This test method may be used as a complement to Test Method E1545 and is applicable to amorphous or to partially crystalline materials in the form of films, fibers, wires, etc., that are sufficiently rigid to inhibit extension during loading at ambient temperature.

1.3  The generally applicable temperature range for this test method is 25 °C to 600 °C. This temperature range may be altered depending upon the instrumentation used.

1.4  The values stated in SI units are to be regarded as standard. No other units of measurement are included in this standard.

1.5   This standard does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility of the user of this standard to establish appropriate safety, health, and environmental practices and determine the applicability of regulatory limitations prior to use.

1.6   This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.

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