transfer of patent rights agreement

+33 1 84 80 13 50

• Français ( French )

Transfer of right agreement

FROM 450 € tax.excl

If you have hired a service provider to create the source code for your software, or to create the drawings for your prototype, or any other creation that falls under copyright, you need a transfer of rights agreement!

What is a tranfer of rights agreement ?

The transfer of rights agreement is a contract by which the transfer of ownership of an immaterial good and the rights attached to it takes place. It is similar to a sales contract. Often used for intellectual property rights, it can be adapted to industrial property rights (patents, trademarks, designs and models) as well as to copyright (artistic creations, software).

The transfer of rights agreement entails the full transfer of ownership of the intangible property and must therefore meet a number of conditions. It must be written .

Depending on whether it is a patent assignment or a copyright assignment, the important clauses of the contract may differ.

This contract must therefore be very well drafted for an effective protection of the parties, hence the interest to call upon a professional.

How to assign a patent .

For a patent assignment, you should pay attention to a few important points:

• The rights transferred (the right to exploit the invention, the right to extend the title internationally or the prerogatives to defend the title (in case of infringement action for example))
• The guarantee against eviction by the assignor and by third parties (the assignor (the seller) assures the assignee (the buyer) that he is the exclusive owner of the invention and that this assignment will not harm persons outside the contract)
• The fixing of the price : the transfer of rights being a sale, it can be made in return for a price, it is then onerous. The price fixation generally takes into account the expenses made by the assignor for the life of his invention (application for patent registration, exploitation…). It can also be free of charge or for a symbolic sum of one euro, which is generally the case when the assignor transfers the invention to his company.

It should be noted that the assignment can only be made for an already existing invention, thus the assignment of a future invention is forbidden.

If the existence of the invention is mandatory, the existence of the patent is not, since an unpatented invention or an invention for which a patent application has been filed for less than one year is possible. This case requires clarification.

In addition to the above-mentioned rights, it will also be necessary to add the assignment of the priority right. If your assignment contract is concluded with a foreign co-contractor and concerns this type of invention, the assignment of this priority right must be mentioned.

The case of the transfer of artworks : moral and economic rights

Concerning the transfer of copyright agreement, the content of the contract will be different.

Copyright is divided into two types of rights: economic rights (right of representation and reproduction of the work) and moral rights (right of disclosure, right of paternity, right to respect the integrity of the work and right to withdraw the work).

For a copyright assignment, only the economic rights can be assigned. The moral rights cannot be the object of this contract, it remains the property of the author.

The contract of transfer of copyright must include certain obligatory mentions under penalty of being cancelled:

• The economic rights assigned clearly in a separate mention (the right of reproduction, representation, adaptation, translation etc.);
• The duration of the transfer of rights (in practice the duration is that of copyright, i.e. the whole life of the author and 70 years post mortem);
• The extent of distribution of the assigned rights (such as the number of products produced, or the use of the rights on a media for example);
• The destination of these rights (if the work is an artistic creation or ab applied art creation for example);
• The distribution territory (for which countries in particular or for the whole world);
• The method of calculating the remuneration of the author assigning his rights (whether it will be a proportional or lump sum remuneration)

A transfer of rights agreement must therefore be very well drafted for an effective protection of the parties, hence the interest to call upon a professional. Our team will listen to your needs and accompany you in the transfer of your invention or your work of the mind.

Intellectual Property Transfer Agreement

Jump to section, need help with a legal contract, what is an intellectual property transfer agreement.

An intellectual property transfer agreement is a document that outlines the terms of any contract between two parties, typically in the context of an employment situation. The agreement details which pieces of intellectual property are being transferred to whom and what will happen if one party breaches the contract.

Intellectual property transfer agreements are often used when one party may have more influence over another's career or work performance than they would otherwise be able to exercise. Hence, both parties need to understand what obligations they will have when going in on a contract like this.

Common Sections in Intellectual Property Transfer Agreements

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

Intellectual Property Transfer Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.4 7 dex104.htm INTELLECTUAL PROPERTY TRANSFER AGREEMENT , Viewed January 25, 2022, View Source on SEC .

Who Helps With Intellectual Property Transfer Agreements?

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

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

Meet some of our Intellectual Property Transfer Agreement Lawyers

Benjamin E.

Benjamin is an attorney specializing in Business, Intellectual Property, Employment and Real Estate.

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

Advised startups and established corporations on a wide range of commercial and corporate matters, including VC funding, technology law, and M&A. Commercial and Corporate Matters • Advised companies on commercial and corporate matters and drafted corporate documents and commercial agreements—including but not limited to —Convertible Note, SAFE, Promissory Note, Terms and Conditions, SaaS Agreement, Employment Agreement, Contractor Agreement, Joint Venture Agreement, Stock Purchase Agreement, Asset Purchase Agreement, Shareholders Agreement, Partnership Agreement, Franchise Agreement, License Agreement, and Financing Agreement. • Drafted and revised internal regulations of joint venture companies (board of directors, employment, office organization, discretional duty, internal control, accounting, fund management, etc.) • Advised JVs on corporate structuring and other legal matters • Advised startups on VC funding Employment Matters • Drafted a wide range of employment agreements, including dental associate agreements, physician employment agreements, startup employment agreements, and executive employment agreements. • Advised clients on complex employment law matters and drafted employment agreements, dispute settlement agreements, and severance agreements. General Counsel • As outside general counsel, I advised startups on ICOs, securities law, business licenses, regulatory compliance, and other commercial and corporate matters. • Drafted or analyzed coin or token sale agreements for global ICOs. • Assisted clients with corporate formations, including filing incorporation documents and foreign corporation registrations, drafting operating and partnership agreements, and creating articles of incorporation and bylaws. Dispute Resolution • Conducted legal research, and document review, and drafted pleadings, motions, and other trial documents. • Advised the client on strategic approaches to discovery proceedings and settlement negotiation. • Advised clients on employment dispute settlements.

⛵AJ has practiced in entertainment, technology, intellectual property, data privacy and protection, a broad array of domestic and international transactions, finance, and as outside General Counsel for startup and growth companies.

I offer top-tier legal expertise in startups, corporate governance, and general legal research. As a professor and published author of research articles and conference presentations, I have established myself as a legal expert, writer, and scholar. My strong research skills and innovative thinking make me a highly capable business consultant, legal adviser, and copywriter. Currently a member of the Minnesota bar. Recent freelance projects include business plans, contract drafting, legal advisory memoranda, due diligence, pre-trial motion practice, and discovery review.

I am an experienced business coordinator with years of experience operating within an international setting where I discovered my passion for contracts and helping people. I became an attorney later in life to further and enhance these passions and to be able to help those in similar positions as I was find the legal help they need, and work with clients on a rate that is a fraction of the cost of going to a larger firm.

General corporate attorney specializing in commercial contracting and data privacy.

Find the best lawyer for your project

Intellectual property lawyers by top cities.

• Austin Intellectual Property Lawyers
• Boston Intellectual Property Lawyers
• Chicago Intellectual Property Lawyers
• Dallas Intellectual Property Lawyers
• Denver Intellectual Property Lawyers
• Houston Intellectual Property Lawyers
• Los Angeles Intellectual Property Lawyers
• New York Intellectual Property Lawyers
• Phoenix Intellectual Property Lawyers
• San Diego Intellectual Property Lawyers
• Tampa Intellectual Property Lawyers

Intellectual Property Transfer Agreement lawyers by city

• Austin Intellectual Property Transfer Agreement Lawyers
• Boston Intellectual Property Transfer Agreement Lawyers
• Chicago Intellectual Property Transfer Agreement Lawyers
• Dallas Intellectual Property Transfer Agreement Lawyers
• Denver Intellectual Property Transfer Agreement Lawyers
• Houston Intellectual Property Transfer Agreement Lawyers
• Los Angeles Intellectual Property Transfer Agreement Lawyers
• New York Intellectual Property Transfer Agreement Lawyers
• Phoenix Intellectual Property Transfer Agreement Lawyers
• San Diego Intellectual Property Transfer Agreement Lawyers
• Tampa Intellectual Property Transfer Agreement Lawyers

ContractsCounsel User

Intellectual property assignment

Location: washington, turnaround: a week, service: drafting, doc type: intellectual property transfer agreement, number of bids: 7, bid range: $599 - $1250, full sail university release, location: oregon, turnaround: less than a week, service: contract review, page count: 1-5, number of bids: 2, bid range: $350 - $485, related contracts.

• Accounting Services Agreement
• Accounts Receivable Purchase Agreement
• Ad Agency Contract
• Adhesion Contract
• Advertising Services Agreement
• Agency Agreement
• Agency Contract
• Agreement for Sale
• Arbitration Agreement
• Assignment Agreement

other helpful articles

• How much does it cost to draft a contract?
• Do Contract Lawyers Use Templates?
• How do Contract Lawyers charge?
• Business Contract Lawyers: How Can They Help?
• What to look for when hiring a lawyer

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Find lawyers and attorneys by city

• Business Legal Services
• Banking & Finance Law
• Business Disputes
• Business Immigration Law
• Commercial Law
• Commercial Property Law
• Construction Law
• Corporate Law
• Data Protection & Privacy Law
• Employee Share Schemes
• Employment Law
• Financial Services Regulation
• Funding & Investment
• Insolvency & Corporate Recovery
• Intellectual Property
• IT & Commercial Technology Law
• Overview   
• Acquisition & Leveraged Debt   
• Asset Finance & Asset Based Lending   
• Construction & Development Finance   
• Debt Finance   
• Financial Services Regulation   
• Funding & Investment   
• Trade Finance   
• Alternative Dispute Resolution   
• Business Dispute Case Assessment   
• Commercial Contract Disputes   
• Commercial Property Disputes   
• Construction & Engineering Disputes   
• Defending Employment Tribunal claims   
• Shareholder Disputes   
• Intellectual Property Disputes   
• Litigation & Arbitration   
• Partnership Disputes   
• Professional Negligence Claims   
• Public Procurement Challenges   
• Agency Agreements   
• Commercial Contracts   
• Confidentiality & Non-Disclosure Agreements   
• Franchise Law   
• Joint Venture Agreements   
• Sale & Distribution Agreements   
• Service Agreements   
• Subcontractor Agreements   
• Supply of Goods Agreements   
• Terms of Business   
• Commercial Leases   
• Corporate Transactions   
• Property Development   
• Property Finance   
• Sale and Purchase   
• Unregistered Land   
• Construction & Engineering Contracts   
• Banking & Finance Law   
• B Corp Conversion Lawyers   
• Cap Table Creation and Management   
• Corporate Governance   
• Corporate Restructuring   
• Employee Share Schemes   
• Exits & Disposals   
• LLP Agreements   
• Mergers & Acquisitions (M&A)   
• Share Capital   
• Cybersecurity   
• Data Breaches & Incident Management   
• Data Governance   
• Data Protection Health Check   
• Data Protection Impact Assessments   
• GDPR Compliance   
• GDPR Training   
• Outsourced DPO   
• Support for DPOs   
• EMI Share Options   
• Employee Ownership Trusts (EOTs)   
• Flowering Shares   
• Growth Shares   
• Hurdle Shares   
• Phantom Share Schemes   
• Non Tax-Advantaged Share Plans   
• Absence & Sickness Management   
• Discipline & Grievance Procedures   
• Discrimination Claims   
• Employee Share Schemes and Equity Incentives Solicitors   
• Employment Contracts   
• Employment Status and IR35   
• HR Audit   
• Redundancies and Business Reorganisations   
• Senior Employee Exits   
• Settlement Agreements   
• Transactions and TUPE   
• Consumer Credit & Hire   
• Payment Services   
• Regulated Banking & Finance Activities   
• Crowdfunding   
• EIS & SEIS   
• Investment Agreements   
• Pre-Seed & Seed Funding   
• Private Equity   
• Series A, B & C Funding   
• Term Sheets   
• Venture Capital   
• Director Disqualification Solicitors   
• Copyright Lawyers   
• Design Rights   
• Intellectual Property Audits   
• Intellectual Property Licensing   
• Intellectual Property Strategy   
• Patent Litigation   
• Patent Protection & Management   
• Trade Marks   
• Utility Models   
• Cloud Service Agreements   
• SaaS Agreements   
• Software Licence Agreements   
• The big idea   
• Getting started   
• Getting on with it   
• Scaling up   
• Looking to exit   
• Creative Industries
• Energy, Utilities & Environment
• Life Sciences
• Manufacturing & Engineering
• Public Sector
• Retail & Luxury Brands
• Enterprise Plan
• On-demand Plan
• Fixed Fee Products

• Meet Our Team
• Press & Media
• What Our Clients Say
• Company News
• Client Stories
• Thoughts and Opinions
• Podcasts and Videos
• Knowledge Hub
• Make An Enquiry
• Request A Call Back
• Birmingham   
• Cambridge   
• London   
• Manchester   
• Oxford   
• Sheffield   

Knowledge Hub for Growth

How to transfer intellectual property rights.

Intellectual property has to be transferred by a legal process – an assignment—if you want to dispose of it to someone else. And by law you need a written document, with the owner’s signature on it, to do this.

Often, assigning your rights won’t be the best way to exploit your assets – a licence deal with someone who will work your IP and pay you a royalty for doing so could be a better arrangement. And if you are giving ownership rights to someone else, beware that a joint owner might be able to do things with the IP that do not require your agreement – so, if you must give away a share of your IP, make sure you get sound legal advice from a intellectual property lawyer first.

What intellectual property rights can be transferred?

Patents, trade marks, copyright, registered designs and the various flavours of unregistered design rights can all be assigned, and so can applications for them. But at the fringes of the intellectual property world are some similar-looking rights that may need special treatment:

• Confidential information is generally considered not to be a form of property, so in practice it is transferred not by an assignment but by delivering the information in whatever form it is kept (by oral disclosure, if it is not recorded in permanent form) and undertaking to the recipient that you will not use it yourself, or tell anyone else about it.
• Unregistered trade marks are protected by the common-law action for passing off, but that does not make them property. The property protected by passing off is actually business goodwill, and that can be transferred by executing an assignment.
• Domain names are frequently lumped together with intellectual property these days, and given that they are often based on the same words as trade marks there is sense in this. But a domain name is not a piece of intellectual property: it exists as a result of the contract you have with the registrar, not under any statute. You can submit a transfer request in the required form to the registrar, which has the same effect as an assignment.
• Moral rights are part of the copyright world, and being deliberately designed to benefit creators regardless of who owns the other rights in their work they are expressly non-assignable. They can however be waived, which achieves much the same effect as an assignment – and they can be inherited, so the author’s heirs can enforce them.
• The rules about transferring copyright in other countries –  in particular, those that subscribe to the “authors’ rights” approach often make copyright inalienable, as is the case for example in Germany, so take care if there are valuable foreign copyrights involved (and remember that because copyright arises automatically there are usually going to be foreign rights to consider, though they may not be worth enough to worry about much).

What is the process for transferring intellectual property rights?

The statutes that govern the different types of intellectual property tell you what is required to transfer them to someone else: in general, you have to sign a written assignment. Only the person making the transfer needs to sign – they are the ones giving something away: the recipient does not have to sign, though frequently will do.

These days, it is common to use electronic signatures, and provided the parties to a document agree to sign electronically, and e-sign the document intending to be bound by it, this is usually enough. However, while the law is coming to accept electronic execution of documents, it is not yet settled so care needs to be taken. And if the assignment is by deed (which is common where foreign rights, especially copyright, are included) it is more likely that “wet-ink” signature will be needed.

The requirement for writing and a signature is all about creating certainty. That is not to say that an oral assignment is not (as the saying goes) worth the paper it’s written on: it cannot be effective in law, but it can work in equity. In effect, the courts will say that if you tell someone that they can have your patent, you have not actually transferred it but you cannot argue that the other person has no interest in it. You have given them beneficial ownership of the patent, just like if you had declared a trust over a piece of land you owned in favour of someone else.

If you would like help drafting an intellectual property transfer agreement our team of IP solicitors can help. A well drafted intellectual property transfer agreement is relatively inexpensive and can reduce the likelihood of disputes with the buyer.

What problems might arise?

Very often, people make agreements under which intellectual property is created but don’t deal with who owns the IP. When you commission someone to write a piece of software or take a photograph or write some copy, you don’t automatically get the copyright – however much you pay for the work. That remains with the creator until it is assigned in writing. This sort of problem accounts for a lot of cases before the courts.

If you ask a judge to sort it out for you (which is invariably much more expensive than paying a lawyer to write the document for you in the first place) they will rarely interfere with the ownership of the copyright, and you will have to be content with a licence to use the software, photo, copy or whatever in the manner that the judge finds the parties contemplated when the commission was made. Not always a happy situation, when you think you have paid handsomely for the work to be done. But sometimes the judge will decide that the IP has to belong to the commissioner – perhaps because the commissioner needs to be able to enforce the rights against the person they commissioned as well as against third parties. And if the facts show that the creator had agreed to transfer the IP, but hasn’t done so, the judge will usually order them to perform their side of the bargain. We see many cases where ownership of IP is in dispute, and would be happy to advise you on what you might expect the court to order.

Key clauses that an intellectual property transfer agreement should include

The law does not stipulate what must go into an assignment. The only mandatory provision is a clause making it clear that rights are passing from the assignor to the assignee. The details are up to you, and should cover the payments to be made and any right to have what you have assigned revert to you in the future.

There are also a number of clauses that a well-drafted assignment needs to contain to make it work smoothly:

• Warranties, to the effect that the transferor owns the rights (and that there are no encumbrances – they have not created a charge to secure their bank overdraft, for example), that no-one has infringed their rights (or, in diluted form, that they are not aware of any infringements), and that the rights being transferred are valid and subsisting and all renewal fees have been paid (although warranting the validity of any IP right is dangerous, and should not be done without very careful thought and legal advice).
• Further assurance – an obligation on the transferor to take steps that might be needed to make the transfer fully effective, which in the case of registered rights may mean confirming to the Intellectual Property Office that the transfer has been made.
• Power of attorney – it is common to find language that appoints the assignee as attorney for the assignor, so that they can execute any necessary documents without having to track down the assignor again and get them to sign papers. However, as powers of attorney have to be by deed and most assignments are not deeds, these clauses are often unenforceable, so take care to ensure that if there is a power of attorney the assignment document is a deed.
• Waiver of moral rights, which must be in writing. There are many exceptions to moral rights protection, making them weak and often useless for the creators for whose benefit they were intended, but any assignment that includes copyright must deal with moral rights too, just in case.
• Accrued rights of action. Just because the IP has been transferred does not mean that the new owner can sue for infringements that took place earlier. If the new owner wants to be able to deal with prior infringements (and this is usually preferable to relying on the old owner doing anything), the assignment must transfer the rights to take action.

How we document the transfer of intellectual property rights

IP rights are often transferred along with a collection of other business assets, and the transaction is recorded in a single very large agreement. Transfers can also be contained in commissioning agreements, publishing agreements, recording contracts, and a host of other arrangements. In some situations – for example, where IP rights have not been identified precisely enough in the wider agreement, or where the agreement creates a commitment to transfer the IP, perhaps when some later event occurs - a stand-alone assignment might be used. 

In some situations, your intellectual property solicitor will recommend the creation of a confirmatory assignment. A confirmatory assignment does not transfer rights – instead it provides evidence that they have transferred. As the main agreement will contain commercially sensitive or confidential information, it can be important to be able to show the rights have transferred without having to produce the main agreement. In addition, many intellectual property offices around the world have very specific requirements about what documents they will accept. And where ownership is in dispute, a confirmatory assignment may be useful because it does not contradict the argument that the rights were in fact transferred earlier.

Which transfers of intellectual property rights should be recorded on the official registers?

Transfers of UK registered intellectual property rights – patents, trade marks, registered designs and other minor rights – should be recorded at the Intellectual Property Office. In the case of EU trade marks and designs, transfers must be recorded at the EUIPO, and transfers of European patent applications must be recorded at the EPO.  Similar principles apply if there are foreign registered rights included in the assignment. Remember that there are some overseas rights that do not exist here, like utility models and (in some countries, notably the USA) registered copyright.

Intellectual property rights are generally easy to transfer although there are some suggested precautions you should take to ensure a transaction goes smoothly. It is best practice to have a transfer of ownership agreement drafted by an Intellectual Property solicitor . This will help you avoid legal disputes that are likely to cost significantly more than the cost of a transfer agreement. You should ensure that you notify the IPO and EUIPO of a transfer of a registered property right (trade mark, patent or registered design), we can help guide you through this process for a small fee. Contact us using the form below for more information or ask for a no-obligation quote.

Please leave us your details and we’ll contact you to discuss your situation and legal requirements. There’s no charge for your initial consultation, and no-obligation to instruct us. We aim to respond to all messages received within 24 hours.

• First name *
• Last name *
• Telephone *
• Your enquiry - how can we help you?
• Yes, I'd like to receive updates (you can unsubscribe at any time)
• Phone This field is for validation purposes and should be left unchanged.

Your data will only be used by Harper James Solicitors. We will never sell your data and promise to keep it secure. You can find further information in our Privacy Policy .

Explore related resources

Our offices, a national law firm.

Our commercial lawyers are based in or close to major cities across the UK, providing expert legal advice to clients both locally and nationally.

We mainly work remotely, so we can work with you wherever you are. But we can arrange face-to-face meeting at our offices or a location of your choosing.

Like what you’re reading?

Get new articles delivered to your inbox.

Join 8,153 entrepreneurs reading our latest news, guides and insights.

How can we help?

To access legal support from just £140 per hour arrange your no-obligation initial consultation to discuss your business requirements.

Make an enquiry

Business life cycle report

Founders, where are you in your business journey?

Use our latest report as a moment of reflection and reassurance that others are going through similar ups and downs at each life cycle stage.

• [email protected]

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).

Our Offices

11, 1st Floor, Free Press House 215, Nariman Point Mumbai – 400021

+91 22 67362222

Express Building 9 – 10 Bahadur Shah Zafar Marg Delhi – 110002

+91 11 23701284/5/7

155, ESC House, 2nd floor, Okhla Industrial Estate, Phase 3, New Delhi – 110020

+91 11 45062522

68 Nandidurga Road Jayamahal Extension Bengaluru – 560046

+91 80 46462300

Binoy Bhavan 3rd Floor, 27B Camac Street Kolkata – 700016

+91 33 40650155/56

The rules of the Bar Council of India do not permit advocates to solicit work or advertise in any manner. This website has been created only for informational purposes and is not intended to constitute solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work in any manner. By clicking on 'Agree' below, you acknowledge and confirm the following:

a) there has been no solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work through this website;

b) you are desirous of obtaining further information about us on your own accord and for your use;

c) no information or material provided on this website is to be construed as a legal opinion and use of this website will not create any lawyer-client relationship;

d) while reasonable care has been taken in ensuring the accuracy of the contents of the website, Argus Partners shall not be responsible for the results of any actions taken on the basis of information provided in this website or for any error or omission in the website; and

e) in cases where the user has any legal issues, the user must seek independent legal advice.

21 Jun 2018

PATENT ASSIGNMENT: HOW TO TRANSFER OWNERSHIP OF A PATENT

By Michael K. Henry, Ph.D.

• Intellectual Property
• Patent Prosecution

This is the second in a two-part blog series on owning and transferring the rights to a patent. ( Read part one here. )

As we discussed in the first post in this series, patent owners enjoy important legal and commercial benefits: They have the right to exclude others from making, selling, using or importing the claimed invention, and to claim damages from anyone who infringes their patent.

However, a business entity can own a patent only if the inventors have assigned the patent rights to the business entity. So if your employees are creating valuable IP on behalf of your company, it’s important to get the patent assignment right, to ensure that your business is the patent owner.

In this post, we’ll take a closer look at what a patent assignment even is — and the best practices for approaching the process. But remember, assignment (or transfer of ownership) is a function of state law, so there might be some variation by state in how all this gets treated.

WHAT IS A PATENT ASSIGNMENT AND WHY DOES IT MATTER?

A patent assignment is an agreement where one entity (the “assignor”) transfers all or part of their right, title and interest in a patent or application to another entity (the “assignee”). 

In simpler terms, the assignee receives the original owner’s interest and gains the exclusive rights to pursue patent protection (through filing and prosecuting patent applications), and also to license and enforce the patent. 

Ideally, your business should own its patents if it wants to enjoy the benefits of the patent rights. But  under U.S. law , only an inventor or an assignee can own a patent — and businesses cannot be listed as an inventor. Accordingly, patent assignment is the legal mechanism that transfers ownership from the inventor to your business.

PATENT ASSIGNMENT VS. LICENSING

It’s common to confuse the two concepts, but patent assignment is different from licensing. 

In a license agreement, the patent owner gives another entity (the “licensee”) permission to use the patented technology, while the patent owner retains ownership. 

In a patent assignment, the original owner permanently transfers its ownership to another entity.

USING EMPLOYMENT AGREEMENTS TO TRANSFER PATENT OWNERSHIP

Before your employees begin developing IP,  implement strong hiring policies  that ensure your IP rights will be legally enforceable in future.

If you’re bringing on a new employee, have them sign an  employment agreement  that establishes up front what IP the company owns — typically, anything the employee invents while under your employment.

The employment agreement should include the following provisions:

• Advance assignment of any IP created while employed by your company, or using your company’s resources
• An obligation to disclose any IP created while employed by your company, or using your company’s resources
• An ongoing obligation to provide necessary information and execute documents related to the IP they created while employed, even after their employment ends
• An obligation not to disclose confidential information to third parties, including when the employee moves on to a new employer

To track the IP your employees create, encourage your employees to document their contributions by completing  invention disclosure records .

But the paperwork can be quite involved, which is why your employment policies should also include  incentives to create and disclose valuable IP .

DRAFTING AGREEMENTS FOR NON-EMPLOYEES

Some of the innovators working for your business might not have a formal employer-employee relationship with the business. If you don’t make the appropriate arrangements beforehand, this could complicate patent assignments. Keep an eye out for the following staffing arrangements:

• Independent contractors:  Some inventors may be self-employed.
• Joint collaborators:  Some inventors may be employed by, say, a subsidiary or service company instead of your company.
• Anyone who did work through an educational institution : For example, Ph.D. candidates may not be employees of either their sponsoring institution or your company.

In these cases, you can still draft contractor or collaborator agreements using the same terms outlined above. Make sure the individual innovator signs it before beginning any work on behalf of your company.

OBTAINING WRITTEN ASSIGNMENTS FOR NEW PATENT APPLICATIONS

In addition to getting signed employment agreements, you should  also  get a written assignments for each new patent application when it’s filed, in order to memorialize ownership of the specific patent property.

Don’t rely exclusively on the employment agreement to prove ownership:

• The employment agreement might contain confidential terms, so you don’t want to record them with the patent office
• Because employment agreements are executed before beginning the process of developing the invention, they won’t clearly establish what specific patent applications are being assigned

While you  can  execute the formal assignment for each patent application after the application has been filed, an inventor or co-inventor who no longer works for the company might refuse (rightly or wrongly) to execute the assignment.

As such, we recommend executing the assignment before filing, to show ownership as of the filing date and avoid complications (like getting signatures from estranged inventors).

HOW TO EXECUTE A WRITTEN PATENT ASSIGNMENT

Well-executed invention assignments should:

• Be in writing:  Oral agreements to assign patent rights are typically not enforceable in the United States
• Clearly identify all parties:  Include the names, addresses, and relationship of the assignor(s) and assignee
• Clearly identify the patent being assigned:  State the patent or patent application number, title, inventors, and filing date
• Be signed by the assignors
• Be notarized : If notarization isn’t possible, have one or two witnesses attest to the signatures

RECORDING A PATENT ASSIGNMENT WITH THE USPTO

Without a recorded assignment with the U.S. patent office, someone else could claim ownership of the issued patent, and you could even lose your rights in the issued patent in some cases. 

So the patent owner should record the assignment through the  USPTO’s Assignment Recordation Branch . They can use the  Electronic Patent Assignment System (EPAS)  to file a  Recordation Cover Sheet  along with a copy of the actual patent assignment agreement.

They should submit this paperwork  within three months  of the assignment’s date. If it’s recorded electronically, the USPTO  won’t charge a recordation fee .

Need to check who owns a patent?  The USPTO website  publicly lists all information about a patent’s current and previous assignments.

WHEN WOULD I NEED TO EXECUTE A NEW ASSIGNMENT FOR A RELATED APPLICATION?

You’ll need only one patent assignment per patent application, unless new matter is introduced in a new filing (e.g., in a  continuation-in-part , or in a non-provisional application that adds new matter to a  provisional application ). In that case, you’ll need an additional assignment to cover the new matter — even if it was developed by the same inventors.

WHAT IF AN INVENTOR WON’T SIGN THE WRITTEN ASSIGNMENT?

If you can’t get an inventor to sign an invention assignment, you can still move forward with a patent application — but you’ll need to document your ownership. To document ownership, you can often rely on an   employee agreement ,  company policy ,  invention disclosure , or other employment-related documentation.

DO I NEED TO RECORD MY ASSIGNMENTS IN FOREIGN COUNTRIES?

Most assignments transfer all rights, title, and interest in all patent rights throughout the world.

But in some countries, the assignment might not be legally effective until the assignment has been recorded in that country — meaning that the assignee can’t enforce the patent rights, or claim damages for any infringement that takes place before the recordation. 

And there might be additional formal requirements that aren’t typically required in the United States. For example, some countries might require a transfer between companies to be signed by both parties, and must contain one or both parties’ addresses.

If you’re assigning patents issued by a foreign country, consult a patent attorney in that country to find out what’s required to properly document the transfer of ownership.

NEED HELP WITH YOUR PATENT ASSIGNMENTS?

Crafting robust assignment agreements is essential to ensuring the proper transfer of patent ownership. An  experienced patent professional  can help you to prepare legally enforceable documentation.

Henry Patent Law Firm has worked with tech businesses of all sizes to execute patent assignments —  contact us now  to learn more.

GOT A QUESTION? Whether you want to know more about the patent process or think we might be a good fit for your needs – we’d love to hear from you!

Michael K. Henry, Ph.D.

Michael K. Henry, Ph.D., is a principal and the firm’s founding member. He specializes in creating comprehensive, growth-oriented IP strategies for early-stage tech companies.

14 Jun 2018

INTRODUCING OUR NEW PATENT AGENT, BRENT CLOTHIER

By Michael Henry

Don't miss a new article. Henry Patent Law's Patent Law News + Insights blog is designed to help people like you build smart, scalable patent strategies that protect your intellectual property as your business grows. Subscribe to receive email updates every time we publish a new article — don't miss out on key tips to help your business be more successful.