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What is Deed of Assignment?
A deed of assignment for IP Rights is a legal agreement where ownership on an Intellectual Property right is transferred from the Owner of the IP (called the ‘assignor’) to a third party (called the ‘assignee’).
In exchange for the transfer of ownership of IP, the assignee will provide something of value to the IP owner. This can take different forms such as:
- Payment – payment could be
a. Fixed price payment or
b. Royalty based – i.e. a percentage of sales
- Other forms of payment – the parties may agree on a different consideration instead of money. For instance, in exchange for the transfer of ownership in the IP, the assignee may make payment in the form of issuing shares in its company to the assignor
- All forms of IP – a deed of assignment can cover the full range of IP such as:
a. Patents over inventions
b. Copyright over artistic or literary works
d. And other ‘non traditional’ forms of IP such as Domain names or even confidential information such as trade secrets or know-how.
Example Scenarios for a Deed of Assignment
If you code a new computer program which makes uploading of pictures to Instagram a few seconds faster, you can protect your code under multiple forms of IP. For instance your code would most likely be protected by copyright, you also may be able to obtain a patent over your code or you could even look to protect your code as a trade secret (i.e. not telling anyone how it works and hoping that they cant work it out from reverse engineering your code). In any event you could transfer ownership of your code solution to a third party by a deed of assignment.
When you write a sci-fi novel series consisting of three separate books, you own the copyright in these works which gives you exclusive rights such as the right to reproduce, publish or distribute your work. However, to commercialise your creative work immediately, you could sign a deed of assignment to transfer the ownership of the copyright in your 3 novel series to a third party in return for a large (we hope!) payment.
What is the difference between a licence agreement and a deed of assignment?
A Deed of Assignment permanently transfers ownership of the IP to someone else, whereas a licence agreement simply allows someone else to use our IP (subject to the terms and conditions you impose in the licence agreement).
In other words, a deed of assignment is like selling your house, but a licence agreement is like renting out your house.
With Deed of Assignment, you lose all your IP Rights permanently because you are ‘selling’ or permanently transferring the ownership in your IP to someone else.
Once the IP has been transferred because your no longer own the IP you cannot control what the new owner will do with the IP because you no longer own the IP. Once the Deed of Assignment has been signed then the new owner of the IP will be able to do anything with the IP that you as the old owner could have done (before you assigned the IP).
With an IP Licence agreement, on the other hand, you only allow the other party the right to use your IP in accordance with the terms and conditions of the licence.
Why do I need a deed of assignment?
With deed of assignment, the owner of the IP can generates revenue for its business.
What is the use of having Intellectual Property Rights over an invention or a creative work if you can’t commercialise it? If you have valuable IP and you want to generate some money from that IP then selling your IP could do that – and the simple way of doing that is by way of a Deed of Assignment.
Unlike a licence agreement where the payment is made to you over a long period of time, you can agree on a lump-sum payment in the deed of assignment to get paid immediately.
A Deed of assignment can be a useful mechanism for small businesses who do not have the resources to commercialise their inventions or creative works but still want to make money from their IP.
Transferring IP between related Companies.
Often Deeds of Assignment are used to transfer the ownership of IP between corporate entities. Often this can be done to then put in place a tax effective structure where the IP is owned by one of the corporate group companies based in a tax effective location and then the other companies in the group are given a licence to use that IP in return for paying a licence fee. The licence fees are then earnt in a tax effective location, so that ultimately lower taxes are payable.
What sort of clauses should be in a deed of assignment?
1. Identification of IP:
Clear identification of the IP Right which will be transferred is essential to avoid any future disputes. For example, if the copyright over a book series will be transferred, you should clearly define which books’ copyright will be transferred. Will it cover future books of the series as well?
If the agreement is for a trademark, what is the registration number? Is it a logo trademark only or a word and logo mark, or just a word mark? What goods/services falls under the trademark?
Clearly defining the IP being assigned is a fundamental component of a Deed of Assignment
Both parties need to guarantee that they will be able to perform their obligations under the contract and they have the authority to do so.
For instance, if you are going to transfer ownership of a trademark, you will have to give the assignee legal comfort that you own the trademark and that you are able to assign the rights in that trademark to them.
3. Moral Rights:
If the agreement concerns copyright over an artistic or literary work, then the moral rights given to authors and performers will be important and you will want to ensure that your Deed of Assignment includes some clauses where the owner of the moral rights consents to an infringement of their moral rights. For more information about moral rights you can have a look at this.
Most often the parties will want a clause in the Deed of Assignment that mandates that the deed and any information contained in the deed is kept confidential. To that end a robust confidentiality clause will assist.
(Related read: Assignment vs Novation)
If you have questions or need a Deed of Assignment please feel free to get in touch.
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