What does an IP Assignment Agreement do?
An intellectual property (IP) assignment agreement is an agreement where the party that owns IP transfers ownership of their IP to another party. Simple in principle right?!
The types of IP that are commonly assigned are copyright over creative work, trademarks and patentable discoveries and inventions. However any type of IP can be assigned. IP assignment agreements can cover existing, partially completed and future IP (but only for some classes of IP, for instance the copyright in work that will be created in the future can be assigned under a copyright IP assignment).
Examples of when you would use an IP Assignment
For example, you might have invented a device that you want to sell to a business to make money. Maybe you want to sell your business and the IP, such as logos, designs, trademarks and patents, that goes with it. Or maybe you have created IP after hours (i.e. not as part of your normal day job) and you have talked to your employer about that IP and you agree to assign the rights to any IP you created outside of work hours to your employer for a fee.
After you have assigned your IP
Once you have assigned your IP, you will no longer have any rights over it. This means that it is important to carefully consider your options before assigning your IP. For example, would it be better for you to licence your IP rather than selling it? If you licence it, it can be for a fixed term and you retain ownership rights. Licensing gives the licensee the right to use, rather than own, your IP. Have a read of our Licensing Agreement page for more information.
Sale price of IP
If you do decide to sell your IP, make sure that you consider all of the costs that went into producing the IP, as well as its future potential value and a profit margin, when calculating the sale price.
Sometimes the purchaser or party acquiring your IP will want to pay a royalty fee rather than a lump sum. This protects them because they have less initial outlay and royalties are dependent on the commercial success of the IP. But bear in mind that if there are no sales, the assignor won’t receive any royalties.
IP Assignment tricks and traps!
Also be careful of any tricks that the party acquiring your IP could engage in. Here is one we have seen a few times…the party acquiring the IP under the IP Assignment agreement agrees to pay a royalty for ‘purchasing’ the IP rights, but then the purchaser of the IP does not take active steps to sell any products that incorporate the IP. In fact they may have only bought the IP to stop you selling products based on your IP. In essence this means that the purchaser of the IP gets it for free and the seller of the IP is never properly compensated for their IP! You can overcome this by including minimum royalty amounts in the IP assignment (so that if no products are ever sold at least you are paid the ‘minimum royalty amount’ – whatever you agree that to be.
IP Assignments must be in writing
It is important that assignment agreements are in writing and are clear and comprehensive. For instance if you are wanting to assign the ownership of copyright, by virtue of the Copyright Act the assignment must be in writing.
What should be in an IP Assignment?
An IP assignment agreement should specifically state what rights and IP are being transferred. Include official registration numbers (for patents and trademarks – they don’t exist for copyright). The agreement must also state the date of transfer, and the price payable for the IP (if any). IP agreements should include warranties and indemnity clauses. Common warranties include statements guaranteeing that:
- The purchaser of the IP rights (the assignee) will have sole and absolute ownership of the IP
- The seller of the IP rights (the assignor has the right to transfer or sell the IP
- Selling the IP does not infringe on a third party’s IP
- The IP has not already been assigned (or licensed) to anyone else
- That the assignor who may have moral rights in the IP, consents to an infringement of their rights
Of course there are other items that can be included in an IP Assignment agreement, it really depends on what you are trying to achieve in your particular transaction. Let us know if you need a hand!