This is yet another frequently asked question. Intellectual Property (e.g. patents, designs, trade marks, etc) is an asset, i.e. property, just like physical property, such as a house or car. So, it follows that IP can be sold or ‘rented’ (i.e. licensed) in a broadly similar way.
Assignment
If you are buying or selling IP outright (i.e. receiving or handing over all ownership and rights for an agreed fee), then the instrument by which the IP is transferred from one owner to another is usually called an “assignment”. Assignment documents are often simple sales contracts that essentially confer the ownership of, and rights in and to, one or more pieces of intellectual property to the “assignee” in return for the agreed sum. These documents have to be signed by both parties and that, in effect, completes the legal transfer.
However, if the assignment transfers ownership of registered IP, then it is essential that the register entries for each affected piece of IP are updated (at the relevant IP office) with the new owner details as soon as possible and, in any event, within 6 months of the date of the assignment (because any delay beyond that can affect the new owner’s ability to claim damages if they take someone to court for infringement.
Licensing
If you do not want to relinquish ownership of your IP, but instead want to allow someone else to use it or exploit it in return for some financial benefit, then a license agreement can be used to set out the conditions of that agreement. License agreements can be quite complex, and are based entirely on the terms you have agreed with the licensee, so you should always seek the advice of a commercial solicitor to draft the contract (or, if the other party provides a draft of the license agreement, to review it thoroughly). In fact, it is not unusual, and often hugely beneficial, to use an experienced commercial solicitor to help you to negotiate the terms of a license agreement.
Basic types of license
There are a few different types of license agreement, but the main ones are:
- An exclusive license (which gives the licensee the exclusive right to exploit a piece of IP, and that not only excludes others from being allowed to do so but also the IP owner);
- A sole license (which gives the licensee the sole right to exploit a piece of IP, which excludes others, but not the IP owner, from doing so;
- A non exclusive license (which gives the licensor the right to exploit a piece of IP, but does not stop the IP owner from giving licenses to others to do the same thing).
These are very basic headlines to illustrate the type of licenses you, as an IP owner, can consider, depending on what you want the outcome to be and also depending on what the licensor wants to achieve. Licenses can also be territorial, so, for example, you could give someone the exclusive right to exploit a piece of IP, but only in a specific country or territory.
In terms of financial benefits associated with licenses, these often take the form of a fixed license fee (e.g. a fixed amount every quarter or year) and/or royalties based on the number of units of a product sold. There is no hard and fast rule when it comes to these fees: it is dependent entirely on the outcome of negotiation between the parties, but it stands to reason that the financial benefit associated with an exclusive or even sole license is likely to be higher than a non exclusive license for the same thing.
Need Help?
If you have any questions about transferring IP or need any other advice about intellectual property, please contact us for a free initial consultation by emailing vicki.strachan@strachanip.co.uk or visiting our website at https://strachanip.co.uk/contact/. Alternatively you can use this link to schedule a mutually convenient time to speak: https://calendly.com/strachan-ip-a-fresh-view-of-intellectual-property/30min
