Intellectual Property Assignment Agreements

An Assignment Agreement is a legal document which can be used by one party (the assignor) to assign rights or interests previously belonging to the assignor to another party (the assignee).

Assignment Agreements are commonly used in the transfer of Intellectual Property (IP) rights. An IP Assignment Agreement might be used as part of a business sale or when engaging a new employee. They might also be used where a company has engaged a service provider to create new IP,  such as a logo or the code for an online tool, so the company can arrange for the IP created to be immediately assigned to them.

[What is Intellectual Property?]

[Different Types of Intellectual Property  Agreements Explained]

What an Assignment Agreement Must Cover

Assignment Clause

An Assignment Agreement must contain a clause that actually assigns the IP rights to the assignee. The assignor and assignee must each be explicitly defined, and the nature of the rights themselves must be described in detail to avoid confusion or disagreement later down the line about which rights were transferred and which weren’t.

The assignor must agree to do all necessary things, including signing required documents, to facilitate a successful transfer.

Timing of Assignment

The assignment clause must also explain whether it is only assigning IP rights that exist at the time of the agreement or whether it extends to related IP created in the future.

An example where future IP might be written into an Assignment Agreement is where an employer is looking to obtain ownership of IP produced by an employee in the course of their employment.

Moral Right Assignment

It is also advisable that the agreement addresses the moral rights over the IP assigned. Moral rights include the owner’s right to be credited as the creator of a work, the right not to have the work subject to derogatory treatment and the right against other parties passing off the work as their own. Ordinarily, the moral rights to a work should be assigned to the assignee alongside the ownership rights.

Conditions

Some assignments will come with conditions attached. It is important that these conditions are clearly articulated in the Assignment Agreement if they are to be enforceable. Conditions can include a fee in exchange for the rights (common in business sales) or a transition period between the execution of the agreement and the complete transferal of the rights.

Conditions might also be imposed where there exists a duty of confidentiality from the assignor to a third party. If an assignor holds any rights that they cannot transfer because of an existing confidentiality agreement with someone else regarding that IP, they must agree to hold such rights on trust for the assignee, meaning they must retain ownership over those rights and hold them for the benefit of the assignee.

Warranties and Indemnities

Warranties and indemnities are statements made by the assignor in an agreement that protects the assignee from liability in the event that the assignor attempts to transfer IP which does not belong to them.

An assignor must make various warranties, including that they are the sole owner of the relevant IP and that they have the authority to assign the IP in full. They must also state that none of the rights they are assigning are licensed or otherwise restricted to any third party, that they are not infringing on a third party’s moral or IP rights and that they have no other obligations inconsistent with the agreement.

Notice Obligations

Some contracts contain obligations that notice be provided to certain parties before the ownership of any relevant IP right is changed. If such obligations exist for any of the parties involved in the agreement, those obligations must be noted in the agreement and met by the parties.

Disclosure Rules

Sometimes the law requires that the assignment of rights to a new party be disclosed to various relevant organisations. For example, IP Australia - Australia's peak regulatory body for Intellectual Property - can require notice of a change in ownership. Any transfer of ownership of a trade mark would need to be lodged with IP Australia to update the Trade Mark Register.

Other Considerations

Some contracts contain “no assignment” or “consent required” clauses which restrict the assignment of IP rights. This is common in franchise agreements, which often contain clauses stating that the rights granted to franchisees over the relevant IP are rights of use, not of ownership. These agreements often explicitly state that the rights of use are not assignable without consent.

Parties entering into an IP Assignment Agreement may also need to consider the Australian Consumer Law (ACL), found in Schedule 2 of the Competition and Consumer Act 2010 (Cth).

Section 18 of the ACL states that a person must not, in the course of trade or commerce, engage in conduct that is, or is likely to be, misleading or deceptive. Section 29 likewise prohibits the making of false or misleading representations about goods or services. These prohibitions extend to the assignment of IP rights. For example, a prospective assignor could not make representations that they were in a position to assign an IP right to a prospective assignee if the prospective assignor did not have sole ownership or control of that right.

What an Assignment Agreement Can’t Do

It is important to recognise that Assignment Agreements can only be used to transfer rights and benefits. They cannot be used to transfer burdens and obligations. A deed of novation is required to transfer contractual burdens onto another party.

Takeaways

Intellectual Property Assignment Agreements are used to transfer IP rights from an assignor to an assignee.

They are commonly used in business sale agreements, employment and service contracts.

IP Assignment Agreements must include a number of clauses detailing:

• The assignment of the IP rights;
• The timing of the assignment;
• The assignment of moral rights;
• Conditions on the assignment;
• Warranties and indemnities;
• Notice obligations;
• Disclosure rules;
• and more.