Transferring intellectual property (IP) is a critical process for businesses and individuals looking to protect and/or capitalise on the value of their assets. This article covers the steps involved in transferring IP effectively.
Understanding the type of IP
Before considering purchasing or transferring IP, it is key to identify the type of IP being considered:
- Patents: protects inventions and methodologies.
- Trade marks: protect brand names, logos, motion marks, slogans, certifications.
- Copyright: protect original works of authorship, such as books, music, computer programs.
- Trade Secrets: protect confidential business information.
Due Diligence
Before considering the purchase or sale of IP rights, conduct thorough due diligence to ensure:
- The IP is valid and enforceable,
- The transferor has the right to transfer the IP,
- There are no existing disputes or encumbrances; and
- The transfer complies with all relevant laws and regulations.
Necessary Documentation
To transfer IP, you need to prepare and execute the appropriate legal documents. It is a common misconception that the transfer of intellectual property rights occurs merely through payment for the intellectual property – this is not enough.
Section 90(3) of the Copyright, Designs and Patents Act 1988 states that an assignment is not effective ‘unless it is writing signed by or on behalf of the assignor (the party transferring the intellectual property)’. Often businesses use general terms and conditions on their website for the transfer of intellectual property rights which often fall short of the mark due to the omittance of signature execution.
In addition, whilst case law has established that there is no need to explicitly use the words ‘assign’ within the assignment (Cray Valley Ltd v Deltech Europe [2003] EWHC 728 (Ch)), it is recommended that such an assignment is clear to ensure certainty of the parties’ intentions and increase the chances of the transfer being effective. Often parties will take templates or copies of assignment documents from online sources and use them as the legal mechanism without verifying their suitability. The risk here, as is unfortunately often realised in practice, is that the copies or templates do not always go far enough to reflect the intentions of the parties – this leads to the assignment becoming void or the parties being subject to much more unfavourable circumstances than intended. We can help ensure all such documents are legally sound and comprehensive.
Furthermore, an assignment can go further than just transferring intellectual property rights – for instance, they can include contractual mechanisms such as ‘warranties’ and ‘indemnities’. These mechanisms are particularly useful for the assignee, as they add an additional layer of protection by supplying avenues for remedies in the event of infringement or title invalidity.
Other Requirements
Depending on the type of intellectual property that is being transferred, the parties may be subject to further requirements in order to effect the transfer. For instance, when trade marks are assigned, this must be recorded with the United Kingdom’s Intellectual Property Office (‘UKIPO’). This is key for assignees and assignors to appreciate, because the document will then be publicly available via the UKIPO – it is therefore sensible to make sure any assignment documentation is standalone and separate from the wider asset purchase agreement or share purchase agreement.
For more information on assigning trade marks, please read our latest article by our Trainee Trade Mark Attorney, Olivia Richards.
What can I do?
In the first instance, it is recommended that you evaluate your business or potential target IP to identify where intellectual property exists and whether you need to put any intellectual property assignments in place.
For those developing or commissioning the development of intellectual property; it is recommended that assignments are agreed in advance of the creation of any intellectual property, rather than retrospectively.
Whether you are to assign or be assigned intellectual property rights, the drafting of an assignment should be done by a legal professional to ensure its enforceability and provide you with any necessary protections. In addition, legal professionals can advise you on any other obligations you may be subject to in order to fulfil the transfer.
At Stephens Scown, we have a wealth of experience in preparing intellectual property assignments for both the assignor and the assignee of intellectual property. If this is of interest, or if you have any further questions relating to intellectual property, please reach out to our Intellectual Property team – enquiries@stephens-scown.co.uk or call 0345 450 5558.