When should you consider the assignment of intellectual property?

What is an IP Assignment?

An IP assignment is a contract that transfers ownership of intellectual property from one person or organisation to another.

It involves an outright transfer of an owner’s rights, title and interests in copyrights, trademarks, patents, trade secrets, or other intangible creations.

The transferring party (‘assignor’) transfers to the receiving party (the ‘assignee’) its ownership in intellectual property rights (IPRs).

It can be distinguished from an IP licence agreement in that with an IP licence the owning party will grant the licensee a right under the IP (e.g. to manufacture certain products), but ownership of the IP right itself remains with the licensor.

You can find out more about licencing in our guide to licencing

Inherent with an IP assignment is a loss of control of the assets from the date of assignment as the new owner will usually be able to do what it likes with the IP, including transferring ownership to another party.

An assignment also means that if a new owner breach any of its obligations, this will not usually affect the new owner’s ownership of (or right to use) the IP (although it could give rise to a claim for breach of contract or a claim of repudiation).

In contrast to the above, an IP licence agreement will typically contain detailed provisions as to what the licensee can and cannot do (which may include a prohibition on transferring the licence or sub-licensing to a third party).

If the licensee fails to comply with its obligations under the licence, the licensor, in many cases, has the right to terminate the licence and therefore the licensee’s right to use the particular IP will cease.

Who has the rights to intellectual property?

Usually, the person who created the intellectual property is the owner.

However, there are certain situations where this doesn’t apply:

• IPRs created in the course of employment, where it is part of the employees’ job, is presumed to be owned by the employer, or
• As is the case with any registered IP, the named entity on the register is the owner of the IP and therefore is the only person/entity who has the right to effect the transfer.

When might you require an assignment?

There are a number of situations in which your business may wish to enter into an IP assignment.

These include:

• you may be setting up a new business with co-founders who have developed a particular product or software and you want the IP rights to be owned by the business;
• you have instructed a web developer to develop your website and you want IP rights in the design to rest with your business;
• your business may require staff working on a particular project to assign (or confirm the assignment of) IP to the business;
• you may require third party collaborators to assign IP to you on completion of a project;
• you may be asked to assign certain IP to a collaborating business (which is perhaps taking the responsibility for maintaining IP arising from a project);
• you may be assigning the IP to a third party in exchange for a payment as part of your technology transfer activities;
• you may be setting up a spin-out company and may have agreed that the spin-out company will be the owner of the IP; or
• you may be buying or selling a business and the IP is an integral part of the transaction

Does the assignment of IP need to be in writing?

As a matter of law, assignments of copyright, trademarks and design rights must be made in writing for them to be effective.

In respect of patents and patent applications, although there is no statutory requirement for an assignment to be in writing, a written assignment is arguably always used, because an instrument must be produced to the Patents Office to achieve legal ownership (as opposed to beneficial ownership).

This is due to the requirement that the assignment will need to be recorded on the Patent Register and the Patent Office will need to be satisfied that title has been transferred.

It should be noted that many IP assignments may also involve the transfer of IP in jurisdictions other than Ireland and, in many other jurisdictions (including the UK) writing is a requirement for all IP assignments.

Accordingly, best practice is to always use a written assignment.

In addition to the above, a written assignment also allows the parties to clearly define:

• what IP is being assigned;
• whether any other ‘associated rights’ are being assigned (e.g. the right to sue third parties for past infringements);
• when the assignment will take place;
• what price (or other consideration) is payable in exchange for the assignment and on what payment terms; and
• whether any warranties are given as to the IP being assigned.

How do you know you own the intellectual property after the agreement is signed?

In order to make sure the assignee becomes the new owner of the IPR, it may be necessary to register the rights with the Intellectual Property Office.

It is important to make sure the assignee’s name is on any registered documents and complete any necessary registrations.

What if you only want to assign partial rights to the assignee?

You can specify what rights you want to assign in the assignment agreement.

For example, if you have a novel, you may want to assign only the rights to make a film but retain the rights to publish the novel as a book.

What can employers do to protect their IP?

Generally, under Irish employment law, IP created by employees is owned by the employer provided that it was created in the course of the employee’s employment with the employer.

This presents challenges for employers and whether or not IP was created in the course of employment is often the subject of legal argument in the Courts.

Employers can implement a number of initiatives to protect their IP and mitigate potential legal disputes over the ownership of IP:

1. Contract of Employment– At a minimum, we recommend the contract of employment specify that the employee acknowledges and agrees that all IP rights in any matter made or discovered by the employee during the course of employment (whether or not during office hours) affecting or relating in any way to the business, from time to time, of the employer be disclosed to the employer and belong to the employer.

In addition, we recommend the contract of employment include contractual confidentiality obligations which would apply during employment and after termination.

2. IP Assignment Agreement – We also recommend that the employee is required to sign and date an IP Assignment Agreement which applies at all times, both during the period of the employee’s employment with the employer and after the termination of employment.

Any such agreement should set out what has been agreed between the parties in respect of proprietary and IP rights, including, the full and irrevocable assignment of IP rights to the employer.

We recommend that the employee is also required, at the expense of the employer, to execute such documents as the employer may require to protect its IP rights.

3. Non-Disclosure Agreement – Employers should also consider entering into a non-disclosure agreement with certain key employees to protect their know-how and IP when disclosing confidential information to the employee which again applies at all times, both during the period of the employee’s employment with the employer and after the termination of employment.

Any such agreement should set out what has been agreed between the parties in respect of the meaning of confidential information, confidentiality obligations, if and when disclosure is permitted, return of confidential information and reservation of rights to the employer.

You can find our non-disclosure template here

It is important for employers to take all necessary steps to ensure that their IP is protected.

IP is a business asset and should be treated as such.