Intellectual property (IP) - whether in the form of a patent, copyright or trademark – grants the owner control over how the property is used and by whom. The owner may choose to commercialise the IP by granting licenses to other companies giving them the right of usage. Alternatively, they may decide to assign – or effectively sell - the IP to another company in exchange for a large sum.
The primary difference between assignment and license in IP rights is in the transference of ownership. An assignment transfers ownership and title to the assignee, whereas a licence grants the licensee permission to use the IP – usually for a limited time period - whilst ownership of the patent remains with the licensor.
One other significant difference between assignment and license in IP rights is that while an assignment must be in writing, a license is not legally required to be.
What is an IP Licence?
Obtaining a patent or copyright over a piece of IP gives the holder exclusive ownership over that property. This could be a song, piece of software, an invention or a physical object. Without obtaining a license, it would be unlawful for any third party to use that property. However, the owner of the property is entitled to license out its use to third parties as they choose.
For example, if a software developer designs a new app, they may allow certain companies to integrate the app into their software for an ongoing fee. However, the developer still holds the controlling interest in the app and can choose to grant licenses to other companies too, depending on the conditions agreed in the license.
The exact terms of the license are at the owner’s discretion. It may for example include territorial restrictions, a time frame, or particular restrictions on how the property can be used. The license will typically outline confidentiality agreements as well as the terms of termination of the license. Although licenses are not required to be in writing in order to be valid, all parties may well prefer to have a written agreement for clarity.
What is an IP Assignment?
In the case of an assignment, the assignor transfers the full title and ownership of the copyright or trademark to the assignee. Assignment is comparable to the sale of real estate in that the sale - once made - is final and cannot be revoked. The assignor loses all their previous rights to the IP since they are no longer the legal owners. For this reason an assignment would generally be a lot more expensive than the acquisition of a licence.
Assignments are commonly used to purchase the IP of commissioned creative work, such as a logo designed by a graphic designer, or a piece of software designed by a software developer for a client. Whilst most assignments will cover international IP rights, some IP may have territorial restrictions which are worth considering before entering into the contract.
Under UK IP law, an assignment is always required to be in writing and signed by the assignor. The assignment is usually written in the form of a deed and will need to precisely detail the IP being assigned.
Registering an Assignment or License
Not all IP requires registration, although some types do. Copyright exists automatically upon the creation of the work and lasts for the lifetime of the owner, whether or not registered. Trademarks, on the other hand, must be registered. Patents also have strict registration requirements, whilst design rights are more flexible.
Neither assignments nor licences are required to be registered, although it is advisable to do so. The assignment or licence will still be legally binding without registration, but if there is a later dispute, the original licence or assignment will not necessarily protect the assignee if it remains unregistered. Before purchasing a license or assignment, it is also important to ensure that the IP itself has been properly registered, to ensure your rights are properly covered.
Effect of Brexit
Prior to Brexit – and for the remainder of the implementation period – the UK is subject to European IP law. It is as yet unconfirmed how IP rights may be affected in the future, although it is likely that protection and enforcement for registered IP owners will remain largely unchanged. Due to the uncertainty of the situation, ensuring your rights are clarified and that any transactions are properly registered now could help to avoid any potential doubt post-Brexit.
Get in touch for help with your assignment or licence
Although the fundamental difference between Assignment and License of IP Rights is a clear cut one, each process can be highly technical and vary widely, depending on the requirements of both parties. If you would like help or advice on either an assignment or licence of IP rights, please do get in touch with one of our lawyers for expert, affordable legal advice.
The contents of this article do not constitute legal advice and are provided for general information purposes only.
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