How To Transfer Intellectual Property

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All forms of intellectual property --  copyrights, trademarks, trade secrets and patents – can be transferred in two ways: the property can be temporarily transferred under a license; or the property can be permanently transferred by way of an assignment.

Licensing

The key to licensing is the principle of reversion (or reversionary rights) which refers to the fact that you will get the rights back once the license terminates. Typically the reversion occurs upon one of several factors:

  • The agreement expires because of a fixed time period
  • The company that licensed the work or invention (the licensee) stops selling the property
  • The licensee failed to commercialize your work (they never sold it), or
  • The licensee breached the agreement.

If the license agreement does not provide for a reversion in the event of termination, you should have an attorney review it to be sure that you are licensing and not assigning your work.

Separate rights under intellectual property can be licensed separately. For example, each right granted under copyright – for example, the right to copy, the right to distribute, the right to make derivatives can be licensed to a third party who becomes the owner of copyright as to that specific grant. A license cannot extend beyond the life of the intellectual property (for example a license for a patent cannot last longer than the life of patent protection) and in the case of copyright law, all transfers made after 1977 can be transferred 35 years after the transfer was made.

 Assignments

Assignments are a permanent transfer of the rights. In other words, you’re selling the rights to someone else and you will not be getting them back. Assignments are typically made under employment or contractor agreements, when companies acquire the assets of other companies, or when intellectual property is used a security such as when a movie studio secures loan by assigning movie rights in return for a loan. For a thorough explanation of assignments as they apply to each form of intellectual property, review this article.

The Writing Requirement

Assignments must be in writing to be enforceable. Although many licenses can be oral, there are numerous reasons why they should be in writing – most notably the writing establishes a clear chain of transfer as well as establishing criteria for enforcement of the license.

Ownership

Although it may seem axiomatic, you cannot transfer what you do not own.  When you sign a license or assignment, you will typically have to warrant (or promise) that you own the rights that you’re transferring. Problems sometimes develop because, for example, an employee believes that he or she owns rights in an invention or work and the owner believes that the company owns it. Employee ownership rules differ based upon the type of intellectual property. As a very general rule, employers will own all copyrights, patents,, trade secrets, and trademarks created within the course and scope of employment. The same rules do not necessarily apply in cases of independent contractors. Because ownership and transfer rules are complex, the advice of an intellectual property lawyer should be considered before entering into an intellectual property transfer.

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