While speaking with a colleague of mine a few weeks ago, he asked me if I knew how to assign a patent from his name in to his company. In going over the details with him, he explained that he had originally patented his product in his own name, then later created his company, and is now seeking a way to acquire investors for his (patented) product. The obvious problem is that so long as the patented product is registered in his name and not his company’s, his company does not itself hold any rights to the patent and is therefore devoid of any value relating to the patent. In order to entice investors in to investing in his company, he wants to transfer the patent to the company thereby providing it with the valuable intellectual property asset.
Realizing that my colleague could benefit from a brief explanation of the methods for transferring intellectual property (IP), and knowing that there are likely many IP owners out in the world that likely have similar questions, I thought it a good idea to make IP Assignment and Licensing the subject of this next post. Please note that in registering IP, licensing IP, or in assigning IP, it is always best to consult and utilize the services of an attorney; Nowakowski Legal PLLC is of course always available to assist with any legal needs that you might have.
All major intellectual properties such as a copyright, trademark and patents can be licensed and/or assigned to other individuals or entities. The major difference between an assignment and a license is that an assignment is generally a more permanent transfer, whereas a license is a limited transfer generally associated with restrictions and the ability to revoke or terminate. The best way to think about the difference between a license and an assignment is to associate a license with a “lease” on the IP, whereas an assignment is more of a permanent transfer of the IP. A more detailed explanation of both are as follows:
Assignment – an assignment is a transfer of all the rights and liabilities in the subject IP. That being said, you can provide an assignment of less than your entire ownership in an IP, so long as whatever “piece” is transferred is given away in its entirety. For example, you can provide another entity with an assignment of co-ownership in a patent, so long as the co-ownership is given in its entirety and without restriction (i.e. you can not reserve a right to remove his/her co-ownership).
Major uses of assignments are to transfer an IP in to a company for purposes of enticing investors, for the sale of the IP directly to a purchaser, or to transfer or include ownership of the IP to others that have some contractual ownership in the IP. Several vehicles are in place for some IPs which will cause them to automatically transfer via assignment in certain circumstances by operation of law (i.e. death of the owner, acquisition of a company by another, etc.).
License – a license is the authorization of use of an IP for a specific purpose and is generally limited by term, territory, and renewal provisions. In contrast to an assignment, a license is not a transfer of ownership and is not a permanent provision of rights in the IP. Instead, a licensing agreement will contain specific terms stipulating the specific rights and usages the licensee may have in regards to utilizing the IP. For example, a standard licensing agreement might give a licensee the exclusive right to use the IP in in the sale of its product in the Southern half of a state for the next 3 years.
Major uses of a license are to acquire compensation in exchange for the right to a limited use of the intellectual property. Licenses that are less restrictive and provide more exclusivity to the purchaser tend to be more expensive than licenses that are more restrictive and less exclusive; this is because being the only person able to utilize the IP for a variety of purposes is much more valuable than being one of many entities that can use the IP for a select few reasons. The payment to the license holder generally takes the form of a standard payment for the license itself, and then payment of royalties for each exercised use of the IP. For these reasons, licensing is one of the primary vehicles utilized by IP holders for purposes of profiting off of their IP.
It should be noted that neither assignments nor licenses of IPs need to be recorded to be considered effective. However, for purposes of providing appropriate notice to any interested parties (and to avoid potential confusion and litigation), it is generally best practice to always record your transfers of IP (especially for assignments). In order to record an assignment or license of a registered IP, you can go to the appropriate government entity and file with them; for a patent or trademark go to The United States Patent and Trademark Office (www.uspto.gov) or for a copyright go to The United States Copyright Office (www.copyright.gov).
If you or anyone you know has any questions regarding the assignment or licensing of Intellectual Property, then contact Nowakowski Legal PLLC today to learn how we can be of assistance.