If you have registered a trade mark or patent with IP Australia, or copyright subsists in your creative works, you may consider assigning or licencing your intellectual property (IP). But what’s the difference, and when should you assign your IP rather than licence your IP?
IP Assignment and IP Licence: What’s the Difference?
An IP assignment is the transfer – by written agreement or deed – of all IP arising in a particular work or invention. By contrast, licensing is where the IP rights-holder gives another permission to use their IP on agreed terms and conditions. The licence can be express, implied, revocable or non-revocable, exclusive or non-exclusive.
Implications of Assigning and Licencing Your IP
When you assign your IP, you are permanently transferring your right to use your IP (a non-revocable transfer). Further, you cannot impose performance obligations on the new owner. Usually, this transfer is effected by a substantial lump-sum payment.
The purchaser may choose to pay royalties instead of a lump sum in which the initial payment will be less, and the royalty payment can be conditional on the IP product’s success. If the IP can no longer be exploited, you will not receive any further payment.
When you licence your IP, you typically retain the rights and as such, have greater room to negotiate the terms of the transfer. Your should consider including the following terms in your IP licence:
- Exclusivity: Negotiate whether the licensor has exclusive use of the licence as it may be more commercially viable to licence your IP to multiple licensees.
- Duration of the Licence: You can negotiate a short-term licence or decide to limit the exclusive licence to a shorter period.
- Restrictions: You can restrict the licence to a geographical space and for a specified use.
- Termination: Your licence agreement should include a dispute resolution process as well as set out how parties will terminate the lease.
- Fee: Depending on the value of your IP, you can also negotiate the royalties you can receive.
- Other matters: You should address confidentiality, performance obligations, a right of inspection and so forth.
Why Should I Assign or Licence My IP?
Your intellectual property is a valuable asset and as such, someone might decide to exploit their IP commercially by transferring their rights in exchange for a lump-sum payment. Alternatively, some people may choose a licence as part of their broader business strategy and to allow another business to market and sell the IP. For example, a franchisor licenses their trade mark to their franchisees for marketing purposes as the franchisee leverages the goodwill and brand of the franchise.
Inventors commonly licence their patent, and a licensing agreement enables the business to exchange resources and information. This will assist with research and expenditure as well as help minimise time delays associated with bringing the product to market.
It’s important that you create a strategy to exploit your IP commercially and seriously consider if you want to share your IP, or simply transfer it to someone else. If you have any questions or need assistance drafting an IP assignment or licence agreement, get in touch with our IP lawyers on 1300 544 755.
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