Three Differences Between an IP Licence and Assignment

Intellectual property (IP) is a vital part of every business’ assets. IP can include trade marks, trade secrets, copyright or patents. Like any asset, you can commercialise, license or sell your IP for profit. It is important to consolidate these assets and ensure that you assign or license your IP appropriately. This article will outline the three major differences between licensing your IP through an IP licence and assignment agreement.

The Interest Vested in the IP

One of the major differences between an IP licence and assignment is the interest in (or right to use) the IP.

Licensing IP

When licensing IP to another (the licensee), you are granting permission for them to use your IP under certain conditions. You retain the interest in the IP you are licensing. These sorts of arrangements are outlined in a licence agreement which articulate both parties’ rights in the licence agreement.

The IP licence agreement will address:

• territory restrictions;
• the period that the agreement will last;
• whether the licence is exclusive or non-exclusive;
• the right of inspections;
• the nature of the IP (i.e trade mark or patent);
• confidentiality; and
• termination and dispute resolution for a breach.

Assigning IP

Assignment is different from licensing because it is a permanent transfer of ownership from one owner to another. Therefore, as the original owner of the IP, your interest in the IP will cease once you have assigned it.

For some IP, like trade marks, you can transfer the right to use partially or in full. 

Assignment of IP Must Be in Writing

Licensing IP

An IP licence agreement does not necessarily need to be formalised in a written document. A licence agreement may exist if all parties involved behave such that a licence could be implied. The law has certain provisions that facilitate the existence of these relationships without the existence of a written agreement.
Even though a licence agreement can exist without written documentation, we would recommend formalising licence agreements in writing to avoid confusion or disputes further down the track. 

Assigning IP

In contrast, an assignment of IP is permanent and irrevocable. On this basis, a transfer of ownership must be in writing. If it is not, the transfer will not be recognised. Furthermore, for certain IP that requires registration (e.g. trade marks and patents), you must also file the transfer through IP Australia.

Notification of IP Licence Vs. Assignment IP

Licensing IP

When you licence your IP, you do not need to notify IP Australia of the licence. It is a private agreement between you and the licensee. Because of this, the onus is on you to keep track of: 

• every licence that you are a party to; and 
• the rights conferred by each agreement.

Assignment IP

When you assign IP to another owner, the assignee will need to file an application for transfer of ownership through IP Australia. Next, the Registrar at IP Australia will review the application and update the register accordingly. Once the Registrar at IP Australia receives the form with the records of assignment, the assignee is officially the owner of the IP. Once the assignment is published by IP Australia, the Registrar is obliged to notify any other relevant person.

However, not all IP appears on the Register. As such, not all IP assigned in an agreement needs to be reported to IP Australia. You must report the assignment of the following types of IP to IP Australia:

• trade marks;
• patents;
• designs; and
• plant breeders’ rights.

Key Takeaways

As indicated above, there are a number of differences between an IP licence and an assignment. These differences are important to remember if you want to make the most out of your hard-earned goodwill and brand recognition. The major difference between a licence and an assignment is that you will generally not have any interest in your IP if it is assigned to another party. A licence will ensure that you retain some interest in your IP and that it is used according to the terms you have set. If you have questions about licensing or assigning your IP, contact LegalVision’s IP lawyers on 1300 544 755 or fill out the form on this page.