Drafting and negotiating contracts for the assignment of intellectual property rights

The assignment of intellectual property rights is a critical issue in commercial agreements, as it involves transferring ownership of intellectual creations, such as inventions, artistic works or trademarks, from one party to another. In today’s context, where innovation and ideas are invaluable assets, knowing how to draft and negotiate contracts governing these rights is essential to protect the interests of all parties involved. However, the complexity of intellectual property can lead to disagreements if they are not clearly addressed in the contract.

In this post, we will explain the key points for drafting and negotiating IP assignment agreements. The purpose is to ensure that both parties obtain fair benefits and avoid future conflicts.

Before negotiating the assignment of IP rights, it is essential that both parties clearly identify which IP assets are part of the agreement. These can include a wide variety of creations, from technological inventions to artistic works, depending on the type of industry and the contract in question.

In general, IP can be classified into four main categories: patents, trademarks, copyrights and trade secrets. Each of these categories has different legal implications and can influence how contractual clauses are drafted and negotiated.

Patents grant the holder an exclusive right to an invention, allowing him/her to exploit the invention for a certain period of time. In Spain and the EU, this period is 20 years. This right includes the possibility to manufacture, use, sell or license the invention. If you want to know more about this modality, you can read our article: Patent procedure.

Patents, being valuable rights, are frequently the subject of assignment contracts in sectors such as technology and pharmaceuticals. When negotiating a contract for the assignment of intellectual property rights involving patents, it is essential to clearly define the scope of the assignment. In this regard, the party receiving the rights must ensure that it is obtaining all the rights necessary to exploit the invention. While the assigning party may establish restrictions or limitations, such as territorial or sectoral exclusivity.

Trademarks are distinctive trademarks that allow products or services to be identified and differentiated from competitors. In particular, they may include product names, logos or commercial slogans. In the case of the assignment of a trademark, one of the essential aspects to negotiate is the guarantee that the trademark is duly registered and that there are no legal disputes over its use.

Protecting our trademark goes far beyond registration. When drafting trademark assignment clauses, it is vital to include provisions on the proper use of the trademark. Indeed, the value of a trademark can depend to a large extent on how it is managed and filed in the marketplace. Assigning a trademark involves transferring both ownership and the reputation that goes with it. It is therefore essential to ensure that the receiving party maintains the standards of quality and protection of the trademark, avoiding diluting its value.

Copyright protects original works of creation, such as books, films, musical works and software, among others. In the case of the assignment of intellectual property rights over a copyrighted work, it is essential to clearly establish which rights are being transferred: reproduction, distribution, adaptation, among others.

Unlike patents and trademarks, copyright is granted automatically when the work is created, without the need for formal registration. Although registration may provide additional advantages in terms of proof of ownership. An assignment contract should clearly define the rights being assigned, the geographical scope, the duration of the agreement and any limitations on use.

Trade secrets cover valuable information which is not in the public domain and which gives a competitive advantage to its holder. Within this category are formulas, algorithms or customer lists. In reality, trade secrets are not subject to formal registration, so their protection depends on maintaining their confidentiality.

When trade secrets are transferred, it is essential to include confidentiality clauses and security measures to protect the information during and after the transfer. Similarly, it is important to provide for penalties in case of non-compliance, as unauthorised disclosure can cause serious damage to the assigning party.

Next, it is essential to define who will be the owner of the rights and under what conditions the assignment will take place. In many cases, the assignment of intellectual property rights may vary depending on the type of contract. It is essential to clearly specify the parties involved and the terms under which the rights will be transferred.

For example, in a work-for-hire agreement, the intellectual property generated generally belongs to the contracting party, i.e. the party who commissioned the work. However, this can be modified if the parties explicitly agree in the contract. In cases where the contract does not stipulate otherwise, the law tends to favour the employer or the party financing the work.

In the case of collaborations or joint ventures, it is common for intellectual property to be shared between the parties. This means that both partners may have rights to use and exploit the assets, although there may be clauses limiting exclusive use by one party in certain contexts. It is also possible that each party may have different rights to specific aspects of the product or innovation created. By way of illustration, one company might have rights to the design, while the other controls the marketing rights.

If the agreement is a licence or assignment, ownership of the assets may remain with the licensor or assignor; but the licensee or assignee may have limited rights to use or exploit the IP assets as agreed. In such cases of assignment of intellectual property rights, it is important to spell out in detail the conditions under which these rights are granted. Specifically, the time for which they will be effective, the geographical areas where they apply and whether they are exclusive or not.

In all cases, it is essential to address issues such as co-ownership, moral rights and joint authorship. Co-ownership can create problems if the rights of each party to exploit or transfer intellectual property are not clarified at the outset, which can lead to conflicts if the parties have divergent commercial interests.

Moreover, moral rights, which usually protect the creator’s right to be recognised as a creator and not to have his work altered in a harmful way, should also be clearly specified in the contract.

Once it has been determined who will be the owner of the rights, it is necessary to define the scope and duration of the rights. This involves specifying what kind of rights are granted in the contract, such as rights of use, reproduction, distribution, modification, display or sub-licensing, and under what conditions.

Then, if it is a licensing contract, it is common for the scope of the rights to depend on a number of factors. In particular, these would be: the purpose of the licence (commercialisation, internal use, etc.), the territory where these rights can be exercised, and whether the licence will be exclusive or non-exclusive. It is also essential to define whether there will be periodic payments, as well as the terms under which the licence may be terminated.

In the case of an assignment, where intellectual property rights are permanently transferred, it is important to define the full scope of the rights being assigned. This may include factors such as the type of consideration that the assignor will receive in exchange for the rights. As well as the guarantees that will be provided as to the validity of the assigned rights and the indemnities in case of infringement of those rights.

Finally, in order to ensure proper enforcement and protection of intellectual property rights, it is essential to include certain clauses and provisions in the contract. Some of the most common ones are

  • Confidentiality clause. This clause obliges the parties to an IPR assignment contract to keep confidential information secret. Exceptions, such as legally mandated disclosure, should also be included to avoid misunderstandings.
  • Non-competition clause. In IP-related contracts, it is common to provide that neither party may engage in activities that directly compete with the other, such as creating or marketing products similar to those transferred in the agreement.
  • Non-solicitation clause. This clause prohibits either party from attempting to recruit or hire the other party’s employees, customers, suppliers or partners by interfering with their business relationships.
  • Dispute resolution clause. Since disputes may arise in connection with the interpretation or performance of the contract, it is advisable to include a clause setting out how such disputes will be resolved. Options may include arbitration, mediation or litigation, and aspects such as location, jurisdiction, applicable rules and costs should be defined.

These recommendations represent some of the best practices for drafting terms and conditions related to intellectual property in a contract. However, this list is not intended to be exhaustive, as each agreement may require adjustments or additional elements depending on the specific nature of the intellectual property and the complexity of the contract in question. It is therefore essential to seek the advice of legal and IP professionals before drafting or signing any contract involving these rights.

Given the importance of protecting your intellectual and business assets, it is essential to have a trusted partner. At ISERN we offer specialised legal advice on the registration and protection of trademarks, patents and other rights both nationally and internationally. With more than 100 years of experience in the sector and a team of more than 150 highly qualified professionals, we have established ourselves as leaders in the field of intellectual property, having assisted more than 40,000 clients throughout our history.

If you need advice for the negotiation and drafting of contracts related to the assignment of intellectual property rights, ISERN is your best option. Do not hesitate to contact us today!

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