Licensing and Assignment of Rights

Representing IP owners throughout the State of Florida in IP licensing and assignment matters

Patents and Copyrights

IP owners do not obtain IP protection for the purpose of hanging copyright and trademark registrations and/or patent grants on a wall. Quite the contrary. IP rights are sought with an eye on obtaining substantial financial rewards from the IP through commercialization. Of course, one way to do this is for the IP owner to personally exploit the IP, for example by researching, manufacturing, marketing, and selling a new pharmaceutical protected by a patent. As another example, the author and copyright owner of a novel could also self-publish the novel and try and sell the novel on his/her own.

Many times, however, the IP owner will not have the financial means to commercialize the IP and/or the marketing/selling skills for generating interest and sales. One of the many benefits associated with copyrights and patents is that the IP owner may also financially benefit through IP licensing or an IP assignment of rights.

Both licensing and assignment are a common means of IP commercialization. This transfer of rights, either through a license or an assignment of rights, is a common way for an IP owner to financially benefit from the fruits of his/her/its creativity, ingenuity, and hard work through the commercialization efforts of the licensee or assignee, whichever the case may be.

Licensors retain the legal title to the IP, and IP licenses are often restricted by scope and time. That is, the license to use the designated IP in a specified manner will end after a specified period of time, although many times, the license will be renewed by the parties to the original licensing agreement. Licenses may also be restricted to a specific geographical area, and they may be exclusive or non-exclusive. Licenses are also generally revocable.

Assignment generally involves the conveyance of the entire associated bundle of rights by the IP owner. Once assigned, the assignee effectively holds legal title to the IP, and the transfer of the rights is irrevocable. The former IP owner will be permanently divested of ownership through an assignment of rights. Assignments will often involve a lump sum (i.e., a one-time upfront) payment.

We emphasize that where employees or independent contractors are involved in creating, developing, and/or inventing IP on behalf of the employer, the transfer of IP rights to the employer should be solely by an assignment of rights. Licensing is not appropriate where the IP would stem from an employer-employee relationship or employer-independent contractor relationship. For copyright-related IP, the assignment of rights provision should be made part of a document which also addresses the work-for-hire doctrine for employees or independent contractors.

Particularly with respect to patent IP, a decision as to whether to license or assign IP should be based on a thorough evaluation of the nature of the IP involved; the potential value of the IP in the market place; the risk factors associated with the IP commercialization based on the nature of the invention; the current state of the art; etc. to be assumed by the licensee or assignee; the financial objectives of the IP licensor/assignor; whether or not the IP owner is seeking venture capital investment and/or debt financing; the pros and cons of future royalties versus a lump sum payment; etc.

Trademarks & Service Marks

Registered trademarks/service marks can also be licensed and assigned. Regarding mark licensing, because registered marks are intended to protect the consumer, the licensing of marks generally requires much more oversight by the licensor relative to the licensor of patent or copyright rights. The licensor of a mark must maintain control over the use of the mark and the quality of the products/services provided under the mark. Again, the underlying policy is the protection of the consumer who has established expectations associated with the mark. Inadequate supervision could result in abandonment of the registered mark.

A good example of mark licensing-in-action is when a franchisor (e.g., the owner of the Quiznos® mark) authorizes the usage of its mark by its independent franchisees (the owners of Quiznos® restaurants) under the terms of the franchise agreement). A franchise agreement will typically contain a lengthy provision as to the franchisee’s obligations to provide goods and/or services consistent with the “quality” and “goodwill” associated with the registered marks.

Registered trademarks can also be assigned, but the assignment will only be considered valid if it is being transferred along with the goodwill of the business (i.e., the specific goods and/or services) associated with the trademark. This requirement is consistent with trademark law: trademarks and service marks are connected to goods/services. Absent such a connection, the mark has no legal significance.

The Licensing or Assignment Agreement

A Licensing or Assignment Agreement will typically be a quite lengthy document, particularly where the licensee or assignee is assuming responsibility for “major” costly development activities. Particularly with respect to patents, an assessment of the pros and cons of assignment versus licensing should be done before a lot of time is spent preparing any such agreement for consideration by the other side. A licensing agreement will in general entail a long, on-going relationship between the parties to the agreement relative to an assignment agreement, and contingency plans should be included in such a long-term agreement.

How We Can Help

We have extensive experience in drafting and negotiating IP agreements and contracts. In providing such legal services, our objective is two-fold: 1) to ensure that the resultant agreement is clearly written, legally sound, incorporates the facts and circumstances surrounding the transfer of the particular IP as understood by the parties to the agreement, and includes all potentially relevant provisions; and 2) to negotiate favorable terms on behalf of clients to obtain a win-win situation. We work with our clients to identify the risks to be assumed by the licensee or assignee against the potential gain. We understand that the key to a successful negotiation is to demonstrate an understanding of the other side’s concerns as the starting point for meaningful negotiations. Our IP attorney, through her experience in new product development, can provide insight into the concerns of the potential licensee/assignee where a transfer of patent rights is being considered. This background may lead to particularly meaningful negotiation discussions on behalf of our clients.

If you are considering becoming involved in a transaction involving the licensing or assigning of IP rights, call us at (305) 279-4740 or contact us online for a FREE consultation.