Intellectual property (IP) rights confer the exclusive right of use to the originator of the intellectual property and prevent unauthorized use by third parties. And like every other tangible good, you can commercialize IP rights either through transfer or license to a third party in exchange for a fee, royalties, or different kinds of payments acceptable by the intellectual property owner.
Consequently, the contractual document allowing the transfer of intellectual property rights from the originator to another is known as the “Intellectual Property Transfer Agreement.” Transferable intellectual property rights include trademarks, logos, trade secrets, inventions, and designs; the list is non-exhaustive
Generally, any person with intellectual property rights can transfer his ownership, except his employment contract exempts him. In such circumstances, whatever he creates would become the employer’s property. However, suppose there is no written agreement between the parties. In that case, the IP rights remain with the original creator, and it will be almost impossible to prove even if there was an oral agreement between the parties.
Usually, an IP transfer agreement regulating the transfer of IP rights describes the rights’ scope, the nature of the transfer, and a detailed payment structure or revenue-sharing model. Accordingly, you need an IP transfer agreement if you start or intend to acquire a company to transfer your intellectual property.
Different Ways of Using an IP Transfer Agreement
- Employees or independent contractors can assign their intellectual property rights to any work created for their employer during the term of employment;
- Founders of a business entity can transfer intellectual property rights in any original work to the business entity;
- A third party can transfer intellectual property rights in any work created or invented to another party in exchange for compensation.
Important Clauses to Include in the IP Transfer Agreement
- Assignment: The IP transfer agreement should include a clause explicitly assigning/transferring the title in the IP from the assignor to the assignee. It must state the extent of the rights granted to the assignee.
- Indemnity: This clause safeguards the assignee from misrepresentation in the assignment agreement. Generally, the person granting the rights must indemnify the other party from any legal proceedings or costs due to a defective title in the IP or any third-party infringement claims.
- Dispute Resolution: A dispute resolution clause is a must-have like every other agreement. This clause provides details regarding how to resolve disputes between the parties.
- Term and termination: The agreement must contain separate clauses defining the term and instances to terminate the contract. Notably, a stop does not need to result from any legal dispute.
- Territory: The IP transfer agreement must state where the IP rights will operate. The same IP can be assigned or licensed to two or more separate entities for use and exploitation in different territories. Failure to include the clause in the agreements might cause future disputes.
- Consideration: Consideration here refers to the fees or payments made in exchange for the proposed intellectual property. Hence, the IP transfer agreement must contain a consideration clause stating how the consideration is made. The clause may also stipulate whether there will be an upfront payment at the contract signature or a full charge.