An Intellectual Property (IP) Transfer Agreement is a legal document used to assign or transfer the ownership of IP from one creator or author of a work to another. The transfer here can be to a person or an entity. For this article, we will focus on the transfer to a startup.
There are always at least two parties to an IP transfer agreement: the transferor and the transferee. The transferor is the party transferring all the rights and privileges it enjoys as the author or creator of intellectual property. On the other hand, the transferee is on the receiving end here. Upon execution of the IP Transfer Agreement, the transferee assumes the position of the transferor as the owner of the transferred IP and will continue to enjoy the rights and privileges attached to such IP.
Personnel within a startup that requires an IP Transfer Agreement
- Employees
- Independent Contractors/Freelancers
- third-party service providers
- Founders
- and any other person who is in one way or another contributing to the creation, authorship, or development of any intellectual property.
Importance of an IP Transfer Agreement
For startups, the importance of an IP transfer agreement can vary in degrees, mainly depending on the stage of the startup. However, there are four (4) main reasons why an IP Transfer Agreement transcends the location of a startup, and they include:
Clearly Defines the Type of Ip to Be Transferred.
Clearly defining the IP to be transferred is very important. Depending on the role or position of the transferor, the definition or description of the IP can be general or very detailed to cater to the corresponding IP being transferred. A simple IP transfer agreement can avoid disputes over what was shared.
Scope of Transfer
An IP Transfer Agreement establishes the scope of transfer, outlining whether all or only some rights are transferred and to what extent those rights are transferred. Most times, warranties and waivers are found in the IP transfer agreements. The former is to ensure the authenticity of the IP being assigned.
Proof of Ownership
Ownership of IP for founders is significant, as it portrays the authenticity of the product or service offering of the startup. Provided the agreement transfers full right to the startup and the correct terminology is used, an IP transfer agreement can serve as proof of ownership of IP, which is or forms part of a claim in the future. Granting a license is not the same as transferring ownership.
Funding
Startups’ intellectual property is now a major deciding factor for investors interested in investing in a startup. Most investors conduct independent research and due diligence on startups to ensure they are not investing in an empty vessel.
It is important to remember the essence of an IP transfer agreement for startups, which is to secure the ownership rights to all IP developed for and on behalf of the startup. IP Transfer Agreements can be used to transfer any IP. The goal is to get it written down to avoid disputes and promote legitimate claims.