This is written by Palak Patel, pursuing Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution as part of her coursework. Palak is an associate at Mansukhlal Hiralal and Co., Mumbai.
Intellectual Property laws is a branch of law that deal with protection and enforcement of legal rights in respect of the original creations, inventions, designs, piece of music and artistic work of the creator or inventor. The purpose of these laws is to encourage people to develop creative works that helps and benefits the society by ensuring that the person developing an art, design, idea or technology can develop the same without fear. To protect intellectual property rights, there are various types of contracts executed by the owner of the Intellectual Property.
Types of Contracts and Their Purpose
Intellectual property Assignment Agreement
The agreement to assign the Intellectual property right, transfers the intellectual property right completely or partially from the original creator to another person or organization for a consideration. By this kind of an agreement the original owner transfer his right to develop or sell the said intellectual property to another person or legal entity. Assignments can be assignments of Patents governed by the Patents Act, 1970, Assignment of Trademarks governed by Trademark Act, 1999, Indian Copyright Act, 1957. Following are the types of Assignments:
- Assignment of Patents
- Assignment of Trademarks
- Assignment of Designs
- Assignment of Copyrights
- Assignment of confidential know-how
- Assignment of Geographical Indications
In order to protect the information falling under the branch of intellectual property, which are also dynamic for the functioning of the company, like trade secrets, business plans or business structures, technologies or codes, you may need to enter into NDAs while contemplating business relationships. NDA are usually entered between parties contemplating a deeper business relationship (such as two parties discussing a major licensing deal) to protect any disclosure of confidential information in future, even if the larger transaction is not successful. In that case, the non-disclosure obligations of the NDA continue to apply. Clauses that are included in NDAs are also common in other documents such as employment or consultancy agreements.
Technology Licensing or Technology Transfer Agreements
By this agreement the owner of the intellectual property authorizes another person or company to use such rights of the technology developed by the owner, for a consideration amount as agreed between the parties. This is a way to transfer knowledge of technology. This helps small companies grow as they acquire such technology licenses from the bigger companies for production and promotion of a product. Many joint venture agreements in automobile sector in India have involved such arrangements, where the Indian company gets access to the foreign partner’s technological expertise and combines it with local distribution expertise in Indian market. For example, Hero Honda (now terminated), Maruti Suzuki, Mahindra – Renault, etc. are some examples.
Trademark Licensing and Franchising Agreement
Trademarks distinguish or help identify the goods and services of one’s company or entity, by a licensing or franchising agreement. The goodwill gained by such mark is shared by another entity who will help promote the business or carry on a business with the same mark and by maintaining the same standard of the business and its goods and service. Popular restaurants such as McDonalds, Subway, Dominos, KFC, Pizza Hut and coffee shops such as Starbucks follow a franchising model.
Copyright Licensing Agreement
By this agreement, the owner of the copyrights can grant other people or companies the ‘license’ to monetarily exploit the copyright, such as by creating a reprint, or to reproduce or distribute the original works on the terms and conditions of the owner. License can be very limited in scope, time or territory, for example, it may only be for creation of a translation (or a movie) and nothing else, restricted to a period of two years and the right to sell may be limited to a particular state or country.
In exchange for such right, the owner is paid a royalty or an amount of consideration as agreed upon by the parties. This does not permanently transfer the right of copyright to another person; it is licensed for some duration.
Inventions Assignment Agreement
This contract gives the employer the rights over the creations of his employee during the period of his employment. Usually the employment agreement contain a clause whereby all the creations of an employee are the product of the employer’s business. Further these kinds of agreement and clauses also protects the confidential information of the company. Intellectual property right in an employer-employee relationship is by default assigned to employer by virtue of Copyright Act but the same is not the case in respect of trademarks and patents. Hence, executing a separate inventions assignment agreement is necessary for this purpose.
E-book Publishing Agreement
Usually the e-book publisher acquires the rights to publish the e-book written by the author or owners of the written manuscript of any book. By this agreement the right to publish the written manuscript as an e-book is being granted to the e-book publisher. The owner is given royalty towards sale of such e-books or is paid a certain amount of consideration. This may be combined with a print publishing agreement (for publication in physical form) or separate from it, depending on the publisher.
Music License Agreement
A music license agreement is an contract between the creator of the music and a third party to exchange his composition for a consideration, whereby giving a right to the third party to publish or distribute the music in various forms.
Research and Development Agreement
Such agreements are entered between a company with any individual or an organization for conduction research and development of an idea, goods or services. They are generally entered in respect of:
- research in connection with manufacturing/ hardware products, or
- with professors who pursue research at universities, or
- with scientists working at companies.
The company or the university includes assignment clauses to assign any intellectual property developed to itself.
Work For Hire Agreements
These agreements are executed or entered between company to hire an artist to perform a certain piece of work or to create work that the company intends to have a copyright over, e.g. designs, logos, corporate videos, etc. It is important to identify the work in which intellectual property is assigned.
Most important clauses in any intellectual property contract
Intellectual property contracts deal with a wide range of rights that can be assigned, licensed to any other person or company. However, the clauses in such contracts are to be drafted with utmost care and caution. There four major elements in an intellectual property contract that one more take into one’s mind while drafting these contracts are
A confidentiality clause is a must to protect the owner. There is a major upraise in technological know-how, therefore extra security measures have to be undertaken to protect the creation and hence a confidentiality clause binds the binds from disclosing the integrities of the creation. Some intellectual property such as patents, copyright or trademarks are published and therefore freely accessible. However, they are often applied in connection with other confidential know-how to produce business results – such confidential know-how needs to be kept confidential.
Access to Confidential Information
In order to protect confidentiality in a realistic manner, conditions for access to know-how and confidential information by parties’ employees, consultants or representatives must be specified. Even standards for ensuring that confidential information is kept secure may be specified.
Ownership of Intellectual Property Used or Created Over the Duration of the Relationship
The contract must be crystal clear in indicate who shall be the owner of the intellectual property which is being used or continuously created over the duration of the relationship. Ownership status over the intellectual property should be clarified even if the relationship is subsequently terminated. This is a common dispute wherein the employee once, the creation is complete choose to quit his employment and wishes to take away the creation along with him just on the ground that the same is created by him. But the fact that the same was created during his employment does not give him the right to own has to be clarified in every contract.
Documentation and Record of Intellectual Property
Sophisticated contracts may specify a mechanism to record and document (e.g. by creation of specific lists) the intellectual property that is created over the duration of the relationship so that it is specifically identifiable. This facilitates better valuation of the intellectual property in future and also expands the opportunities to monetize such property by complete or partial assignment, depending on the parties’ goals.
The contracts must also clarify and bring out the repercussion of breach of the contract. Vague description of such termination/cancellation/ penalty clauses end up in disputes that take years to resolve, therefore an iron clad contract in respect of penalty clauses in a must. There should no uncertainty.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills. All these intellectual property contracts are also taught in the Diploma in Intellectual Property, Media and Entertainment Laws, intended for those who want to understand intellectual property laws and contracts and media and entertainment industry more deeply.