This article is written by Vatsal Dhar pursuing Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.com. This article discusses 10 different types of Contracts which need an IP Assignment Clause.

What is IP Assignment Clause?

IP refers to the creation of ideas, inventions, literary and artistic works, designs, symbols, names and images used in day to day business. IP Assignment implies any transfer of such rights, interest or title by one party to another in an Agreement. It is then possible for a party to whom an assignment is made, to step up and stand in the position of one of the parties present in the Agreement.

There are two types of Assignments

1. Absolute Assignment

When there is an immediate transfer of rights from the assignor to the assignee.

2. Conditional Assignment

It takes effect subject to certain conditions. Unless the conditions are fulfilled, transfer of interest from the assignor to assignee does not take place.

Why it is Needed?

Assignment in case of IP is a very vital feature in a matter pertaining to IPR since it is concerned at bringing value to the creation of the creator. In order to get the monetary value out of the IP, the rights need to be transferred and therefore almost all IP contracts involve the assignment of rights and have an assignment clause. Assignment of IP is also crucial in the course of an employment or consultancy. Usually, an employer or client will want the IP created during the course of the employment or consultancy to be assigned, since otherwise, if other people get access to that IP, it would result in a loss to the employer/client.

The following types of Agreements need an IP Assignment Clause

• IP Assignment and Confidentiality Protection Agreement

• Assignment of Trademarks

In India, trademarks are regulated by the Trademarks Act, 1999. Assignment is an important aspect of this Act. As per Section 2(1)(b) of the Act, the assignment has to be in writing between the assignor and the assignee. The registration of trademark and notification of assignments act as prima facie evidence of the existence of a trademark. The main purpose behind protecting trademarks is of use to both owner and assignee. For the owner, the trademark serves as an advertising tool used for promotion, facilitating repeated sales and successful marketing of new products. Trademarks also foster competition and maintenance of quality by securing the benefits of a good reputation.

Trademarks in India can be assigned with or without goodwill. Only the registered proprietor has the right to assign a trademark, he is also subject to the rights conferred to him by registration. Section 43 deals with certification trademarks, it states that the assignment of certified trademarks would not be possible without the consent of the registrar which was to be applied for in writing. 

• Assignment of Copyrights

Copyright provides protection against unauthorized reproduction of the original work. Copyrights are personal, moveable property which can be transferred though assignment agreements from one person to the other. The concerned might be authors, composers, artists etc. Section 18 of this Act gives every copyright holder the right to transfer his copyright to an assignee by means of an assignment agreement.

Copyright, in general, constitutes certain specific rights that the author of an original literary, dramatic, musical, artistic work or computer software and the director of a film enjoy in their creation. The moral rights of an author in India have been duly acknowledged. Even after the assignment of the copyright, the author of a work shall have the right to claim authorship of the work and restrain or claim damages in respect of any distortion or other act in relation to the said work which is done before the expiration of the term of copyright which brings the author into disrepute.

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• Assignment of Patents

A patent is a right granted to a person inventing a new, unique or innovative article or an improvement of an existing article or an original process of making an article. The patentee can prevent any other person from using such patented invention during the term of the patent. Patent law in India is covered under the Patents Act, 1970, Patents (Amendment) Act, 1999, Patents (Amendment) Act, 2002 and Patents (Amendment) Act, 2005.

Assignment of Patents refers to the act by which the rights with respect to the patents are wholly or partially transferred to the assignee. Such assignee acquires the right to prevent and restrict others from using, marketing or selling the particular invention. This exclusive assignment can be limited to a territory, market, line of business or product.

The following are the two types of Assignments in Patents

• Legal Assignments

It generally implies an assignment of an existing deed. A patent which is created by a deed can only be assigned further by a deed. The said legal assignee entitled to be registered as the proprietor of the patent thus acquires all the rights thereof.

• Equitable Assignments

In order to transfer a patent or a share of a patent, we require an equitable assignment. This kind of assignment affects proprietorship but does not directly change it. The individual or organization to whom it is equitably assigned gets the right in equity as the owner of a such patent altered in law.

• Assignment of Designs

The objective of this Act is to ensure the protection of a new or original design created by the owner. This Act provides security to the owner that his design will not be applied by any third party elsewhere. 

The definition of ‘Design’ includes features of shape, pattern, configuration or composition of lines or colours applied to any article whether in 2D or 3D format but does not include any mode or principle of construction or anything which is in substance a merely mechanical device. The Act also states that an individual becomes entitled by assignments, transmission or other operation of law to the copyright in a registered design if he makes an application in the prescribed form to the Controller to register his title.

• Technology Transfer Agreement

In this agreement, technology is transferred from one company to another or within the same corporate group, the owner of the IP authorizes such use of technology for a consideration mutually decided. This helps small businesses to grow as they acquire such licensed technology from bigger stakeholders.

• Franchising Agreement

This agreement sets out the nature and purpose of the franchise arrangement, grant of necessary IP licenses, parties ongoing rights, duties and obligations and any restrictions on the same. The goodwill gained by such mark is shared by another entity who further helps in promoting the business and maintaining the same standard of the business on its goods and service.

• Music License Agreement

This type of agreement is entered between the creator/ composer of the music and a third party to exchange his rights on composition for further publishment or distribution of the music in various forms or languages for an amount hereby decided mutually.

• Work made for Hire Agreement

This kind of agreement is entered between an organization and an artist, wherein an artist is hired to perform a specific piece of work or to create a unique artwork that the organization intends to have copyright over. It is important to identify the work over which IP is assigned to the organization. That involves the identification of the type of services that the artist is expected to perform during the term.

• Research and Development Agreement

This agreement is entered between a company and an independent researcher. The main purpose of hiring such researcher is to conduct research and development and provide the suggestion of innovative ideas, product or services. The company includes such assignment clause to assign any IP rights directly to itself.

They are generally entered in respect of:

1. Project Management and reporting;
2. IP ownership and rights to being named as inventor or assignee;
3. Publication rights;
4. Funding.

• Content License Agreement

This Agreement provides one entity with the license or authorization from the other entity to use the content (music, movies, songs) in the manner so described. An IP assignment clause in this Agreement helps in writing content for a specific entity, usually the organization which commissions such work.

• E-Book Publishing Agreement

Under this agreement, an e-book publisher acquires the right to publish an e-book of a newly written manuscript or previously published book. Such rights are generally conveyed by the author directly or by the publisher of such a book. The author also needs to check whether the e-book publishing right is exclusive or non-exclusive, date and frequency of payment and any clause impacting the right to publish new editions of same on the both online & offline mode of distribution.

• Video Game License Agreement

In this type of Agreement, the licensor gives its consent to the licensee for use of the trademark as on agreed terms and conditions. These Agreements are generally based on characters, sportsperson, their choice of sport and career mode. This is why a license of relevant trademarks is required from the relevant sports federation or production house.

• Inventions Agreement

This type of agreement is generally between the Employer and the Employee, whereby a technical employee agrees that all inventions created or conceived by the employee during the course employment are the property of the employer. The employer is entitled to receive all such ownership rights over the work of his employees during the tenure. Unlike Copyright where the rights are by default assigned to the employer by virtue of Copyright Act, for trademarks and patents, it’s advisable to the parties to enter into a separate inventions assignment agreement to fulfil the said purpose.

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