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This article is written by Bushra Asif, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.com. Here she discusses “How to Protect your Intellectual Property”.

“Forget land, buildings, or machines-the real source of wealth today is intelligence, applied intelligence. We talk glibly of “intellectual property” without taking on board what it really means. It isn’t just patent rights and brand names; it is the brains of the place.” – Charles Handy.

So, how frivolous are people in safeguarding the ‘Brains of the Place’?

Let us take a look at it step by step: what really is the domain of Intellectual Property and what provisions are a must to be included in an IP Assignment Agreement to make sure you are covered well?

Intellectual Property

According to Stanford Encyclopedia, ‘Intellectual Property is generally characterized as non-physical property that is the product of original thought. Typically, rights do not surround the abstract non-physical entity; rather, Intellectual Property rights surround the control of physical manifestations or expressions of ideas. Intellectual Property law protects a content-creator’s interest in her ideas by assigning and enforcing legal rights to produce and control physical instantiations of those ideas.’ Whereas, the World Trade Organization broadly defines Intellectual Property rights as, “The rights given to persons over the creations of their minds.” This definition is kept general intentionally since there are so many different creations that come within the ambit of this area of law. 

In most countries, there are four primary types of Intellectual Property (IP) that can be legally protected: patents, trademarks, copyrights, and trade secrets. Each has their own attributes, requirements and costs. A brief description of each is as follows:

Patents: Patents protect new, useful, and non-obvious inventions (ideas!). An invention can be a device, structure, process, machinery, etc.

Trademarks: Trademarks protect source identifications, usually for brands, slogans, logos, or designs (sometimes even scents or colors). Trademark protection may extend perpetually.

Copyrights: Copyrights protect original textual works and visual or artistic expressions.

Trade Secrets: Trade secrets protect valuable secret information like ideas that must be kept confidential. Others to whom they are disclosed to must also keep them confidential. Similar to trademarks, trade secret protection may extend perpetually.

Of course, the idea behind protecting Intellectual Property is the fact that products coming from the intellect of the human mind should be afforded the same protective rights that apply to physical property. So, how and what law governs and protects it? Basically, IP law deals with the rules for securing and enforcing legal rights to inventions, designs, and artistic works – to protect the exclusive control of intangible assets.

From Barbie to cereal to a tattoo, a copyright lawsuit can get contentious; some have even reached the Supreme Court entailing billions of dollars in compensation.

Few of the most famous cases in history, such as  Google vs Oracle, Kellog Co. vs National Biscuit Co., Barbie vs Bratz, A&M vs Napster, Inc. show us the relevance of protecting the Intellectual Property the right way can save the company a lot of hassle, time, money and contentions down the road. 

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Provisions to include in an IP Assignment Agreement

The Intellectual Property assignment is a complete transfer of all the rights, title and interest in certain IP rights from the creator to another entity. The transferring party is called the Assignor who transfers it to the receiving party called the Assignee.

There is no standard form for assignment Agreements which will fit all scenarios, so each has to be worded carefully taking into considerations all its particularities endorsed by both the parties.

In general, the following clauses and sub-clauses are most crucial and must be worded carefully:

Assignment Clause

  • Actual Assignment

The assignment clause requires the Assignor to assign its Intellectual Property to the Assignee so he has total ownership of the intellectual property. This could encapsulate either only what the Assignor has created specifically for that project or also include whatever he has made in relation to that creation or nearly anything he creates. It must contain a complete and concise description of the property being transferred; details of exactly what the Intellectual Property would comprise of, including any relevant applications or registrations for Intellectual Property protection and “goodwill” (business reputation) sold with the property; “goodwill” is the established reputation of an asset, regarded as a quantifiable asset and calculated as part of value when it is sold. In complex assignment Agreements, this clause may also refer to a description of the prospective transfer of assets that will be annexed to the main Agreement.

If you’re an employer:

  1. Confirm that your IP ownership is clearly covered, using terminology which does not leave any doubt regarding it.
  2. Define comprehensively the scope of work covered: not just what your employees work on during their working hours, but make sure to include what they do anywhere, anytime, using company’s resources or that which is in connection with the company projects. 
  3. Employees should be bound to promptly disclose all work produced within the defined scope and ambit.
  4. Develop procedures to determine the relevance of the particular Intellectual Property being created so as to sift and keep the pertinent one and the one which is of very limited use to the company, the claim over it should be waived in favour of the employee developing it.

If you’re an employee:

  1. Make sure that the contract does not give your employer rights to any creations that were created independently before you enter into the contract or is including more than is required – your creativity should not be exploited (be particularly warned about inclusions that bound you even after the termination of the Agreement).
  2. If you create something that is outside the domain of the Agreement albeit it raises issues or something that is within the scope, but far more lucrative to you than your employer, try dealing with it early and specifically – and remember, often only an express written transfer will ensure ownership to you.
  3. If you plan to start your own business, don’t think that working for your employer during the day, while developing related technologies for your new business at night will not entail issues rather consider it a recipe for conflicts. It is advisable to terminate your employment as soon as you can when developing the inventions, works and other Intellectual Property that you plan to use in your new venture.
  • Timings of the Assignment

The Intellectual Property that you wish to take over may have been created somewhere in the past or will be created under your supervision in future or was created over a period of time incrementally. Now, it is paramount that you specify that when it was made which is fully incorporated in the Agreement. Anything left out of the bracket will not fall in your domain if a dispute arises. Moreover, it is of supreme importance that you specify exactly when you will have ownership of it, i.e – right from the start or after it has been made or midway when some milestones have been achieved.

  • Due Diligence

If you are the Assignee, perform a thorough due diligence. You can use IP databases to conduct searches in order to verify whether the Assignor has the rights on the patent, trade-mark or registered design that is being assigned. However, it will be more prudent to rely on the expertise of an IP professional. 

  • Moral Rights

These rights are given to the creator of the Intellectual Property– by virtue of them the author/creator is properly named or credited whenever his work is being used, or the work is treated or shown.  They are generally recognized in civil law jurisdictions and, to a lesser extent, in some common law jurisdictions. Moral rights apply only to literary, dramatic, musical and artistic works, and also to films. The most important exceptions to be aware of are computer programs and employees. In most situations employees do not enjoy moral rights.

These are: (1) the right of attribution, also called the right of paternity; and (2) the right of integrity.

Right of attribution demands that the creator’s name must always appear next to his work.

Right of integrity gives a right to the creator due to which no one can alter or damage his work without his permission. 

Some jurisdictions allow for the waiver of moral rights. Whereas, some jurisdictions differentiate between narrow and wide moral rights. Whilst the former is about integrity of the work, the latter limits usages, which may harm the author’s integrity.

Generally, a clause is included in which the Assignor gives his consent to the waiver of the Moral Rights.

  • Third-Party Confidentiality/Trust

If the Assignor has engaged any third party to add in any way to the making of the Intellectual Property then he must procure, from every such third party who helped in the creation, development and/or adaptation of any material, product, information, documentation or other deliverables which contribute to the Intellectual Property, consents to waive any right over such contribution. This can save from future ownership disputes that may arise from such third parties.

Warranties

Irrespective of how sound the parties’ due diligence activities are, most Assignees request warranties from the Assignor, which represent contractual assurances concerning specific facts. A breach of a warranty generally leads to an award of damages. Therefore, Assignees feel more confident using warranties clearly established in the Agreement. The warranties, however, should not substitute a due diligence prior to the assignment. 

You must include the following vital warranties to make your right to Intellectual Property more robust and secured:

The Assignor represents and warrants that:

  • It is the absolute, sole and legal owner of the Intellectual Property;
  • It has full authority and legal capacity to assign it in its entirety;
  • The Assignor has not encumbered any right, title or interest or licensed any Intellectual Property to any third party;
  • It has procured consent, with respect to the infringement of Moral Rights, from every party involved in developing it;
  • The Intellectual Property does not infringe any third party’s IP rights or Moral Rights; and
  • The Assignor does not owe any obligations to any third party that clash with the rights and obligations set out in the Agreement.

It is imperative that whether you are the Assignor or Assignee, you let an IP lawyer review or draft the warranties contained in the Agreement. An IP lawyer will not only know and explain the cruciality of such warranties but also demonstrate how they indemnify the Assignee from liability in the event that the Assignor attempts to transfer (intentionally or otherwise) Intellectual Property that belongs to another party.

Conclusion

Undeniably, Intellectual Property is the backbone for many business owners, and this means numerous lawyers are hired to assist with company matters. The role of an Intellectual Property lawyer may be different since the advent of technology increases and computers revolutionize the business world, and this means a heightened awareness of what these items are and how they affect the company realm. Moreover, the damage done in most cases is irreparable and unquantifiable, so when the stakes are high it is better to take precautions.

By having an IP lawyer glean your contract before you sign any Intellectual Property Assignment Agreement with a company you can avoid any pitfalls that you might overlook and as a company you can identify and secure your IP rights to give it a sturdy defence against an IP challenge, and avoid costly legal disputes or enhance the company’s bottom line assets for end game objectives.


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