Intellectual property rights may be established, protected, or granted to another party by contracts or agreements. Considering that the subject matter is so complex, the law regarding contracts is usually handled by lawyers who specialize in it. It is highly recommended to seek legal advice while drafting intellectual property agreements because they often involve challenges foraging into interdisciplinary areas such as antitrust laws, franchise regulations, and international trade.
In today’s business landscape, the significance of intellectual property (IP) assets is on the rise and is becoming increasingly crucial in various sectors. The value of a business is now closely tied to its IP assets, which can be licensed, transferred, or used as capital in a joint venture. To ensure business success, it is imperative to safeguard and manage Intellectual property through well crafted agreements. Therefore, the primary objective of IP contracts is to serve as a valuable tool for IP management and prevention from exploitation. In this article, we provide an overview of some of the important types of IP contracts which facilitate the protection of IP assets.
TYPES OF IP CONTRACTS
(1)INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT
The process of facilitating the transfer of ownership rights for various forms of intellectual property, such as copyrights, trademarks, patent, trade secrets, and other intangible creations is known as an intellectual property assignment. It is crucial in establishing a transparent record of ownership and transfer, while also safeguarding the rights of all parties involved in the transaction. This documentation is essential in establishing a precise record of title for the intellectual property being transferred .
The IP assignment agreement, that is also known as an IP transfer contract, makes sure that a company can keep its ownership rights when an employee contributes to the development of an intangible work on the organization’s behalf. 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
Sometimes, a certain level of ambiguity arises between the concepts of licensing and assignment. In a licensing agreement, the licensor grants the licensee the right to use their intellectual property in a specified manner, while also retaining a stake in it. In contrast, assigning intellectual property involves the transfer of all rights and ownership to the assignee. This is a permanent arrangement, and the assignor forfeits all control and ownership over their intellectual property once the transfer is complete.
(2)NON DISCLOSURE AGREEMENTS
While taking into account business relationships, one is obligated to execute Non-Disclosure Agreements (NDAs) as a way to protect the information covered by the intellectual property that is also essential to the operation of the company, such as trade secrets, business plans or structures, technologies, or codes. NDAs are typically signed between parties looking at expanding their commercial relationship which includes creating a confidential relationship between the party possessing confidential information and the receiving party.
(3)TECHNOLOGY LICENSING OR TECHNOLOGY TRANSFER AGREEMENT:
Technology transfer refers to the flow of modern technology between businesses or within the same business. It is a method, by which commercial technology has been distributed, i.e., by which current information, know-how, resources, and/or capacities are shared to meet both public and private demands. While discussing technological advances, it ought to be safeguarded given that it is the owner’s exclusive property. The technology transfer agreement is used as an instrument for building a legal relationship between the rightful owner i.e.-transferor/licensor and the user i.e.-transferee/licensee, with the intention of acquiring or transferring exclusive rights or approval to use technology.
(4)TRADEMARK LICENSING AND FRANCHISING AGREEMENT
Trademark licensing refers to an arrangement where the owner of a trademark allows another individual or group to use the mark. This agreement typically includes terms regarding exclusivity, compensation, quality standards, permitted usage and advertising methods, territorial limitations, and the provision of models, patterns, or samples. On the other hand, a franchise involves a business contract between a franchisor and a franchisee. The franchisor is the proprietor of a business who transfers certain rights to their brand under the same name, which is essentially a replica of the original business.
Compared to licensing, franchising is a more complex business relationship and agreement. In a franchise agreement, the franchisor maintains authority over how their brand is employed and how each franchise under their name is operated. There is a high degree of interdependence between the franchisee and franchisor in a franchise relationship. Popular entities like Domino’s, McDonald’s, Subway and Starbucks follow a franchising model.
(5)COPYRIGHT LICENSE AGREEMENT
A Copyright license agreement is also known as a copyright release agreement. Through this agreement, the proprietor of the copyright can offer various people or businesses the license to commercially utilize their copyright, for example, by producing a reprint or duplicating or transmitting the original work on the terms and conditions of the proprietor. The permit is restricted in its scope, duration, or territory, as determined by the owner of the asset, who gets compensated by way of royalty arrangements or other forms of consideration.
This agreement merely allows the use of the creation for a particular period and includes the method as well as system for compensation, the terms of usage, duration of the agreement, along with clauses to prevent and adjudicate any disputes which may arise as a result of the agreement.
(6)INVENTION ASSIGNMENT AGREEMENT
An invention assignment agreement is a legally binding contract between an employer and a contractor/employee.
One of the ways to protect intellectual property as an invaluable asset for any company is by executing a contract between an employer and an employee to make sure that the inventions done by the employee are under the company’s name and that the company retains all rights over the invention.
Invention assignment agreements are relevant as they help in protecting intellectual property. The agreement ensures that the IP assets of the company are protected as the company holds rights over inventions. Invention assignment agreements also aim to avoid any confusion with respect to the ownership of the invention as the agreement is formed between the employer and employee to abstain from any disputes later regarding ownership. The clarity in ownership further helps avoid any disputes at a later stage.
(7) MUSIC LICENSE AGREEMENT
A music license agreement is a legally binding document that outlines the terms and conditions under which a copyright holder, typically a musician, permits another party to use their copyright material i.e music. If someone uses another person’s creative work for commercial purposes, it falls under public performance rights that can be granted by either paying royalties or obtaining a license that allows the individual to perform the song in exchange for an upfront fee.
A music license agreement outlines the rights that will be granted , such as the number of copies of the work that can be reproduced, the applicable territory or countries, whether it is exclusive or non exclusive etc. It may also specify the conditions under which ownership reverts to the copyright holder, or who owns derivative works created under this agreement, and the jurisdiction in which the disputes will be resolved.
(8)RESEARCH AND DEVELOPMENT AGREEMENT
Agreements of such kind are entered into by a company with an individual or an organization for the development of ideas or goods and services. It is usually pertains to data analysis in connection with manufacturing/ producing hardware products, or with academicians 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 it.
IMPORTANT ELEMENTS IN AN INTELLECTUAL PROPERTY CONTRACT
All IP contracts contain essential elements such as:
- Jurisdiction: It is important for the parties involved in a contract to establish clear jurisdictional guidelines in the event of a dispute or legal concern. This includes specifying which state or location’s laws will govern the resolution of any potential conflicts. By clearly outlining these details in the contract, the risk of future conflicts is reduced.
- Duration of Agreement : A contract must include a clearly defined duration clause to avoid ambiguity and ensure that both parties have a mutual understanding of the agreement’s length. In the absence of this clause, the contract would be considered incomplete.
- Ownership Of Ip: The ownership of the contract and the licensee or third party to whom the intellectual property is being transferred for the term of the contract must be expressly stated in the agreement.
- Payment Terms : The agreement must also state the terms of payment, the credit facility, and the duration within which the payment is to be made to avoid any fraud.
- Termination of Agreement : This clause empowers the licensor to terminate the agreement in light of unauthorized work or to avoid overuse of their creation automatically.
- Disclosure of Information and Data: It is essential that the contracting parties keep the terms or any trade secret to themselves to prevent a possible leak which might lead to any loss due to the disclosure of data or information. Thus, this clause makes sure that either party does not suffer any losses vis-Ã -vis the flow of data and information.
CONCLUSION:
IP contracts play a pivotal role in major strategic partnerships which also aids in generating revenue for the parties involved. It is widely known that technology cannot exist in isolation, it requires a conglomeration of various other contributing factors which form the final product. IP contracts are therefore the aides that come in to support such transactions. Having a thorough understanding of the kind of arrangement that a party wants to enter into, is pertinent in determining the liabilities that would be undertaken by them. For businesses, specially small businesses and alliances, it is crucial for the legal resource to possess a comprehensive understanding of the agreements and contracts that establish ownership, assignment and authorization of IP they develop or own. Therefore, along with the protection that IP contracts provide in terms of return on investments and general disputes over ownership, a large part of revenue generation and strategic partnerships also stem from IP contracts.
Author: Aditi Sharma
