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Your business may own various forms of intellectual property (IP) that bring value and profit to your activities. You can own IP like you would own other kinds of business assets, and your IP rights can bring you profits in a similar way. However, there may come the point where you do not want your IP anymore and want to move on. In these cases, you can assign your ownership rights to another person using an IP assignment agreement and gain a lump sum in return. However, this is a binding legal process, so you want to be careful to protect your interests and gain the true value for your IP rights. Therefore, this article will go through three mistakes to avoid when reviewing an IP assignment agreement.

What Is an IP Assignment Agreement?

In New Zealand, there are lots of different kinds of IP rights, which you can gain in different ways. Depending on the nature of your IP, these can include:

  • applying to register your IP according to the type it is;
  • having inherent rights due to the type of original work you create; and
  • establishing IP rights through continued recognition and goodwill in a mark.

Once you have established your ownership of particular IP, you gain certain rights relating to how:

  • you can use it;
  • others can use it;
  • you can commercialise it; and
  • you can sell it.

Different kinds of IP that you can own include:

  • trade marks, both registered and unregistered;
  • copyright;
  • plant variety rights;
  • patents; and
  • designs.

Once you have established your ownership rights in your type of IP, you (as the assignor) may assign or sell them as you wish in most cases. The party you sell it to (the assignee) can then exclusively use and commercialise that IP. An assignment agreement sets out the terms of this process, and all parties (and witnesses) must sign and date the document.

Note that you cannot impose any performance obligations on the assignee as a part of this agreement like you can with licences. Therefore, think carefully about the control that you may lose in this process.

The paragraphs below set out various mistakes you should avoid when reviewing your IP assignment agreement.

1. Skimming Over the Agreement

A transfer of your IP is a complex scenario and can be confusing if you do not have experience in the area. If you do not thoroughly look over your contract, you may miss important clauses or phrases that limit your benefits, and you may lose out on various aspects. Therefore, you should ensure you fully understand the document. Each party should receive independent legal advice from an experienced IP lawyer during the process, and they can help you understand the assignment agreement.

For example, your assignment agreement will likely include clauses about confidentiality and what you need to keep secret as the assignor. If you are not clear on what this confidential information is, you could face legal action if you disclose something that you should not.

2. Referring to Your IP in Broad Terms

Before you assign your IP to a new party, you need to clearly define what IP it is you are assigning. 

For example, if you are selling your business, do you want to assign your business name and logo? Or just the logo?

In the assignment agreement itself, you should strive to be as specific as possible when detailing what IP you are transferring. Additionally, your agreement can include a catch-all phrase if you are assigning all of your business’ IP, including any relevant to the:

  • business’ runnings;
  • products you sell;
  • services you provide; and
  • founders or owners.

However, this should be in addition to your specific IP listings in your assignment agreement and what registrations you have. Otherwise, you may run into problems later on if there are any ownership disputes and you were not clear about what IP assets you were transferring. Therefore, you want to define this list early on in the assignment process so that all parties are clear about what you are letting go of.

3. Under Negotiating Your Benefits

You may be handing over your ownership rights to a new party in an assignment agreement. However, that does not mean you do not get anything in return. An assignment can be a different way of commercialising your IP, gaining a lump sum based on your IP’s current (or potential) value upfront. This fact operates contrary to a licensing agreement, where you get smaller royalty sums as time goes on.

As part of a business sale, your IP may be attractive to future buyers, so you need to negotiate your side of the deal accordingly.

Therefore, you want to capitalise on the potential benefits of your assignment and get compensation for its true worth. So take time to value your IP appropriately and get help doing so.

You also should negotiate what IP rights may stay after assignment. For example, copyrighted works have additional moral rights for creators, which some contracts may ask you to waive. If you do not want this in your assignment agreement, negotiate accordingly.

Key Takeaways

Whatever your end goal is when assigning your IP, your assignment agreement must fulfil that goal. Take your time to read the document, and be clear about what IP you are assigning. If you would like more information or help with your IP assignment agreement, contact LegalVision’s IP lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is an assignment agreement?

An assignment agreement sets out the terms of an intellectual property assignment. In this process, you transfer your IP ownership and rights to another party.

How can I determine my IP’s value?

You should seek expert advice when determining your IP’s value, as it can be difficult to do. You can consider things like the value of similar IP in the market, or potential income that your IP asset may generate.

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