Intellectual Property Transactions

Jane Lambert

Whenever I give a talk at M-SParc I hold an informal clinic afterwards.  Many of the questions that I am asked concern ownership of intellectual property rights. Indeed, the title of the talk that Emily Roberts chose for our last session on 20 Sept 2019 was "Your ideas, your work, your rights. What do you really own?"

The starting point is to determine who is the first owner of the intellectual property rights and that is usually set out in the legislation that creates the IP right. So, s.11 (1) of the Copyright Designs and Patents Act 1988 provides that the author of a work is the first owner of any copyright in it and s.7 (2) (a) of the Patents Act 1977 provides that a patent for an invention may be granted primarily to the inventor or joint inventors.  However, there are exceptions such as where the author or inventor creates his copyright work or invention in the course of his employment. In that case, the employer owns the copyright or acquires the right to apply for a patent unless the employer and employee agree otherwise.

Problems sometimes arise when a customer commissions work that results in a patentable invention or another intellectual property right.  At first blush, the consultant or other person who did the work that resulted in the invention or other intellectual asset is entitled to the right, but is that fair?  What about the person who funded and directed the work?  It is his business and it is he rather than the consultant who needs the right to stop third parties from exploiting the asset.  The common law can sometimes help by recognizing the person who commissioned, directed and paid for the work as the beneficial or equitable owner of that work even if the legal owner is the person who carried it out.  But the best solution is a written n agreement before any work is done as to who is to own any copyright, right to apply for a patent or other IP right that may arise.

If that has not been done the business owner could ask the person who did the work for him to assign the IP right to him. There is usually no reason why that person should refuse to do so.  He is a graphic designer, product development consultant or some other intermediary.  If the work that he did for his client is pirated he can't show any loss.  The client, on the other hand, can but he can't sue unless he has the IP right. The intermediary might want to use techniques, ideas or even some of the matter that he created in future commissions but provision can be made for that in a licence back.

A simple assignment will be a one-page document in which the work, rights and territory are identified, the IP rights are assigned usually in exchange for a token consideration of say £1.  The assignor will normally assign with full title guarantee and he may promise to execute further documents at the assignee's expense to give effect to the transfer of ownership.  Any licences back or other provisions of the transaction can be added to the instrument.

An assignment can be compared to the conveyance of a parcel of land in that it is an outright transfer of ownership but it is not the only type of transaction that can be carried out with regard to intellectual property. Folk can be permitted to exploit an intellectual asset without actually owning it.  Rights to use such assets are known as "licences".  These fall into three categories:

• exclusive licences
• sole licences, and 
• non-exclusive licences.

If an assignment is like a conveyance, then an exclusive licence is similar to a lease in that the licensee is the only person entitled to use the asset.  He can even stop the licensor.  Because he is the only person who can use the asset he has the right to sue infringers.  Non-exclusive licensees are simply permitted to use the asset and have no rights in it.  A typical example of a non-exclusive licence with which almost everyone is familiar is the right to load and run software.  A sole licence can best be regarded as a non-exclusive licence where there is only one licensee.  Care has to be taken when considering sole licences because in the United States it appears to be possible to be a "sole and exclusive licensee".  That is not possible in Wales or England or indeed any other part of the UK. Here you can be a sole licensee or an exclusive licensee but not both.

There are lots of other transactions in relation to IP that the law recognizes but it is not possible to consider them all right now. For the moment it is enough to know that a copyright, patent or other IP right can be bequeathed or given away,  that it can be realized to pay creditors if the right owner becomes insolvent and that it can be mortgaged just like any other property right.

Anybody wishing to discuss this article or transactions in IP generally may call me on 020 7404 5252 during office hours or send me a message through my contact form,