Keys to Drafting Enforceable IP Assignment Agreements

An Intellectual Property Assignment Agreement is a written and enforceable contract effectuating an assignment of intellectual property rights from an "Assignor", the owner of the rights, to an "Assignee", the purchaser of the rights, in exchange for valuable consideration.

Unlike an Intellectual Property License Agreement, which provides the licensee a right to use, but not to own, certain intellectual property rights, an assignment agreement involves a complete and exclusive sale of the rights, thus giving the assignee complete ownership to exploit the intellectual property rights in whatever way, shape, or form it likes, subject to any limitations listed in the agreement. Usually the assignee will pay the assignor cash or stock consideration in exchange for these rights.

This article will take a look at a traditional IP Assignment Agreement between two companies. In our hypothetical agreement, the assignee is making to the assignor a combination of both stock and cash payments, the details of which will be addressed in the agreement, along with details regarding the transfer of the intellectual property rights, and any other material information in respect to the transactions. The seller of the IP rights is referred to as "Assignor", while the purchaser is referred to as "Issuer."

The first section the agreement should provide Definitions of the key terms used in the agreement. Terms that can have more than one meaning, such as "assets", "business", "closing", and of course "intellectual property" should be defined. Next the agreement should address the Issuance of Shares and Transfer of Intellectual Property. The agreement might state that as of the Closing, the Issuer shall sell, assign, transfer, convey and delivery to Assignor the "Assignor Shares and Warrant", which will be described herein.

In return, the Assignor shall sell, assign, transfer, convey and deliver to Issuer all of Assignor's right, title, and interest in and to Assignor IP rights as defined herein. Then, both the stock to be awarded and the Intellectual Property rights to be transferred should be described in detail. The timing of the payments, be it at the time of closing or at some point thereafter, should also be addressed.

The next paragraph addresses the details of the Closing, such as the location, date, and what each party shall deliver. The deliverables usually include the shares, copyright, trademark, and/or patent certificates, transfer agreement for each, and the IP assignment agreement, and any accompanying agreements.

The next paragraph deals with Representations and Warranties, where both parties must warrant that they own that which they purport to transfer to the other party (the stocks and the IP rights), and they are authorized and have the requisite corporate power to execute the transaction documents.

Both parties should also warrant that the execution of the agreement will not conflict with any federal, state or local laws, the bylaws of their respective corporation, another agreement, and so on. The parties must lastly promise that the assets to be transferred are own free and clear of any encumbrances, unless provided, and that there are no undisclosed liabilities that could have a material adverse effect on the transaction.

Lastly, the agreement should address general matters in respect to the transaction. The parties should agree that the agreement sets forth the entire understanding of the parties and supersedes all prior agreements; that any amendments must be in writing and signed by both parties; that the agreement shall be binding upon each party's heirs, legal representatives, successors, and permitted assigns; and that no party may assign the agreement without the other party's prior written consent.

The parties may also want to include a provision recognizing that in these types of arrangements, damages may not be a sufficient remedy in the case of breach, and that the remedies of specific performance orders, restraining orders, and injunctions shall be permitted. Finally, the agreement should also address which law will govern the interpretation of the agreement, whether the agreement may be executed in two or more counterparts, and whether the provisions of the agreement are severable.

These are the key aspects of an Intellectual Property Assignment Agreement. Drafters should be sure to consult Federal intellectual property laws before drafting this type of agreement, and should make sure the parties have a clear understanding of their arrangement. To read and/or download actual Intellectual Property Assignment Agreements, please check out the Agreements section of this website.