Assignment vs licensing: A comprehensive guide with 6 key benefits and lawyer-drafted templates
The intellectual property of a business is one of its most important assets. Effectively managing intellectual property is therefore crucial for businesses seeking to safeguard and maximise the value of their creative assets. Two key methods of permitting a third party to use IP are assignment and licensing, each with its own set of advantages. In this guide, we will explore the benefits of both assignment and licensing, providing insights into when to use each strategy and the relevant legal documents involved.
What is intellectual property?
Intellectual property (IP) is intangible property that results from human creativity. These creations of the mind include inventions, literary works, sounds, designs, logos, and they give the owner exclusive rights to use, sell or license their creations for a certain period. As the owner of the IP, you are granted certain rights that protect your IP (known as intellectual property rights) which allow you to prevent others from stealing or copying your creations.
There are four main types of intellectual property typically licensed or assigned by businesses, these are:
Patents: Patent rights cover an invention, for example, a new product, machine part or design process. These are generally technical in nature and protect the functionality of the product or process. For a patent to be registered with the UK Intellectual Property Office (UKIPO), an invention must be novel, involve an inventive step that is not obvious to someone skilled in the field, and be capable of industrial application.
Copyright: This covers creative works, for example, literary works, art, photography, music, or software code. Copyright exists automatically, so there is no need to register it. For example, if you draw an original drawing, then you will automatically own the copyright in that drawing - handy, right?
Trademarks: A trademark can cover product names, logos and even unconventional “marks” such as colours, sounds and 3D marks. The purpose of a trademark is to protect the external identity and “get-up” of a business. To register a trademark in the UK, it must be distinctive for the goods or services it represents, not deceptive, and must not conflict with existing trademarks.
Design rights: Design rights protect the visual appearance of a product or one of its parts, such as its shape, packaging, pattern or decoration. These rights can be obtained automatically through unregistered design rights or through a formal registration process with the UKIPO, providing varying durations of protection.
So now you’ve got the basics covered, how can an IP owner use their IP rights to their advantage?
The rights to IP can be bought or sold (by way of assignment) or licensed. Both assignment and licensing give owners an opportunity to permit another business or person to use their creations.
Assignment of intellectual property
Assignment of intellectual property is the transfer of ownership of IP from one party to another. This means that the original owner is no longer the owner of the IP, so the transfer is permanent. The new owner will have full ownership and control over the IP. Assigning IP is almost like selling a house - when you sell a house, the buyer becomes the new owner, and the buyer will have the right to use, sell, or lease the property as they see fit. Similarly, when you assign your IP rights, you are transferring ownership of the IP to another party, and they now have full control over it.
What are the benefits of assigning IP?
There are several benefits of assigning intellectual property, including:
1. Clear ownership
When intellectual property is assigned, the ownership rights are transferred from one party to another, providing clarity and certainty about who owns the IP. This can be particularly important in situations where there may be multiple parties claiming ownership or where ownership is in dispute.
2. Financial gain
Assigning intellectual property can also provide the potential for greater returns on the investment in developing or acquiring the IP. By transferring ownership to another party, the owner may be able to sell the IP for a lump-sum payment. This can be particularly useful for companies that have IP that is no longer relevant to their current business model.
3. Mitigate risk and reduce costs
Certain types of IP can be costly to maintain and can be a risk if it is not being actively used or protected. Assigning IP to a new owner can help to mitigate this risk by reducing the number of assets that need to be monitored.
If you’re looking to assign IP, check out our fully customisable assignment of IP templates:
- Assignment of Intellectual Property (deed) (which can be used where more than one IP right is being assigned).
Licensing intellectual property
Licensing of intellectual property, on the other hand, is the grant of a right to use IP without transferring ownership. The owner of the IP retains ownership but gives another party permission to use it under specific conditions.
For this reason, licensing IP is like renting a house - when you rent a house, you don't own it, but you have the right to use it for a specified period of time, subject to certain conditions set by the owner. Similarly, when you license your IP, you are allowing another party to use it for a specified period of time and under specific terms that you set.
What are the benefits of licensing IP?
Licensing intellectual property can have several benefits for IP owners, including:
1. Generating revenue
One of the primary benefits of licensing intellectual property is the potential to generate revenue. By licensing their intellectual property, the owner can grant others the right to use it in exchange for a fee or royalty. This can be a significant source of income for the owner, particularly if their intellectual property is highly valuable.
2. Expansion of brand reach
By licensing their IP to others, the owner can expand the reach of their product or technology beyond their own resources. This can help to increase the visibility and reputation of their IP. This may also give the IP owner access to new markets and customers that they may not have been able to reach on their own.
3. Control over the use of your IP
Licensing intellectual property gives the owner control over how the intellectual property is used, which helps to ensure that the IP is used in ways that align with the owner of the IP's goals and values. Additionally, under the conditions of the licence, IP owners can establish relationships with potential partners, which can lead to new opportunities for growth and development.
If you’re licensing intellectual property, check out our IP licence templates:
- Intellectual Property Licence (for use where both copyright and trade marks are being licensed)
Assignment and licensing are two very distinct methods to exercise IP rights, each giving owners an opportunity to permit another party to use the IP.
Assignment involves a transfer of ownership and control, while licensing involves the grant of a right to use IP without transferring ownership. In the same way you can with tangible property; licensing is like renting the IP and assignment is selling the IP to a new owner.
How can Docue help businesses or individuals when it comes to intellectual property?
Lawyer-grade templates: without knowledge of both licensing and assignment, IP owners could end up navigating tricky waters if their intended IP contracts didn’t assign or licence their IP as they had intended. That’s why at Docue, we’ve worked hard to provide accessible and affordable IP templates with helpful information boxes, created by qualified lawyers to guide you through the process at the click of a button.
So easy to use: Docue is quick and simple to use. With Docue, you can choose from 100+ templates to create your own legal documents in no time.
Full contract process: signatures can be collected electronically, and all contracts you make are saved securely in your company's own contract account.
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