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Assignment of Intellectual Property

Assigning Intellectual Property

Intellectual property rights (IPRs) can be licensed. In addition, like any other property, IPRS can be sold or given away.  

Sale of IPRs (by means of an assignment) to a purchaser of the IPR owner's business may be necessary as part of the sale of the business. An assignment of ownership of IPRs may need to be agreed and put into effect if an author, inventor etc. is commissioned to create a work or an invention.

The effect of an assignment of IPRs in either case is that the original owner is excluded from using the IPRs unless the new owner gives him a licence. There are formalities for each form of IPR that need to be implemented to create a legally effective assignment, as follows.

Patents or Patent Applications: An assignment must be in writing, signed by all parties to the transaction and registered at the Intellectual Property Office within six months of the assignment. Failing registration, the assignee's rights against infringers are restricted. The assignor cannot subsequently challenge the validity of the patent.

Copyright or Design Rights: An assignment must be in writing but need only be signed by the assignor. Future copyrights may also be assigned in this way. (See also Registered Designs below).

Registered Trade Marks or Service Marks: Such a mark can be assigned independently of the goods or services to which it relates. The assignment must be registered with the Intellectual Property Office. If not, the new owner is restricted in his ability to sue infringers.

Unregistered Trade Marks: An unregistered trademark can only be assigned with the business, product or service with which it is associated.

Registered Designs: The assignment must be in writing and registered with the Intellectual Property Office. If such registration does not occur, the assignee will have difficulties in suing infringers. There are also rules which ensure that registered designs and associated design rights are kept in the same hands.

Warranties as to IPRs: As the assignor, you may well be asked by the assignee to give a warranty confirming that you are free to assign the IPRs, that the IPRs are valid and free from undisclosed third party rights restricting their use.

Tax and Accounting Issues: Whether an IPR is assigned or licensed may have important tax and accounting consequences. Money received in return for an IPR disposed of outright (assigned) or where money is otherwise received by way of a lump sum is more likely to be treated by the HMRC as capital. Conversely payments related to levels of sales of goods or services incorporating the IPR (e.g. royalties ) are more likely to be treated as income.

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