What is the difference licensing and assigning IP?

What is the difference between licensing and assigning IP?

Both an IP license and assignment agreement act as key building blocks towards developing your IP.  They are concerned with the rights held in your companies intangible property such as trademarks, trade secrets, designs, patents and copyrights. However, an IP license and agreement serve very different purposes and impose contrasting responsibilities and consequences. In the pursuit to establish trust within your business dealings and effectively develop your IP it is important to understand what both arrangements entail. 

IP Assignment Agreement

An assignment agreement is a contractual agreement that transfers IP rights from one person or entity to another. In this agreement, you cease to hold an interest in the IP as it is a legal record that certifies  a  permanent transfer of ownership from the assignor to the assignee. 

IP License

An IP license is also a contractual agreement but it does not transfer rights rather it operates to authorise another person or entity to use the rights to a protected IP. Essentially, it is a legal contract that allows for the shared use of IP rights granting the licensee permission to use your IP in an agreed way. 

The Difference

The primary difference between both arrangements is that when licensing you retain an interest in the IP, whereas in an assignment agreement your rights held in the IP are being transferred. 

Consequently, a licensor maintains their rights and interest in their IP as it merely involves licensing the right to use. A license involves a long term payout or on-going payments to the licensor. Thus, it is an arrangement that allows for potential on-going future income. An assignment agreement is like a sale as it is finalised by a one time guaranteed payment. Transferring all of the assignor’s rights held in their IP to the assignee. 

Furthermore, licensing IP is much less formal as it does not necessarily have to be evidenced in writing to be enforceable. In some circumstances, an implied license can arise being evoked by operation of law. Although, it is always a good idea to have the licensing agreement recorded in writing so that both parties are clearly aware of their rights and to prevent the misappropriation of your IP. 

An assignment agreement cannot be enforced in the same manner. Due to the permanent and irrevocable nature of an assignment agreement, it is required to be in writing in order to be enforceable. A request of assignment must also be filed by the assignee through IP Australia. 

IP Australia must certify an assignment agreement for it to be official. However, IP licensing is carried out as a private agreement. 

Taking Care

These are the two main avenues for directly monetising your IP but their differences must be understood as their implications are disparate. A business’ value is heavily based upon the leverage of the IP it has created. Thus, it is critical to take care when either licensing or assigning your trademark, a patent, copyright, design or another form of IP. To best protect your interest, whether you are licensing or assigning, ensure the agreement is in clear detail outlining the rules and expectations governing the use of that IP. 

About Raymond Chbib

Raymond ChbibRaymond is a legal intern at OpenLegal, working with our legal content team. He is currently a penultimate student at the University of Technology Sydney, studying a Juris Doctor degree with an undergraduate Bachelor of Global Studies. He is particularly interested in Intellectual Property law and the increasing internationalisation of that area of business.