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What You Should Know about Intellectual Property Licences and Transfers

By: Christopher Heer, Daryna Kutsyna | Last updated: August 15, 2018
By default, intellectual property is owned by the individuals who have created it and, where applicable, registered or patented it in their jurisdiction. However, there are a number of circumstances under which intellectual property may need to be, or is, licensed or transferred to another. This process is often more complex than simply acknowledging the transaction between the two parties, and is dependent on the type of intellectual property that needs to be transferred.

Types of Licences and Transfers

Intellectual property can be transferred in several ways, which differ in the exclusivity of the transfer (i.e., whether the asset is passed directly from one entity to another or is shared among multiple owners) and the permanence of the transaction. Generally, four main categories can be identified:

  • Exclusive licensing is a temporary granting of rights in the intellectual property asset to another entity for the purposes of production and commercial distribution or use of the intellectual property asset. This type of licence is given exclusively (as the name suggests) to one entity, usually for a royalty or lump sum fee given to the original creator. The term of the licence can vary, but has a defined end date.

  • Non-exclusive licensing is similarly temporary in nature, and is contractually based on an exchange between the owner and the licensee. It differs from exclusive licensing in that the intellectual property can be temporarily transferred to multiple entities rather than just one. The licensing is usually conditional on the licensee's acceptance of the terms set out by the licensor; the terms can be different for each of the licensees.

  • Assignment is a permanent transfer of the asset to another owner through a contract that cannot be revoked without the consent of the assignee. The original owner retains no control or interest in the intellectual property, and can no longer derive gains from it unless he or she acquires a licence from the new owner. Intellectual property can be assigned immediately upon creation (i.e., employees whose works immediately become property of the employer), or at a later time through an agreement between the two parties.

  • Inheritance of intellectual property occurs when the original owner passes away, and follows the general inheritance process of the jurisdiction unless specific provisions have been made in the will. Due to the nature of the transfer, it is permanent. The recipient of the intellectual property inheritance may choose to transfer or license it to another owner using one of the three methods described above.

Intellectual property transfers such as assignments ought to be registered with the Canadian Intellectual Property Office (CIPO) or foreign intellectual property offices as appropriate to ensure the assignor doesn't subsequently assign the right to someone else who then registers it. In Canada, a request for registration of the assignment must be filed which spells out the basis for the transfer, the assignor(s) and their consent to the transfer, the assignee(s), witnesses, extent of the scope of the transfer, and proof of the transfer. There is a nominal fee that applies for the transfers to be registered as well.

Transferring Different Types of Intellectual Property

Not all intangible assets can be transferred in the same manner; there are specific provisions that govern transfers based on the type of intellectual property in question.

Patents and industrial designs can be assigned, licensed or inherited in whole or in part. Patents that are co-owned cannot be divided into more parts without the consent of other co-owners – transfers may be made to a single other entity without such consent.

Registered trademarks may be, but ought not to be, transferred separately from the goodwill accumulated by the business. While their transfer does not have to be recorded by CIPO and will be recognized in courts if it was made in good faith between the assignor and assignee, an official recordal can ease further transfers and protect from third party litigation. Registered trademark rights can be assigned in whole or in part. Transfers of unregistered trademarks, on the other hand, cannot be recorded with CIPO as they are governed entirely through common law. Such a transfer will also have to transfer the trademark in full to be valid and ought to concurrently transfer the goodwill associated with the business.

Copyright rights may be transferred from the original owner to the new owner through licensing, assignment or inheritance. Contractual transactions, however, will not apply to the moral rights; only the economic rights to the copyrighted work are eligible to be transferred. The only instance in which moral rights can be transferred from the original owner to the new owner is through inheritance.

Further Considerations

Transfers and licences of intellectual property should not be taken lightly. Before committing to a written licence or assignment, make sure to evaluate all the pros and cons of the transfer and determine whether what you are receiving in exchange for your intangible asset is commensurate with its value. Evaluate all contracts with which you are presented, including employment and freelancing agreements, thoroughly to be aware of any transfers or licences to which your work will be subject.. Where possible, get a legal review of the contracts governing the transfer to obtain a better understanding of them.