In this ‘IP Tool Box Series,’ I’ll be discussing the differences between an Assignment Agreement and a License Agreement. I’ll explain what they are, what their differences are, and why they are important tools.
What an Assignment Agreement is:
An Assignment Agreement is a contractual Agreement that Assigns or transfers Intellectual Property (IP) rights from one person or entity to another. This type of agreement is used to transfer rights held in any intangible property, e.g. Trademarks, Patents, Copyrights, Trade Secrets, Trade Names. An Assignment Agreement is also a legal record that certifies the transfer of ownership of Intellectual Property rights. In an Assignment document, there are two parties, one party is the Assignor (giving party) and the second party is the Assignee (receiving party).
What a License Agreement is:
A License Agreement is a contractual Agreement that Licenses or authorizes another person or entity to use the rights to a protected IP. This type of agreement is used to license rights held in any intangible property, e.g. Trademarks, Patents, Copyrights, Trade Secrets, Trade Names. At its base, a License is a legal contract that simply certifies the shared use of IP rights. In a License, there are two parties, one party is the Licensor (giving party) and the second party is the Licensee (receiving party).
Assignment Agreement vs. License Agreement:
The primary difference between the two agreements is that a License allows the Licensor to maintain their rights and interest in their IP, whereas an Assignment transfers all of the Assignors rights to their IP and assigns it to the Assignee. With regards to payment, an Assignment involves a one time, guaranteed payment to the Assignor, at an agreed upon price. A License involves a long term payout to the Licensor, but with an unsure price payment. A license allows for potentially unlimited future income.
Another significant difference between the two agreements is in the requirements to make them enforceable. Specifically, an Assignment Agreement is required to be filed and recorded with the United States Patent and Trademark Office Assignment Recordation Branch. A License is less stringent and can be granted orally. The best practice would be to have a negotiated and signed License, but unlike the Assignment, a record of the agreement it is not required for enforceability.
A License can be an alternative to an Assignment, if an interested party doesn’t have resources up front. A License can allow for long term payment, instead of the upfront payment expected with an Assignment. A License is also a good option if an interested party is unsure of the marketability, because it can be adjusted to allow for royalties based on performance/sales. Another great advantage of a License is the ability to reverse the transfer of rights if the buyer doesn’t keep up with the bargain.
Why These Agreements Are Important:
These agreements allow for the establishment of trust and are key building blocks towards developing Intellectual Property. With that in mind, both types of agreements should detail the responsibilities of each party for maintaining IP rights and include provisions for indemnification. One can find and download either of these forms and complete them with limited guidance, but an experienced attorney could prove invaluable. Depending on how an agreement is written and what legal jargon is used, a badly written agreement could end up costing you rights to your hard earned property. An Attorney can ensure all expectations and responsibilities are laid out so that all pertinent terms are understood and agreed to, with no room for assumptions.
Don’t leave a matter as important as your intellectual property to an online form. Willing help in the form of an experienced legal team is here and is just a call away. Please contact us if you have been presented with a License Agreement and/or Assignment Agreement, or need one of these Agreements to protect your intellectual property.