In this post, we will answer the question “What is intellectual property law?” We will then explore what intellectual property lawyers do and some of the key differences between copyright and intellectual property law. We’ll conclude with a discussion of intellectual property assignment agreements, including how you can use them to protect your company’s rights.
What Is Intellectual Property Law?
The modern concept of intellectual property law originated in England during the 17th century. But the term itself was not used until the 19th century and did not become commonplace in legal systems around the world until the 20th century.
Intellectual property law governs the rights that owners have in property that include intangible creations of the human intellect. Some common examples of intellectual property include copyright, trademarks, and patents.
Intellectual property law exists primarily to encourage people to create a broad range of intellectual goods. It does this by giving an economic incentive to benefit from the property that they create by preventing others from infringing on their rights. Intellectual property lawyers play crucial roles in protecting and enforcing their clients’ rights.
What Do Intellectual Property Lawyers Do?
Intellectual property lawyers perform tasks that tend to fall within three broader categories:
Intellectual property lawyers advise their clients on how to protect intellectual property that the client plans on developing or has developed. This process often requires the lawyer to assess the validity of the intellectual property to understand the client’s needs and the best course of action. For this reason, intellectual property lawyers often have technical backgrounds.
Protecting the Client’s Intellectual Property
A lawyer may register a client’s trademark or prepare and file an application with the United States Patent and Trademark Office (PTO). The lawyer will also follow up and respond to requests to ensure that filings are accepted.
Enforcement of Intellectual Property Rights
This occurs when a third party infringes on the client’s intellectual property. While some infringement cases are relatively straightforward, such as affixing a fake brand label to a product, others are more complex. For example, Apple Inc. and Apple Corps have battled over the trademarked term “Apple” for decades. Apple Corps music was founded by the Beatles some eight years before Steve Jobs founded the Apple that we all know today. Apple Corps sued Apple Inc. at the time and filed another suit following the release of iTunes.
Intellectual Property vs Copyright
The difference between intellectual property and copyright is often the source of some confusion. A copyright is a protection granted to a creator of an original work. This gives the creator the sole right to use and distribute the work, typically for a set period of time. Once this period expires, the copyright can either be renewed, or the work will become part of the public domain and can be used without the consent of the creator.
Many different types of work can be protected under applicable copyright law — for example, art, photographs, books, music, and plays. Note, however, that a copyright can be sold and transferred to a third party who has the same rights as the creator under intellectual property law.
Intellectual property is a broader category that encompasses copyright and other forms of human creation.
What Is an Intellectual Property Assignment Agreement?
An intellectual property assignment agreement is a contract in which a party’s intellectual property rights are granted to another entity. Like any other property, such as a house or car, intellectual property can be sold and transferred. Intellectual property assignment agreements are common in business settings.
Many companies own intellectual property that is not being utilized and is potentially valuable to another company. Selling intellectual property in these cases can help generate revenue. Moreover, companies are bought and sold all the time. These transactions typically involve the transfer of intellectual property to the new entity.
For example, suppose there was a company that was large enough to acquire Coca-Cola. Coke holds countless patents, trademarks, and other intellectual property assets. One of the most iconic is Coke’s design patent that was filed in 1915 for its hourglass-shaped glass bottle. As part of the transaction, Coke could sign an intellectual property assignment agreement to give the new entity the right to use the design of the bottle. Coke could also sell just the design patent or could grant a third party a license to use the design.
Types of Intellectual Property Assignment Agreements
Intellectual property assignment agreements are especially important for startups and employers. There are two types of intellectual property assignment agreements that companies use to protect their interests:
Technology Assignment Agreement
This agreement assigns the startup any intellectual property that was created before the formation of the company. The creator(s) can retain individual intellectual property rights in some cases.
Invention Assignment Agreement
This agreement assigns the startup the ownership of intellectual property that is created by employees after the company is formed. This agreement can cover intellectual property created by both the founders and employees. For the latter, the assignment agreement prevents employees from infringing on the company’s property rights both during and after their employment with the company has ended.
Why Startups Need an IP Assignment Agreement
Intellectual property assignment agreements are a necessity for startups. Investors want to ensure that the company they are investing in has complete ownership of all intellectual property assets of the company. If individual investors do not transfer ownership, it will be extraordinarily difficult to convince investors to fund the company.
For many startups, founders create intellectual property before the formation of the company. Unless the ownership of the assets is transferred using the right assignment agreement, founders and other third parties can potentially lay claim to them in the future.
Moreover, when multiple parties own a patent, its value is diluted. Each owner can use the patent without the consent of the other owners. This includes granting a license to third parties to use the intellectual property. The third-party will simply obtain the license from the owner willing to sell it for the lowest price rather than having to negotiate with all owners.
Important provisions to include
Since intellectual property is such a valuable asset and the law is so complex, it’s advisable to have an experienced intellectual property lawyer draft and/or review an assignment agreement. The intellectual property assignment agreement should include several key provisions:
- Assignment of intellectual property. This provision describes the nature of the agreement, such as the consideration that is being exchanged for the intellectual property.
- Description of the property. The agreement should include a full description of the intellectual property that is being assigned. The description can be included in the agreement or attached as an exhibit.
- Warranty. This provision provides that the assignor has the right to assign the intellectual property. If the assignor lacks the capacity, the assignment will likely not be effective.
- Term. The term of an intellectual property assignment agreement specifies how long the assignment will last. The assignment can be for a specified amount of time or can be permanent. If the former, the agreement should include procedures for renewing the agreement.
- Territory of assignment. This provision defines the territorial limits that apply to the agreement.
- Confidentiality. A confidentiality clause protects the assignor’s interests both while the agreement is active and following termination. It prevents the assignee from using or disclosing sensitive intellectual property information which can have enormous consequences for the company.
- Remedies. Remedy provisions state what the parties’ rights are in the event of a breach of the agreement. Including injunctive relief or liquidated damages is a good practice, since it can cut down on the time and costs associated with litigation.
Other Important Points for the IP assignment agreement
In addition to the provisions discussed in the previous section, there are a few other important points to focus on to ensure that you receive the best legal protection.
First, ensure that the intellectual property assignment agreement requires an employee to disclose any inventions, ideas, or work product related to the company’s products or services produced during the employment term.
Second, specify that the company retains ownership of all inventions, ideas, and work product. For example, suppose you hire a software developer to create an application for your company. The developer creates the application and subsequently leaves the company. Addressing this issue at the outset prevents the developer from attempting to claim ownership of the application.
Whether you own a startup or an established business, it is crucial to ensure that your company’s most valuable assets are protected. A company’s intellectual property can include a broad range of assets, such as copyrights, trademarks, patents, and trade secrets. Intellectual property law grants owners of intellectual property important rights and gives them an economic incentive to benefit from the property that they create.
Intellectual property assignment agreements assure investors that your company owns all of its most valuable assets. Moreover, the agreements safeguard employers’ interests by preventing employees from utilizing their work product and intellectual property outside of the scope of employment.
If you have questions about intellectual property law or want to protect or enforce your rights, contact our experienced legal team today for a free consultation.