4.5 - Selling IP

Intellectual Property (IP) is an asset that can be bought and sold. An IP assignment is a written agreement to legally transfer ownership of IP from one party (the Assignor) to another party (the Assignee).

For most forms of IP rights (IPR), particularly registered IPR like patents, a written assignment is required by law and this will need to be recorded with the respective patent or trade mark offices in each country.

On this page:

Unlike in a licence where the IP remains owned by the party who is licensing the IPR to the other party, under an assignment the new owner has full control over the IP and the previous owner will give up its control.

An Assignment Agreement generally does not include the grant back of any licence rights that would allow the Assignor to continue to use the IPR and the Assignor will have no rights to use and benefit from the IP, even if the new owner does not use or commercialise the IPR. As such, IP owners should think very carefully about whether to assign their IP if this is being used as the route to commercialisation. A licence may be more appropriate than an assignment (please refer to the Licensing IP guide).

Where an assignment is appropriate, the Assignor should consider the need for a separate licence agreement to grant back certain rights to use the IPR (for example for academic research and educational purposes).

When to assign IP?

The assignment of IP can take place in two sets of circumstances:

  1. Recording or confirming assignment:
    1. from researchers working on a particular project to the university
    2. from the university back to the inventor(s) when the university has decided not to pursue exploitation and the inventor(s) wish to do this in their personal capacity. This will be dependent on the university’s IP policy
  2. As part of a commercialisation transaction, including:
    1. Assignment to a spin-out company being formed by the university where it is agreed that the company should own (rather than license) the IP
    2. Sale of IP to a commercial partner where this is the best route to market (i.e., a licence is not appropriate or possible)

In the majority of circumstances, a university would expect to licence IP rights to a commercial partner and not to sell the IP.

Key Considerations

The following table is provided as a guide to help the parties appreciate the key considerations that each party will have when negotiating an assignment agreement. This assumes that the Assignor is a university, and the Assignee is an industry partner. In the template provided under the Framework, either the university or the industry partner can be the Assignor.

Discussing and understanding each party’s needs and concerns up front will help you reach an agreement more quickly and will help you apply the template to reach a fair agreement.

For organisations, particularly SMEs, that do not have any experience of buying or selling IP, this table will help you understand what the key provisions of an assignment agreement are and what you need to think about before you start discussions with the other party.

Further information on how to complete the template is provided with the guide and template agreement. Additional plain English guidance on the meaning of key clauses is provided in a separate annotated version of the template.

Resources

This table sets out the key points each party needs to consider when buying or selling IP. Understanding your own key considerations, as well as those of the other party, will help you to negotiate a fair and reasonable agreement that works for both parties. Further guidance on how each of these points is approached in the assignment template is given with the respective template.

Key points Assignment Provision University (Assignor) Industry Partner (Assignee)
The Parties
  • Identifying the correct legal parties to the transaction
  • Identifying the correct signatories
  • Ensuring the appropriate authorised personnel are signing the agreement
  • Ensure that the university is the correct legal owner of the IP being assigned and that it is confident it has the necessary full ownership rights through employment or assignment from all inventors and collaborators
  • Ensure the correct approvals have been sought and an authorised person signs the agreement. For some organisations a particular approval process and authorised signatory is required when disposing of any assets, including IP
  • Ensure the IP is being assigned to the correct legal entity, particularly within a corporate group structure
Definition of IP
  • A clear description of the IP being assigned
  • For registered IP this should include registration numbers and filing dates
  • Is the assignment just to existing rights or will future rights also be included?
  • Be clear exactly what IP is being assigned and whether there will be ongoing obligations to assign further IP that may arise
  • Check that the university owns the IP and that there are no other rights already granted to the IP (for example, a previous licence or an ongoing research collaboration). If rights have already been granted to the IP, these agreements will need to be assigned to the new owner or terminated before the IP is sold
  • For patents, this will include all future patent applications and granted patents that take priority from the assigned patent(s)
  • Ensure the industry partner is buying the full IP rights it will need and that this is clearly defined
Assigned and retained rights
  • Typically, alongside all future rights, the assignment will include the right for the Assignee to sue for past infringement and retain the benefit from this
  • Universities should consider whether they need any ongoing rights to the IP, and if so, ensure this is granted by way of a licence from the Assignee
  • Retain rights to the IP for its own academic research and educational uses through a separate licence agreement (if these are not already granted, for example under an existing collaboration agreement)
  • If the right to sue for past infringement is included in the assigned rights, the value (if any) of past infringement of the IP by a third party should be considered when agreeing the price for the IP purchase
  • Ensure the industry partner has full control of the IP it is buying, and it is clear what rights the university will retain via a licence
Payment terms
  • The negotiated price for the assigned IP and how this will be paid
  • Upfront one-off payment or staged payments
  • Ensure that a fair price is paid for the IP - valuing IP requires expert advice
  • If the value is not taken in full as an upfront payment, there may be risks associated with future payments (for example, if the Assignee goes bankrupt, or if it sells on the IP)
  • Ensure the industry partner pays a fair price for the IP rights it purchases and that this price reflects the value to the industry partner and the contribution of the University to its creation
Warranties
  • The agreement would typically include warranties relating to ownership and there being no restrictions on the IP
  • The University should be prepared to warrant that it owns the IP being assigned and that it is free from all charges/encumbrances and that no rights have been granted to third parties
  • The University should take legal advice if it is expected to take on further warranties
  • Consider whether any other warranties are appropriate to manage risk, particularly if the transaction includes a large up front payment