Most companies have intellectual property as part of their assets, including software, product design, or copyright to white papers. Buying or selling such property is done using a document called a deed of assignment.
Understanding intellectual property in buusiness
A large part of what a business consists of may be tied to intellectual property. It's easy to see physical property a company owns, such as a building, office furniture, or inventory, but intellectual property can be more challenging to identify.
Most businesses have intellectual property, or works created by human minds or, in some cases, by computers. Some examples of intellectual property include architectural drawings, ad campaigns, company or product names, inventions, and source code.
How to transfer intellectual property rights in business
Examples of when transfers of intellectual property might happen include when a company is buying another company, when you are setting up an LLC and want to transfer your intellectual property into the company, or when a business buys product rights from another company or individual.
A deed of assignment can be done in one transaction, instead of one transaction for each item of intellectual property, by transferring all ownership rights of all intellectual property detailed in the deed. The document is signed by both the buyer and seller. No payment is required for it to be valid.
What to include in a deed of assignment
A deed of assignment must be in writing and should include:
- The names and addresses of the assignor and assignee
- A description of the program or product for which the rights are being transferred
- A statement that all intellectual property rights to the property are being transferred
- Signatures of the parties and the date of the agreement execution
The deed could also include the following sections, where applicable:
- Consideration, or payment, to be made to the original owner.
- Warranties, or promises that the intellectual property rights being assigned don't infringe on anyone else's intellectual property rights. For example, in a deed regarding the transfer of a copyright, this section could state that the copyrighted work is original and not owned by someone else.
- Indemnification, or promise by the seller to reimburse the assignee if there is some problem with title to the property.
- Future assignments. For example, the agreement could be ongoing, so that anything the assignor creates in the future for this product or program is also transferred to the buyer.
Registering new ownership
Although a deed of assignment transfers ownership in intellectual property, it does not change the registration of the ownership. The assignee is responsible for handling all registration requirements.
For example, if a patent is transferred via a deed of assignment, the new owner must record the change in ownership with the U.S. Patent and Trademark Office. Similarly, the transfer of a copyright is recorded with the U.S. Copyright Office.
Restrictions on intellectual property transfers
Transfers of intellectual property must comply with U.S. laws. One obvious caveat is that you can't transfer property you don't own. Transfers must also comply with antitrust laws, which are set up to prevent one company from completely dominating an industry.
If intellectual property rights are being transferred overseas, the transfer must comply with Export Administration Regulations and the International Traffic in Arms Regulations, which are designed to protect national security and trade.
The deed of assignment can be a crucial part of a business deal or transaction. You can create a deed of assignment yourself, or you can work with an attorney.