Licences, Assignments and Recordals
Negotiating on Intellectual Property Titles: Licences, Assignments, Recordals
Patents, utility models, and trade marks fall within the category of so-called movable property and may therefore be assigned, exchanged, contributed to companies, inherited, licensed, etc.
Current regulations provide that the exploitation of an invention, a design, or a trade mark (industrial property titles) may be carried out either directly by the owner or indirectly through a third party, by means of licence agreements, merchandising, franchising, co-branding agreements, etc.
It is also possible to assign, even partially, the rights relating to the said industrial property titles.
The Biesse firm assists its clients in the negotiation of licences or assignments of patents, trade marks, designs, and know-how, in Italy and abroad.
How the Assignment of an Intellectual Property Title Works
An assignment is a contract by which the owner of a trade mark, patent, or design transfers to a third party all or some of the economic exploitation rights, in exchange for consideration that may be paid in a lump sum or spread over time. In doing so, the owner (assignor) divests themselves of ownership of those rights, which are instead acquired by the purchaser (assignee).
An assignment may be for consideration or free of charge, and may be the result of a sale and purchase agreement, a business transfer, a contribution to a company, an exchange, etc. The assignment may cover all titles belonging to a particular family or only some of them (for example, it may cover only the extensions of marks and patents in countries where the owner is not active).
Standard contracts relating to industrial property titles, in particular licences, confidentiality agreements, assignments, franchising agreements, etc., are available online. In some cases these contracts are provided by consultants who are not experts in the field.
However, concluding contracts relating to industrial property titles without the assistance of a professional in the field is very dangerous, as these are intangible assets that must be maintained and defended, governed by national and international regulations. The risk of concluding incomplete and/or disadvantageous contracts is very high.
Under a licence agreement, the owner (licensor) retains ownership of the rights but grants another party (licensee) the right to exploit the title (for example, to affix the mark to their own products or to produce and market the patented invention) for a pre-determined period of time, in exchange for consideration. The consideration (royalty) may comprise a fixed component and a variable component, usually commensurate with sales or turnover generated by the licensed title. The licence may be exclusive, if the owner waives direct exploitation of the licensed title and undertakes not to grant other licences, or non-exclusive, if the owner reserves the right to directly exploit the licensed title or to grant other licences, possibly for different territories. It may occur, for example, that a title is licensed to several parties each operating in a specific territory. Merchandising, franchising, and co-branding agreements are also within the scope of licence agreements.
A merchandising agreement allows the owner of a trade mark operating in a particular sector to grant a licensee the right to affix it to their own products or services, which are generally related to a different product or service category from the owner's, even if compatible with it. Through this commercial strategy, the owner can capitalise on the pull effect of their mark (especially if well known) and greatly expand its potential.
A franchising agreement, on the other hand, allows a company to grant an affiliate (franchisee) the availability of a series of industrial property rights – trade marks, commercial names, patents, utility models, designs, copyright, know-how, technical or commercial consultancy – placing them within a network of affiliates in the territory, for the purpose of marketing specific products and/or providing specific services in a uniform and standardised manner.
Finally, a co-branding agreement provides for a company to associate its mark with that of another company in order to increase the appeal of the products or services to which both signs are applied, or to optimise the costs of an advertising campaign.
A correct portfolio management strategy should therefore consider both direct economic exploitation of the title (for example, affixing the mark to one's own products, producing and selling patented goods, etc.) and indirect exploitation in all markets that, for various reasons, the owner is unable to cover. Obviously, the broader the patent or trade mark coverage in geographical terms, the greater the commercial exploitation potential of the title, as assignments and licences usually relate to registered or patented rights.
For this reason it is important to carefully assess with one's industrial property consultant the potential for economic exploitation of marks and patents, in order to define the best strategy for protection and extension.
Industrial property rights can be "monetised", i.e. converted into an additional source of income for companies if viewed from a financial perspective. Industrial property titles can be used as collateral for access to public funding (patent box, grant schemes) or private funding such as mortgages and leasing. The main financing instruments, which are still seldom used in Italy, are as follows:
- IP LOAN: use of intellectual property as collateral for a loan to broaden funding sources;
- IP SECURITISATION: transformation of the royalty stream from licence agreements into tradeable securities placed with investors to obtain financing by anticipating income from exploitation;
- IP SALE AND LEASE BACK: assignment of intellectual property to a leasing company and simultaneous conclusion of a leasing agreement to obtain financing by selling the asset with the option to repurchase;
- public financing through the Patent Box tax regime or national or regional grant schemes.
Under certain conditions, so-called know-how also benefits from protection: this is the body of industrial and commercial knowledge capable of adding value to production and/or marketing insofar as it is secret. This often involves knowledge that, while valuable, cannot access patent protection. Such information is protected by the rules on trade secrets, and there is nothing to prevent companies from commercially exploiting it through appropriate agreements aimed at transferring technologies or knowledge and/or licensing them.
As a rule, no particular form is required for the assignment of industrial property titles and/or the granting of licences.
However, written form is required for the transcription of such acts at the competent offices, for publication purposes. The transcription procedure makes official and public to the competent offices and all interested parties the change of ownership of trade marks, patents, and designs, or the granting of exploitation rights over titles such as licences or rights of use, also in order to make such acts enforceable against potential third parties in the event of a conflict.
Transcription consists in filing the assignment or licence deed at the competent offices; in some cases this must take the form of a notarial deed or a private deed with notarial authentication. Alternatively, a declaration of assignment or licence may be filed, which in Italy must be registered with the Tax Authority (Agenzia delle Entrate) in original or certified copy.
The recordal procedure, on the other hand, is used to notify the competent offices of all changes relating to the owner: change of address, name, representative, etc.
A confidentiality agreement becomes an essential tool when, in order to perfect one's invention or verify its practical feasibility, the inventor is obliged to involve third parties (designers, engineers, toolmakers, laboratories, potential clients) before filing the patent application. A confidentiality agreement makes it possible to bind the third party to secrecy regarding what will be disclosed to them, thus avoiding having the idea misappropriated or incurring a pre-disclosure that could potentially invalidate the subsequent patent. Biesse's consultants are available for advice and assistance in concluding assignment and exploitation agreements for patents, utility models, and trade marks, as well as for all related agreements (confidentiality agreements, non-compete covenants, distribution agreements, transcriptions, etc.).
