Difference Between Licensing and Assign Agreement

Whenever we discuss about the difference between Licensing and Assign Agreement first we have to discuss about both in a nutshell. An agreement can be defined as a meeting of the mind with the understanding and recognition of shared legal rights and responsibilities as to the precise acts or obligations which the parties agree to exchange; a mutual consent to do or refrain from doing anything; a deal. The arrangement is not necessarily compatible with the contract, since it can neglect the basic aspect of the contract, such as concern. Under Section 2(e) of the Indian Contract Act, 1872, the word “Agreement” is specified as every promise and every set of promises to be considered for each other is an agreement.” And an agreement enforceable by statute is a contract. The term “lease” is defined in accordance with Section 52 of the Indian Easement Act, 1882 as “Where a person grants to another person, or to a certain number of other persons, the right to do or to continue to do, in or on the immovable property of the grantor, anything which in the absence of that right, would be unlawful and that right does not amount to servitude or interest in the property, right i. Thus a Licensing Arrangement is a formal document between two parties, the Licensor and the Licensee, where one party (the Licensor) grants permission or authorization to use its property/intellectual property/brand name or trademark/patent technology to another party (the Licensee) under a specified set of terms and conditions.

Licensing Agreements

A licence arrangement is a written agreement between two parties in which the owner of the land allows another party to use the property in compliance with a particular set of conditions. Licensing arrangements or licensing agreements normally include the licensor and the licensee. Licensing agreements set out the conditions by which one party can use land owned by another party. Although the assets in question which include a variety of products, including land interests and personal belongings, licence arrangements are most commonly used for intellectual property purposes, such as patents and trademarks, as well as copyrights for printed materials and graphic arts. For eg, Nestle and Starbucks entered into a $7.15 billion coffee licencing agreement in May 2018. Nestle (the licensee) agreed to pay $7.15 billion in cash to Starbucks (the licensor) for exclusive rights to market Starbucks products (single-serve coffee, teas, bagged beans, etc.) around the world through Nestle’s worldwide distribution network. In addition, Starbucks can earn revenue from bottled coffees and teas offered by Nestle. The licence arrangement provided Starbucks with the opportunity to push brand awareness beyond its North American operations via Nestle’s distribution networks. For Nestle, the company acquired access to Starbucks products and a good brand reputation.

Types of Licensing Agreements

1. Exclusive Licensing Agreement – This form of arrangement establishes a special partnership between the licensor and the licensor. In such arrangements, no one except the designated licensee is entitled to exploit or use the licensed property within the duration of the agreement. The special characteristic of this form of arrangement is that even the licensor is exempt from the use or misuse of the approved property within the duration of the agreement. Copyright, patents and patent licences are the best examples of an exclusive licensing arrangement.

2. Non- Exclusive Licensing Agreement  – In this form of arrangement, the licensor may issue a licence for the licensed property to any number of licensees and may also use the licensed property within the duration of the agreement.

3. Co- Exclusive Licensing Agreement – This form of arrangement requires more than one licensee to use and manage the licensed property, except this time the number of licensees is limited and their number is set at the time of entering into the agreement.

4. Sole Licensing Agreement – This form of the arrangement is somewhat similar to an exclusive licensing agreement, but the only exception is that the licensor retains the right to use the licensed property for the duration of the agreement.

Assignment Agreements

Contract assignment means that the contract and the property rights or responsibilities within the contract can be delegated to another party. As a general concept, a contract assignment may be included in a business contract. This form of provision is typical in negotiations with manufacturers or suppliers and in deals on intellectual property. Contract assignment is also used in contracts that give either side the option to pass its share of the contract to someone else in the future. Many assignment clauses enable all sides to commit to the assignment. An assignment can be made to anyone but is normally made to a subsidiary or a successor. A division is a company that is purchased by another business, while a descendant is a business that accompanies a transaction, takeover or merger.

Specifications in IP Assignment Agreement

1. Identification of the Parties -identifies the contract as an arrangement for the assignment of intellectual property and identifies the Assignor and the Assignor. The party transferring (‘assigning’) ownership interest shall be referred to as the Assignor, while the party obtaining it shall be referred to as the Delegated.

2. Obligations of the Parties -It is necessary to explicitly specify the obligations of the Parties in order to prevent any subsequent dispute as to the nature of those obligations; the precise meaning and extent of the obligations of the Parties depends on the form of intellectual property transferred; however, the principal duty of the Assignor is to transfer the rights of intellectual property.

3. Liability and warranty provisions-refers to the right of the assignor and the authority to enter into such an agreement; for example, to promise that he is the sole owner of all rights, title and equity in the IP and that the IP is legitimate and valid; that the transferred IP does not infringe the rights of third parties.

4. Compensation-A summary of the potential duties of each party if intellectual property is found to infringe the interests of a third party.

5. Applicable law and jurisdiction-The national law may prevail in the case of a conflict; it is also necessary to specify the appropriate court or the arbitration/mediation process to which the issue can be referred.

Licensing and Assignment Agreements

1.  Interest Vested: One can licence the IP to another person or business to use as the owner of the IP. One and the other party negotiate on the terms of this usage. This is known as a licensing arrangement, and in this case, one is the licensor and the other party is the licensor. The terms of usage outlined in this Document should be agreed between oneself and the other party in order to protect the best interests. These terms govern the arrangement which includes: the limitation of the licensee’s usage to a single geographical location; and the payment of rights in the form of royalty.

In relation to a licence, an assignment agreement is a permanent transition of the IP. This transition is irrevocable and usually takes place as a sale or transfer from the owner (assignor) to the purchaser (assignee). If one is trying to pass control of the IP, he can ensure that this transfer is made in writing by means of an act or other formal agreement. These documents can pass current or potential IP rights in exchange for a lump-sum payment.

2. Method of  Assignment: There is no requirement to do so in writing in licencing IP. Involved licences can often be invoked by the application of the rule. Example commissioned to produce patent content, and no formal arrangement is in effect. In this case, it is generally presumed that a tacit licence has been issued to the person who commissioned the material to be produced. There is a tacit licence on the payment that the commissioned party has an implicit licence for the copyrighted piece. It would then be implied that they will use it for the purposes of an unwritten arrangement.

The designation to an IP shall be permanent and irrevocable in the assignment agreement. Therefore in order to do this correctly, the task must be in writing.

3. Notification: There is no notification mechanism for one IP licence. It is actually a private arrangement between the licensor and the licensee.

When the IP owner transfers an IP to the assignee, the assignee would have to file an application for transfer of ownership. If the Registrar collects the form with the assignment information, the assignee is legally the owner of the IP. Once this phase has been finished. The Registrar is then obligated to inform any other person involved.

4. Cost: Although the assignment gives the assignee sole ownership of the piece of land, the purchase of the assignment would normally cost more than the acquisition of the licence.

5. Enforceability –  Another significant difference between the two of them is in the requirement to make them enforceable. It is a signatory that the assignment agreement is required to be recorded and filed in The United States Patent and trademark office assignment recordation branch. It is observed that the license is less stringent and thus it can be granted orally. The best-suited method is to have a negotiated and signed licensed, unlike assignment a record of the agreement is not mandatory.