How to sell intellectual property?

Intellectual property, as the name suggests, refers to the rights of the creators of intellectual property ranging from inventions, trademarks, literary, musical work and even designs. The intent behind laws concerning the intellectual property is to protect the rights of the creator/owner of such intellectual property so that any unauthorized use of such intellectual property has repercussions under law.

In India, the laws concerning intellectual property can be broadly enumerated as below:

1. The Trade Marks Act, 1999
2. The Patents Act, 1970
3. The Copyright Act, 1957
4. The Designs Act, 2000
5. The Geographical Indication of Goods (Registration and Protection) Act, 1999
6. The Protection of Plant Varieties and Farmers Rights Act, 2001
7. The Semiconductor Integrated Circuit Layout Design Act, 2000

The intellectual property laws and the provisions contained therein bestow upon the creator/owner the exclusive rights to commercially exploit such intellectual property for a certain period of time, which varies depending upon the statute provisions governing the relevant intellectual property. One of the common ways employed by owner and creators of intellectual property is to provide an intellectual property license to the interested parties. Another way of selling intellectual property is to assign the same to the interest party in lieu of consideration. 

How to sell intellectual property?

As discussed above, there are several methods of exploitation available to the owners and creators of intellectual property. The owner can inter alia use the rights themselves such as using the trademark for marketing one’s own products or services or license the same to franchisees and share revenue with the franchisee establishments. To put it across in simpler terms, assignment and licensing are the two methods that exist for an owner or creator of intellectual property wherein they can get into agreement with a third-party to receive a fee, royalty or other kind of remuneration.

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1. How to sell a Trademark?

The Trade Marks Act, 1999 permits the assignment of a trademark and defines the same as an assignment in writing by the act of parties concerned. The details pertaining to the rights granted as well as the procedure for the same have been covered in Sections 37 and 39 of the Act. It is pertinent to mention that when a trademark is assigned, the entire set of rights with respect to that trademark gets assigned to the assignee. While the assignment of a registered trademark has to be recorded with the Trade Marks registry, even unregistered marks can be assigned.

The Act, in addition to the above, also allows the proprietor of a mark to license their trademark and thereby allow a third party to use the mark and even register such a licensee as a registered user. It is pertinent to mention, however, that upon the transfer of rights based on a license, the right conferred on the licensee is limited to the terms of such a license agreement. Such a licensee additionally does not have the right to further assign or transfer the mark in any capacity. 

2. How to sell a Patent?

The Patents Act, 1970 does not lay down a specific procedure to be followed to assign a patent. It is to be kept in mind that in case a patent has more than one inventor, all of such inventors will have to jointly give their assent to the assignment. The assignee of a patent (through a written deed) becomes the owner of the patent for all intents and purposes. A right in an invention (in which a patent is yet to be granted) can also be assigned under the Act; Section 20 of the Act states that an application to this effect may be made to the Controller of Patents.

Additionally, the rights over a patent may also be transferred in the form of a mortgage. Where the rights of the patent are transferred in the form of a mortgagee for a specific amount of money and once such amount is paid back to the mortgagee, the rights in the patent return to the registrant of the patent. 

An agreement of licensing a patent is made between the patent owner and the licensee which thereafter allows the licensee to make, sell, exercise or use the invention that has been so licensed under either an exclusive or non-exclusive basis.

3. How to sell Copyright?

A copyright owner has the option to assign their right to the assignee for either a lumpsum payment or an ongoing payment like in the case of royalties. Assignment of a copyright is the transfer of the interest in the work to the assignee from the assignor. Sections 18, 19 and 19A of the Copyright Act lay down the provisions governing the assignment of copyright. It is pertinent to note that under Section 18(1), the proviso provides that the authors of literary and musical work that form a part of a cinematographic film have an inalienable right to collect royalties which was introduced in the year 2012.

This provision lays down that any assignment of a protected work which shall assign this inalienable right to the assignee is void ab initio, that is void from the very beginning. The Act additionally provides for reversion of rights where in case an assignee fails to utilize the rights assigned under a duly executed agreement for a period of one year, the rights revert automatically to the assignor. 

Another method provided under the Act, is through licensing of his/her rights in the work by the copyright owner. Through this mechanism, the owner of a work already in existence or prospective owner of a future work may grant a license to any party by creating a limited interest in the exploitation of the copyright, limiting the use of such right by time, territory, non-exclusivity and/or scope.

It is pertinent to mention that the agreement to affect such license must be in writing and in case the work has not come into existence yet, then the same shall only come into effect upon the creation of such work. Further, the Act contains provisions concerning compulsory and statutory licenses where certain situations demand that the authorities under the Act provide the applicant with a right to use copyrighted work. 

4. How to sell a Design?

The Designs Act, 2000 as such does not refer to any specific method or procedure governing assignments and licenses except for that any such document transferring the rights in a design needs to be in writing. However, the Act does provide for registration of such transfer with the statutory authority. It is to be further noted that much like any other transfer of intellectual property it is crucial to define the scope of transfer as well as have well-defined terms of payment. 

Conclusion

As we’ve discussed previously, the procedure to commercialize any intellectual property usually begins with the registration of the same under the appropriate statute and authority. Additionally, it is important to always keep such documents in writing and to have the same recorded with the relevant statutory authority, wherever the same is allowed. It is most important to have an air-tight agreement since such transfer of rights may result in the transferee trying to usurp more rights than they are entitled to. In order to ensure the protection of your intellectual property and rights emanating therefrom, it is extremely important to take sound legal advice at all levels of dealing with intellectual property, starting from the registration to the licensing or assignment of the intellectual property.  

Frequently asked questions 

1. How do you buy and sell intellectual property?

The ideal way to conduct any transaction involving intellectual property involves the crucial element of firstly ensuring that the rights being transferred are protected under the appropriate law and such transfer, in order to be valid needs to be processed under the provisions of such statue that bestows the rights on the creator/owner of such intellectual property. It is therefore highly recommended that one engages the services of the relevant professional before engaging in any kind of transaction involving transfer of intellectual property. 

2. How do you profit from intellectual property?

All types of rights in an intellectual property can be utilized by either the owner (through the exploitation of the IP themselves), or the owner can instead receive payment for transfer of rights in such property to a third party. Assignment and licensing are two major forms of transferring rights in intellectual property which thereafter assist the transferor in receiving monetary compensation as consideration. 

 3. Who will buy your intellectual property?

Any party interested in commercializing their rights over intellectual property has numerous methods at their disposal to get in contact with interested buyers. A good place to start in the case of a trademark is to build a strong brand that can later be franchised to third parties. Similarly, if an inventor is interested in getting consideration for their patented invention, they could benefit from identifying industries that uses the current equivalent of the technology or could benefit from the invention. 

4. If you created something on the behest of your employer, do you still get to sell it? 

Since a lot of people employed with organizations have jobs that include the creation of intellectual property, in a case like that, if the employee’s contract contains the provisions pertaining to creation of intellectual property (and that the same is automatically assigned to the employer), the employee does not get a claim over any IP rights over such a creation. 

5. How much does intellectual property cost?

As such the registration of intellectual property under Indian laws differs on account of a lot of factors, including the subject of creation, the type of law under which protection is applied for and in some cases even the nature of entity of the applicant. It is always good to get in touch in a legal professional well versed with the nuances of the relevant law, who can better assist the creator in protecting their work.