Technology Assignments & Sales

Technology Assignments

What is an “assignment”?

An assignment is when you transfer property rights from one party to another.  In tech transactions, it may be something like a purchase of some form of intellectual property like a patent for cash; however, an assignment can take many different forms.  For example, a founder of a company may transfer their rights in a patent for an invention that they developed in exchange for their initial stake in the newly formed company.  Many people don’t realize that there are steps that need to be taken to transfer ownership and, in most cases, they can’t take the property back just because they want to leave the company.  This is where an assignment comes into play and should be put into a formal written agreement assigning the rights.  These agreements commonly are included within a purchase agreement or as a separate written agreement in connection with purchases and sales of companies, or individual items of property.  They are included to be sure that the transfer of ownership is properly documented.  They can be used for things like physical assets, like a car, but they become even more valuable when you are dealing with assets that are intangible like trade secrets, trademark rights, or patents.  When you sell a car or inventory, you can move the physical property from the seller to the buyer, but with intellectual property, there is often nothing physical to give to the other person.

Patent, Patent Application, Trademark, & Trademark Application Assignments

Patents are something that does have some form of ownership documentation in the form of a patent application or the actual issued patent from the US Patent and Trademark Office (USPTO).  It becomes necessary to not only put together an assignment agreement, but also take the required steps to be sure the patent or patent application is transferred through the proper channels, such as the USPTO.   Here is a sample of what an issued patent cover page and patent assignment form looks like:

Trademarks and trademark applications are also documented with filings with the USPTO.  There are also steps that should be taken to show transfers of ownership similar to patents.  Here are sample trademark

When putting together trademark or patent assignment agreements, it is critical that the buyer conduct their due diligence to be sure the seller has full rights to sell the patent or trademark.  The buyer needs to be sure the patent or trademark is still valid as the owner needs to take steps to “prosecute” their patent or trademark to avoid infringement by others or defend potential infringement claims against it.  Also, just because a person has filed an application for a trademark or patent, it does not guarantee the application will be granted.  It is not as simple as going online to search on the USPTO website to see the status of an application as not all applications are publicly available and if you aren’t experienced in the process, you may not be able to understand where the application process is at.  There are state and international law issues that could come into play and an experienced attorney in this area should be used to assure you protect these valuable assets and get what you are paying for in a purchase transaction.  The due diligence should also include researching into whether there may be any liens or security agreements that could be using the patent or trademark as collateral, which could result in the buyer not obtaining full rights.

Domain Name Assignments

Most people in tech are familiar with ICANN for domain name registration.  In addition to ICANN, domain names are protected under trademark or service mark laws.  Disputes for domain names are typically subject by ICANN to the Uniform Domain Name Dispute Resolution Procedure (UDRP).  In addition, the federal Lanham Act and Anticybersquatting Consumer Protection Act (ACPA) deal with protection of domain names as trademarks.  Mere registration with ICANN does not automatically guarantee any trademark law protections.  Due diligence in a domain name purchase or other transaction needs to include research into who the registrant of the domain name is and whether any trademark applications based upon the domain name may have been filed or an actual trademark issued.  In addition, counsel should be sought as to whether the sale of the domain name may be a violation of the ACPA.

Trade secrets and other intellectual property assignments

Other forms of intangible property can be transferred through use of an assignment agreement and most company stock or asset purchase agreements will include clauses or a separate agreement that assign any possible intellectual property to the purchaser.  So even if no actual patent, trademark, or application for those have been filed, it tries to assure other things like ideas or developments made by the seller are covered and transferred to the new owner.

Technology Purchase & Sale Agreements

Assignments are commonly associated with intellectual property agreements, such as purchase and sale as discussed above.  There are a number of factors to be considered when negotiating and drafting tech purchase agreements and are too numerous to discuss in detail and a qualified attorney should be consulted to handle not just the basic purchase agreement, but dealing with all of the IP that is involved and many companies may not even be aware of.

All of these are complex legal issues and consulting a local licensed attorney familiar with all these issues can be invaluable.

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Legal Disclaimer: All answers and discussions in this article are meant to be general and educational in nature only and should not be relied upon as legal, business, or tax advice for your specific situation.  Most discussions refer to laws and regulations as applied to a California corporation and these can vary by location, as can other factors in certain situations within California, so it is always best to consult with a licensed local attorney with experience in these matters.  Use of, or any discussion as a result of these articles does not create an attorney-client relationship and is not governed by rules on confidentiality. 

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