Journal Article

Assignments and royalties don't mix

Mark Anderson

in Journal of Intellectual Property Law & Practice

Volume 4, issue 4, pages 283-288
Published in print April 2009 | ISSN: 1747-1532
Published online April 2009 | e-ISSN: 1747-1540 | DOI: http://dx.doi.org/10.1093/jiplp/jpp017
Assignments and royalties don't mix

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Legal context

Since the nineteenth century, English law has provided that certain covenants given by a purchaser of land may ‘attach’ to the land and be binding on subsequent owners of the land. Jessel MR, in the 1881 patent case of Werderman v Société Générale d'Electricité, seemed to propose a similar rule for patent assignments, but this proposal was not taken up in subsequent cases. IP therefore follows the ordinary rule for personal property, where covenants are only binding on the contracting parties. A limited exception applies in the case of licences of IP, which may be binding on subsequent owners of the IP under special provisions of IP legislation.

Key points

In recent years, there have been increasing numbers of IP transactions where IP is assigned in return for royalties. If the IP is later re-assigned, the new (third) owner may have no obligation to pay royalties to the original owner of the IP. This disadvantages the original owner, who may have no effective remedy, unlike a licensor of IP who could terminate the licence. This article reviews the limited case law in this field, and proposes a change to the law, to make contractual obligations in IP assignments binding on subsequent owners of the IP.

Practical significance

The changes proposed in this article would re-align IP law with the expectations of commercial parties, and ensure that an assignor of IP is in no worse position than a licensor of IP in relation to the receipt of contractual royalties.

Journal Article.  5105 words. 

Subjects: Arbitration ; Intellectual Property Law

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