In law, assignment refers to the transfer of rights or benefits from one party (the assignor) to another (the assignee). The ability to assign differs depending on the area of law governing the rights assigned.

What is assignment?

Ownership of intellectual property (IP), including patents, copyrights, and trademarks, may be assigned so that they can confer a benefit to all the parties involved. An assignment is the transfer of rights held by one party (the assignor) to another party (the assignee). For example:

  • A company may have a license to use the patent for a particular piece of machinery
  • It can assign its right to use that machinery to another company provided they are the legal owner of the right and are not prevented from doing so i.e. by the license agreement

As a general rule, the assignor remains liable to its principle unless there is an agreement to the contrary and most assignors would require the assignee to follow the same rules that the principle license places on them and compensate them for any breach of this agreement.

How does assignment work in contract law?

Under contract law, assignment of rights provided in a contract is permitted unless the contract does not allow an assignment through the use of a non-assignment clause. It has long been held however, that under common law, assignment of the burden of a contract is not permitted.

The distinction between a burden and a benefit is crucial for contract law. A bank loan for example, is commonly transferred (bought or sold) between banks. There are multiple methods of transferring a loan, and each has its own characteristics. When a loan is assigned:

  • The original lender sells the benefit of the loan (the right of repayment and interest);
  • But it cannot assign the burden of the loan (i.e. the responsibility to make further payments to the lender)

It is vital that a pre-arranged framework is in place with a clear written agreement between all parties engaged in the transaction. Common issues to consider when drafting an IP agreement include the definition of the IP that is being assigned, and if you are the license holder you should make sure your license agreement allows you to assign your rights to another party.

You must also check the circumstances, if any, in which a licence may be cancelled or the rights assigned reverted.

How does assignment work in property law?

In land or property law, assignment of a lease works in much the same way. When a leaseholder assigns the lease to a tenant, the benefit of the lease is transferred, and with it comes the responsibility of maintaining the terms of the lease.

The issue here is that a party is not allowed to transfer the burden of a lease, and so the new tenant’s responsibility to keep the terms of the existing lease is not binding. If this is your situation the solution is to create a chain of indemnity, where you (the assignor) agree with the new tenant to keep the existing terms by signing a new contract, and the original landlord must sue you if a term is breached by the new tenant.

If you are unsure of any of your rights under the law of assignment, it is highly recommended to seek legal advice from a specialist intellectual property solicitor who can ensure you are fulfilling all of your legal obligations under your contract.

For general advice on intellectual property rights, see our page on IP law.

Are you looking for a solicitor to help you with a dispute under assignment law? Contact Law works with intellectual property specialists around the country who can help you in reaching a resolution for your dispute, or simply draft contract terms for you prior to you assigning legal rights to a third party. Call us on 0800 1777 162 or complete the web-form above.

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