1. Putting Your Ideas to Work:
How to Assign or License Your IP
By: Brandan Ray, Boston University Entrepreneurship & IP Clinic

2. Agenda Brief Overview of types of IP What is an IP assignment?
What is an IP license?
Examples, Best Practices, Considerations
What the Clinic can do for you
Agenda

3. Copyrights – “original works of authorship fixed in a tangible medium of expression” (books, software code, movies, audio recordings)
Trademarks – source identifier, brand names, product labels (Apple, Nike, GE)
Patents – new and useful inventions (telephone, lightbulb, car assembly line)
ALL IP can be assigned or licensed similar to regular personal property
Types of IP

4. Outright transfer of ownership of IP Must be in writing
Usually permanent after execution and not subject to conditions as with licenses
IP Assignments

5. IP Assignments (contd.)
Person  Person
Person  Entity
Entity  Entity
Typically only the party assigning the intellectual property must sign the assignment
IP Assignments (contd.)

6. Assignment by type of IP
Trademark - transfer of ownership and goodwill in trademark
Patents - transfer of ownership of patent and associated rights (make, sell, use)
Copyright – transfer of ownership of copyright and associated rights (i.e. right to collect royalties for use, reproduction, distribute, etc.)
Assignment by type of IP

7. Temporary “lease” of certain IP RIGHTS, not ownership
Subject to certain conditions and limitations (i.e. scope, time, location)
IP Licenses

8. Patents – license to make, sell, and/or use invention
Trademark – license to use trademark in specific geographic area or market, or type of product
Patents – license to make, sell, and/or use invention
Copyright – license to exercise one or more rights (i.e. reproduce, distribute, perform, derivative works)
Licenses by type of IP

9. Assignment Examples– Entity Formation
Commonly used at the start of entity formation
Often executed as a joint NDA/IP assignment involving a present transfer for existing and future-developed intellectual property (i.e. “Assignor hereby assigns to Company all right, title and interest including…”)
Assignment Examples– Entity Formation
Pre-entity as well

10. Assignment Examples– Corporate Taxation
At entity formation, founders may transfer IP in exchange for ownership of shares in the company
The equity they acquire may not be subject to taxation given satisfaction of other requirements under applicable tax laws
Assignment Examples– Corporate Taxation

11. Assignment Examples– Partnership/LLC Taxation
In general: no gain or loss for a contribution of IP to a partnership or LLC in exchange for a partnership interest or membership interest
If contribute IP with associated debt, then transaction may be taxable
Assignment Examples– Partnership/LLC Taxation

12. Best Assignment Practices - Recording Registered Assignments
When registered IP is assigned, record it with the appropriate federal agency ASAP
Allows other parties to be put on notice of new rights holder
Shows easily traceable chain of title
Simple method of proving ownership in cases of infringement
Best Assignment Practices - Recording Registered Assignments

13. Best Assignment Practices - Recording Registered Assignments (contd.)
Copyrights – U.S. Copyright Office
Copyright assignments can be recorded electronically and require a small fee
Trademarks – U.S. Patent and Trademark Office “PTO”
Trademarks can also be recorded electronically and require a small fee to record
For specific trademarks or copyrighted works, the trademark assignment must include a transfer of goodwill, and both the trademark and copyright assignments must specifically list the marks and/or works transferred
Best Assignment Practices - Recording Registered Assignments (contd.)

14. Best Assignment Practices - Recording Patent Assignments
Patents– U.S. Patent and Trademark Office “PTO”
Patents should be recorded upon assignment (or license), but require no fee to do so
Failure to record a patent assignment, or failure to make a timely recordation, can impact rights in a patent or patent application
Patent assignments must identify the transferred property by application number and filing date, and usually include a transfer of priority rights
Recording with the PTO will put other parties on “constructive notice” meaning they cannot claim priority to the patent rights
Best Assignment Practices - Recording Patent Assignments

15. Developed technology, but want to license out to commercialize
License to people who will help develop your product (manufacturer, programmer)
Customers may require a license to use product
Why License IP?

16. Licensing Provisions and Considerations
Provisions you should be conscious of in your license agreement:
Scope and Exclusivity–
market/geographic area
type of product or types of customers
how much value will you acquire if you grant an exclusive license or non-exclusive license
milestones
Technology Restrictions –
any prohibitions on altering the technology
will you get to own/use alterations the licensee makes
Licensing Provisions and Considerations

17. Licensing Provisions (contd.)
Time –
how much time for maximum value
termination provisions
duration for end-user product support
Limitation of Liability –
performance warranty
limitation of liability and indemnification
infringement
Licensing Provisions (contd.)

18. Licensing Provisions (contd.)
Quality Control
using IP in specific way
trademark uses; types of products based on invention
Compensation
Revenue
lump-sum
royalty based on sales
ability to audit sales and other books
sublicense (higher royalty)
Licensing Provisions (contd.)
Lubricant for horses and condoms, one could be for one company; use chemical to make specific type of product

19. Example-Licensing Royalties
Licensee has a license to sell a patent in a given Territory
Gross Revenue : $150m
Revenue in Territory: $100m
Permitted Deductions (insurance, transportation, manufacturing): $15m
Net Sales: $85m
Total Royalty: $10.625m ($85m x 12.5% royalty rate)
Example-Licensing Royalties
Sometimes include an anti stacking credit

20. Best Licensing Practices-Penalties
Tailor the license
termination provisions other than the license’s timely expiration
loss of exclusivity or other rights for the licensed technology
include provisions for notice and cure
loss of rights in court the event of infringement
Best Licensing Practices-Penalties

21. Best Licensing Practices- Infringement
Claims
negotiated, or litigated
usually one party has option, then other has right
Damages
reimbursement for negotiation or litigation
division of proceeds
other arrangements
Defends
cost division
indemnification
Best Licensing Practices- Infringement

22. Best Licensing Practices – The TLO
MIT’s Technology Licensing Office (“TLO”)
When IP is developed “using significant MIT funds or facilities, MIT will own the Intellectual Property.”

23. Best Licensing Practices – The TLO (contd.)
Generally, IP will not be considered to have been developed using MIT funds or facilities if:
only a minimal amount of unrestricted funds has been used; AND
the Intellectual Property has been developed outside of the assigned area of research of the inventor(s)/author(s) under a research assistantship or sponsored project; AND
only a minimal amount of time has been spent using significant MIT facilities or only insignificant facilities and equipment have been utilized (note: use of office, library, machine shop facilities, and of traditional desktop personal computers are examples of facilities and equipment that are not considered significant); AND
the development has been made on the personal, unpaid time of the inventor(s)/author(s).
policies/intellectual-property
Best Licensing Practices – The TLO (contd.)

24. Best Licensing Practices – The TLO (contd.)
The TLO may agree to patent and license the technology for you and you will receive a share of the royalties
Alternatively, the TLO may allow you to patent and license the technology yourself
ALWAYS better to approach them with technology even if you are unsure of whether they can claim ownership
Best Licensing Practices – The TLO (contd.)
Based on the factors in the prior slide, the TLO will decide ownership

25. What can the Clinic do for you?
Draft IP assignments when forming an entity, transferring to a new entity
File assignment recordings with the USPTO or Copyright Office
Draft copyright, trademark, and patent licensing agreements
We do not draft patent applications or foreign filings/recordations
We can advise on some tax concerns regarding IP assignments, but more in depth advisement may require referral to tax counsel
What can the Clinic do for you?

26. So…

27. THANK YOU! © Brandan Ray 2018
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