Licences, Assignments and Other Agreements

Once a product design has been completed, it is likely that you, the designer, will have to enter into one or more agreements with others in regard to the further exploitation or commercialisation of your design. Although a written contract is not always compulsory, it is always advisable to reduce the terms and provisions of an agreement to writing. It is preferable to obtain the assistance of a lawyer in this regard, but whether or not you get a lawyer, it is of the greatest importance to put it in writing.

The following types of agreements often arise with regard to novel products:

  • An assignment agreement, when you, the original designer, decide to sell your design and all rights in it to someone else, so that they will become the new owner of all the rights, and will exploit the design for their benefit, usually upon payment of a lump sum, but sometimes coupled with a continuing royalty payment.
    NOTE: An assignment of copyright must be in writing.
  • A licence agreement, where you, the original designer, decide to retain ownership of this design and the rights therein, but licence or authorise someone else to be responsible for the commercialisation of it, usually upon payment of a continuing royalty to you.
  •  A confidentiality agreement, where you, the original designer, need to disclose confidential information to someone else, eg to acquire technical assistance, financial assistance, marketing advice, etc, and you wish to safeguard your rights.
  • A joint venture agreement, where you, the original designer, wish to enter into a partnership or other continuing business relationship with someone else in regard to the further exploitation or commercialisation of your product.
  • A registered user agreement, where you, the original designer, have registered a trademark in respect of your product, and wish to give someone else the right to use your trademark.
    NOTE: A registered user agreement should preferably be in writing, and should preferably be recorded at the Trade-marks Office.
  • A restraint of trade agreement or clause, eg where an employee leaves employment, or when a business is sold. A restraint clause may be held to be unenforcable if it is unreasonable.

It is possible that some of these agreements can be recorded against a design, patent or trademark registration, to notify third parties of the contractual position. It is usually important for the person receiving rights under such agreements for them to be registered at the Design, Patent or Trademark Office.

Lawyers well experienced in competition law should be consulted, as well as IP lawyers, for example, competition law in South Africa, anti-trust law in USA and the block exemptions to the free-trade rules in Europe may be most important in structuring IP-related agreements.