The transfer of IP rights in both a share sale and an asset sale

In relation to a share sale, the purchaser will procure the target company with all its assets and liabilities through the transfer of shares. Consequently, additional transfer documents will not be a desideratum and all intellectual property rights that are owned by the target will continue to remain in its possession. However, there is an exception to this rule if an assignment or licence of intellectual property is owned by an undertaking in the target’s group that is not being acquired. It is also imperative to appreciate that any intellectual property licences that were granted to the target could terminate once the sale has been completed. The purchaser may therefore need to negotiate a waiver or a new licence with the licensor.

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Conversely, in an asset sale, the purchaser will procure some or all of the assets and liabilities of the target along with the business. The title to every intellectual property asset sold has to be transferred to the purchaser. Normally, a written assignment is incorporated in the sale agreement. In regard to transferring non-UK intellectual property rights, stand-alone documents are usually annexed to the contract of sale. Once the transfer has occurred, it is important that all pertinent records are updated and satisfy the necessary legal requirements. Contracting parties may wish to add a provision to this effect. Lastly, intellectual property licences that have been granted to the seller must either be assigned or novated to the purchaser.

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