Drafting and negotiating licensing, assignment and franchise agreements for IP rights, including recordal.

Intellectual property rights are not only defensive instruments. They can be assigned, licensed and pledged, and they feed directly into a company’s valuation. A trademark’s real commercial value usually emerges in how permission to use it is structured.

Most disputes in this area arise not from the right itself but from what the contract left unsaid: which products the mark may appear on, who sets the quality standard, what happens to stock on termination, who owns a design the licensee developed. A good agreement governs the day the relationship ends, not the day it is going well.

Assignment or licence?

Assignment — ownership changes hands and the assignor retains nothing. Used in company sales, shareholder exits and brand acquisitions.
Licence — ownership stays with you and permission to use is granted. Under an exclusive licence even the proprietor may be barred from using or further licensing; a non-exclusive licence may be granted to several parties. Where the contract is silent on which it is, serious disputes follow.
Pledge and security — IP rights can secure credit facilities. Such transactions must also be recorded in the register.

On assignment formalities and recordal: how to assign a trademark. On licence terms: trademark licence agreements.

Formalities and recordal

Transactions concerning industrial property rights must be in writing, and assignments additionally require notarised signatures. Failing the formality can render the transaction invalid — a trademark cannot be assigned by handshake or email exchange.

Recording the transaction in the register is a separate and critical step. An unrecorded assignment or licence cannot be asserted against third parties acting in good faith. The commonest loss in practice runs like this: the contract is properly signed, the recordal is forgotten, and years later ownership becomes contestable.

What a licence must settle

Scope. Which right, which goods and services, which territory, which term. Vague scope ends with the licensee spreading into adjacent fields.
Exclusivity. Exclusive or not; whether the proprietor may still use the right; who holds sole rights in a given territory.
Consideration. Flat fee, royalty on turnover, minimum guarantee or a blend. For royalties, how the base is calculated (gross sales, returns and discount adjustments) and the audit right must be spelled out.
Quality control. The standards the mark must be used to, and the proprietor’s inspection rights. This is the most neglected clause and the most vital one for the mark: an unpoliced licence erodes distinctiveness over time.
Manner of use and sub-licensing. Logo usage rules, advertising approvals, who holds the domain and social accounts, and whether sub-licensing is permitted.
Who enforces? Who may act against third-party infringement, and how costs and damages are shared. Without this clause, both sides wait for the other when infringement occurs.
Ownership of improvements. Who owns a new design, packaging or technical improvement developed by the licensee? In product-developing relationships this is the next largest source of dispute.
Termination and its aftermath. Grounds, notice and cure periods, the sell-off period for existing stock, destruction of materials and closing of accounts.
Governing law and dispute resolution. Competent court or arbitration — particularly important in cross-border licences.

Franchising: licensing at its most intensive

In a franchise the mark is the network’s only shared asset, and every outlet affects it directly. Quality control, adherence to the operations manual, supply obligations and non-compete clauses are therefore drafted in far more detail than in a licence. What happens to the signage and the customer data on termination should be settled at the outset. See franchising and trademark licensing.

Before an assignment: what are you buying?

When acquiring a trademark or patent, the register entry alone tells you too little. Check before signing:

Is the right actually in force — term, renewals and annuity status?
Is it subject to a pledge, attachment or an earlier licence?
Has the mark been genuinely used in the last five years, and does the evidence transfer with it?
Are there pending oppositions, invalidity actions or infringement disputes?
Does the specification actually cover your needs, or will classes have to be added?
Who owns the corresponding foreign registrations? Acquiring the Turkish right and overlooking the rest is common.

For the full set of checks in an acquisition: IP in company acquisitions. To establish monetary value: trademark valuation.

Licensing and tax

The tax consequences of licence income and assignments follow directly from the contract structure. Earnings from patents and utility models may fall within the industrial property tax exemption; cross-border licences raise withholding tax and double taxation treaty questions. The tax dimension should be assessed while the contract is being structured, not afterwards.

When the shareholding changes: where the mark sits

In small and mid-sized companies the mark is frequently registered in a founder’s personal name. Practical at the outset, it can leave the company unable to use its own brand when the partnership breaks down.

There are several ways to manage this in advance: register in the company’s name; where it is already personal, grant the company a long-term exclusive licence and record it; or address what happens to the mark on exit in the shareholders’ agreement. Whichever is chosen, decide before the company grows — the same negotiation is far harder once the mark carries value.

Where a monetary figure is needed: trademark valuation.

Where contracts fall silent

Most disputes arise from what the parties never discussed. The topics most often skipped when setting up a licence or franchise:

In whose name are the domain and social accounts opened, and who keeps them when the relationship ends?
Who owns the customer data and marketing content the licensee generates?
Who holds rights in the packaging and visual designs used on the licensed products?
May the licensee work with a competing brand in the same sector?
How is the fee adjusted for inflation or currency movement? Without this clause, one side loses every year of a long agreement.
Does the agreement survive a sale of either party — assignment and change-of-control provisions.

Discussed while the relationship is working, each of these is a clause of a few lines. Discussed after it breaks down, each is a cause of action.

Frequently asked questions

Must a licence be recorded?

Validity between the parties does not depend on recordal, but an unrecorded licence cannot be asserted against third parties in good faith. If the mark is assigned, an unrecorded licensee is exposed. Recordal is inexpensive insurance and is generally advised.

Can a licensee sue for infringement alone?

That depends on the type of licence and the authority given in the contract. An exclusive licensee has wider standing; a non-exclusive licensee generally must first call on the proprietor. Draft the clause expressly rather than leaving it to inference.

Does licensed use satisfy the use requirement?

Yes — use by a licensee with the proprietor’s consent counts as use by the proprietor. Collecting and keeping the evidence still matters; see revocation for non-use.

Can I terminate unilaterally?

Only on the grounds and by the procedure the contract provides. Where good cause, notice and cure clauses were not drafted at the start, an attempt to terminate usually turns into a damages claim.

Can a pending application be assigned?

Yes. An application not yet registered can be assigned and the assignment recorded, with registration then issuing to the assignee. This detail is often missed in acquisitions: only registered marks make it onto the transfer schedule, pending applications are forgotten, and they register in the seller’s name.

Is an assignment agreed orally or by email valid?

No. Assignment requires writing and notarised signatures; without them the transaction is not valid. The typical scenario runs like this: the parties agree by email, payment is made, the mark goes into use — and the register still shows the assignor, who remains able to transfer it to a third party years later.

Let us structure your licence, assignment or franchise arrangement — get in touch.

This page is general information and does not constitute legal advice. Contract terms must be tailored to the parties’ commercial relationship.