“Intellectual Property in Contracts for Small Businesses”


Business owners get into agreements with other parties for a various reasons and they may not always be completely understood or aware of the legal ramification on the company’s priceless Intellectual Property (IP) assets, such as its trademarks, copyright, patents, and trade secrets.

Your intellectual property (IP) has to be properly protected because it has a lot of conceivable worth for your company.

Intellectual property in Contracts

Patents, trademarks, copyright, and trade secrets are some examples of intellectual property (IP), although a definition of IP in a contract may also include confidential or proprietary information. It may encompass both local and international, registered and unregistered, intellectual property.

Some Typical contracts and their purpose in relation to IPR

Assignment Contract

The Intellectual property rights may be fully or partially transferred from the original author to another person or entity for payment under an agreement to assign the IPR. By means of this type of contract, the original owner transfers to another individual or company his right to promote or market the relevant intellectual property.

Non disclosure Agreement

Companies enter into NDAs when considering commercial relationships to safeguard information falling within the branch of IP that is also dynamic for the running of the company as such as trade secrets, business plans or corporate structures, technologies. This is primarily resorted to protect the confidential information qualifying as intellectual property.

Agreements for Technology Licensing or Transfer

Under this agreement, the owner of the IP grants permission for another individual or business to make use of the technology that the owner created in exchange for an adequate amount that has been mutually agreed upon. It is a means of disseminating technological information. When smaller businesses buy technological licenses from larger ones to produce and market a product, it aids in their growth.

Copyright Licensing

The owner of the copyright can grant the other people or organizations permission or ‘License to leverage the copyright e.g, creating a reprint, or to reproduce or distribute the original works on mutually agreed terms under such an agreement.

Research and Development Agreement

Such agreements are made between a business and any person or group for the purpose of doing research and development for products, services, or ideas. Some typical examples are scientists working with pharmaceutical companies, academics researching at universities etc.

Important Clauses in Intellectual Property Contract

  1. Ownership: Who will be the owner of the intellectual property used or continually developed throughout the relationship must be made absolutely explicit in the contract. Even if the connection is subsequently ruined, the ownership status of the intellectual property needs to be made clear.
  2. Confidentiality: The owner must be protected by a confidentiality clause, as protecting the private and confidential nature of IPR is the main goal of agreements relating to IPR.
  3. Patents, copyright, and trademarks are examples of intellectual property that has been published and is thus openly accessible. They must be kept secret since they are frequently used in conjunction with other confidential knowledge to create business results.
  4. Limit of IPR Use: The IPR owner must specify that the other party will limit access to the sensitive information to just those employee, agents, advisors, consultants, or representatives who are necessary to work on its behalf in order to carry out the contract and that no other parties should be granted access to such information.
  5. Inventory: IPR owners need to be attentive enough to record and document their IPR so that it is always possible to identify it.

6. Termination / Breaches: If a contract is substantially breached, it may be possible to claim termination. The breach needs to be sufficiently serious, a so-called repudiatory breach. In determining whether a breach was repudiatory, the court will look at whether the term that has been breached was vital to the performance of the contract. If it is, then termination is permissible, and damages can be claimed.


Also Check : How To Registered Trademark In USA

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