License and assignment of property rights are important legal mechanisms in the field of intellectual property and commercial relations. Both instruments are used to regulate the rights to use works, inventions, trademarks and other intellectual property. However, there is a significant difference between them. In this article, we will analyze the difference between these concepts in more detail. First, let’s define the basic concepts and their characteristics.
License
A license is a permit granted by the author or owner of an intellectual property object (Licensor) to another person (Licensee) to use the work. The work may include: a book, music, movie, software or other work. The license determines how the Licensee can use the work (whether it can copy, distribute, modify, etc.). The license may be paid or free, exclusive or non-exclusive.
Characteristic features of the License:
1) Pursuant to Article 1108 of the Civil Code of Ukraine (hereinafter – the CCU), a license may be: exclusive, single, non-exclusive, as well as of another type that does not contradict the law.
– An exclusive license is granted to only one Licensee and prohibits the Licensor from using the intellectual property object in a certain area, as well as issuing licenses to other persons to use this object in the same area.
Example: Company A has developed a water purification technology and granted an exclusive license to Company B to use this technology. As a result, this means that company B can use this technology, and company A, which developed this technology, can no longer use it.
– A single license is granted to only one Licensee and prohibits the Licensor from granting other persons licenses to use the intellectual property in the specified field, but allows the Licensor itself to use the intellectual property in the same field.
Example: Person 1 wrote a book and granted a single License to publishing house “O”. This means that Publishing House O has the right to publish this book, and Person 1 cannot grant the rights to other publishers. But Person 1 can continue to use its rights to the book.
– A non-exclusive license allows the Licensor to use an intellectual property object in a specified field and to issue licenses to other persons to use this object in the same field.
Example: Programmer L has developed software and granted a non-exclusive license to two companies. This means that these two companies can use the software and Programmer L can use it as well.
2) The license clearly defines what rights are granted to the Licensee. This may include the right to reproduce, distribute, publicly perform, display, translate, adapt the work, etc.
3) The license may be limited to a certain territory. For example, the License may allow the use of the work only in Ukraine or in a certain region or worldwide.
4) The license determines the term for which the rights are granted. It can be a certain period (5, 10, 15 years, etc.) or indefinitely.
5) The license determines the amount and procedure for paying remuneration to the author for the use of his or her work. This can be a one-time payment, royalties, or other type of compensation.
6) The License may contain provisions for the protection of the Licensor’s rights in case of violation of the terms of the License by the Licensee.
7) There may be a licensing publishing agreement. This means that the owner of the rights grants the other party permission to create and publish copies of the work, performance recording, phonogram or videogram in the amount that meets the needs of the public.
8) A license agreement may not include rights to use an intellectual property object that were not in force at the time of signing the agreement.
9) Those rights and methods of use that are not specified in the license agreement shall be deemed not to have been granted.
10) If the agreement does not specify the territory to which it applies, it is automatically considered the entire territory of Ukraine.
11) If the License Agreement does not contain any terms on the term of the agreement, it shall be deemed concluded for the period remaining until the expiration of the exclusive property right to the intellectual property object specified in the agreement, but not more than for five years. If neither party notifies the other party in writing of its withdrawal from the agreement six months before the expiration of the said five-year period, the agreement shall be deemed extended for an indefinite period.
Alienation of property rights
Alienation of property rights means the transfer or transfer of ownership of an intellectual property object (literary work, song, software, etc.) from one entity (right holder) to another. This may include such ways of using the work as making copies, distribution, public performance, broadcasting, adaptation, and other uses of the work or other intellectual property.
Characteristic features:
1) It may be alienated in its entirety on the territory of all states of the world or partially on the territory of certain states of the world, or for all uses on the territory of certain states of the world.
2) The agreement must clearly define which property rights are transferred (e.g., the right to make copies, distribute, public performance, etc.).
3) The agreement must contain the following: – information allowing to identify the object (e.g., name or other characteristics); – scope of rights transferred or granted under the agreement in respect of the object; – amount or method of determining payment (remuneration) for the right to use the object, or indication that the agreement is concluded free of charge.
4) After the author’s death, the contract is concluded with his/her heirs by law or will who have civil capacity.
5) The alienation of property rights is usually permanent, i.e., indefinite, unless otherwise provided by the agreement. After the alienation of rights, the former owner completely loses its property rights to the intellectual property object.
The difference
– The main difference is that a license agreement allows only the use of the right, while an agreement on the alienation of property rights provides for the complete transfer of ownership of property or intellectual rights.
– A license agreement is often limited to specific terms of use of the subject matter of the right, such as the term of validity, territory, types of use, etc. An agreement on the alienation of property rights provides for broader rights from the new owner, who receives full control and the ability to use the object of the right without such restrictions.
– In the case of an agreement on the alienation of property rights, a formal transfer of ownership is often envisaged, which may require specific legal procedures and documents confirming this transfer. In a license agreement, there is no transfer of ownership, as the owner remains the owner, but grants only the right to use.
– A license agreement often contains terms and conditions regarding liability for violation of the terms of use, while in an agreement on the alienation of property rights, liability is often associated with the owner, who no longer has control over the object of the right.
Thus, a license and alienation of property rights are two key mechanisms in the field of intellectual property management, each of which has its own characteristics and purpose. A license allows for the temporary or limited use of an intellectual property object, while retaining ownership by the licensor. This allows the owner to maintain control over his or her intellectual property while receiving income from the use of the intellectual property by others. The alienation of property rights, on the other hand, involves the full and final transfer of all rights to the object to the new owner, which allows him to freely dispose of the object.
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assignment of property rights / copyright / intellectual property / license
