As we noted in the previous article, there are various types of agreements in the field of intellectual property, which, according to the Law of Ukraine “On Copyright and Related Rights” (effective as of January 1, 2023, as amended on April 15, 2023) (Section IV, as amended on April 15, 2023) (hereinafter – the Law), as well as the Civil Code of Ukraine (Chapter 75), are used by copyright and related rights holders to dispose of their intellectual property rights. And in this article, continuing the topic, we will consider in detail such type of agreement, which can be conditionally called an agreement on the transfer (alienation) of exclusive economic rights to intellectual property objects (hereinafter also referred to as the agreement on the transfer (alienation) of economic rights), which in turn is divided into different types of agreements in terms of disposal of economic rights to copyright and/or related rights.
In general, a contract for the transfer (alienation) of property rights is a type of civil law contract that mediates copyright relations related to the disposal of intellectual property rights to objects of copyright and/or related rights (musical works with and without lyrics, literary works works of fine arts, choreographic works, photographic works, graphic design works, audiovisual works, illustrations, computer programs and many other works, including those specified in Article 6 of the Law, and performances, phonograms, videograms and programs of broadcasting organizations), as well as patents, trademarks, inventions, industrial designs.
Under an agreement for the transfer (alienation) of property rights, one party (a person with exclusive property rights) transfers to the other party such rights in part or in full in accordance with the current legislation of Ukraine and on the terms and conditions specified in the agreement.
Peculiarities of the contract for the transfer (alienation) of exclusive property rights
- Based on the fact that different scope of rights can be transferred (alienated), transfer (alienation) agreements are divided into two subtypes:
- a) agreements on the transfer (alienation) of a part of intellectual property rights
- b) agreements on the transfer (alienation) of all intellectual property rights
Unlike a license agreement, an agreement on the transfer (alienation) of exclusive intellectual property rights is aimed at the complete assignment of property rights to a work, invention, utility model, industrial design, trademark or other intellectual property object, therefore the content of an agreement on the transfer (alienation) of intellectual property rights provides for the irrevocable alienation of rights to the protected object. Thus, the person who has transferred the relevant exclusive intellectual property rights under the agreement ceases to be the subject of the transferred rights.
At the same time, based on paragraph 1 of part 2 of Article 49 of the current Law, such property rights are transferred (alienated) under such an agreement only for the entire term of protection of rights, namely
– for copyright objects – for the life of the author and 70 years after death,
– for objects of related rights – for 50 years from the date of performance of the work (musical work with or without lyrics) or production of a phonogram/video,
“2. A person who acquires economic rights to a copyright or related rights object becomes a subject of economic rights within the scope of economic rights to such object acquired by him/her during the statutory term of validity of the respective economic rights to such object. The provision of an agreement on the transfer (alienation) of property rights to copyright or related rights for a period other than the statutory term of validity of the acquired property rights is null and void,” the Law states.
- The transfer (alienation) agreement is aimed at transferring intellectual property rights from one person to another with the possibility for the acquirer of such rights to use the protected property rights itself or by further transferring them to other entities. In this regard, the person to whom the exclusive property rights have been transferred becomes the assignee. However, keep in mind that based on the contract for the transfer (alienation) of intellectual property rights, the transferee acquires not only rights but also obligations with respect to the object of the contract. In particular, for example, the obligations to respect the moral rights of authors (to indicate the name of the author when using works) or to use a patented object and maintain the validity of a patent or certificate and other relevant obligations.
- Agreements on the transfer (alienation) of exclusive property rights to industrial property objects are characterized by the following specific feature – when transferring intellectual property rights to such an object, the owner of the security document (patent, certificate) cannot reserve any right to use it, establish any time or territorial restrictions on the rights transferred to the assignee. This is a fundamental difference between the transfer of industrial property rights and the transfer of copyrights, where “division of rights” is allowed.
An agreement on the transfer (alienation) of exclusive intellectual property rights is bilateral. The first party is a person who owns exclusive intellectual property rights to a certain object. Please note that such a person may be not only the creator (author, inventor, etc.), but also another legal entity or individual who has acquired exclusive rights to the intellectual property object in accordance with the established procedure (for example, the author’s heir). The second party is the person to whom the relevant exclusive intellectual property rights are transferred. It can be either an individual or a legal entity.- An important condition of the contract for the transfer (alienation) of exclusive economic rights should be the obligation of the owner of the exclusive economic rights to notify the transferee of the rights of third parties, in particular, of the presence or absence of a license agreement concluded by the owner with a third party prior to the transfer of exclusive economic rights.
Essential terms of the contract for the transfer (alienation) of exclusive property rights
to intellectual property
The essential terms of the agreement for the transfer (alienation) of exclusive intellectual property rights shall include:
– term of the agreement
– ways of using the work
– the territory covered by the transferred right
– amount and procedure for payment of royalties
– other terms and conditions on which an agreement must be reached at the request of one of the parties.
The main essential condition is the condition on the object of the contract, i.e. the result of intellectual and creative activity, the property rights to which are transferred under the contract. The subject matter of the contract must be clearly defined by specifying the full name of the intellectual property object, fixing the number of the patent or certificate, and the date of issue.
Another essential condition of an agreement on the transfer of exclusive intellectual property rights is the condition on the subject matter of the agreement. The subject matter of an agreement on the transfer (alienation) of exclusive intellectual property rights is exclusive property rights to the object of intellectual property rights. Such rights mean the monopoly of the subject of intellectual property rights to use the object of this right. The subject matter of such an agreement should be understood as the entirety of the property rights that are transferred. This condition is especially important for agreements on the transfer (alienation) of exclusive intellectual property rights to copyright and related rights, since according to Article 49(1) of the Law, in the event of transfer (alienation) of property rights to a copyright or related rights object, partial property rights to the extent not provided for in the agreement are deemed not to have been transferred (alienated).
An essential condition is also the condition on the price of intellectual property rights transferred under the agreement. The amount and procedure for payment of royalties shall be determined by the agreement on the transfer (alienation) of exclusive intellectual property rights. Such remuneration may be paid in the form of a one-time (lump-sum) payment (the essence of the name is that it is paid once and for all), or deductions for each copy sold or each use of the work (such remuneration is called royalties), or combined payments (when both a lump-sum payment and royalties are combined).
As we noted in the previous article, after the Law came into force, a significant update was introduced to this Law, which declares the right of the author, performer, phonogram and videogram producer to receive fair remuneration for the use of the relevant copyright and related rights objects in the appropriate ways determined by the Law and the Law of Ukraine “On Effective Management of Property Rights of Copyright and (or) Related Rights Holders”. This right is guaranteed by Article 12(3), Article 38(3), Article 39(3) and Article 40(3) of the Law, respectively.
The current Law states that the terms and conditions of transactions on the disposal of property rights to copyright or related rights objects regarding the transfer (alienation) of the property right to fair remuneration provided for in Article 12(3), Article 38(3), Article 39(3), Article 40(3) of this Law, respectively, are void (Article 48(1)(2) of the Law). And if we are talking about an agreement for the transfer (alienation) of exclusive property rights, this means that such an agreement cannot contain a condition that the transferee also receives the right to receive fair remuneration for the use of the relevant intellectual property rights in the manner specified in such an agreement.
Our specialists have experience and many years of practice in drafting agreements for the transfer (alienation) of exclusive intellectual property rights. At the same time, we emphasize that in our practice there is no such thing as a “template agreement”, as each of our draft agreements is focused on specific needs that are individual for each client.
Agreement of alienation of rights / copyright / intellectual property
