Keeping Intellectual Property (IP) recordal projects under control can sometimes be a daunting task. With the exception of certain transactions, such as stock purchase agreements, recently acquired intellectual property rights likely need to be transferred into the name of a new owner in each jurisdiction where such rights exist. In many instances, this can involve hundreds or even thousands of trademarks and patents. It is important to remember that timely recordal of a change of ownership is critical to protect the ongoing validity and enforcement of intellectual property rights for several reasons, including:
- The new owner may not be able to prosecute infringements, file oppositions or attend to renewals or annuity payments in a timely fashion. For example, enforcement of a patent can typically only be carried out under the authority of the owner of record or its exclusive licensee. If prompt injunctive relief is required, an undesired delay may result from the need to record the transfer of rights. Furthermore, the right of the patent owner to obtain damages for acts of infringement which occurred before the transfer documents were recorded may be lost in certain jurisdictions.
- Failure to timely record changes in ownership could result in the issuance of unnecessary citations by local trademark office examiners, resulting in unnecessary costs and delay to overcome the objection by urgently filing the transfer documents.
- The failure or delay in recording a transfer of ownership may result in a possible loss of royalties. For example, certain countries require that license agreements are recorded before royalties can be remitted outside of the country to a foreign licensor. The substantive provisions of such IP licenses may be subject to review by IP examiners and/or local tax authorities. Delays in obtaining such approval could result in loss of royalties.
- If a change of ownership is not promptly recorded, a misconception can arise in the marketplace as to the identity of the actual owner, leading to a possible loss of rights where a trademark no longer functions as a true indication of origin. This is particularly true in the case of well-known trademarks, or in the case of other marks which are extensively used in their particular jurisdiction.
In order to reflect the new owner of the patent or trademark as the “owner of record”, it is necessary in many jurisdictions for counsel to prepare separate assignment documents where such rights exist. In some jurisdictions, a copy of a “general” worldwide assignment may be acceptable. Most countries provide a mechanism for filing and recordal of a change of ownership at a central registry, although the form and substance of these documents can vary from jurisdiction to jurisdiction.
Parties who have recently acquired IP should prioritize those IP rights that are subject to international filing systems, such as the Patent Cooperation Treaty (PCT) and the European Patent Convention, which may have special requirements and time limitations. In this respect, it is recommended that the acquiring company engage counsel experienced in the worldwide transfer of intellectual property rights in order to avoid costly delays that could result in significant increases in transfer costs.
VAT and stamp taxes, legalization costs, ensuing official actions and publication requirements can all contribute to the overall costs of recording IP ownership transfers. Experienced intellectual property counsel familiar with the worldwide recordal of ownership transfers should bring these issues to the acquiring company’s attention prior to filing at the national IP offices.
Companies that have recently acquired intellectual property rights should carefully consider how to effectively address the time, effort and expense of multi-jurisdictional IP Recordals.