Maryland Bar Bulletin
Publications : Bar Bulletin : March 2008
Bar Bulletin Focus
Intellectual Property
IP Representations in Business Agreements
By Guido Galvez, Aida Lebbos and Bernard Rhee
It is important for any general business lawyer to be able to identify when intellectual
property is part of a transaction, and to understand which of the fundamental
representations regarding intellectual property rights are appropriate. What is meant by
intellectual property in business agreements? Patents are a typical, easily-recognized
form of intellectual property, but trademarks, copyrights, trade secrets, know-how and
other proprietary material and concepts (“Intellectual Property”) may also be the subject
of business transactions.
Examples of Business
Agreements That Often Involve Intellectual Property Rights
There are many types of agreements that are either specifically for Intellectual Property
rights or that include the transfer of Intellectual Property rights as a component of a larger
transaction. For instance, your client may enter into a license agreement to obtain the
right to use a patent or trademark owned by another party. On the other hand, your client
may acquire ownership of the patent or trademark through an acquisition of assets or
businesses.
Examples of other agreements that may contain Intellectual Property representations are:
manufacturing, supply or purchase agreements in which one party will make, provide or
buy products or services that are covered by Intellectual Property rights; asset purchase or
other agreements that are common in mergers and acquisitions; franchise agreements;
non-disclosure agreements; and research and development and other similar collaborative
agreements. In addition to these typical agreements, Intellectual Property representations
may also be part of marketing and advertising agreements, employment contracts and
general services agreements. Parties to business agreements are often asked to make
similar statements in the form of warranties or covenants. This article only addresses
forms of representations.
Examples of Common
Intellectual Property Representations for Business Agreements
It is typical for the seller, licensor or assignor of Intellectual Property (“Transferor”) to be
asked to give some form of one or more of the following representations in any
agreement that includes a transfer of Intellectual Property rights:
1. Inventorship/Authorship/Ownership. Transferor owns the entire right, title and interest
in the Intellectual Property, and no claims have been asserted challenging Transferor’s
inventorship, ownership or right to use the Intellectual Property.