Meaning
The specific contractual language used to effectuate an immediate transfer of intellectual property rights ensures that the ownership of the asset passes to the assignee at the moment of creation. This provision, called a present grant clause, typically uses words like “hereby assigns” rather than “agrees to assign” to prevent disputes over ownership. It governs the ownership of patents, trademarks, and copyrightable works created during the term of an agreement.
The boundary of this clause excludes future intellectual property that is not covered by the scope of the underlying agreement.
Ownership Transfer
Employing the correct phrasing in employment and consulting agreements prevents the creator from retaining ownership of the developed asset. This distinction is essential because a present grant clause automatically transfers the rights as soon as the invention is conceived. The signed agreement provides the necessary written proof of the transfer to potential investors and buyers.
If a company lacks this clause, it must secure separate assignments from each creator at a later date.
IP Verification
Diligence during a financing round always includes a review of all technology transfer agreements. Lawyers inspect the contracts to confirm that every engineer and designer signed an agreement containing a present grant clause. The absence of this specific phrasing creates a risk that the company does not own its primary product.
Resolving this issue after the fact can be expensive and may require renegotiating terms with former contributors.
Preventative Action
Implementing standardized contracts for all workers protects the firm’s asset base. This process requires that no worker begins tasks before executing the paperwork. These practices defend the company’s assets.
