Reaching an agreement - intellectual property infgringement

Essentially, IP refers to creations that arise out of somebody’s original thought, such as inventions, literary and artistic works, and names and images used in commerce (eg brand identifiers). IP can be protected by a set of legal rights: intellectual property rights (IPRs). These are legal rights of ownership that people can hold in IP. 

An intellectual property right infringement is the breach of an IPR. IPRs are infringed when a work protected by intellectual property law is used, copied or exploited (ie sold, marketed, advertised, licensed, or used in any other way to generate income) without the consent of the owner of the right.

It will be up to you to decide what steps you want to take when your IPR has been infringed. You may, for example:

• send a Cease and desist letter

• rely on a form of alternative dispute resolution (ADR)

• bring a legal claim in court

• come to an agreement with the infringing party

For more information, read Remedies for intellectual property right infringement.

This guide deals with aspects of the fourth option: coming to an agreement with the infringing party.

You may wish to come to an agreement with the party infringing your IPR. As court action can be extremely expensive and time consuming, reaching an agreement is generally a more affordable and quicker option.

The different ways in which you may come to an agreement with the infringing party depend on the specifics of your situation and what exactly you wish to achieve. Features of an agreement may include:

Licensing your IP

You can consider licensing your intellectual property to the infringing party. All types of IPRs can typically be licensed.

A licence is a contract between the IP owner and a user (also known as the ‘licensee’), which gives the licensee permission to do something that would otherwise be an infringement of the owner's rights. For example, permission to use the IP for a specified purpose. An intellectual property licence can relate to one or more IPRs and can be limited to a specified period of time. IP licences are often granted in exchange for payment (eg a fee or royalty payments).

As the IP owner, it is up to you to decide whether and how to license the use of your intellectual property. 

For more information, read Intellectual property licensing.

If you wish to grant somebody a licence to use a trade mark, you can use a Trade mark licence agreement. This allows the licensee to use the trade mark in connection with specific products or services in return for a fee. For more information, read Licensing trade marks.

Selling your IP

You can consider selling (or ‘assigning’) your intellectual property to the infringing party. This involves a written, signed agreement known as an Assignment of intellectual property. All intellectual property rights can be sold.

Assigning your intellectual property involves an outright transfer of your rights, title and interests in the IPR to the other party. As such, by assigning your IP, you permanently transfer your rights as owner of the IPR to the other party. 

With certain copyright material (ie literary, dramatic, musical and artistic works and film) you may still have certain 'moral rights' even after you sell the IP. Moral rights include the right to be recognised as the author or the work or a right to not have the work altered or adapted in a way that would prejudice the reputation of the original author (ie you). While such moral rights can't be sold or transferred, you can agree to waive them.

Selling an IPR that somebody else is using can be the best option when you no longer need to use the IP yourself and are sure that you will not need to do so in the future.

Marketing your IP

You can consider involving the infringing party in the marketing, exploitation or further development of your IP. This will generally involve entering into a marketing agreement with the infringing party. All intellectual property rights can be marketed.

For more information on marketing your intellectual property, visit Chamber of Commerce, Innovate UK EDGE and Scottish Enterprise (if you are based in Scotland).

Entering into a coexistence agreement

While most coexistence agreements involve trade marks, they can also be used for designs, copyrights and patents.

You can consider entering into a coexistence agreement with the infringing party where they have similar IP. 

A coexistence agreement is agreement between yourself and the infringing party setting out that they can carry your businesses without fear of infringing your IPRs pertaining to similar IP. For example, with regards to trade marks, such an agreement may set out that both parties agree to trade in the same or similar market using an identical or similar trade mark.

Having such an agreement in place ensures that businesses can mutually benefit from reassurance that they can rely on their IP without infringing on each other’s similar intellectual property rights. For example, businesses with the same or similar names will be able to go about their daily activities without worrying that they will be sued for passing off or trade mark infringement.

For more information, read the government’s guidance on coexistence agreements.

Using your IPR as security for a loan

If you require a loan, you can consider speaking to the infringing party and coming to an agreement with them. You may be able to offer your intellectual property as security for a loan (ie collateral that secures the loan in case the borrower– here, you – defaults on their agreed repayments or refuses to repay the loan). Generally speaking, all IPRs can be used as security for a loan. The lender (ie the person or business giving the loan) will then have a legal right in the intellectual property until the loan is repaid.

Any such loan should be registered. This can be done using: 

• form TM24 (for trade marks)

• form DF12A (for designs)

• Form 21 (for patents)

Where copyright is taken as security to a loan, this will generally involve the assignment of the copyright to the lender. Such an assignment should include assurance clauses and appropriate warranties, notably a warranty that the lender is the owner of the copyright. Where the copyright forms a necessary part of the borrower's business, the lender should give the borrower a licence to use the copyright assigned by way of security.