January 23, 2022


Intellectual property Asset is a valuable property and sometimes more valuable than any tangible property. Many organizations make profits through promotions and advertising based on Intellectual property rights for which it is necessary to ensure the safety of our intellectual property assets. Intellectual Property Rights is the backbone of an organization. Exclusive rights of ownership of IP asset help achieve growth in the gains as well as market share in the industry. The baseline of intellectual property is that one who came up with an intellectual creation or idea shall have exclusive ownership and control of such creation which is inclusive of commercialization of such creation.

The owner of the creation also possesses the right to transfer their IP rights to any other person or organization through an agreement. Such agreement can be in the form of licensing of the intellectual property asset or assignment of the intellectual property creation. In recent years India has attained significance in the sectors of Information Technology and Pharmaceuticals, that required intellectual property right protection by its nature. The article covers licensing and assignment of IP rights.

Licensing of Intellectual Property Assets:

In the matter of licensing of IP assets, one who holds on to the ownership rights of the IP asset (licensor) agrees to give permission of use to another party (licensee) for a particular period in time and for a fee or royalty. The details of termination of this agreement, as well as the procedure, are also particularized in the agreement between the mutually agreed contract of licensing.

Will a term agreement be a valid licensing agreement? In the matter of PVR Pictures Ltd. versus Studio 18 where the parties agreed that PVR Pictures Ltd. will hold the exclusive license for the distribution of certain kinds of cinematographic films through a Term Agreement. PVR Pictures Ltd. instituted a suit against Studio 18 on the basis of the latter denying to enter in an agreement with a PVR Pictures Ltd for a movie, therefore amounting to infringement of their exclusive license. The question was whether PVR Pictures Ltd. was the licensee of Studio 18 for that particular film? The High Court of Delhi held that a term agreement doesn’t suffice as a licensing agreement. To obtain a valid license, the terms of licensing must be set out in writing in the form of a mutually binding document. We shall further discuss the most common types of licenses in India:

● Exclusive license, where the licensor agrees to gives exclusive rights of use of the IP asset to the licensee. Thus, only licensee is authorized to use the IP asset in this case.

● Sole license is the one in which the licensor, as well as the licensee, enjoys the rights of use where such rights cannot be extended to any other third party.

● Non-Exclusive License, wherein the licensor allows the licensee to enjoy the rights of use but the licensor is also open to extending such rights to any third party.

Generally, the licenses are a combination of the above three depending on the geographies and the commercial market.

Licensing can be either voluntary and Compulsory.

Voluntary licensing is when the owner of the IP asset grants some of the rights to another person through a written agreement Whereas Compulsory licensing applied to Statutory licensing is an authorisation of use and sell ordered by the controller general of the IP office of India irrespective of the wish of the owner of the intangible property. India patent office granted its first compulsory license to Natco Pharma for the production of an anticancer drug used in the treatment of liver and kidney cancer.

Assignment of Intellectual Property Assets:

In the case of assignment of intellectual property assets, the owner of the IP asset transfers their ownership along with all rights in exchange for its commercial value. It is the same as selling a tangible property. All in all the owner of IP asset gives up the rights of claim and control by transfer of the same to a third party.

Licensing versus Assignment:

Licensing allows the licensor to hold the ownership or the property and grants the licensee certain specific rights for a specific time period and for a specific price whereas, assigning of IP asset is a complete cessation of rights of ownership, interest and all claims related with the intellectual property asset to another person. The assignee enjoys absolute control over the asset.


Commercialization of IP assets helps one gain considerable gains, but whether a company should license the intellectual property asset is a fairly different question, considering the advantages as well as the disadvantages. Licensing is a mutual risk taken by the two or more parties who have also agreed to the commercial gains through the same agreement. The current laws in the field of intellectual property rights are evolving around the world. Also, there are many areas that are required to be addressed in the IP laws of India. The information discussed above has a great and wide impact on the Indian economy.

Author Details: Rohan Sharma (B.L.S. LL.B Student, Dr D.Y. Patil College of Law )

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