Being present: Drafting effective intellectual property assignments
18 August 2025
What you need to know
Assignments of intellectual property (IP) present unique challenges. In addition to contractual issues, there are a range of statutory and common law requirements that must be accommodated.
IP assignments often relate to future property. An agreement or promise to assign in the future presents risk, as it may not (without more) satisfy the requirements for a valid IP assignment.
A recent Federal Court of Australia decision provides a timely reminder and guidance on how to draft IP assignment clauses effectively.
What you need to do
Be mindful that the words "shall assign" may be construed as either: (a) a present assignment (in which case the document may satisfy the statutory formalities), or (b) a promise to assign at a future time (in which case, a further document will likely be needed to satisfy the formalities), depending on the context of the agreement.
Check your precedent language and ensure your company's contracts are effective.
Ensure you are aware of this risk whenever ownership of IP is called into question, such as in litigation and when conducting due diligence.
The importance of getting IP assignments right
Intellectual property (IP) rights typically originate in the hands of the creator (author, inventor, etc.) and need to be assigned to the intended owner. This can often involve a chain of assignments, such as:
sub-contractor to contractor;
contractor to principal; and
principal to IP holding company within a corporate group.
If any of the assignments in a chain are ineffective, the ultimate owner may not have legal and beneficial ownership of the IP rights. This can create major issues if, for example, that owner tries to apply for registration, purports to assign or license the IP rights (e.g., in the context of an M&A transaction), or seeks to enforce the IP rights. In some cases, failure to line up assignments may be permanently fatal and cannot be subsequently cured.
Key considerations for assigning IP rights
There are a significant number of restrictions that apply to the assignment of IP rights, including statutory formalities and principles arising from common law. They include:
an assignment of copyright must be in writing and signed by the assignor;
an assignment of an Australian patent or design must be in writing and signed by both the assignor and the assignee;
the entitlement to apply for a patent can be assigned and there are no formalities;
jointly owned Australian patents, designs and trade marks can only be assigned with the consent of all co-owners, whereas joint authors of copyright typically hold their rights as tenants in common and each can assign their interest without such consent;
an unregistered trade mark can only be assigned alongside the relevant goodwill in the business, although a registered trade mark can be assigned with or without goodwill;
confidential information (which often is the only IP protection for data) technically cannot be assigned, although it can be transferred, along with standing to sue for breach of confidence; and
moral rights cannot be assigned in Australia, although the owner of moral rights can consent to acts that would otherwise infringe.
We emphasise that this is not an exhaustive list.
Present versus future assignment
A particular issue arises for future assignments. A contract that is in writing and signed will satisfy the relevant formalities in respect of any present assignment which that contract effects. However, if the assignment clause is instead construed as a promise to assign in the future, the future assignment will not be effective at law until there is some future step that satisfies the formalities (e.g., a future document that is in writing and signed).
In Acohs Pty Ltd v Ucorp Pty Ltd (2012) 201 FCR 173, the Full Court of the Federal Court of Australia considered the following clauses relating to assignments of copyright in material safety data sheets (MSDS) and other works:
[Assignor] shall assign the copyright of all prepared MSDS[s] to [Assignee].
The [Assignor] shall assign to [Assignee] all intellectual property rights (if any) in any compilation of data compiled on behalf of [Assignee] and in any MSDS written by the [Assignor] for and on behalf of [Assignee] by the [Assignor].
The [Assignor] shall assign to [Assignee] all intellectual property rights (if any) in any data authored by the [Assignor] for and on behalf of [Assignee] … .
In each case, the Full Court held that while future copyright can be presently assigned (by virtue of s 197(1) of the Copyright Act 1968 (Cth)), the words "shall assign" in the above context were "words of futurity referable to a discrete act" and "not words of present assignment" (at [194]). As a result, those clauses did not effect a present assignment, and the contract in which those clauses appeared could not satisfy the statutory formalities for the future assignment it contemplated.
More recently, in Hampden Holdings I.P. Pty Ltd v Aldi Foods Pty Ltd [2024] FCA 1452, Justice Moshinsky was asked to consider the following clause:
"The Intellectual Property Rights in the final design that we provide to you on completion of the Services shall be assigned to you on payment of the Price in full and cleared funds."
Justice Moshinsky held that the clause operated as an immediate assignment upon a condition (in that case, payment). Justice Moshinsky considered that Acohs related to a different context and so was of limited assistance in construing the clause in issue.
Best practice for effective assignments
We regularly see contracts which have been executed using language such as "shall assign", "undertakes to assign" or even "shall be owned". This language may not be effective at law, depending on the context of the agreement.
Where this risk arises, and assuming that there was no further assignment document executed, the intended assignee may hold equitable title and be able to compel the assignor to effect the assignment at law. However, this will often require a further step, such as executing a document, and it is not always possible to track down all necessary signatories. Further, until the issues are resolved, the ultimate owner will not hold legal title, and so any registrations of the relevant IP may be vulnerable to attack, and any assignments or licences granted by that ultimate owner may be ineffective.
To avoid this issue, IP assignments should be drafted carefully so that they clearly effect an immediate assignment. For example, the language "[Assignor] assigns…" or "hereby assigns…" is much more likely to be construed as an immediate assignment than "shall assign".
It is also critical to ensure that the categories of rights and subject matter being assigned are clear, and reflect what was intended by the parties.
Next steps
Be mindful of the complexities with IP assignments, and ensure you obtain advice where required.
On the issue of present versus future assignments, review your company's precedent agreements to ensure they contain effective language. This is especially important for companies that may participate in M&A activity – noting transaction timetables rarely accommodate the unfortunate realisation that none of the relevant agreements contain effective assignments of IP.
You should also keep this issue in mind when filing applications for registered IP rights and in any disputes in respect of IP rights. Issues in the chain of ownership may be fatal to the registrability or enforceability of the relevant IP rights.
Other author: Isaac Song, Associate.
