Transfer of Industrial Property rights in France

Following a series of publications devoted to non-conventional trademarks [1], and various articles on artificial intelligence systems and their interaction with intellectual property rights[2], we have chosen, in this traditional period of return from the summer holidays, to deal with less topical subjects, but which also touch the heart of our profession, namely contractual practice in France about industrial property rights, and in particular assignment agreements.

Developments of case law in this area in recent years have led us to address this subject, as they appear to call into question a common practice, namely using deeds of assignment of IP rights for free.

When called upon to rule on the validity of such contracts, the courts have not hesitated to declare them null and void.

Another subject, inseparable from assignment contracts, which recent case law has also had to deal with, concerns the recordation of these documents with the INPI (French Office).

Considering those operations affect the day-to-day life of the owners of IP intangible assets, the latest court rulings on the subject involve significant practical consequences.

1. Transfers of industrial property rights free of charge reclassified

Three judgments handed down by the court of first instance[3], one of which was upheld on appeal[4], ruled purely and simply that the contract involving the transfer of industrial property rights free of charge is by “definition a gift”. As a result, the free assignment contract must be canceled because it did not comply with the notarial form required for donations under Article 931 of the Civil Code.

This solution has aroused contrasting reactions from practitioners and academics, appearing obvious to some[5] and surprising to others[6].

To understand these decisions, it is necessary to define the concepts of assignment and donation. After this definition works, working hypotheses will be indicated that can be used in the drafting of contracts involving the transfer of intellectual property rights.

1. According to the lower courts, a free transfer rhymes with a donation

An assignment is deemed as a sale whereby ownership of a thing is transferred to the purchaser in consideration of a price (article 1582 of the Civil Code).

A donation, on the other hand, is a gift and is defined as “an act by which the donor currently and irrevocably disposes of the thing given in favor of the donee who accepts it” (article 894 of the Civil Code).

To be valid, a transfer of goods is governed by the law of sale and must comply with the conditions of formation, which require the parties to agree on the item and the price, without the need for a written document. By definition, therefore, a sale contract cannot be made free of charge.

With regard to the assignment of IP rights, the provisions of the French Intellectual Property Code supplements these general rules with requirements as to form (need for a written document) and publicity.

It is in this context that the courts have ruled that a contract that explicitly transfers IP rights free of charge is by definition a gift.

Under the terms of article 931 of the Civil Code, “all deeds of gift inter vivos shall be executed before a notary in the ordinary form of contracts, and a copy shall be kept, on pain of nullity“. If the contract is reclassified as a gift, it must be canceled.

However, the fact that the act is free of charge does not appear to be sufficient in itself to reclassify a transfer as a gift. In particular, the act must include the donor’s intention to make a gift to the donee (known as liberal intent or animus donandi), without any consideration.

In this respect, it follows from the Court of Cassation’s established case law that liberal intent must be demonstrated[7] and cannot be presumed from gratuitousness.

However, in their recent decisions, the judges seem to infer the liberal intention of the assignor from the very wording of the assignment contract, which stipulates that it is made on a gratuitous basis: “(…) the contract dated 13 July 2015 (…) explicitly entails the transfer of ownership of the trademark and designs ‘gratuitously'” (TJ Paris, 08 Feb 2022); “there is nothing in the contract to suggest that this is not a genuine gift” (CA Paris, 13 March 2024); “(…). It is established that article 4 of the trademark assignment contract of 20 May 2020 provides that the assignment is free of charge” (TJ Lyon, 09 April 2024).

While this solution may appear unorthodox in relation to the position of the Cour de cassation, it does allow us to return to the importance of drafting assignment contracts.

B. Consequences for the drafting of contracts for the assignment of IP rights

First of all, to avoid the contract for the transfer of intellectual property rights being declared null and void because it is reclassified by the courts as a gift, and to avoid having to draw up a notarial deed if necessary, it is important to consider the transfer transaction and to be able to understand whether the contract is in fact for consideration or not.

This would be the case if there were any consideration for the transfer at no price, i.e. if the transferee would owe the transferor anything other than pecuniary consideration.

In this case, first and foremost, the clause stipulating that IP rights are transferred “free of charge” should be avoided.

If the contract does not indicate any financial consideration, the existence of the onerous nature of the contract may result from any indication highlighting the obligations of the parties as a result of the situation in which the transfer takes place.

Any ambiguity should therefore be removed from the preamble to the contract, which precedes the list of clauses.

In particular, the preamble may provide a useful introduction to the parties to the contract, the reason or reasons why the parties have entered into the contract, explaining from the outset both the environment in which the contract will operate and the (non-liberal) intention of the parties.

Secondly, the body of the contract could emphasize that the transfer is for consideration and that there is no intention to make a gift.

As one commentator has pointed out, “an assignment of industrial property may also include various obligations and commitments for the benefit of the assignor: obligation to exploit, non-competition, coexistence, etc., which therefore make it onerous“[8].

To sum up, from a contractual point of view, it is therefore possible to arrange the transfer without a price in such a way as to avoid judicial sanction, or to avoid notarizing the deed.

II. Entry in the register of contracts for the assignment of IP rights

As mentioned above, the French Intellectual Property Code requires that acts relating to IP rights be recorded into the register and thus published, which is a prerequisite for the exercise of these rights against third parties.

In the case of trademarks, designs or patents, the formula is the same: “any transfer or modification of the rights attached to these rights (registered design/patent application or patent/trade mark) must, in order to be enforceable against third parties, be entered in the National Designs/Patents/Trademarks Register” [9].

While it is always preferable to enter an assignment in the register as soon as possible after it has taken place, a ruling handed down by the Lyon Court of First Instance on 9 April reminds us of the importance of entering a contract for the assignment of industrial property rights in the relevant national register held by the INPI, even during legal proceedings.

1. Better late than never: the importance of recording

Under these provisions, the assignee of an industrial property right can only take an infringement action against a third party if the assignment contract has been recorded. Even if the assignee has acquired ownership on the title contractually, it could not in principle take legal action in the absence of recordation and could even be ordered to pay the costs of the action[10].

It follows from this recent decision that the assignee could therefore bring the infringement action without having registered the assignment contract with the INPI, and would be entitled to bring the action provided it have recorded the contract before the court had given its ruling. However, the seizure of infringement cannot be regularized.

Where the acts of infringement of the right began before the assignment and continue afterwards, the assignee will not, in principle, be able to obtain compensation for the acts of infringement for the period prior to publication of the recordation of the transfer of rights, unless the contrary is provided for by the registered assignment contract.

B. It is important for the assignee to contractually arrange the effects of the assignment over time.

The assignee will be able to assert its title from the date of publication of the recordation. It is also from this date that the assignee can be compensated for the damages caused by the acts of infringement.

On the other hand, if the assignment contract specifies the period from which the assignee may assert the rights arising from the assignment, it will be possible to claim compensation even for acts of infringement that precede publication of the recordation.

For example, it is possible to stipulate in the contract that ownership of the IP title will take effect retroactively to a date prior to that on which the contract was signed.

 In conclusion, the drafting of a deed of assignment, which is a legal act with significant effects on the Industrial Property title concerned, should not be considered a trivial act.

As specialists in Industrial Property, we can assist you in drafting these assignment contracts, as well as any other contract involving Industrial Property rights.

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[1] COULONVAUX Jérôme, “Non-Conventional Trademark – Part 1 – Color Mark“, 16 June 2023; VAN DRIESSCHE Adeline, “Non-Conventional Trademarks – Part 2 – Trademarks that stimulate the senses“, 12 December 2023; CHRISTOL Julie, “Non-Conventional Trademark – Part 3 – Sound Marks“, 21 March 2024; ARTUPHEL Emilie, MARC Eléonore, “Marques non conventionnelles – Partie 4 – Les marques tactiles : Quand le toucher devient une marque“, 27 June 2024.

[2] V. not. VAN COPPENOLLE Frank “Artificial Intelligence in the BioTech field“, 21 March 2024; KUYPERS Lien, DE CLERQ Katia, “The interaction between Artificial Intelligence and design: an analysis under EU design law“, 21 March 2024.

[3] Paris Court of First Instance, 8 February 2022, no. 19/14142 for a trademark and design assignment contract; Paris Court of First Instance, 12 April 2023, no. 23/50949 ruling on a copyright assignment; Lyon Court of First Instance, 9 April 2024, no. 19/14142 on a trademark assignment.

[4] Paris Court of Appeal, 13 March 2024, no. 22/05440

[5] For example: THRIERR Olivier, “Dura lex sed lex. Vere? Cession de marque : le – juste – prix“, BLIP, le blog de la propriété intellectuelle, 23 July 2024 (https://blip.education/dura-lex-sed-lex-vere-cession-de-marque-le-juste-prix)

[6] BAILEY Sarah, CHOQUET Hélène, BONDUELLE Patrice, ” Cessions de droits de propriété intellectuelle à titre gratuit – dangers et solutions ! “, Revue Lamy Droit de l’Immatériel, Nº 205, 1er juillet 2023 ; KAMINA Pascal, ” Une cession à titre gratuit est-elle nécessairement une donation ? “, CCE n°4 avril 2022, LexisNexis.

[7] Court of Cassation, First Civil Chamber, 24 January 2018, no. 16-26.971; 18 March 2020, no. 18-19.650; 10 February 2021, no. 19-20.026; 12 January 2022, no. 20-14.455.

[8] KAMINA Pascal, “Une cession à titre gratuit est-elle nécessairement une donation“, CCE No. 4 April 2022, LexisNexis.

[9] Articles L. 513-3, L. 613-9 and L. 714-7 of the French Intellectual Property Code.

[10] Cour de cassation, Commercial and Financial Division, 11 January 2000, no. 97-10.838; for a recent example: Paris Court of Appeal, 15 March 2023, no. 2021/09605.