Assigning or Licensing a Registered Design in Australia

Registering a design is only the beginning of its commercial life. Once protected, a registered design can be sold, transferred, or licensed to others. For businesses and individuals, these transactions can generate significant commercial value, but they also carry legal complexities.

Assigning a Registered Design

An assignment occurs when the designer or current registered owner transfers all or part of their ownership rights in the design to another person or company. An assignment can be permanent (a full transfer) or limited (for example, covering only part of Australia or lasting a set period of time).

Ownership can also transfer through devolution, i.e. for example, under a will (bequest) or by operation of law, such as a court order. Importantly, a design can only be assigned or devolved to someone legally entitled to own it.

Recording an Assignment (sec 114 Designs Act)

Under section 114, the Designs Office (IP Australia) records changes of ownership of registered designs when requested. This applies both to assignments and devolutions. To update the Register, a request must be made in the correct form, be accompanied by satisfactory written evidence, and clearly relate to the specific design (by stating the application or registration number).

Only a “person”, meaning an individual or a legal entity like a company, can be the registered owner of a design.

Evidence of Assignment

The most common evidences are-

• A deed of assignment or letter of assignment, signed by both assignor and assignee.
• A deed of sale.
• For court-related transfers, a court order or official documentation (e.g. receivership or liquidation letters).
• For transfers by will, an authenticated grant of probate or letters of administration.

The document must clearly state that the assignor is transferring ownership rights. Preferably, both signatures appear on the same document, though two identical copies signed separately are also acceptable.

Where assignment is part of a broader commercial agreement, confidential terms may be redacted, but the assignment details themselves cannot.

If errors appear in the assignment document, they can be corrected by statutory declaration or (in some cases) alternative evidence, as confirmed in Westpac Banking Corp v Dawson (1990) 8 ACLC 681.

Special situations in assignments

• Assignment by a Co-Owner

A co-owner can only assign their share in the design with the consent of all other co-owners under section 14(2). If evidence of consent is missing, the request is invalid. The Registrar will notify co-owners, who then have one month to object before the assignment is recorded.

• Assignment by a Minor

People under 18 can own and assign designs. The process is the same as for any other registered owner.

• Mergers

In the case of company mergers, the issue is whether the change amounts to a mere name change or a genuine assignment if the ACN/ABN has changed (for Australian companies), the transaction is treated as an assignment and if it is only a name change, no assignment is recorded, though the Registrar may still notify co-owners.

• Ceased Designs

Assignments cannot be recorded for ceased designs, unless the change of ownership happened before the design ceased. If the design is later restored, ownership changes can be recorded again.

• Retrospective Assignments

Assignments cannot be backdated. Even if an agreement states that ownership transferred earlier, the Register records the date of the agreement as the effective date.

• Time-Limited or Partial Assignments

Assignments may be restricted in time or territory (e.g. valid for five years or only for Victoria). In these cases, the Register records the limitation.

Sometimes, what is described as an “assignment” is actually a license, i.e. for example, when only part of the exclusive rights are transferred. In such cases, the Register records it as an assignment/license.

Licensing a Registered Design

Licensing allows the design owner to retain ownership while authorizing another person to use the design. Licenses can take different forms-

• Non-exclusive license, i.e. the owner can license the design to multiple parties.
• Sole license, i.e. only one licensee is granted rights, though the owner can still use the design.
• Exclusive license, i.e. the licensee has full rights, and even the owner cannot use the design without permission.

Licenses can also be limited by time, territory, or product scope.

Recording Licenses on the Register

The Register records that a license exists, the licensee’s name, and (if relevant) limitations such as term or region. It does not specify whether the license is exclusive, non-exclusive, or sole.

The Registrar must be satisfied that the person has a genuine interest in the design (section 131). Supporting documentation should include enough information to identify the licensee.

Compulsory Licenses

In some cases, a third party can apply for a compulsory license under section 90 of the Designs Act. A person may apply to the court for a compulsory license if:

• The design has a certificate of examination, and
• After a reasonable period, products embodying the design have not been made in Australia to a reasonable extent, and
• The registered owner has no satisfactory reason for failing to use the design, and
• The applicant has tried but failed to negotiate a license on reasonable terms.

If the court is satisfied, it can order the owner to grant a license.

Terms of a Compulsory License

When a compulsory license is granted by court order, specific conditions must be clearly outlined to ensure fairness and legal clarity. The order must state that the license is non-exclusive, meaning the registered owner retains the right to grant other licenses. Additionally, the license can only be assigned in conjunction with the enterprise or the goodwill associated with it, preventing its transfer as a standalone asset.

The applicant who receives the license is also required to compensate the design owner with a just and reasonable amount. This payment may be mutually agreed upon by both parties or, if necessary, determined by the court to reflect fair market value.

While the license remains in effect, it can be revoked if circumstances materially change. However, any revocation must be handled carefully to avoid causing undue harm to the licensee, especially if they have made investments or commitments based on the license.

That said, if a compulsory license is granted but the registered owner continues to fail in meeting public demand for the design, an interested party may escalate the matter by applying for the design registration itself to be revoked. This ensures that design rights serve the public interest and are not used to unjustly restrict access or innovation.

Mortgages and Other Interests

In addition to assignments and licenses, other interests like mortgages can be recorded against a registered design. For example, a bank may hold a security interest until a loan is repaid.

Some interests, such as liens or trust arrangements, are not registrable. The Register only records legal interests in the design itself, not obligations arising from trusts or contractual relationships between beneficiaries.

Recording Ownership and Licensing

Registering ownership or a license for a design is far more than a routine administrative task, it plays a critical role in determining the enforceability of legal rights. Without proper registration, parties may find themselves unable to take action against infringement or defend their interests effectively.

For instance, a licensee cannot initiate legal proceedings for infringement unless their license is both valid and officially recorded. Similarly, an assignee, someone who has acquired rights to the design, cannot enforce those rights unless the Designs Register accurately reflects their ownership. This formal recognition is essential for establishing legal standing.

Neglecting to update the Register when ownership changes occur can lead to significant complications. Disputes may arise over who holds the legitimate rights to the design, and in some cases, failure to record changes can even result in challenges to the validity of the registration itself. Maintaining accurate and up-to-date records ensures clarity, protects legal interests, and strengthens the enforceability of design rights.

Work with us

So, navigating the transfer or licensing of registered designs requires precision. At every stage, i.e. drafting assignment deeds, recording licenses, or resolving disputes, so mistakes can risk the validity of your rights. Our team assists applicants and owners in preparing documents, satisfying evidentiary requirements, and ensuring smooth registration of ownership changes or licenses.

Whether you want to sell your design rights, license them for commercial use, or resolve a dispute over ownership, we can help protect your interests and keep your designs enforceable. Contact us now for a free consultation.