IP Assignment explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A company that owns a brand, an invention, software or a design can earn from it without running every sale itself. It can sell the right, lend it for a fee, or hand over a whole way of doing business. The three routes move ownership, control and income in very different ways, and each is dealt with differently by the four intellectual property statutes.
This guide is for promoters, finance and legal heads and advisers deciding how to take an IP asset to a new product line, a new State or a new partner. If the assets are not yet listed and checked, start with IP portfolio management.
An assignment transfers the right itself; a licence lets another person use it while you stay the owner; a franchise is a licence of a brand together with a business system. India has no single franchise statute, so a franchise rests on contract plus the trade mark and other laws. Each IP Act has its own rules on writing, registration and recording of assignments and licences, and these should be checked in the linked section posts before any signature.
The routes, side by side
The routes below are a practice comparison drawn up by TaxClue; it is not a legal classification.
| Route | Ownership after the deal | Control over use | Income pattern | Registration step | Suits when |
|---|---|---|---|---|---|
| Outright assignment | Moves to the buyer | Seller has none, unless the contract keeps some | One price, or a price plus instalments | Recording of the assignment under the relevant Act | You are exiting a line or the right is not core |
| Exclusive licence | Stays with the owner | Owner keeps quality terms; even the owner may be shut out of the licensed field | Royalty, often with a minimum | Depends on the right; see the Act-wise table | One partner is to build a territory or field |
| Non-exclusive licence | Stays with the owner | Owner may license many | Royalty or fixed fee from each | Depends on the right | Wide, low-touch reach |
| Franchise | Stays with the owner | Highest: brand standards, systems, training, inspection | Entry fee plus continuing royalty | Trade mark licence formalities, plus the business contract | A repeatable outlet or service model |
| Technology transfer or know-how agreement | Know-how usually stays with the giver | Through confidentiality, field and improvement terms | Fee, royalty or both | Patent or design recording where those rights are included | A process or technical package is being shared |
| Joint venture | Held by the venture or licensed into it | Shared through the venture's governance | Share of profit | Depends on how the right is put in | The partner brings money or market, and you bring the right |
Cross-border payments of royalty and the tax on them are outside this article; see our FEMA and income-tax guides.
What each Act requires
For each right the law has its own rules on how an assignment or licence is made and recorded. This article does not restate them. It points to the section posts, which carry the text.
| Right | Subject | Where to read |
|---|---|---|
| Trade mark | Power to assign and assignability of a registered mark | Sections 37 and 38 of the Trade Marks Act, 1999 |
| Trade mark | Registered users, the licensing route | Section 48 of the Trade Marks Act, 1999 |
| Patent | Assignments that are not valid unless in writing and duly executed | Section 68 of the Patents Act, 1970 |
| Copyright | Licences by owners | Sections 30 and 30A of the Copyright Act, 1957 |
| Design | Entry of assignments, transmissions and licences in the register | Section 30 of the Designs Act, 2000 |
Two points of practice follow. First, the right to be assigned or licensed must be the one actually registered or owned: the audit described in our IP audit guide checks that before the deal. Second, a transfer that is signed but never recorded can leave the register showing the old owner, which is a risk for the buyer and for any later lender.
Where a deal also touches the funding of the company, the term sheet and subscription agreement is the document to read next.
Franchise has no statute of its own
India has no Act that governs franchising as such. A franchise is built from a trade mark licence, a contract on the business system and, where relevant, the general contract and consumer laws. The practical consequence is that every protection must be written into the agreement. The live post on franchise law and agreement drafting covers the framework and the clauses. Where exclusive territories or resale price terms are in the deal, one more check is needed under competition law; see the post on vertical agreements under the Competition Act.
Key commercial terms (practice, not a legal requirement)
| Term | Question to settle | Common trap |
|---|---|---|
| Territory | Which State, channel or country is covered? | Online sales cutting across a territory |
| Term | How long, and is renewal automatic? | A long term with no performance test |
| Royalty base | Net sales, units sold, or profit? What is deducted? | Undefined deductions that shrink the base |
| Minimum | Is there a floor payment? | Exclusive grant with no minimum |
| Quality control | Who approves products, packaging and advertising? | Loss of control weakens the mark |
| Improvements | Who owns changes made by the licensee? | Silence in the contract |
| Termination | What ends the deal, and what happens to stock and goodwill? | No exit plan for unsold stock |
A sample clause is not given here; clauses should be drafted for the deal, and the live templates for trademark licence and patent licence show the structure.
Worked example: a food brand entering a new State
Kesari Foods Private Limited (invented) owns a registered brand and wants to enter a new State. It compares two routes. All figures are assumed.
- Expected net sales of the local partner: ₹4,00,00,000 a year in either route.
- Licence: the partner makes and sells under the mark; Kesari Foods gets 5 per cent of net sales and bears no local cost.
- Franchise: the partner runs outlets to Kesari's system; Kesari Foods gets 8 per cent of net sales, spends an assumed ₹9,00,000 a year on training and inspection, and receives a one-time entry fee of ₹10,00,000 over a five-year term.
Computation:
- Licence royalty: 4,00,00,000 x 5% = ₹20,00,000 a year; over five years ₹1,00,00,000.
- Franchise royalty: 4,00,00,000 x 8% = ₹32,00,000; less support cost ₹9,00,000 = ₹23,00,000 a year; over five years ₹1,15,00,000; add the entry fee of ₹10,00,000 = ₹1,25,00,000.
On these assumptions the franchise earns ₹25,00,000 more over five years but needs Kesari Foods to run a support team and enforce standards. The licence is lower and lighter. Kesari's board chooses the route by whether it wants the added control and effort, not by the figures alone. Either way, the signed agreement must name the registered mark exactly and the recording step must be completed.
Common lapses
- Calling a deal a "licence" when its terms transfer the right outright, or the reverse.
- Licensing a mark that is only applied for, without saying so.
- A royalty base with no definition of net sales.
- No right to inspect, and so no way to show control of quality.
- Leaving improvements and customer data unaddressed.
Need help with your IP commercialisation?
Choosing the route and drafting the deal is easier with a record of what you own and where it is registered. Our IP portfolio management team can map the assets, test the options and prepare the agreement and recording steps.
Key takeaways
- Assignment moves the right, a licence lends it, and a franchise lends it with a whole business system.
- There is no franchise statute in India; the contract carries the protections.
- Each IP Act has its own rules on writing, recording and registration; read the section posts before signing.
- Compare routes on ownership, control, income and exit, not income alone.
- Define the royalty base, quality control, improvements and termination in the contract.
Read next
- Intellectual property audit for a company
- Term sheet and share subscription agreement
- Business model types and unit economics
- Franchise agreement: format and clauses
Disclaimer: Based on the Companies Act, 2013 (MCA consolidated text) and, for the Essential Commodities Act, 1955, the India Code text showing amendments up to Act 40 of 2021, as consulted on 6 October 2026. Later amendments, rules, notifications and control orders should be checked in their current form. Checklists, report outlines and examples are illustrative drafting by TaxClue with invented names and figures. This article is general information, not legal advice; check the official text before acting.