What is the difference between a licence and an assignment of IP?
Written by For Founders Law, a Toronto firm licensed by the Law Society of Ontario. About us
Short answer
An assignment transfers ownership of intellectual property to someone else; a licence gives permission to use it while the owner keeps ownership. Under Canada's Copyright Act, an assignment, or a licence granting an interest such as an exclusive licence, is only valid in writing and signed by the owner. Companies usually want assignments from founders, employees and contractors, and grant licences to customers and partners.
The words sound similar and get used loosely, but they lead to very different results. One changes who owns the work. The other only changes who may use it.
How do they compare?
| Assignment | Exclusive licence | Non-exclusive licence | |
|---|---|---|---|
| Who owns the IP after? | The assignee | The original owner | The original owner |
| Can the owner keep using it? | No, unless licensed back | Usually not, within the licensed scope | Yes |
| Can the owner license others? | No | Not within the licensed scope | Yes |
| Must it be in writing for copyright? | Yes, signed by the owner | Yes, signed by the owner | Not under s. 13(4), but put it in writing anyway |
| Typical use | Founders, employees and contractors to the company; selling a business | Distribution deals; some content deals | SaaS customers; most brand deals; open source |
What does Canadian law require?
Under section 13(4) of the Copyright Act, no assignment, and no grant of an interest by licence, is valid unless it’s in writing and signed by the owner or its authorized agent. Section 13(7) confirms an exclusive licence is a grant of an interest. Assignments can be partial: limited by territory, medium, market or time.
Moral rights, the author’s rights to the integrity of the work and to be associated with it, can’t be assigned, only waived, under section 14.1. An assignment without a waiver leaves them with the author.
For trademarks, ownership can be transferred under section 48 of the Trademarks Act, and a licensee’s use benefits the owner under section 50 only if the owner controls the character or quality of the goods or services. A trademark licence should say so.
Which should my company ask for?
- From founders, employees and contractors: an assignment of everything they create for the company, with a moral rights waiver. See who owns code a contractor writes and founder vesting.
- From an agency building your product: an assignment of deliverables, with a licence to any pre-existing tools they reuse.
- To customers: a licence to use your software, not ownership. See SaaS agreements.
“Work made for hire” is a US concept and doesn’t transfer ownership under Canadian law on its own. See work made for hire.
Which should a creator give a brand?
Usually a licence, defined by usage rights: platforms, paid ads, territory and duration. Assignments of content should cost more, because you lose the ability to reuse or relicense it. See who owns content made for a brand and brand deal contracts.
What should a licence say?
Scope (what uses), exclusivity, territory, term, fees, sublicensing, modification rights, attribution, quality control for trademarks, and what happens at the end.
What to do next
We prepare contractor agreements, founder IP assignments and content licensing agreements, at fixed fees on our fees page. Check your own gaps with our free who owns your code tool.
This guide is general information about Canadian law, not legal advice for your situation. To talk through a deal, book a free 15-minute consult.