In today’s economy, your business’s most valuable assets may not be physical – they’re often intangible. Intellectual property (IP), such as logos, code, processes, and designs, can drive business value, attract investment, and provide a competitive edge.
Yet many Australian businesses still launch new products, hire contractors, or enter partnerships without clear written agreements covering who owns and controls their IP. This common oversight can lead to expensive legal disputes, reduce your company’s valuation, and risk breaching key Australian IP laws.
This guide, prepared by our intellectual property team, explains why every business – from solo consultants to scaling tech start-ups – needs a tailored Intellectual Property Agreement (IP Agreement). We’ll walk you through legal requirements, practical scenarios, and the commercial benefits of protecting your IP in writing.
Key Takeaways
- Written IP agreements are mandatory under Australian law
- Clear ownership clauses prevent expensive partnership and contractor disputes
- Investors and acquirers routinely discount businesses that lack documented IP rights
- Well-drafted IP Agreements help generate revenue, manage competition law risk and preserve goodwill
- Key clauses like exclusivity, royalties, and licence terms strengthen your position
Why Intellectual Property Agreements Matter
Legal Requirements Under Australian Law
Australian IP legislation requires that many transfers of ownership or licensing arrangements be in writing. Without a proper agreement, you risk having your IP ownership rights deemed invalid.
These laws include:
- s 196 Copyright Act 1968 (Cth) – copyright assignments
- s 14 Patents Act 1990 (Cth) – patent assignments
- s 106 Trade Marks Act 1995 (Cth) – trade mark assignments (registration validity)
- s 15 Designs Act 2003 (Cth) – design assignments
Failure to comply renders transfers unenforceable and exposes parties to infringement claims.
Learn more about Intellectual Property Licence Agreements in our article.
Real-World Case Lessons
Case | Jurisdiction | Lesson for Drafting |
University of Western Australia v Gray [2009] | Federal Court of Australia | Employment contracts must expressly address IP created during research |
R G Menzies & Co Pty Ltd v Buildplex Pty Ltd [2014] | Federal Court of Australia | Ambiguous copyright assignment fuels long-running litigation |
Common Scenarios Where Businesses Need an IP Agreement
Employees vs Contractors
Employees: Generally, copyright created “in the course of employment” belongs to the employer (s 35(6), Copyright Act).
Contractors: Typically contractors and consultants retain ownership, unless the contract expressly assigns it.
Example: A design agency hired a freelancer to create a logo. Without an assignment, the freelancer retained IP rights – forcing the agency to stop using the brand and rebrand.
Joint Ventures and Start-Ups
Start-up founders may contribute IP – like code, branding, or product concepts – before a company is formally established. An IP Agreement ensures clarity over:
Who owns pre-existing assets
What happens to new IP developed together
How equity or revenue is shared based on IP contributions
Mergers, Acquisitions and Investments
Due-diligence checklists, often required in mergers, acquisitions and investments, invariably demand evidence of signed assignments and licences showing IP ownership. Missing documents lead to:
- Reduced valuation
- Escrow holdbacks
- Transaction delays
How to Draft an Effective Intellectual Property Agreement
Core Clauses to Include
- Ownership and Assignment: Clearly states who owns what IP
- Licence Scope: Defines usage rights (exclusive, non-exclusive, etc.)
- Permitted Purpose and Territory: Limits where and how IP can be used
- Moral Rights: Ensures creators waive rights to attribution or objection
- Term and Termination: Sets duration and exit rights
- Confidentiality and non-disparagement: Protects reputations and sensitive information
- Dispute Resolution: Specifies how disputes will be handled (e.g. arbitration)
Check out our article on Intellectual Property Clauses to learn more about IP clauses.
Commercial Levers to Strengthen Your Position
Options & Renewals
Grant renewal or extension rights so parties can trial arrangements without long-term lock-in
Reciprocal Rights
Each party licences complementary IP (e.g., software API and branding assets) to strengthen collaboration
Exclusivity
- Whole-of-market exclusivity
- Industry-specific exclusivity
Must be vetted against ss 45-47 Competition and Consumer Act 2010 (Cth) to avoid anti-competitive conduct
Royalties
- Fixed percentage of gross or net revenue
- Minimum annual royalty
- Audit rights
Transferability & Sublicensing
Include clear assignment and sub-licence provisions to maintain value on a future sale of the business
Liens and Security Interests
Register security interests over IP on the Personal Property Securities Register (PPSR) to enforce payment obligations
Legal Compliance Considerations
Australian Consumer Law (ACL)
Misleading conduct (ss 18, 29) can arise if marketing materials overstate IP ownership or licence scope. Ensure all public claims align with the IP Agreement.
Competition and Consumer Act 2010 (Cth)
Exclusivity, grant-backs or non-compete clauses must not create a substantial lessening of competition. Conduct a competition analysis where market power is significant.
Ready to safeguard your creations? Contact our team to draft a customised Intellectual Property Agreement that protects and grows your Australian business.
Frequently Asked Questions
What is an Intellectual Property Agreement?
An IP Agreement is a written contract that sets out who owns, uses, licences and enforces specific IP rights such as patents, trade marks, designs and copyright.
Are written IP assignments mandatory in Australia?
Yes. Sections 196 (Copyright), 14 (Patents), 106 (Trade Marks) and 15 (Designs) require assignments to be in writing for legal validity.
Can we include a royalty clause instead of a lump-sum payment?
Absolutely. Royalties allow flexible pricing where the licensee pays a percentage of revenue, often combined with minimum payments and audit rights.
How do moral rights affect my agreement?
Creators retain moral rights to be named and have their work treated respectfully. Obtain written waivers or consents under s 195AW of the Copyright Act to avoid infringement.
Does an exclusivity clause breach competition law?
Not necessarily. Assess market share and ensure the clause does not substantially lessen competition under the Competition and Consumer Act 2010 (Cth).
