Australia: Intellectual Property Holding Companies - Assignment and Licensing Fees

Last Updated: 22 January 2007
Article by Chris Bevitt


Intellectual property holding companies are commonly used in large multinational groups. An intellectual property holding company is established to hold all or most of the intellectual property of a company group. Existing intellectual property of the company group is assigned to the company by other group members with ongoing arrangements in place to ensure that future intellectual property is also held by the IP holding company.

Usually, the holding company is a passive entity that does not trade. Occasionally, the holding company is also the ultimate parent company of the corporate group. The IP holding company enters into one

or more written or unwritten licences with other companies in the group to allow them to use the intellectual property. These other group members then enter into contractual relationships with customers and other third parties in relation to the intellectual property.

IP holding companies are established for various reasons including:

  • Administration – to facilitate centralised management of all the intellectual property assets of a group;
  • Asset protection – to quarantine the intellectual property from claims against the operating company/ies exploiting it. By placing the intellectual property in a non-trading entity which does not have a contractual or other relationship with customers, it becomes less likely that a customer or other third party can bring a claim against the owner of the intellectual property;
  • Taxation/finance – to enable revenue to be generated in low income jurisdictions or to obtain research and development grants or deductions in jurisdictions with favourable rules;
  • Structured finance or securitisation – to enable
  • the intellectual property assets to be effectively separated from other assets so they can be made available as security or sold; and
  • Disposal/spin-off – to facilitate the sale of the intellectual property or spin-off.

The attached table discusses issues associated with establishing a holding company and exploiting the intellectual property in the context of patents, designs, copyright and trade marks. Due to the differing legal rules applying to different types of intellectual property, careful consideration must be given to the form of any assignment and the nature of licences granted to other companies, whether within the corporate group or not. A particular issue is whether the holding company or a licensee can recover damages for infringement. In a patent context, this can be problematic unless arrangements are structured carefully.

Other issues to consider

The table below discusses a number of the issues relevant to assignment and licensing. Other things to consider include the following:

  • Future intellectual property - the assignment and licensing agreements should cover assignment
  • to the holding company and licensing back to the subsidiary of future intellectual property created
  • by the operating subsidiary. Otherwise, new intellectual property will be owned by the licensee subsidiary not the holding company, potentially defeating the objective of establishing the IP holding company. This is a common problem.
  • Moral rights in copyright works - moral rights are held by the individuals creating the works and cannot be assigned. However, consents can (and should) be obtained to do acts which would otherwise infringe the author’s moral rights, particularly if third party licences are granted.
  • Any moral rights consent obtained must be broad enough to allow the IP holding company and third party licensees and assignees to do acts which would otherwise infringe the individual’s moral rights.
  • Taxation implications (including GST) – all taxation implications arising from assignment and licensing need to be explored, especially if the holding company is incorporated overseas.
  • Stamp duty – stamp duty issues associated with a company or business acquisition, disposal or re-organisation should be carefully considered.
  • Grant terms - the impact on any research and development or commercial grant applications or awards must be considered in advance, particularly in relation to compliance with or fulfilment of applicable grant conditions.

If there are no sales by the holding company or royalties from the licensee then the holding company has no claim for damages in infringement action (account of profits and injunction may be available). The owner cannot recover damages suffered by the licensee. This applies to patents, designs, copyright and trade marks.

Licensing does not jeopardise registration of the IP in respect of a patent, design or copyright. However, if a holding company does not use the trade mark itself, the trade mark may be vulnerable to removal for non-use. Use by the licensee is only use by the owner if the owner controls use of the mark by financial, quality or other control. Financial control occurs if the licensee is a subsidiary and is subject to the owner’s financial control. Quality control occurs where the owner enforces quality standards. Other control may be established in a company group context even though the trade mark owner does not control the related company using the mark but this can be problematic.

A mark is vulnerable to removal if its use may mislead the public as to the quality or origin of goods. (More of an issue for third party licensing than licensing within a group).

Concluding remarks

Due to the inconsistent legal requirements applying to the different types of intellectual property, care must be taking in deciding whether to establish an IP holding company. Documentation of the transfer of the intellectual property into the company and in any licences of the intellectual property also requires close attention. A regular review of contractual arrangements is essential to ensure that the intellectual property can be protected and defended in an infringement situation.
Chris Bevitt, Partner


Intellectual Property Holding Companies – Assignment and Licensing Issues






Assignment of the IP to the IP holding company

Formalities to transfer the IP

Written assignment signed by the assignor and assignee.

As for patent.

Written assignment signed by the assignor.

A document establishing assignee’s title, meaning a written assignment signed by the assignor and assignee.

Partial assignment by territory?

Not permitted.

Assignment can be for a particular place.

Assignments can be for a place in or part of Australia.

Not permitted. Registered trade marks are assignable with or without goodwill. Note: common law ie. unregistered trade marks are only assignable with goodwill and are not suitable to assign to a non-trading holding company.

Licensing by the holding company

Can multiple licensees bring an infringement action?

No. Only the patent owner and the "exclusive licensee" may bring infringement proceedings.

"Exclusive licence" means a licence entitling the licensee to "exploit" the invention throughout the patent area to the exclusion of the patent owner and other parties.

Notes: Exclusive licences should be registered. Multiple exclusive licences of different exploitation rights in respect of the same patent are not exclusive licences under the Act.

No. Only registered owner of a design can bring an infringement action, not a licensee.

No. Only copyright owner and "exclusive licensee" may bring infringement proceedings.

"Exclusive licence" means a written licence authorising licensee to do an act reserved to the copyright owner to the exclusion of other persons.

Note: Unlike with patents, multiple exclusive licensees for different copyright rights in respect of the same copyright material are permissible. The licence must be for one of the acts reserved to the owner under the Copyright Act.

Yes. The trade mark owner and authorised users can bring infringement proceedings. There is no need to appoint an exclusive licensee to enable the licensee to sue for infringement.

"Authorised user" is a person who uses the mark under the control of the owner. See below for a discussion of "control".

An authorised user’s right to bring infringement proceedings can be removed by contract. This is commonly done where the authorised user is a third party, rather than a member of the same company group as the owner.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.