Intellectual property (“IP”) transactions are the backbone for commercializing and monetizing IP rights. Various ways exist in which IP can be commercialized including via transfers, licenses, franchises, product placement, merchandising and sponsorship deals. Along with the increasing uptake of technology, various fancy names and acronyms are also becoming in common use to refer to IP relevant activity, such as SAAS (software as a service), BAAS (blockchain as a service), EULAs (end-user license agreements) and many more.

However, upon a bird’s-eye view of Maltese IP laws, it should be immediately noticed that IP laws define IP transactions in only two forms, namely, in terms of assignments and licenses.[1]

1.Assignments & Licensing

An “assignment” is essentially the technical term used under Maltese law to refer to a “transfer”, although it should be noted that although the term is used by the Copyright Act (Cap 415 of the Laws of Malta), the Trademarks Act (Cap 416 of the Laws of Malta) and the Patents and Designs Act (Cap 417 of the Laws of Malta), it is not defined thereby.

Ownership rights of an IP right, or part thereof, are transferred in an assignment. Crucially, in respect of copyright and patents, it should be noted that whilst the commercial rights can be transferred by the rightful right-holder, it is not possible to transfer “moral” and “inventorship rights”. Instead, such rights can only be waived.

A “license” refers to a right to use an IP right and similarly to an “assignment”, the term is not generally defined under Maltese law although a basic definition thereof is contained within the Copyright Act, namely, “a lawfully granted license permitting the doing of an act controlled by copyright or neighboring rights”.

Licenses can be full or partial, such as limited to a particular type of use, or in relation to a specific good or service or limited by geography. The concept of sub-licensing exists under Maltese law together with the concept of exclusive and non-exclusive licenses although some specifics thereof vary depending on the IP at hand.

From a validity perspective, it should be noted that assignments and licenses are essentially identical. Both types of transactions are not valid if carried out orally and as such, require at least a private writing for validity. Aside from reducing the agreement to a signed private writing, there are however no other requirements for the transaction to be valid. That said, registrable IP rights require that the transaction is registered for effectiveness against third parties. Between the parties to the transaction, the transaction would however remain effective irrespective of whether the registration actually takes place.

2. IP Security Transactions

Apart from assignments and licenses, transactions in IP can also take the form of using IP as a security and such is mostly common when IP rights are used as a collateral to raise finance. In this respect, IP can be granted by way of security under Maltese law in principally two ways, namely, by way of pledge and by way of security by title transfer.

A pledge is a contract which creates a security for the fulfilment of an obligation – specifically, a pledge confers upon the creditor the right to obtain payment out of the thing pledged with privilege over other creditors. On the other hand, in a security by title transfer, the borrower transfers the title to the asset to the lender (or third party) by way of security and then, the lender has an obligation to re-transfer the asset back to the borrower, if and once the underlying debt has been paid.

It should be noted that Malta’s IP Office to date does not cater for the registration of security transactions over IP rights. However, it is expected that upon the coming into effect of Act XII of 2019, which replaces the existing Trademarks Act with a new Trademarks Act, registration of such a right in rem will be possible (limitedly) with respect to trademarks.

This article forms part of GTG Advocates’ series “Basics of Maltese Intellectual Property Law”, authored by Dr Terence Cassar and Dr Bernice Saliba.

For more information on Intellectual Property Law and related areas please contact Dr Ian Gauci on igauci@gtgadvocates.com, Dr Terence Cassar on tcassar@gtgadvocates.com, and Dr Bernice Saliba on bsaliba@gtgadvocates.com.

Disclaimer: This series is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.

[1] Transfers by way of a testamentary disposition (a will) or by operation of the law are also possible although such matters would not amount to a transaction in the sense of this article.