TRANSFER OF IP RIGHTS FOR FREE
THE DOWNSIDE OF GRATUITY
The transfer of intellectual property rights free of charge must be qualified as a donation, and as such must comply with the requirements specific to the matter.(Decision of the Paris Court of Justice, February 8, 2022, No. 19/14142).
This case involved a trademark and Community designs owned by two individuals, Mr. X and Mr. Z. The rights were transferred in 2015 to company A, of which Mr. Z is the sole partner and manager.
In 2018, Mr. X criticized the transfer that took place in 2015 and sued Mr. Z and the company A for nullity of the transfer.
The Paris Court of Justice granted Mr. X's requests and ruled that:
1. The trademark and design assignment shall be requalified as a donation;
2. The contract is void since it did not comply with the formalities imposed by Article 931 of the Civil Code.
The reclassification as a donation is justified by the fact that the contract concluded in 2015 explicitly entails the transfer of ownership of the trademark and designs "free of charge".
With respect to the formalism to be observed, article 931 CC provides that "All acts involving inter-vivos donation shall be executed before a notary in the ordinary form of contracts; and a copy of the same shall remain noted, under penalty of nullity"
The case law allows two exceptions to this formalism. The first is the case of manual donation which require the physical delivery of the thing given. The second concerns disguised or indirect donation, for which it is accepted that the conditions of form follow the act from which they take on the appearance.
The code of the intellectual property does not provide for any additional exemption, but only that the transfer of property must be done in writing (article L. 714-1, paragraph 4 of the CPI in its then drafting)
In this case, the things transferred being intangible rights and therefore not susceptible of physical delivery, and the deed of transfer clearly mentioning that the transfer of ownership of the trademark and the models "free of charge", the contested deed could not benefit from either of the two exemptions.
The court rightly concluded that it was therefore, by definition, an undisguised donation of intangible rights, so that it should have been concluded before a notary. The assignment contract is therefore declared null and void.
The transfer in question concerned physical donors, but an identical solution could have been pronounced, in our opinion, if it had been a question of legal entities as donors. Indeed, the article 902 of the CC provides that "All persons may dispose of and receive either by donation inter-vivos or by will, except those whom the law declares incapable of doing so", which does not exclude legal entities. The Court of Cassation (C. Cass, com., May 7, 2019, appeal n ° 17-15.621) has confirmed such an assessment.
We recommend to be particularly vigilant when transferring your intellectual property rights, and in particular in the case of intra-group transfers for which it may be tempting to avoid the payment of a price for the transfer. LAVOIX’s team of experts are available to assist you in these procedures.