The decision you are actually making
A distributor wants to sell your software under your brand. A manufacturer has asked to put your logo on their products. A related company in your group wants to use your customer lists and pricing model. You are willing to share what you have built, but you are not willing to give it away. That is the moment you need to decide what to do with your intellectual property (IP): let the other party use it, transfer it to them, or leave the arrangement informal.
The real question is not which document to sign. It is what the other party walks away with. A licence gives them permission to use the IP on your terms while you keep ownership. An assignment transfers ownership altogether, so the buyer can use, sell, and licence the asset as their own. The two are different in substance, and the difference is drawn on paper: under s 196(3) of the Copyright Act 1968 (Cth), an assignment of copyright has no effect unless it is in writing and signed by the assignor, and the Act only recognises an exclusive licence of copyright if it is in writing and signed by the owner (s 10(1)).
The third option is to do nothing formal, a verbal "sure, go ahead". For low-value or very short arrangements that can be enough, and in many cases it operates as an informal non-exclusive permission. But it is the option where misunderstandings live: scope, territory, payment, and what happens when the relationship ends are rarely settled by email. One assumption to drop early: "we own it together" is not a status you fall into. Unless you deliberately create joint ownership in writing, the IP either stays with the owner or transfers.
Factors to weigh before you licence
These are the factors that decide whether licensing fits your situation, and what shape the licence should take.
Do you own what you are about to licence
You cannot licence what you do not own, so ownership is the first factor, not the last. Under s 35(2) of the Copyright Act 1968 (Cth), the creator of a work is its first owner. Paying someone to create something does not, by itself, transfer copyright to you. The main exceptions are narrow: copyright in a photograph, portrait, or engraving commissioned for a private or domestic purpose belongs to the person who commissioned it (s 35(5)), and work an employee creates in the course of employment belongs to the employer (s 35(6)).
That is why the assumption "I paid for it, so I own it" is usually wrong when a designer, developer, photographer, or agency created your branding, software, or content. Ownership is whatever the written agreement said, and if there was no written agreement, the creator keeps the copyright. Fix ownership before you promise anyone rights:
- You own it outright: you can licence, assign, or keep the IP to yourself.
- A contractor created it: you may hold only a licence to use it yourself, and you cannot pass rights on to others unless the agreement allows it.
If ownership is unclear, the fix is usually an assignment or an updated agreement that deals with IP ownership in writing, and it should happen before you sign anything with the person who wants to use the IP.
How much control do you need to keep
The central difference between licensing and assigning is control. A licence lets you set the boundaries; an assignment hands them over. If your IP is central to the business and you intend to keep using it yourself, licensing keeps that door open:
- how the IP can be used, and what it cannot be used for
- where it can be used: territory, channels, platforms
- who can use it, including whether sub-licensing is allowed
- how long the permission lasts, and what happens when it ends
Within a licence you also choose exclusivity. An exclusive licence gives only the licensee the right to use the IP in the agreed scope, and can even exclude you. A non-exclusive licence lets you licence the same IP to others as well. A sole licence gives one licensee rights while you keep using the IP yourself. Exclusive arrangements carry the most value and the most risk, and for copyright the Act only recognises an exclusive licence if it is in writing (s 10(1)). If exclusivity is not stated, it generally does not exist, so say it in the document if you mean it.
How do you want to be paid
How you want to earn from the IP points one way or the other. An assignment is usually paid as a single lump sum, because you are selling the asset. A licence can be structured to keep paying you:
- a fixed upfront fee
- monthly or annual licence fees
- royalties based on the licensee's sales
- minimum payments, so your IP is not parked with someone who never uses it
If royalties apply, you will usually want reporting obligations and audit rights so you can check the figures. Weigh the trade-off:
- Upfront fee: simpler and less administration, but you do not share in the growth of the product or brand.
- Royalties and licence fees: ongoing income, but you need the right to verify sales and enforce the payment terms.
For a business that wants recurring revenue from software, content, or a brand, the licence structure is usually the natural fit.
What does the other party actually need
Licensing is the right tool when the other party needs to use the IP. It is the wrong tool when they need to own it. A buyer acquiring your whole product, or an investor taking all rights to the asset, cannot be left holding a permission that you can revoke or refuse to renew; they need an assignment or a broader sale agreement.
Before you assume, ask what the other party needs. Many parties ask for ownership because they assume it is the only way to get certainty, when a well-drafted licence would give them everything they actually need: the right to use the IP, for the term, in the territory, and for the purpose they require. And be careful with "we will just agree by email". For valuable assets, an email trail is a poor substitute for a document that says what happens on breach, non-payment, or the end of the term.
What kind of IP is it
The rules differ depending on the asset, because different IP rights are created and enforced differently:
- Trade marks and brand assets: A registered trade mark is licensed through the authorised use rules in the Trade Marks Act 1995 (Cth). Use of the mark counts as authorised use only while it happens under the control of the owner, and the owner can show control by exercising quality control over the goods or services (s 8). In practice that means brand guidelines, approvals, and quality standards are part of the licence, not an optional extra. Registration also matters: only a registered mark gives you the infringement rights in s 120, which makes enforcement and licensing cleaner, and a mark that is not genuinely used in trade can become vulnerable to removal from the register for non-use under Part 9. A licence that keeps the mark in genuine commercial use, under your control, can be part of protecting the registration.
- Copyright works: Software, websites, courses, videos, templates, and written materials are licensed by granting permission to do the acts the owner controls, such as reproducing and communicating the work. Exclusive licences must be in writing (s 10(1) of the Copyright Act 1968 (Cth)), and the scope of the permission should name the acts, the territory, and the term.
- Confidential information: Recipes, formulas, customer lists, pricing methods, and know-how are not registered rights, but they can be licensed too, usually with confidentiality obligations attached. Once shared, confidential information is hard to claw back, so the licence should say who can see it, what they can do with it, and what happens to it when the arrangement ends.
- Designs and other rights: Registered designs protect the visual appearance of a product, and like other registered rights they can be licensed on similar terms.
Could your arrangement be a franchise
If you are licensing your brand and your way of doing business to operators who pay you fees, check whether you have accidentally created a franchise. Under the Franchising Code of Conduct, which is a mandatory industry code under the Competition and Consumer Act 2010 (Cth), an agreement is a franchise agreement if the franchisor grants the franchisee the right to carry on business under a system or marketing plan substantially determined by the franchisor, the business is substantially associated with a trade mark owned or licensed by the franchisor, and the franchisee must pay an amount to the franchisor (cl 5).
The boundary matters because franchising carries disclosure and conduct obligations that a simple licence does not. If your arrangement sits on that boundary, get advice before you sign, rather than after the first franchisee comes on board. Even where an arrangement is not a franchise, a licence usually forms part of the broader documentation, because the operator needs permission to use your brand, manuals, marketing assets, and materials.
How an Artificer Legal lawyer helps you make the call
This is a decision where the analysis matters more than the template. An Artificer Legal lawyer will:
- stress-test your ownership before you promise anyone rights, including tracing how the IP was created and what your contracts with contractors and employees actually said
- model the downside of each path: what happens on breach, at termination, if the mark goes unused, or if a licensee's quality damages your brand
- check whether the arrangement crosses into the Franchising Code's definition, and flag the obligations if it does
- draft the document the chosen path needs, whether that is a licence (with scope, exclusivity, territory, term, royalties, quality control, and confidentiality clauses) or an assignment
- review the rest of the chain, including service agreements, distribution terms, software terms, and corporate documents where IP moves between entities in a group
The cost of getting this wrong shows up later: a dispute over who owns what, a licensee still using your brand after the relationship ends, or a regulator's letter you did not expect. A short conversation up front is usually cheaper than any of those.
Start with who owns the IP
The question that takes the most effort to get right is not what the licence should say. It is who owns the IP, and what exactly you are giving away. A licence is only as strong as the ownership behind it, and the licence-versus-assignment line is drawn by a few written words: for copyright, both an assignment and an exclusive licence need signed writing to be effective. That is why the decision is made on paper, not in the conversation where someone said "of course, we will sort it out later".
In short: a licence lets someone use your IP while you keep ownership, and it is usually the right fit when you want ongoing revenue, controlled use, or room to keep using the asset yourself. An assignment transfers ownership and fits a genuine sale. Weigh your ownership position, the control you need, how you want to be paid, what the other party actually needs, the type of IP involved, and the franchise boundary. Where the arrangement is ongoing, high-value, or involves your brand, an experienced IP lawyer will help you make the call and put the document in place.