A recent decision by the Lyon Judicial Court has confirmed case law with important practical consequences in France: the annulment of a free assignment of intellectual property rights. This trend in case law, which may come as a surprise to parties to assignment contracts, particularly foreigners, involves considerable risk.
1. The heart of the issue: compliance with a rather cumbersome formality required by French general law
The special law of the French Intellectual Property Code lays down formal rules for the assignment of intellectual property rights which are well-known to professionals in this field.
Assignment agreements of registered IP rights (e.g. trademarks, patents) are subject to a double requirement: a written contract for the assignment of rights, and the registration of this assignment in the register of the French Industrial Property Office (INPI) to make it opposable to third parties.
Copyright also requires the inclusion of a number of precise clauses (concerning the scope of the rights assigned, the duration of the assignment, etc.).
At the same time, the general rules of the French Civil Code set out a specific formalism for donations (Articles 931 and seq.).
The reason for this is that a donation involves a particularly serious consequence for the donor: the irrevocable expropriation of the donor in favor of the recipient. The legislator considered that the seriousness of this act justified the adoption of a certain formalism in order to clarify the donor's consent and ensure his or her protection. This is why the Civil Code requires that a donation be formalized before a notary (notaire).
2. Recent case law: free assignments are requalified as donations, and canceled if they have not been formalized before a notary
A new trend in case law, combining special intellectual property law and general civil law, recently emerged with a decision by the Paris Judicial Court of February 8, 20221, confirmed in this respect by the Paris Court of Appeal in a decision dated March 13, 20242.
The case involved two entrepreneurs who had set up a first company together which was later dissolved; subsequently, one of them decided to found a new structure to which he had assigned, free of charge, a trademark and two designs, all three created at the time of the joint activity.
The co-owner who assigned the rights argued that Article 931 of the Civil Code did not apply to this assignment, given the existence of the specific text of the Intellectual Property Code which does not mention the requirement for a notarial deed and which should take precedence over Article 931 (due to the principle that general rules only apply in the absence of specific rules).
First and foremost, the Court ruled that the contract for the assignment of trademarks and designs was indeed a "free assignment", particularly since there was no clear mention of any consideration to be paid by the assignee. It ruled that, as the provisions of the French Intellectual Property Code do not cover the case where an IP right is assigned for free as part of a donation, it cannot be considered as a special rule derogating from the public policy rule of Article 931 of the French Civil Code, which was therefore applicable.
In this case, the judge therefore requalified and annulled the deed of free assignment.
The Paris Judicial Court (in summary proceedings) reaffirmed this solution in a decision dated April 12, 20233, concerning copyright.
The plaintiff was a former serviceman in the Russian army who, after being wounded in action and then repatriated to Russia, published his testimony. Having been forced to flee from Russia to France, he decided to assign the copyright of his manifesto to an association, which in turn signed a copyright assignment contract with a publishing company. The association and the publishing company were then summoned to appear before the Paris Judicial Court by the author.
The interim proceedings judge found that the contract involved the "explicit assignment" of copyright free of charge and that, since it was not formalized before a notary, it risked nullity (N.B. the interim proceedings judge cannot rule on the merits of the case, but only on provisional measures; thus, in this case, she only "assumes" that the deed is null and void, leaving it to court ruling on the merits to decide).
This solution was confirmed more recently by the Lyon Judicial Court in a decision dated April 9, 20244 dealing with copyright. However, this latest decision offers a glimmer of hope. One of the parties challenged the validity of a deed of free assignment of a trademark executed in 2020 on the grounds that it did not comply with the provisions on donations. However, in May 2022, the parties entered into a new agreement concerning the same trademark, cancelling and replacing the previous one. This new agreement provided for an assignment for the price of 1,000 EUR. It was considered valid by the Court, which stated that "this deed does not therefore regularize the assignment of May 20, 2020, but replaces it".
3. Takeaways
- In France, intellectual property rights can be assigned by contract, either for a price or free of charge;
- However, there is a serious risk in the case of free assignments, which may be declared null and void by a court if they are not formalized before a notary. Parties to such contracts should not ignore this risk;
- To avoid nullity, the assignment of intellectual property rights must be made in exchange for a real consideration or, if the assignment is free, it must be formalized before a notary;
- We can only encourage parties to intellectual property rights assignments to carry out an audit of their contracts in order to identify problematic assignments and rectify the situation.
1 Paris Judicial Court, February 8, 2022, no. 19/14142
2 Paris Court of Appeal, Pole 5, Chamber 1, March 13, 2024, no. 22/05440
3 Paris Judicial Court, April 12, 2023, no. 23/50949
4 Lyon Judicial Court, April 9, 2024, no. 20/05900
