When the deal transfers rights that were never owned: what it costs to be wrong
A licence or an assignment only passes on rights the grantor actually holds. When the grantor's title is wrong, the deal transfers nothing, the buyer keeps paying for a right it never received, and every sub-licence signed downstream collapses with it. Discovering this after signature costs far more than checking title before it, and the cost rarely stays with the party who made the mistake.
The legal basis for checking title
Which framework applies depends on the right in the deal. A European Union trade mark is created and recorded under Regulation (EU) 2017/1001 (EUTMR); a unitary patent is created and recorded under Regulation (EU) No 1257/2012. Both sit on a Union-level register, so the grantor's recorded status can be checked before signature, not guessed at afterwards.
Software copyright follows Directive 2009/24/EC, and a database right follows Directive 96/9/EC. Neither is registered anywhere at Union level. Title to either rests on employment records and prior contracts, not on a public entry — which is exactly where deals go wrong.
| Right in the deal | Registered at EU level | Where title actually sits | What breaks if the grantor never owned it |
|---|---|---|---|
| EU trade mark — Regulation (EU) 2017/1001 (EUTMR) | Yes, Union register | Recorded proprietor | Assignment is void as to the mark; the buyer holds an unregistered promise, not a right |
| Unitary patent — Regulation (EU) No 1257/2012 | Yes, Union register | Recorded proprietor | A licence granted by the wrong holder binds no one else |
| Software copyright — Directive 2009/24/EC | No | Employment or assignment chain | No register to check; a missing link breaks the chain silently |
| Database right — Directive 96/9/EC | No | The entity that took the investment risk | The right may sit with a different corporate entity than the one that signed |
What breaks in practice
The immediate consequence is a breach of the title warranty in the licence or the assignment agreement, which usually triggers an indemnity claim rather than a simple price adjustment. For a registered right, the fix is procedural: correct the register once the true chain is on record. For an unregistered right there is no register to correct, so the buyer is left arguing ownership from documents that may not exist, and every sub-licensee it has already signed inherits the same weakness. The same registry check applies when the dispute is not about ownership but about use — for instance when A domain mirrors your brand trade mark what it costs to challenge.
What to do, in order
- The instructed IP team identifies the legal basis of the right first — trade mark, patent, software copyright, or database right — before diligence starts.
- The diligence team pulls the Union register entry and matches the recorded proprietor's name to the grantor's corporate name, for a trade mark or a unitary patent.
- Buyer's counsel requests the full assignment chain from the original author or maker to the current grantor, for an unregistered right.
- The lead negotiator flags any gap in the chain in writing before signature, not after.
- Drafting counsel inserts a title warranty tied to an indemnity clause, not a bare representation.
- If a gap surfaces after signing, in-house legal sends written notice to the counterparty and preserves the notice period set by the contract.
Who decides, and on what evidence
There is no single decision-maker built into EU law for a title dispute of this kind. Recognition of the right sits with the relevant registry office for a trade mark or a unitary patent, and that office confirms who is recorded — it does not investigate who should have been recorded. Ownership of an unregistered right is established through the courts with jurisdiction under the contract, applying the national law that implements Directive 2009/24/EC or Directive 96/9/EC. If the missing link in the chain is a departed employee rather than a missing paper, see When an acquired team brings prior work: what it costs to sort out afterwards.
Two common variations
If the right is a registered trade mark or unitary patent and the register shows a different proprietor, the discrepancy is visible before signature. Refuse completion until the assignment chain is on record and the register is updated.
If the right is software copyright or a database right and no register exists, request signed employment or work-for-hire agreements covering every contributor. An absent signed document is itself a warning sign, not a formality to chase later.
If the gap surfaces only after signing, invoke the title warranty and the indemnity clause together. A warranty without an indemnity rarely pays for the loss it describes.
What this page does not cover
This page addresses provenance of the right at EU level: which framework applies and where title actually sits. It does not cover the tax treatment of an assignment, transfer pricing between related entities, or the specific limitation period for a title claim, which is set by the national law governing the contract and starts running once the wrong grant is discovered or should have been discovered. A similar provenance gap can appear outside traditional IP entirely; see When the token refers to an unregistered right in a digital asset deal.
Checked against
This page relies on the following EU instruments: Regulation (EU) 2017/1001 (EUTMR), in force from 1 October 2017; Regulation (EU) No 1257/2012, in force from 1 June 2023; Directive 2009/24/EC, in force from 25 May 2009; Directive 96/9/EC, in force from 27 March 1996. This page sets no marketing cookies beyond what is described in Cookies and what is switched off by default in our privacy settings.
Related situations
A related failure mode arises not from bad title but from a change in control clause firing on its own; see A change of control triggers termination IP licence what it costs before the deal even closes.
FAQ
What is the first step when the deal transfers rights that were never owned?
Identify which right is at stake — trade mark, patent, software copyright, or database right — and check whether it sits on a Union register before doing anything else.
Which deadline is already running?
The limitation period for a title claim is set by the national law governing the contract. It typically starts once the wrong grant is discovered or should reasonably have been discovered, not on the date of signature.
Who decides, and on what evidence?
A registry office confirms who is recorded, for a trade mark or a unitary patent. For an unregistered right, a court with jurisdiction under the contract decides on the assignment chain and employment records presented to it.