In this post a couple of weeks ago, I belatedly introduced the topic of dual verb structures. Here’s another dual verb structure: shall grant/assign and hereby grants/assigns (and variants). It appears in provisions relating to intellectual property:
Upon the completion of such transfer, Xenon shall, and hereby does, assign to Neurocrine all such Regulatory Materials …
Effective on the Collaboration Start Date, the Parties shall grant, and hereby grant, each other the following licenses: …
Licensee shall grant, and hereby grants to Institute, subject to Institute’s payment obligations under Section 9.7, and reimbursement of Licensee ’s costs of transferring such materials, a perpetual, worldwide, transferable, sublicensable right and license under such know-how, data and information solely for (i) researching, developing, using, importing, selling and offering for sale Reversion Products in the Territory …
upon the effective date of termination, Celgene shall grant, and hereby grants, to Jounce a non-exclusive, worldwide license, with the right to grant sublicenses, under any Patents or Know-How Controlled by Celgene or any of its Affiliates that arose from the Parties ’ activities under this Agreement …
Licensee shall and hereby does assign to Verastem all right, title and interest in and to any Inventions covering the composition of matter or the method of use of Licensed Compound or Licensed Product or solely related to the Licensed Compound or Licensed Products …
This is majorly effed up, as each of these examples seeks to do some sort of Schrödinger’s cat thing—the cat’s both alive and dead!—by employing language of obligation and language of performance simultaneously. Cray-zee. This sort of thing is why I think of IP drafting as a mutant form of drafting.
So I consulted my one-man intellectual-property Delta Force, Ned Barlas, of the Philadelphia law firm Semanoff Ormsby Greenberg & Torchia (and advisor to LegalSifter). Here’s what he had to say:
It is well-established law in the United States that a would-be inventor can, through language of performance (hereby assigns), transfer their ownership interest in a patentable invention before it is even conceived. Courts have viewed such a transfer as an assignment of an expectant interest, with the assignee holding equitable title that automatically matures to legal title once the invention is made and a patent application filed. The concept of a pre-invention assignment is analogous to the common practice of granting an interest (for example, a security interest) in after-acquired personal property.
But a present assignment or a grant of an interest in future intellectual property might not be effective in all circumstances or for all forms of intellectual property. In that regard, using both language of performance (hereby assigns) and language of obligation (shall assign) in a pre-invention assignment contract appears to be an awkward attempt to address a legitimate issue by providing for a fallback if a present assignment doesn’t work. Unfortunately, using both verb structures jammed together makes it sound as if shall assign announces what is about to occur by means of the language of performance that immediately follows—sort of like a bad magician who announces “I shall next pull a rabbit out of my hat!” just before doing so.
It would be far clearer to have language of performance (hereby assigns) in one sentence, followed by another sentence containing language of obligation in which the assignor undertakes to sign in the future, at the assignee’s request, whatever documents are required to effect an assignment, if the pre-invention assignment turns out to have been ineffective.
Indeed, Ned and I elected to use this approach in an article we’ve been working on: language of performance in one sentence followed by language of obligation in another, to ensure that one way or the other the interest is transferred to the assignee.
Of course, EDGAR never fails to surprise, so you can find this dual verb structure in contexts where the excuse available in intellectual-property contexts—they were trying to address a legitimate issue in a half-assed way—doesn’t apply. Here’s an example:
… Borrower or its Restricted Subsidiary shall grant and hereby grants to Administrative Agent and its agents, advisors and consultants access at reasonable times, and upon reasonable notice to Borrower , to such Real Property …
I have to disagree with you and Ned, here. “A shall assign and hereby assigns X” is both clear and concise, instead of half-assed, and turning that into two sentences that say “A hereby assigns X. In the event that the assignment of the last sentence is ineffective, A shall assign X” seems highly awkward and prolix.
We’ll just have to leave it to the marketplace of ideas to decide who is more trustworthy.
I think there is a difference between:
(a) the practice, which I see in company secretarial documents, of resolving to do something and then stating that you are doing it, which is similar to some of your examples above; and
(b) the issue of assigning or licensing IP that hasn’t yet come into existence. Whether you can assign future IP depends on the jurisdiction and on the type of IP. The formula “hereby assigns and agrees to assign” is messy shorthand for wording that tries to say (i) hereby assigns, and if that doesn’t work (ii) agrees to assign.
Oh, and if you think IP drafting is mutant, watch out, Sir Ian McKellen is on my side…
Regarding your type (a), yet, that is different. It’s “the lamest usage,” and I wrote about it here: https://www.adamsdrafting.com/lamest-drafting-usage/.
Regarding type (b), I don’t think you’re saying anything different from what Ned and I say in the post.
I’d never use agrees to, because people have fought over what it means.
Why do we even need “hereby”? “Bob assigns his IP to Ted.” It’s kind of obvious that the contract in which that language appears is how he does it, and I dare anyone to argue they are concerned that the assignment might occur by some other mechanism, such as turning on your car radio. I need a good laugh today.
Hi Paul. For the reasons explained in the following post, I think hereby is a helpful signal for language of performance: https://www.adamsdrafting.com/why-i-use-hereby-in-language-of-performance/
Categories of contract language analysis:
(1) ‘A hereby assigns X to B’. Language of performance.
But raises the following definitional issue: if purported language of performance is ineffective to accomplish what it purports to accomplish (due to local law or other causes), is it still properly called ‘language of performance’?
If not, what’s a good name for language of ‘unsuccessful attempted performance’?
(2) ‘If the foregoing purported assignment of X to B is ineffective, A shall promptly take whatever actions are necessary to assign X to B’.
Category: I would like to call it ‘language of conditional obligation’, but MSCD knows not such a category. MSCD says it’s ‘language of obligation used to express a condition’.
If the drafter must express both ideas (present transfer and duty of future transfer), what’s the concisest way to do it?
‘A shall assign and hereby assigns X to B’ is temptingly concise, and may technically do both jobs, but it’s too risky.
I see no prudent way around using [a] one clause or sentence purporting to convey X and [b] another clause or sentence imposing a conditional duty on the grantor if the attempted grant fails.
Also rearing their drafty heads are these issues:
(3) When parties want to keep the contract confidential, they may say: ‘A is granting X to B by bill of sale substantially in the form of appendix BILL OF SALE, delivered to B at signing. B acknowledges satisfactory execution, delivery, and receipt of the bill of sale’.
Analysis: Language of policy followed by language of declaration.
(4) When the language of assignment IS effective to convey X, but B might later need more paperwork, the parties might say: ‘Upon reasonable request by B, A shall promptly execute and deliver to B any documents reasonably necessary or convenient to certify, document, or evidence A’s assignment of X to B’.
Such post-closing documents don’t convey anything, they just evidence the grant that took place at closing.
(5) When the granting language is NOT effective, and A’s duty arises to accomplish the grant by other means, the question of retroactivity comes up. B may need the grant to be effective as of signing, not later. To that end, B may want language giving A a duty to ‘ratify’ the bad transfer or to make a later transfer retroactive to signing, as far as that can be done without prejudicing intervening rights. ‘Nunc pro tunc’, anyone? -Wright
Do we have case law that a present IP assignment (hereby assigns) is insufficient? Like Ken & Ned, I use a further assurances clause (as well as moral rights license/waiver/CNS). I (mistakenly?!) considered the further assurances clause more as a backup.