When the commercial transaction with which IP is concerned is the assignment of the IP, the assignment will normally occur in return for the payment of a lump sum purchase price. It would be unusual for the IP assignment to be for royalties.

If the assignment took place in return for future royalties, but the assignee went into liquidation, the assignor will no longer receive royalties, and is not entitled to the IP being returned to it. By comparison, where a licence is granted in return for royalties, and the licensee goes into liquidation, the licence is commonly terminated, and the IP is retained by or reverts back to the licensor, which can then grant a new licence to another person.

An assignment of IP does not normally impose upon the assignee diligence obligations (such as minimum sales to be achieved). The result is that in an assignment for royalties, if an assignee is not diligent, the assignor may not be able to maximise its royalties and may not have any recourse. By comparison, a licence of IP would normally impose diligence obligations upon a licensee, the failure to comply with which would ultimately result in the termination of the licence, enabling the licensor to license to a more diligent licensee.

For these reasons an assignment of IP is not normally for future income such as royalties, but is normally in return for a lump sum consideration paid at the time of the assignment.