As product appearance becomes an increasingly important source of competitive advantage alongside function, design rights play a growing role in business strategy.
In particular, because product design is often the first factor that consumers use to recognize a brand, design rights are also managed as a core company asset.
Recently, inquiries regarding the transfer of design rights have continued to increase due to reasons such as transferring product brand business, changing manufacturing structure, converting to a corporation, or organizing joint development projects.
Today, we will summarize key matters that must be checked in practice, along with representative situations where design rights transfer is necessary.
What is design rights transfer?
Design rights transfer refers to the process of transferring design rights or design application rights held by the existing rights holder to another individual or corporation.
In practice, the following expressions are also used:
- design transfer
- Design transfer
- Design rights transfer registration
- Transfer of design application rights
As the design right is a registered right, the effect of transferring the right is not completed through a simple contract, and a transfer registration process at the Korean Intellectual Property Office is required.
Additionally, the procedures and documents may vary depending on whether it is a registered design or a design at the application stage.
Typical situations where design rights transfer is necessary
Transfer of design rights is particularly frequent in the following situations.
① Transfer of product brand business
In product categories where design competitiveness is important, such as household goods, home appliances, and cosmetic packages, design rights are often transferred along with the transfer of the brand business.
If the transfer of design rights is omitted during this process, a problem may arise where the right to sell the actual product is separated from the legal right.
② Change in manufacturer or production structure
In the process of changing the OEM/ODM structure, a situation may arise where the design rights held by the existing manufacturer or operating entity must be transferred.
In particular, if the actual product production structure and design rights attribution relationship are different, the possibility of future disputes may increase.
③ When converting from an individual business to a corporation
There are many cases where design applications and registrations are initially made in the name of a representative individual, but the rights are later transferred to the name of a corporation during the process of establishing a corporation or attracting investment.
④ Allocation of jointly developed results
After a joint project or collaborative development, rights transfer may occur in the process of reorganizing design rights ownership.
In particular, it is important to clearly organize joint rights relationships as they may lead to disputes during future product launches or licensing agreements.
⑤ Changes in investment and contract structure
Recently, there has been an increasing number of cases where design rights are also used as an important element in corporate valuation.
In particular, for consumer goods brands, the product design itself is often evaluated as business competitiveness, so organizing design rights relationships is becoming important in the investment, distribution, and contract process.
Things you must check when transferring design rights
When transferring design rights, it is important to thoroughly review the following matters in advance.
① Check the scope of registered design
Design rights are protected based on registered drawings and the scope of design expression.
Therefore, it is necessary to review how the actual product form and registered design scope are connected.
In particular, the interpretation of the scope of rights may vary depending on whether it is a partial design in which only some shapes are protected.
② Review related product lines and business structure
Since design rights are closely related to products, it is necessary to check whether the actual business structure and scope of rights match.
For example, in the case of series products or package designs, it may be important to consider whether rights are transferred to only some products.
③ Organizing the actual production and distribution structure and rights relationships
In practice, there are many cases where the following structure exists.
- When the brand company only sells and the manufacturer holds the design rights
- When the operating corporation and the design rights holder are different
- When ownership of rights is unclear after joint development
This structure can pose risks in the subsequent product distribution, investment, and licensing agreements.
④ Check whether the transfer registration has been completed at the Korean Intellectual Property Office
Just because a design transfer contract has been signed does not mean that the legal transfer of rights is complete.
To take legal effect, you must go through the design rights transfer registration process at the Korean Intellectual Property Office.
In practice, there are cases where the registration process is omitted after signing a contract, so caution is required.
Design rights transfer procedure
Transfer of design rights generally proceeds through the following procedures.
STEP 1. Write a transfer agreement
The transferor and transferee agree on the transfer of design rights and write a contract.
The contract typically includes the following:
- Design right registration number and target product
- scope of transfer
- Transfer price
- Party information (name, address, patent customer number, etc.)
- signature or seal
In particular, it is important to clearly state whether it is a partial share transfer or a transfer of all rights.
STEP 2. Application for registration of rights transfer at the Korean Intellectual Property Office
After signing the contract, apply for registration of transfer of rights to the Korean Intellectual Property Office.
At this stage, a correction process may occur if submission documents are missing or have formatting issues.
STEP 3. Rights transfer registration completed
Once the patent office examination is completed, the transfer of rights is registered.
It usually takes a few days to two weeks to process, but it may vary depending on the status of the documents and whether or not they have been corrected.
Once the transfer is registered, the transferee is formally recorded as the owner of the design right.
Required documents and costs for transfer of design rights
- Required Documents
Generally, the documents below are required.
① Rights transfer registration application form
② Transfer agreement or transfer certificate
③ Transferor’s seal certificate (within 6 months from the date of issuance)
④ Consent form, where a co-owner's consent is required
- registration fee
Professional fees: Vary by firm.
Government fee (per case):
- Registration fee: 40,000 won
- Local tax: 21,600 won
- Stamp duty: Stamp duty varies depending on the transfer price in the contract.
Design rights are an important right that goes beyond simple appearance protection and are directly linked to brand image and market competitiveness.
Especially in the fields of consumer goods, household goods, home appliances, packages, and IT products, design itself is often evaluated as a product's competitiveness. Recently, as product images are consumed mainly through SNS and online platforms, the importance of design rights is increasing.
However, if the scope of rights is not sufficiently reviewed during the design rights transfer process, there is a possibility that disputes over similar products or unexpected problems may arise during the product launch process.
Therefore, in order to reliably protect a company's design assets and reduce business risks, it is important to systematically proceed with the process by considering both rights relationships and business structure.
If you need to review design transfer, design title transfer, or design rights transfer registration, please consult with an expert to find out the correct direction.
This article reflects the information available when it was published. Contact us to discuss your circumstances.