Why IP clauses are essential in commercial contracts
In today’s knowledge-based economy, intellectual property (IP) is one of the most valuable assets a business can own—whether it’s a trademark, software code, technical design, brand name, or confidential business process. Yet in Romania, many commercial contracts still lack the clarity or precision needed to protect IP effectively in business-to-business (B2B) relationships. Poorly drafted IP clauses can lead to disputes over ownership, licensing limits, usage rights, or confidentiality breaches—particularly when entering partnerships, outsourcing agreements, or technology transfers.
This article outlines the key IP clauses Romanian businesses should include in commercial contracts, highlights common pitfalls, and provides guidance on structuring legally secure licensing, assignment, and confidentiality terms.
Ownership vs. usage: clarifying IP rights from the outset
One of the most common mistakes in IP-related contracts is the failure to distinguish between ownership of intellectual property and the right to use it. In Romanian commercial practice, this issue often arises in collaboration agreements, commissioned works, software development, and marketing projects.
Under Romanian law, intellectual property created by an external contractor does not automatically transfer to the client unless there is an explicit written assignment. Similarly, providing access to a trademark or software tool does not mean transferring ownership—it may only imply a licence.
To avoid legal uncertainty, contracts should clearly state who owns the existing intellectual property (often referred to as “background IP”) and who will own any intellectual property developed during the course of the project (“foreground IP”). They must also specify whether the transfer of rights is permanent, such as through an assignment, or temporary, as in the case of a licence. Additionally, it is essential to define the scope of any usage rights, including the applicable territory, duration, level of exclusivity, and whether sublicensing is permitted.
Licensing clauses: structure, scope, and risk management
Licensing is a key mechanism through which IP is shared or monetised in commercial agreements. Whether you’re licensing software, brand assets, technical designs or patented processes, the licence clause must be precise and enforceable under Romanian and EU law.
An effective licensing clause should cover:
- The type of licence: exclusive, non-exclusive, or sole
- Permitted uses: commercial, internal, sublicensing, modification
- Geographical scope: Romania only, EU-wide, or global
- Duration: fixed-term, renewable, or perpetual
- Royalty or fee structure: flat fee, recurring payments, or performance-based
Unclear licensing terms can result in IP misuse, unauthorised sublicensing, or infringement claims. Romanian courts have ruled against parties attempting to enforce vague IP licensing terms that lacked territorial or usage limitations.
Assignment of IP rights: formalities and enforceability
If the intention is to transfer IP ownership (rather than just grant usage rights), the contract must include a valid assignment clause that complies with legal formalities.
Under Romanian IP law, for an assignment of intellectual property rights to be valid and enforceable, it must be made in writing and clearly identify the specific IP being transferred. The agreement should also indicate whether the transfer is total or partial in scope. Additionally, to ensure enforceability against third parties, the assignment must be registered with the appropriate authority, such as the State Office for Inventions and Trademarks (OSIM) in the case of trademarks or patents.
Failure to register an IP assignment—particularly in trademark licensing or sale—can render the transfer invalid in relation to third parties, even if it is valid between the parties to the contract.
Confidentiality and trade secret protection
Many commercial agreements involve the exchange of sensitive know-how, client lists, financial data, or technical specifications. Yet, unless protected by robust confidentiality clauses, this information may lose its legal protection under Romanian trade secret law.
To ensure compliance with Law No. 11/1991 (on unfair competition, as updated) and the EU Trade Secrets Directive, contracts should define:
- What information is considered confidential
- The duration of confidentiality obligations
- Permitted disclosures (e.g. to affiliates or regulatory authorities)
- Remedies for breach (injunctions, damages, reputational clauses)
Clear contractual confidentiality provisions not only strengthen a company’s ability to protect its know-how but also serve as evidence in litigation if misuse occurs.
Common pitfalls in IP clauses under Romanian law
Despite their importance, IP clauses in Romanian commercial contracts often present critical weaknesses.
One common issue is the use of vague or overly broad definitions of the intellectual property involved—for example, terms like “content” or “technology” that are not clearly or consistently defined. Many contracts also lack termination provisions that specify what happens to the IP rights when the agreement ends. Another frequent gap is the absence of a dispute resolution mechanism related to ownership or usage of the intellectual property.
Lastly, some agreements fail to reflect recent changes in EU regulations or do not account for the legal complexities of cross-border licensing arrangements, exposing businesses to avoidable legal risks.
These gaps can lead to costly disputes or weaken a party’s ability to enforce its rights.
Conclusion: draft your IP clauses with care
In Romania, businesses that rely on innovation, branding, or proprietary technology must ensure that their commercial contracts contain robust IP clauses. Whether negotiating licensing agreements, outsourcing creative work, or partnering on R&D, clearly defining ownership, usage rights, and confidentiality terms is essential.
A well-drafted contract not only protects your intellectual assets but also positions your business for growth, collaboration, and successful enforcement if rights are violated. At Iorgulescu-Legal, we help companies structure and negotiate IP terms that safeguard innovation and minimise legal risk.