Your IP assignment might already contain warranties you never wrote

Commercial lawyers often treat an IP assignment as one of the cleanest transactions in private law. The assumption is that rights move, consideration changes hands, and the parties walk away with no residual obligations. The drafting tends to be sparse because the subject matter—intellectual property—is intangible, conceptual, and seemingly exempt from the rules governing ordinary commercial goods.

That assumption is wrong. And in many transactions, dangerously so.

For example, Article 2 of the U.S. Uniform Commercial Code does not govern patents, copyrights, or trademarks. It governs “transactions in goods.” On its face, that has nothing to do with an assignment of rights in creative works, codebases, or inventions. But modern commercial practice rarely presents “pure” IP in isolation. Intellectual property is almost always embodied in, delivered through, or inextricably linked to software, devices, hardware-embedded systems, or digitally distributed products.

The moment the transaction is classified as a sale of goods, Article 2 brings its implied warranties with it. The statute supplies terms the parties never discussed: merchantability, fitness for a particular purpose, title, and—most surprisingly to many practitioners—a warranty against infringement. These warranties apply unless properly excluded. Silence is not neutral; silence is liability.

Courts have repeatedly held that software delivered on tangible media, firmware embedded in equipment, or technology transferred as part of a device or system can constitute “goods” within the meaning of Article 2. In those cases, the UCC is not concerned that intellectual property is involved. It is concerned with the transactional form. If the deal behaves like a sale of goods, Article 2 will treat it as one.

This is where sophisticated parties are blindsided. An assignee believes it is acquiring only intangible rights. In reality, it may be deemed to have given broad warranties about performance, fitness, merchantability, and non-infringement—the very kinds of liabilities that careful drafters usually calibrate with precision. Those obligations can attach automatically, even when the contract contains no express warranty language at all.

The corrective measures are not complicated, but they require discipline. A drafter must specify the warranties the assignor is affirmatively giving, and just as importantly, must disclaim the implied warranties that would otherwise arise by operation of Article 2. Under the UCC, those disclaimers must be conspicuous. They must be drafted with intention, not buried in boilerplate. The law will not rescue a party that relies on implication or quiet assumptions about the nature of the transaction.

The deeper lesson is that the legal character of a deal is not determined by what the parties call it, but by how the transaction is structured. Intellectual property that passes through goods inherits the legal attributes of those goods. A contract that purports to be a “simple assignment” may in fact be a hybrid transaction with the full weight of the UCC behind it.

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