Intellectual property and bankruptcy

Rob Vernout, 14 september 2023

Intellectual property (IP) is an important asset for many companies. For example, trademarks, trade names, patents, design rights and copyrights (such as copyright on software, manuals, etc.). These rights are transferable and can therefore be sold to interested parties, with or without the company.

For the event of a company going bankrupt, it may be wise to secure the IP rights in advance as much as possible.

What happens to IP in the event of bankruptcy?

In principle, IP rights belong to the assets of the bankrupt company. This means that the trustee can sell these rights to pay the creditors. The trustee may also decide to retain IP rights, for example to use them for a restart of the company.

empty pockets and backruptcy
image licensed under CC0 license via Pixabay

How can I protect my IP for the event of bankruptcy?

There are a number of ways to protect IP for the event of bankruptcy. A commonly used method is to register IP rights in a separate IP company. This IP company can then grant a license to the working company to use the IP. In the event of bankruptcy of the working company, the curator will in principle have no access to the IP rights.

In that case, the license to the working company remains in its assets, which the trustee could still sell to another party. To prevent this, a special arrangement can be included in the license agreement. This arrangement can, for example, provide that the license ends in the event of bankruptcy of the working company.

All this must be arranged in a timely manner, preferably when the IP rights are established. If you wait until bankruptcy is imminent, a judge will not accept this and will decide that the IP rights was unlawfull or still belong to the assets of the bankrupt working company.

Tips for protecting IP in bankruptcy for start-ups:

Have your IP rights registered as much as possible, and carefully consider who the registered owner should be.

Consider to register these IP rights in the name of a separate IP company, and in that case have an appropriate licensing agreement drawn up between the IP company and the working company.

Contact an IP lawyer for more information. DOGIO can help you with find one.