The Fate of Intellectual Property Assets in Cross-Border Insolvency Proceedings

Nadine Farid


The licensing of intellectual property rights in patent, copyright and trademark has grown along with the role of intellectual property in the global economy. Increasingly, the licensing of these assets is occurring multi-nationally. As this trend continues, special attention should be paid to the treatment of the licensed rights in the event of bankruptcy of either party to the license agreement.

Intellectual property licenses place special obligations and rights upon contracting parties. Often, the subject intellectual property of a particular license can be the basis for a licensee's entire business model. If the licensor of the rights in that subject intellectual property goes bankrupt, the licensee's rights under the license could be in jeopardy. Similarly, a non-debtor licensor could face significant losses in royalties and in control of the intellectual property rights if the licensee files bankruptcy.

Despite these unique issues facing parties to licenses of rights in intellectual property, there is no universal consensus as to how the rights and obligations of licensing parties should be handled in the event of the insolvency of one of the parties. The insolvency laws that address the matter are highly complicated and are not consistent across different jurisdictions, either in terms of domestic interpretations of the law or, on a global level, in terms of dissimilar laws of various states. . . .

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