IP and Bankruptcy Law: Perfect Together
This is the first in a series of five "IP/Bankruptcy Law Alerts."
The Bankruptcy and Creditors’ Rights Group at Wolff & Samson is mindful that, for some, the recent barrage of corporate bankruptcy filings may present unique business opportunities. While others see bankruptcy as the end of the line, sometimes it can be the beginning of a new business venture. Indeed, substantial intellectual property opportunities are present in numerous recent bankruptcies.
Consider: Most bankruptcies filed these days are asset sales (under Section 363 of the Bankruptcy Code) or, in essence, a corporate merger or acquisition. That is a consequence, in part, of the dearth of available and affordable financing (in and outside of bankruptcy). The result for most companies currently entering into bankruptcy is liquidation. In many of these filings, IP assets play a prominent role, whether the bankrupt company is in the retail, automotive, banking or telecom sectors. For example, Circuit City – with its failed Chapter 11 reorganization – recently obtained bankruptcy court approval to sell its brand name, trademarks and e-commerce business to Systemax, Inc. This was done by auction process. Whether you are a potential bidder for, or a licensor of some component parts of, the IP assets being sold, you need to be aware of your rights, including the ability to control the further distribution of your license, particularly to customers or competitors not of your choosing. Licensees from bankrupt licensors are principally concerned with continual, uninterrupted access to and use of their licensed IP and source codes. Failure to take timely action to assert those rights may jeopardize your property.
On a more global scope, bankruptcies represent opportunities to expand your business by acquiring, at distressed levels, compatible or even competitive IP. Licensors of exclusive licenses have rights in bankruptcy different from those of non-exclusive licensors. Those rights often will enhance your ability to participate effectively in acquiring IP assets in bankruptcy, or even strategically to prevent sales that may have a negative impact on your business plan.
Wolff & Samson’s Bankruptcy Law Group works closely with our Intellectual Property Group to serve our clients in myriad ways. You will be receiving a series of IP/Bankruptcy Alerts concerning topical issues of IP law in bankruptcy. These are meant to educate and to stimulate a response to at least consider these business opportunities.
If you have any questions, or would like additional information about this series of Alerts or recent bankruptcy filings that may affect your business, please contact:
Bankruptcy and Creditors’ Rights Group:
Robert E. Nies ¦ Member of the Firm ¦ Phone (973) 530-2012 ¦ Email firstname.lastname@example.org
Karen L. Gilman ¦ Member of the Firm ¦ Phone (973) 530-2006 ¦ Email email@example.com
David N. Ravin ¦ Member of the Firm ¦ Phone (973) 530-2034 ¦ Email firstname.lastname@example.org
Intellectual Property Group:
Peter E. Nussbaum ¦ Member of the Firm ¦ Phone (973) 530-2025 ¦ Email email@example.com
Jeffrey M. Weinick ¦ Member of the Firm ¦ Phone (973) 530-2028 ¦ Email firstname.lastname@example.org