Intellectual Property Rights in Business Bankruptcies

When a business files for bankruptcy, there are many types of assets that are impacted by the case. The full impact will depend on whether the business is filing for a type of liquidation or reorganization bankruptcy, along with other relevant factors. While it might be obvious how certain types of business assets or property will be treated, for others — especially intangible ones — the process is not always clear. One type of asset that can pose a significant amount of confusion, and sometimes difficulties, in bankruptcy cases is intellectual property. For many companies in South Florida, intellectual property is a critical asset and it can be extremely valuable. Yet intellectual property rights in bankruptcy cases may not seem as clear cut as, for example, real property rights.

If you own a business in West Palm Beach or elsewhere in South Florida, or if you are a member or shareholder in a larger entity considering bankruptcy, it is important to learn more about how intellectual property rights are treated in bankruptcy cases. Our West Palm Beach bankruptcy attorneys can tell you more, and we can speak with you today if you have questions or need assistance with your business bankruptcy case.

What Are Intellectual Property Assets? 

Businesses throughout South Florida have assets that are in the form of intellectual property, but some of them may not even realize it. What are intellectual property assets? In order to gain a better understanding of how these types of assets or rights are handled in bankruptcy cases, it is critical to understand what it is we are talking about. According to the World Intellectual Property Organization (WIPO), intellectual property “refers to creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, and images used in commerce.” Common types of intellectual property assets among businesses include but are not limited to:

• Copyrights;
• Trademarks;
• Industrial designs;
• Trade secrets; and
• Patents.

Assessing the Value of Intellectual Property

 Whenever a business with assets held as intellectual property is filing for bankruptcy, the value of the intellectual property rights will need to be assessed. The value will be important in both Chapter 7 liquidation cases, as well as in reorganization cases filed under Chapter 11 or Subchapter V, for example. Value of intellectual property rights can be determined in various ways, including the worth of the intellectual property to the business’s overall identity, the market value of the intellectual property if it were to be sold, and the ability for the intellectual property to help the business in generating future revenue.

Type of Bankruptcy Filing 

How intellectual property is ultimately handled in a bankruptcy case will depend on the type of bankruptcy. In a liquidation bankruptcy, the intellectual property will need to be used to repay debt owed to creditors before the business closes. In a reorganization bankruptcy, intellectual property can be used to secure new financing, can be liquidated to make debt repayments, and can even be used as a selling point for new investors.

Contact a West Palm Beach Bankruptcy Lawyer Today 

If your business has an interest in intellectual property or intellectual property rights and is considering bankruptcy, it is essential to seek advice from a lawyer who has experience handling these types of cases. Whether your business is considering a liquidation or reorganization bankruptcy, you should get in touch with an experienced West Palm Beach bankruptcy attorney at Kelley, Kaplan & Eller as soon as possible to find out more. Contact us today for assistance with your case.

Sources:

wipo.int/about-ip/en/

law.cornell.edu/uscode/text/11