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Who owns IP if the company goes out of business?

On Behalf of | May 21, 2023 | Intellectual Property

Intellectual property (IP) is a valuable asset for any business. It includes trademarks, patents and trade secrets. When a company goes out of business, questions can arise about who owns its intellectual property.

The answer is, “It depends.”

Several scenarios can play out

Despite the closure of a business, its IP may still be valuable to other companies or individuals.

If the company goes out of business due to bankruptcy, the company’s intellectual property may become the property of the bankruptcy estate. The estate will then sell or transfer the IP to pay off the company’s creditors.

It may be that the IP has already been assigned to a third party, such as a licensor or investor. In that situation, the third party will own the IP. The terms of the assignment agreement will determine who owns the intellectual property. If the company has licensed its IP to third parties, the licenses will continue to exist even if the company goes out of business. The third-party licensees will retain their rights to use the licensed IP, subject to the terms of the license agreement.

Suppose a company goes out of business and does not transfer its IP to someone else. Under these circumstances, it may become part of the public domain. This means that anyone can use or reproduce the IP without permission or payment.

The fate of intellectual property after a company goes out of business depends on several factors. If you are concerned about the ownership of your intellectual property, it’s essential to seek legal guidance accordingly.