Buying Intellectual Property from the Crown

There may be circumstances when IP, such as a trademark, patent or registered design, owned by a third party could be useful to your business.  Since IP is a tangible right, it can be bought and sold, and it can also be licensed.  Therefore, you may consider approaching the owner of the IP to discuss purchase or licence. 

Also, consider the likely very stressful business of dissolving a company.  It can be easy to forget to transfer the IP out of a business before it is finally wound-up.

So what happens to IP in England and Wales if a company is dissolved without transferring the IP first?

If a company is dissolved in England and Wales any remaining assets, including the IP, become the property of the Crown.  The Bona Vacantia Division (BVD) of the Government Legal Department deals with intellectual property previously owned by a dissolved company. 

Whilst you cannot licence IP owned by the Crown, you can purchase it, but the BVD will only sell the IP without title guarantee and will provide no warranties. Thus, if you purchase IP from the Crown, it is possible that they may not have the legal right to sell the rights, for example, if the rights were previously sold before the company was dissolved but the sale was not recorded.  In addition, the Crown will provide no assurances that there are no past disputes relevant to the IP that may become relevant to the purchaser.  As you might expect, no goodwill is transferred with the IP.

Purchase from the BVD is not automatic.  The BVD will carry out various investigations before agreeing to sell the IP, including checking the ownership of the IP at the time of dissolution of the company and considering the market value of the IP.   They will only sell for the market value, subject to a minimum price of £1,000 for each trademark, design, copyright work, patent or other intellectual property right. 

Furthermore, the BVD will not necessarily sell the IP to you even if you apply to purchase.  They may choose to sell to another party, choose to retain it or disclaim it, effectively giving up the Crown’s interest.

Before selling, the BVD will also consider whether the company can be restored following dissolution.  In the event that the company is restored, the ownership of the IP will automatically revert to the company.  If you are the company owner that unintentionally gave away your IP, you may have to reinstate your company to obtain the IP before dissolving the company again.

Both processes can be quite complicated, but if you are looking to apply to purchase IP from the Crown there are a number of actions that you will need to take, some at the instruction of the BVD. 

Since a company can take some time to become finally dissolved, in England and Wales it is always worth checking the status on Companies House before applying to the BVD.  It may be preferable to try to buy the IP from the company if they are still being wound up.

IP will sit with the Crown until expiry unless purchased by a party or disclaimed by the crown.

For trade marks, it may be cheaper and easier to simply a file new trade mark application.  In the UK, the Examiner cannot refuse an application on relative grounds, so the prior registration will not automatically block a later filed application.  Although the prior registration will be cited and the owner notified.  Of course, if the filing date of the prior registration is important to you, this option is unlikely to be suitable.  Furthermore, this could be quite a risky option, since the existing registration will remain in force until expiry and could be purchased from the Crown by a third party until that point.  Furthermore, residual rights may still be infringed.

Finally, the BVD will not deal in foreign assets.  If a UK company has assets in the UK and outside the UK, it is only possible to buy the UK IP from the Crown. 

If you think this could be of interest to your business, our attorney’s at Mathisen & Macara LLP are happy to discuss the best course of action for you.