What Happens to Intellectual Property if a Company is Dissolved?

As the name suggests, Intellectual Property (IP) is a property right, which means it can be bought and sold.  For the owners it is a tangible asset that can be disposed of like their product inventory, manufacturing machinery or buildings, for example.

Often when a company is struggling they may sell off assets in an attempt to stay afloat and secure financial income, and these assets may include some or all of their IP.  If a liquidator is brought in to wind up a company, the liquidator may try to sell the IP.  However, many companies are simply closed down without involvement of a liquidator.  So, what happens to IP that is not sold before a company dissolves?  Who owns it if the company no longer exists?  It may be that such IP could be useful to you, can you buy it?

All interesting questions, which we shall answer below.

In short, 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.

It is possible to purchase IP from the BVD, but they sell 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, copyright, patent of other intellectual property right.  Furthermore, the BVD will not necessarily sell the IP to a specific party applying to purchase the IP.  They may sell to another party, choose to retains it, or disclaim it, effectively giving up the Crown’s interest.

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.

The process can be quite complicated and there are a number of actions that the party applying to purchase the IP will need to take, some at the instruction of the BVD.  We at Mathisen & Macara LLP would be happy to assist you with this process.  Please contact us if you require any further information or to discuss a specific matter.