Patents/IP & Bankruptcy

If a company owns quite a few patents and subsequently goes bankrupt what happens to them, ie if there is no transfer of IP (?) or haven’t been sold - if that makes sense ! Does it become a free for all in terms of applying it ? I presume it would be different for the UK/US markets…


I doubt that a patent expires just because it’s not in use.

Patents do expire (admittedly after a time period, depending on the country), that isn’t what I am querying…

What I need to know is what happens within the time period if a company no longer exists to defend its IP. I realise the patent won’t be void (or will it ?), but what happens for example… if Apple went bankrupt and ‘Apple’ as a company was dissolved, but patents that are filed in Apple’s name have not been relinquished - what would happen if a product violates the patent of a non-existent company ?

(I know it seems complicated, but I presume this scenario would not be uncommon)

I always thought that when a company goes under and is “dissolved,” it’s assets, including patents, are sold / auctioned off to pay debtors and cover costs, etc.?

try a bit of google-fu. found quite a lot of info-

some here-

When an owner of intellectual property files a bankruptcy petition, an estate is created that includes all patents and patent applications of the debtor. Prior to bankruptcy, the owner (or debtor) may have ceased maintaining patents and prosecuting patent applications, and may have completely ignored deadlines of patents and patent applications, thus abandoning valuable assets. Counsel employed by a Chapter 11 debtor-in-possession (DIP), by a Chapter 11 trustee, or by a Chapter 7 trustee in a case involving a patent portfolio can take certain steps outlined below to protect the portfolio and maximize its value. A bankruptcy case that includes patents and patent applications requires skilled patent and bankruptcy counsel.Specific technical knowledge in the subject matter of the patents can be very useful for patent counsel, and having a doctorate in the relevant technical area is ideal.


I worked with an Austin company that went into something like bankruptcy - it was another kind of status on the SEC, an 8-k I think. They were able to hold onto some patents that they eventually auctioned off for funds to pay their vendors

Patents are only issued to people but also include an assignee, usually the named inventor’s employer. Legally, a patent is a contract between you the inventor and your government.

As quote above indicates, the rights of the assignee may not always be straighforward in case of business bankruptcy. For example, a company assigned rights to a patent may be licencing it to one or more other companies, who themselves may be reselling it to others as part of original licence. This situation becomes complex in bankruptcy especially when external interests enter such as pharmaceutical manufacturing or software usage rights. In the early 90’s this situation existed with optical media: numerous international patent infringement claims, licencing, reselling, bankruptcies with onging manufacturing and sales.

Many thanks to all the replies. It seems the above scenario is more complex than envisaged and may just come down to wrangling with lawyers rather than providing a ‘route’ for which to follow in this situation ! But interesting nevertheless - no wonder patent lawyers seem to charge lots of money…

In the SoCal skateboard, sports industry, where bankruptcy is a common business practice, the IP, trademarks, patents, etc are held by a third company with no assets or liabilities and licensed to the “main” company. In the event of a bankruptcy, there are no trademarks held hostage. The owner sets up a new company, re-licenses the trademarks from the “third party” (i.e. himself) and starts up business again.

I’m not sure about larger or public companies, but the idea of separation of the IP ownership seems like a wise strategy.

NXAKT is right, best practise is for a separate company to hold the Intellectual Property so if the trading company gets into trouble its easier (in theory) to tidying things up. In practise, its still going to be just as complicated because the trading company will be part of a “group” of companies.

It’s all based on who the patents are assigned to. The assignee has the right to do with the IP as they wish and it certainly does not become a free for all just beacause a company goes bankrupt. The patents are property and can be sold and transferred as such. They can be sold to pay off debt if they wish.

Only when the time perid/term of a patent expires does thae IP become public domain and that can take years and years by which time the invention is oftwn somewhat obsolete. So yes, inventions can stay in a state of limbo if nothing is done with it and the assignee doesn’t do anything with it.

Two weeks ago I received a patent for a project I worked on six years ago. The company went out business four years ago so I guess the venture capital company kept the IP ball rolling.

If the owner of a patent fails to protect it, i.e people infringe upon the patent and the owners do nothing… then yes with enough times were the patent is not defended then it will become defunk.

Chevis W