Patent License Protection

[StanChan]

What is the name of your state? CA


I am planning to license some technologies that is patented by a small company that might not survive. Could a large company buy the small company or its patents through the bankruptcy court and void the license agreement. Please let me know what the risks are and how to prevent them. Thanks!

 

[divgradcurl]

I am planning to license some technologies that is patented by a small company that might not survive. Could a large company buy the small company or its patents through the bankruptcy court and void the license agreement. Please let me know what the risks are and how to prevent them. Thanks!

This is actually a more complicated question than it might seem on the surface. As a general rule, when one company buys another company, it buys the assets of the company burdened by whatever liens or contractual obligations exist on the assets. However, when a company buys another company's assets at a "fire sale" (part of the bankruptcy proceedings, or winding-up proceedings), to be honest, I am not certain as to what happens to contractual liens on IP.

Before signing anything, talk to a lawyer with some corporate bankruptcy experience to get an opinion. It may be that bankruptcy does not impact licenses such as you are contemplating, and therefore your concerns might be moot. But to protect yourself, talk to a lawyer, and find out for sure.