Research Handbooks in Intellectual Property series
Edited by Jacques de Werra
Chapter 12: Intellectual property licensing agreements and bankruptcy
A bankruptcy as well as certain forced rehabilitation or reorganization proceedings extend potentially to all of the property rights, assets and liabilities of the bankrupt or distressed debtor. A debtor’s intellectual property rights as well as licenses granted or obtained by a debtor commonly fall into the debtor’s estate and form part of it.1 Licenses in particular can be affected in their stability or effectiveness and might be subject to certain modifications or interruptions in the course of the bankruptcy proceeding, or might just be terminated in light of or as a result of the bankruptcy. Issues and questions regarding the treatment and further fate of license agreements arise both for the administrator (sometimes also designated as trustee or liquidator) of the bankrupt estate and for the third party being bound by a contract with the bankrupt debtor, and this both in case of a bankruptcy of a licensor as well as in case of a bankruptcy of a licensee. The treatment of license agreements in bankruptcy, the possible modifications to such agreements as a result of a bankruptcy, and in particular the question of whether and how such agreements will or could survive bankruptcy is a point of crucial interest first of all for the non-bankrupt party. Rights obtained under a license agreement often are of high importance to commercial parties. This is true in particular if the non-bankrupt party made upfront investments under a long term perspective and relied thereby on the license being upheld and stable over its projected term.
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