By Richard Stobbe
What happens to a license for seismic data when the licensee suffers a bankruptcy event?
In Part 1, we looked at a case of bankruptcy of the IP owner.
However, what about the case where the licensee is bankrupt? In the case of seismic, we’re talking about the bankruptcy of the company that is licensed to use the seismic data. Most seismic data agreements are licenses to use a certain dataset subject to certain restrictions. Remember, licences are simply contractual rights. A trustee or receiver of a bankrupt licensee is not bound by the contracts of the bankrupt company, nor is the trustee or receiver personally liable for the performance of those contracts.
The only limitation is that a trustee cannot disclaim or cancel a contract that has granted a property right. However, a seismic data license agreement does not grant a property right; it does not transfer a property interest in the data. It’s merely a contractual right to use. Bankruptcy trustees have the ability to disclaim these license agreements.
Can a trustee transfer the license to a new owner? If the seismic data license is not otherwise terminated on bankruptcy of the licensee, and depending on the assignment provisions within that license agreement, then it may be possible for the trustee to transfer the license to a new licensee. Transfer fees are often payable under the terms of the license. Assuming transfer is permitted, the transfer is not a transfer of ownership of the underlying dataset, but a transfer of the license agreement which grants a right to use that dataset.
The underlying seismic data is copyright-protected data that is owned by a particular owner. Even if a copy of that dataset is “sold” to a new owner in the course of a bankruptcy sale, it does not result in a transfer of ownership of the copyright in the seismic data, but rather merely a transfer of the license agreement to use that data subject to certain restrictions and conditions.
A purchaser who acquires a seismic data license as part of a bankruptcy sale is merely acquiring a limited right to use, not an unrestricted ownership interest in the data. The purchaser is stepping into the shoes of the bankrupt licensee and can only acquire the scope of rights enjoyed by the original licensee – neither more nor less. Any use of that data by the new licensee outside the scope of those rights would be a breach of the license agreement, and may constitute copyright infringement.
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