Clarity on IP Licenses and Bankruptcy

By Richard Stobbe

As we wrote about a year ago (See: What happens to IP on bankruptcy? ), we have been anticipating amendments to the Bankruptcy and Insolvency Act (BIA) and Companies’ Creditors Arrangement Act (CCAA) relating to IP licenses in cases where the IP licensor becomes insolvent. We now know that these changes will come into force November 1, 2019.

When it becomes law, Bill C-86 will enact changes to Canadian bankruptcy laws to clarify that intellectual property users can preserve their usage rights, even if:

  • intellectual property rights are sold or disposed of in the course of a bankruptcy or insolvency proceeding, or
  • if the trustee or receiver seeks to disclaim or cancel the license agreement relating to IP rights.

If the bankrupt company is an owner of IP, that owner has licensed the IP to a user or licensee, and the intellectual property is included in a sale or disposition by the trustee, the changes in Bill C-86 make it clear that the sale or disposition does not affect the licensee’s right to continue to use the IP during the term of the agreement. This is conditional on the licensee continuing to perform its obligations under the agreement in relation to the use of the intellectual property.

For more background, see:

 

 

Calgary 07:00 MST

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