The perils of IP acquisition in the face of company dissolution

I read this article today, about a London brewery which has gone into administration, but who have taken the necessary steps to preserve ownership of their brand. It really rang a bell with me, because it touches on an issue I've come across many times. 

I have a great deal of experience in managing recordal projects worldwide, ensuring that changes in trade mark ownership are updated correctly on the respective registers internationally - this step is important, to make sure that the new owner is able to enforce their rights in the acquired trade mark. 

In many cases, these ownership transfers involve the rights of companies which are in administration, or which have been, or are about to be struck off, and the timing of these changes are key to avoiding the loss of legal ownership of any trade marks or other IP rights. 

Any agreement transferring ownership of IP rights must be signed by both parties (or their Administrators), and often, in order to record changes of ownership at Registries overseas, Powers of Attorney and other documents are required from both parties - but if one party no longer exists by the time those documents are needed, the change cannot be recorded. If a registered trade mark stands in the name of its old owner on a trade mark register in any country worldwide, its new owner is unlikely to be able to rely upon "their" registration in challenging infringers, in recording their rights with Customs Authorities, or in opposing third party trade mark applications, to name just a few examples. 

Additional problems are likely to arise as a result of non-recordal. Where a country examines new trade mark applications on relative grounds, and the new owner seeks protection for an updated logo or brand variation featuring the already-registered core word mark, for example, the new application is likely to be refused, and there will be no signatory available to provide consent from the registered owner (assuming consent is even accepted by the Registry). Similarly, where a Power of Attorney is required to renew a trade mark registration, there may be no option but to allow those historic rights to lapse.

There is one "get-out" option in the UK, which allows for the acquisition of legal ownership in a registered UK IP right, in that once a company is dissolved, any rights it still held at its point of termination pass to the Crown. It is possible to request permission to purchase these rights from the Bona Vacantia Division of the UK Government Legal Department, but there is no guarantee they will agree to the purchase, the process of doing so can be long and frustrating, and it comes at a cost of at least £1,300+VAT per IP right being purchased. 

It also only applies to UK rights, and very few, if any, countries further afield have the same mechanism available.

The key takeaway is therefore that if you are looking to acquire ownership of rights from a soon to be dissolved company, you should always:

• Conduct full due diligence to ensure that all relevant rights are located and included in the transfer documentation;
• Ensure the transfer agreement itself is executed before the company is dissolved; 
• Ensure that any additional documentation needed to record the transfer of ownership with international Registries is also executed before the company is dissolved; and
• Whilst it is not always possible to do so, here feasible, arrange for recordal applications to be submitted to the Registries as soon as possible and before the liquidation is final, just in case a need should arise for more documents to be signed.

I really enjoy working on projects like this, and juggling the various requirements of different Registries around the world, so if I (or any of my colleagues, of course) can help you navigate this process, feel free to get in touch!