Intellectual property rights comprise some of the most important assets of the world’s most powerful companies, intrinsic to profitability and market dominance. Recently, international delegates met in Geneva for the World Trade Organisation’s biennial review of China’s trade policies, where the protection of intellectual property rights was firmly on the agenda. China detailed the legislative, administrative and judicial steps it has taken to address alleged inadequate protection and enforcement of IP rights whilst, at the same time, the US announced tariffs on an additional US$2 billion of Chinese imports. Businesses and governments take IP rights very seriously.
The importance of IP rights comes sharply into focus when financial distress is on the horizon. Legislation and contractual provisions will determine whether IP rights continue to be enjoyed, unaffected by insolvency, enabling businesses to trade through to recovery or whether, by reason of the corporate failure, they can be withdrawn, suddenly closing the curtains on any hope of rescue.
In November 2017, we prepared a special report for publication by INSOL International, “The Protection of Intellectual Property Rights in Insolvency Proceedings”, demonstrating, from a review of 12 jurisdictions around the world, that only three have detailed insolvency provisions dealing specifically with IP rights. Our focus on IP continues in this edition of Global Insight. We note that despite the US being among the few jurisdictions with express provisions - Congress having amended the Bankruptcy Code meaningfully to protect a licensee of IP rights on insolvency - it remains uncertain whether the protection extends to trademark licenses. Rick and Oksana Koltko Rosaluk consider the potential importance of a forthcoming Supreme Court decision in this area.
In Australia, since the beginning of this month, and as part of wider legislative provisions restricting the enforcement of all contractual rights on insolvency, financially distressed companies have gained new rights to continue to enjoy their IP rights. Amelia Kelly and Andrew Schriiffer demystify new restrictions on so-called ipso facto clauses. And finally, we keep the effect of bankruptcy on contractual provisions sharply in our focus as we move back to the US, where David Riley and Eric Goldberg set out reasons why the US Supreme Court should reverse a decision of the Texas Supreme Court and thereby restore stakeholders’ confidence that bankruptcy courts will not permit executory contracts to be assumed or assigned unless fully disclosed.
Whilst Bill Gates is reported to have said that IP has the shelf life of a banana, the world’s legal and regulatory bodies are, nevertheless, progressively realizing the importance of preserving its existence to fuel enterprise recovery. We hope you enjoy reading our colleagues’ articles, we thank Rachel Albanese for her work as this edition’s guest editor, and we invite you to contact the authors or your usual DLA Piper partner if you’d to explore any of the themes we have raised.