Jeremy Grushcow at The Cross-Border Biotech Blog breaks down how the recent amendments to Canada’s insolvency legislation pertain to intellectual property licenses. He writes that unlike in the U.S., where Section 365 (n) of the bankruptcy code protects licensees in the event that that licensor becomes insolvent, Canadian law has not offered such protection in the past. This has historically forced licensors to establish IP holding companies as separate, bankruptcy-remote structures. Gruschow writes that under the Companies’ Creditors Arrangement Act or Bankrupty and Insolvency Act proposals, “even if an intellectual property license has been successfully disclaimed by an insolvent licensor, the licensee’s right to use, or its ability to enforce a right of exclusive use of, the licensed intellectual property is not affected for the duration of the license agreement (which includes any rights of renewal).” He also offers some cautionary notes regarding the amendments’ terminology.
The Ins and Outs of Insolvency
Feb 12, 2010