Insolvency Law And Intellectual Property Rights: Enforcement Complexities In Corporate Bankruptcy
- IJLLR Journal
- Mar 19
- 2 min read
Aditi Yadav, LL.M. (IPR), National Law University Delhi
ABSTRACT
The union of insolvency law and intellectual property (IP) rights marks one of the significant legal issues arising in the modern economy where IP plays a crucial role. As companies increasingly transition their product offerings from physical goods to intangible assets as shown by the landmark 110-375 Indian patent filings in 2024-25 effectively handling such assets in a bankruptcy situation is essential to the maximization of the estate value. This article attempts to unravel the intricacies involved in exercising IP rights amidst the provisions laid down by the Insolvency and Bankruptcy Code (IBC) 2016. Although IP represents a significant value addition to a financially distressed company, the manner of its disposition in the circle of Corporate Insolvency Resolution Process (CIRP) is still a big challenge. There is a major disagreement between the efforts of the liquidator towards the revival or sale of corporate assets and the invention rights preservation. In contrast to the United States where Section 365 of its Bankruptcy Code offers strong protections to the IP licensees, Indian legislation has no definite legal provisions for the licensees. The study looks into the role of the Resolution Professional in carrying out due diligence, differentiating among registered and unregistered rights, as well as interpreting the “moratorium” that prohibits asset transfers. Besides these points a power to refuse “burdensome property” in liquidation is dissected and the constraints under Section 20(2)(b) in altering pre-petition agreements are explained. The final takeaway from the article is that changes to the law are required if we want Indian insolvency law to be on par with international standards for example those put forward by UNCITRAL, and that these changes would provide legal certainty for stakeholders in cross, border situations.
Keywords: Corporate Insolvency Resolution Process (CIRP), Intellectual Property (IP) Licensees, Executory IP Contracts, Section 365 (US Bankruptcy Code)
