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ARTICLE · 26 MAY 2010

Acquiring Intellectual Property from a Bankrupt Licensor

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This article explores the opportunities and pitfalls attendant in a purchase of intellectual property through a Section 363 bankruptcy asset sale.

United StatesIntellectual Property
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author>Article by Samuel W. Apicelli and Edward Graeme Crothall

Originally published in The Legal Intelligencer

This article explores the opportunities and pitfalls attendant in a purchase of intellectual property through a Section 363 bankruptcy asset sale. As a 363(f) sale is completed "free and clear" of all pre-bankruptcy interests, the negotiations of a buyer of IP assets focus more on the schedule of contracts to be assigned to the buyer and of those to be rejected by the debtor, rather than the language of the representations and warranties.

The fate of an improvident buyer in a 3rd U.S. Circuit Court of Appeals case, In re Cellnet Systems Inc., illustrates some of the hazards to be navigated in an IP asset purchase agreement with a debtor-licensor.

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