What Protection is afforded a Licensor or a Licensee with regard to Perfected Property Rights in Bankruptcy?

Abstract

The vast and complex field of technological discoveries and inventions require more and more protection mainly towards the rights of their owners. IPRs such as a patent, trademark or copyright, play a major role in the global development of economics and high finance. The primary reason for my paper concerns the question and thereby the title, “What Protection is afforded a Licensor or a Licensee with regard to Perfected Property Rights in Bankruptcy?”

The paper is divided into five separate parts. The first part describes the problem and purpose as I see it. It also looks at Licence Agreements, Perfected Property Rights, and to what extent a Bankruptcy Estate can claim an IPR, and whether or not an IPR and the licence right to an IPR can be transferred.

The second part is the heart of the paper where I discuss the Perfected Property Rights of a Licensee in the bankruptcy estate of a Licensor. I have highlighted the perfected property rights of a licensee primarily concerning patents. I have discussed the rights and protection available to a licensee against a new owner. I arrived at the fact that there is two ways of dealing with the problems. Firstly there is the traditional principle known in Sweden as “Loss of right to use through acquisition”, i.e., a right to the use of a movable property will be made null and void as a new owner takes president over the right to use. Secondly, there is the principle of priority or agreement. This principle of priority means that the first legal act has precedent. To emphasise this principle of priority I have made analogies within the area of the pledging of a patent. I have also compared the theories of whether or not the traditional principle “Loss of right to use through acquisition” or the principle of priority should apply. This was for me, the most important and actual question, and I see it as a problem in Sweden that needs attention. As there is no available legislation in Sweden I compared our way of dealing with these problems to the legislative way of dealing with the same problems in the USA. As the technical development emerged in the US it follows that they have attained the most experience concerning legal questions in the field of IPRs.

The third part concerns the perfected property rights of a licensor in a bankruptcy of a licensee and I have even described perfected property rights with regard to the purchase of IPRs. I have made an analogy with the Swedish Sales Act. I have taken part of the conclusions available from literature and the ideas and theories concerning perfected property rights with regard to the right of publishing, and that it should be considered valid also for patent licence agreements. I also found it relevant to discuss the Swedish case NJA 1966 p241 concerning the right of publishing within a bankruptcy estate and the sale of the stock in hand.

The fourth part looks at the US Bankruptcy Act, focusing on the New Intellectual Property Bankruptcy Protection Act. The US has enacted legislation on behalf of IPR licensing to protect a licensee so that a licensee can continue to use a licence after the bankruptcy of a licensor. The fifth and final part is the analysis, where I have brought together Swedish judicial preparatory works, US legislation, Swedish principles and discussions. The result will hopefully support my theory that we have a problem in this area in Sweden today that need to be solved. I believe that we should follow the example of USA and legislate.