The Asset Sales Committee had a very lively session at the 15th Annual Winter Leadership Conference held on Dec. 4-6, 2003 in beautiful La Quinta, Calif. The first half of the session was devoted to a discussion of intellectual property issues in bankruptcy asset sales. The discussion was led by committee co-chairs S. David Peress (The Ozer Group; Needham, Mass.) and John G. Loughnane (Gadsby Hannah LLP; Boston, Mass.). David brought his experience from both private practice and as managing director and general counsel for Ozer while John lent his experience from a decade of bankruptcy practice and his recently concluded two year in-house
experience with a large international publicly traded software company.
The panel discussed three broad categories of IP: proprietary IP sold or licensed by the debtor in its normal course of business (“Commercialized IP”); outward facing identifying IP owned by a debtor such as trade names and logos (“Brand IP”); and proprietary and confidential information maintained by a debtor about its business processes or its relations with third parties (“Trade Secret IP”). Written materials prepared by John centered on the legal framework governing IP contracts in bankruptcy and contained drafting tips from both a licensor and licensee perspective. Discussion at the meeting centered on the importance of not overlooking hidden value that may exist in an estate stemming from a debtor’s Brand IP and Trade Secret IP assets and how best to unearth such value. As an example, David discussed his success in realizing value for the trade name “The Wiz” by selling it to another New York area retailer. Reference was made to firms such as IP Recovery of Wellesley, Mass. that can be utilized to uncover and help monetize trade secret and brand IP assets.
The panel concluded by noting the biggest issues in IP asset sales. The key issues in bankruptcy sales of commercialized IP are ownership, confidentiality, key employee retention, as well as contract assignment. For both brand IP and trade secret IP, the issues are identifying the asset, assessing the value, marketing and contract assignment.