| Abstract: |
A bankrupt debtor’s ability to escape unprofitable contracts, enshrined in
Section 365 of the American Bankruptcy Code, is considered central to a
successful reorganisation within Chapter 11. The ambit of this power and the
consequence of its application has been the subject of unceasing legal and
business controversy. Intellectual property licenses assumed the forefront of
this controversy in 1985 when the Court of Appeals for the Fourth Circuit held
that Section 365 includes a unilateral power to rescind an Intellectual
Property License. Congress reacted to the Court’s decision by amending Section
365 and legislating specific protections for Intellectual Property Licensees.
This paper explores the American jurisprudence on the treatment of
intellectual property licenses during bankruptcy and examines them within the
insolvency regimes of the United Kingdom and India. The study reveals an
important legal deficiency: neither jurisdiction incorporates any explicit
protections for Intellectual Property Licenses during bankruptcy. Further, we
find no substantive provisions that deal with the treatment of ongoing
contracts during Corporate Insolvency Resolution Proceedings in India and
Administration in the UK. For India, this raises an important issue relating
to the desirability of a resolution professional’s ability to interfere with
pre-petition IP licensing agreements. The authors underline the importance of
such interference and suggest amendments to the Indian insolvency regime to
deal with intellectual property licenses during bankruptcy. |