Bankruptcy risks for intellectual property licensing in Canada
The recent economic turmoil has brought to the forefront concerns by licensees as to what happens to their rights to licensed intellectual property upon the bankruptcy of a licensor. Unfortunately, under Canadian law, the answer to that question is not clear.
Background
In Canada, it is generally accepted that a bankruptcy trustee has the right to disclaim certain types of contracts, in order to promote a viable restructuring of a bankrupt business. However, it is not clear whether an IP license agreement can be disclaimed as an executory contract (which are contracts with ongoing obligations on both sides) by a bankrupt licensor's trustee in bankruptcy.
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