In Short
When a company enters liquidation, its trade marks become assets that the liquidator can sell or transfer to pay creditors. The liquidator must follow proper procedures to transfer trade mark ownership, including updating the register with the relevant intellectual property office. Business owners should understand that trade marks do not automatically transfer and require formal assignment documentation.
Tips for Businesses
If purchasing a trade mark from a company in liquidation, verify the liquidator’s authority and conduct due diligence. Complete formal assignment documentation and register the transfer with the intellectual property office promptly to secure your ownership rights.
Summary
This article explains trade mark transfers during company liquidation for UK business owners. LegalVision is a commercial law firm that specialises in advising clients on intellectual property matters.
When a company enters liquidation, its trade marks become part of the assets that must be dealt with by the liquidator. Understanding what happens to these valuable intellectual property rights is crucial for business owners, creditors, and potential purchasers. This article explores trade mark transfers during company liquidation, covering liquidator sales, bona vacantia, and how to protect your IP.
Liquidation Trade Mark Transfer Rules
When a company enters liquidation, all its assets, including trade marks, vest in the liquidator, whose primary duty is to realise these assets to pay creditors. Trade marks can be sold or transferred like any other asset. The transfer must be recorded at the Intellectual Property Office (IPO) to be effective against third parties. Without registration of the assignment, the new owner cannot enforce the trade mark against infringers. The IPO charges £50 to record assignments.
Crown Ownership After Liquidation
If the liquidator cannot find a buyer for registered trade marks, they may pass to the Crown as bona vacantia when the company dissolves. The Crown, through the Treasury Solicitor, becomes the owner of these trade marks. However, the Crown does not actively manage or enforce these rights in most cases. Interested parties can apply to the Treasury Solicitor to purchase trade marks that have passed as bona vacantia. This involves making an offer and demonstrating a legitimate interest in acquiring the mark. The Crown will typically consider reasonable offers, particularly if the applicant intends to use the trade mark commercially, although there is a minimum purchase price (currently £1,000).
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Alternative Trade Mark Registration Options
For those interested in acquiring trade marks from companies in liquidation, several options exist:
- Purchase from the Liquidator: Contact the liquidator directly to express interest and negotiate a purchase price.
- Purchase from the Crown: If the company has been dissolved and trade marks have passed as bona vacantia, approach the Treasury Solicitor with an offer.
- Wait for the trade mark to expire and then apply to re-register it.
- Opposition or Cancellation: If someone else registers the trade mark but is not using it, you may be able to apply for revocation for non-use after five years.
Preventing Future Liquidation Issues
Business owners can take steps to protect their trade marks from being lost in liquidation:
- Separate ownership structures: Consider holding valuable trade marks in a separate company or holding company structure. This ring-fences intellectual property from the trading company’s liabilities. The holding company can then license the trade marks to the operating company. If the operating company fails, the intellectual property remains protected.
- Licensing arrangements: If trade marks are held separately, formalise licensing arrangements with written agreements. This clarifies ownership and ensures that if the trading company fails, the licence can be terminated and the trade marks licensed to a new entity or sold separately.
- Regular renewals: Ensure trade marks are renewed on time every 10 years. Set reminders well in advance of renewal dates. There is a six-month grace period (with additional fees) for late renewal.
- Proper registration: Register your trade marks formally with the IPO rather than relying solely on unregistered rights. Registered trade marks are property rights that survive liquidation and can be transferred. Unregistered rights may be lost more easily.
- Monitor company finances: Early intervention when financial difficulties arise may allow you to restructure or sell the business as a going concern, preserving trade mark value.
- Document ownership: Keep clear records of trade mark ownership, assignments, and licences. This makes it easier for liquidators to identify assets and for purchasers to conduct due diligence.
LegalVision’s Trade Mark Essentials Guide provides valuable information for any business looking to register or enforce a trade mark.
Key Takeaways
When a company enters liquidation, its trade marks become assets that the liquidator can sell to pay creditors. Any transfer must be recorded at the IPO to be effective, with a £50 fee. If the liquidator cannot find a buyer, registered trade marks may pass to the Crown as bona vacantia, and interested parties can purchase them from the Treasury Solicitor. Unregistered trade marks are more vulnerable and may be lost when trading ceases. Business owners can protect their intellectual property by holding trade marks in separate company structures and licensing them to operating companies, ensuring that if financial difficulties arise, the trade marks remain protected. Formal registration with the IPO, timely renewals every 10 years, and clear documentation of ownership all help safeguard trade marks from being lost in liquidation proceedings.
If you need assistance in navigating trade mark transfers during liquidation, LegalVision provides ongoing legal support for all businesses through our fixed-fee legal membership. Our experienced intellectual property lawyers help businesses across industries manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Your trade mark becomes an asset of the liquidation estate. The liquidator will attempt to sell it to pay creditors. If it cannot be sold, a registered trade mark may pass to the Crown as bona vacantia when the company is dissolved.
Yes, you can approach the liquidator and make an offer to purchase the trade mark. However, the liquidator must act in creditors’ interests and may seek competitive bids to ensure they obtain the best price. You will likely need to pay fair market value.
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