September 2007
ANNEX 1
INTELLECTUAL PROPERTY AND OTHER INTANGIBLE ASSETS (formerly Chapter 31.10 Part 2)
1. Intellectual property – general
Intellectual property is the legal rights associated with creations of the mind such as works of art, inventions, designs or business logos. Formal systems for the protection of the rights associated with these creations has developed over time, these being copyright, design right, patents and trade marks.
2. Copyright General
The purpose of copyright is to give authors of original creative or artistic works rights to control the reproduction, distribution, copying or performance of the work. The types of works that are protected by copyright are defined in the Copyright, Designs & Patents Act 1988 [note 1] and include literary, dramatic, musical and published works. Also covered are sound recordings, films broadcasts and computer programs. Copyright extends to almost anything that can be called ‘a work’.
3. Protection afforded by copyright
Unlike other forms of intellectual property, there is no formal registration procedure for copyright. Copyright is effective from the date that the work is created and, whilst there are accepted procedures for establishing the originality of the work (such as the author posting a copy to him/herself), or depositing a dated copy with a bank or solicitor), the final decision may rest with the courts.An author who is made bankrupt should be informed that any copyrights already in existence form part of the bankruptcy estate and that future copyrights maybe claimed as after acquired property. If the author already has an agreement with a publisher, the publisher should be informed of the bankruptcy order and requested to provide a copy of any agreement.
4. Ownership of copyright
The Copyright, Designs and Patents Act 1988 defines the author of the work to be the first owner [note 2] except in the case where the work is created by an employee during the course of employment when, subject to any agreement to the contrary, the ownership passes to the employer [note 3]. Similar provisions apply to Crown Servants in respect of works created in the course of their duties [note 4].
5. International conventions relating to copyright
There are two main international conventions relating to copyright protection. These are the Berne Convention for the Protection of Literary and Artistic Works, and the Universal Copyright Convention. The United Kingdom (UK) is a member of both conventions and means that copyright protection for works created in the UK is extended to other countries that are members of the convention.
6. Duration of copyright
In the UK the length of time for which copyright protection is afforded is dependant on the nature of the work. Literary, dramatic, musical or artistic works are protected under copyright for 70 years after the death of the author [note 5]. For films the protection lasts for 70 years after the death of the last survivor of the director, author of screenplay or composer of any original soundtrack [note 6]. Sound recordings [note 6] and broadcasts [note 7] are protected for 50 years after the year of release or broadcast and for written works the period is 25 years after publication [note 8].
7. Ascertaining a copyright owner
(Amended February 2013)
As there is no registration process for copyright, it follows that there is no register available to check or verify the holder of the copyright of a work. In order to ascertain the owner of a copyright the official receiver may have to contact a number of different organisations depending on the nature of the work:
8. PRS for Music (formerly The Performing Rights Society)
(Amended February 2013)
PRS for Music is a membership organisation for composers, songwriters and music publishers that collects and distributes money (royalties) for the use of musical compositions and lyrics, on behalf of authors, songwriters, composers and publishers, relating to music that is heard in public. The majority of copyright holders whose music is, or has been, heard in public will be members of the organisation. Their contact details are as follows:
Main contact point for “PRS for Music”:
Address: Copyright House
29-33 Berners St
London W1T 3AB
Switchboard: 020 7580 5544
Fax: 020 7306 4455
http://www.prsformusic.com/Pages/default.htmx
Other contact points for “PRS for Music”:
PRS for Music
Elgar House
41 Streatham High Road
London SW16 1ER
PRS for Music
National Sales Centre
Elwes House
19 Church Walk
Peterborough PE1 2UZ
PRS for Music Ireland
Pembrooke Row
Lower Bagott Street
Dublin 2
PRS for Music Scotland
3 St George's Studios
93-97 St George's Road
Glasgow G3 6JA
9. PPLUK (Phonographic Performance Limited)
(Amended February 2013)
PPLUK is a membership organisation for holders of copyright that licenses the use of recorded music played in public, broadcast on radio, TV or on the internet, and collects royalties relating to recorded music or music videos played in public, on behalf of record companies and performers. It differs from PRS for Music in that it collects royalties relating to the copyright on the recording of the work rather than the copyright of the work itself (for example, the composer would typically be paid by PRS for Music but the singer or musician would be paid by PPLUK). Their contact details are as follows:
General enquiries:
1 Upper James Street
London
W1F 9DE
Tel: 020 7534 1000
e-mail info@ppluk.com
10. PRS for Music (The Mechanical Copyright Protection Society)
(Amended February 2013)
The Mechanical Copyright Protection Society was disbanded in 2009 and was absorbed into PRS for Music (see Annex 1 paragraph 9 above). The mechanical (reproduction) rights and mechanical royalty payments for members are still dealt with by PRS for Music, which collects royalties whenever a member’s music is downloaded or listened to online, or recorded onto an audio-visual or other physical product.
11. PPLUK (Video Performance Limited)
(Amended February 2013)
Video Performance Limited was absorbed into PPLUK as a membership organisation for holders of copyright on music videos. PPLUK collects royalties relating to the broadcast, public performance, copying and duplication of music videos and passes the royalties on to the copyright holders. Their contact details are as follows:General enquiries:
1 Upper James Street
London
W1F 9DE
Tel: 020 7534 1000
e-mail info@ppluk.com
12. The Authors’ Licensing and Collecting Society
The Authors’ Licensing Collecting Society collects royalties due to writers for what is known as “secondary rights”, this is royalties due for the photocopying, broadcasting or recording of written works such as books, published articles or scripts. Unusually, in the field of copyright, there is no organisation with responsibility for collecting royalties relating to “primary rights”, that is the royalties on the initial sale of the book. This is usually administered under a commercial arrangement between the writer, publisher and author. The contact details of The Authors’ Licensing Collecting Society are as follows:
Authors’ Licensing and Collecting Society
The Writers House
13 Haydon Street
London
EC3N 1DB
Tel: 0207 264 5700
13. Design and Artists Copyright Society
The Design and Artists Copyright Society collects royalties relating to the copyright on works of art such as pictures, paintings, drawings, sculptures, photographs and ceramics where the work is reproduced or used in, for example, a television programme or book. The Design Artists Copyright Society also collect royalties relating to what is known as “Artist’s Resale Right” [note 9]. This is due on the re-sale of copyrighted works of art after the initial sale by the artist. Their contact details are as follows:
33 Great Sutton Street
London
EC1V 0DX
Tel: 020 7336 8811
14. Public Lending Right
The Public Lending Right Act 1979 established a system whereby authors, illustrators, translators, adaptors, ghostwriters and editors are paid a fee in relation to the number of times their book is borrowed from a public library. At the start of the “lending year” (July-June) the Government sets aside a sum of money which is to be used for this purpose and, during the year, a sample is taken of books borrowed from libraries to allow a calculation to be made for the “pence per loan” to be paid to the author. The maximum any one author may receive is currently £6,600 in any one year. The right to receive these monies can be assigned by the author to another party, for example a publisher. There are rules regarding the eligibility of books and authors for registration to the scheme and these can be viewed at the scheme website (www.plr.uk.com). Their contact details are as follows:
Public Lending Right
Richard House
Sorbonne Close
Stockton-on-Tees
TS17 6DA
Tel: 01642 604699
Fax: 01642 615641
15. Copyright as an asset
Copyright is property and therefore the copyright relating to any work created by an insolvent prior to the making of an insolvency order would vest in the liquidation estate or trustee of the bankruptcy estate [notes 10 and 11] subject to the exclusions relating to the creation of the works outlined in Annex 1 paragraph 4. Conversely, a company in liquidation or a bankrupt may hold the benefit of a copyright on the basis of these same exceptions [note 12]. The copyright relating to a work created by a person whilst in bankruptcy may be claimed by the trustee as after-acquired property [note 13]. Again, this is subject to the exceptions relating to works created in the course of employment.
Where the copyright of an insolvent’s work (or a copyright assigned to a company in liquidation or a bankrupt ) has vested in the liquidation estate or trustee , the copyright may be sold with the assignment being signed by the liquidator or trustee of the bankruptcy estate as assignor (see also Annex 1 paragraph 16). If the insolvent owes outstanding royalties to the author, the liquidator or trustee may still, subject to the terms of the original assignment, sell the copyright with the outstanding royalties being a provable debt in the insolvency.
In addition, royalties may be paid by a publisher or other organisation (see Annex 1 paragraphs 17 to 18) to the owner of a copyright in exchange for exploiting that copyright. The royalties may be payable under the terms of a licence, with the owner retaining the copyright. In circumstances where a bankruptcy or winding up order is made against the owner of a copyright, the official receiver should make contact with the publisher or other organisation paying the royalties and ask them to pay any royalties due to the liquidator/trustee.
It may be the case that a bankrupt is in receipt of royalties as a condition of the sale of a copyright. In this case the royalties cannot be claimed as an asset as the copyright does not vest in the estate. Instead, the royalties should be treated as income and can be claimed under an income payments agreement or an income payments order (see Chapter 31.7).
Royalties are treated as income for corporation or income tax purposes.
16. Assignment of copyright
As with any other asset copyright can be freely transferred, either as a whole or for a particular field (for example, the film rights to a novel). Copyright is transmissible by assignment, testamentary disposition (under a will) or by operation of law as personal property [note 14]. An assignment must be made in writing and signed by, or on behalf of, the assignor [note 15].
A copyright owner who does not wish to transfer the copyright outright may instead choose to licence its use [note 16], that is, grant someone else the right to do acts which would normally infringe copyright. There is no requirement for the licence to be in writing.
17. Licensing of copyright
The copyright, or part thereof, relating to a work may be subject to a licence granting permission to the licensee to carry out certain acts (for example, to produce copies or publicly perform) a work subject to copyright. The licence may be exclusive in that it allows only the licensee to carry out those certain acts (for example, the right to produce the DVD of a cinema released film) or non-exclusive in that a number of parties have similar rights to carry out the act (for example, a number of radio stations with a right to play the same song).
There is no requirement for the licence to be in writing, but an exclusive licensee will have no right to sue infringers unless the licence is in writing and signed by the copyright owner.
18. Sale of a copyright licence
A company in liquidation or a bankrupt may hold a licence in respect of a work subject to copyright. In theory it may be possible to sell the licence as an asset in the insolvency. Often though, the licensee may have been chosen specifically for his/her personal skill or reputation and this may make the licence agreement one of a personal nature, which cannot be transferred or sold.
It has been decided that an author may have a personal contract with a company notwithstanding that the constitution of the company or its directors may change [note 17]. Where an author is to be remunerated either by a share of profits or by royalties, it is usually assumed that a contract is of a personal nature and not assignable. Alternatively, if the author was paid a fixed sum, it is probable that the publisher would have the right to assign the agreement.
In the circumstances where the official receiver wishes to effect the sale of a licence he/she should obtain a copy of the original agreement in order to establish the nature of the licence and whether or not it is realisable. Licenses which are not of a personal nature may be assigned. It is very likely that legal advice of a specialist nature will be required.
19. Disclaimer of copyright
Returns relating to copyright licensing or exploitation are often very low and, obviously, unpublished works will generate no royalties at all. Unless the work is a bestseller the returns are likely to be very low In these circumstances it may be appropriate for the official receiver to consider disclaiming his/her interest in the copyright [note 18] particularly when it is considered that copyright can continue for 70 years after the death of the author and would have to be administered for a long period.As an alternative an unsaleable copyright relating to films (fiction and non-fiction) and television programmes, and particularly any physical film stock, may be offered to the British Film Institute who maintain and preserve an archive of moving images. The contact details are as follows:
http://www.bfi.org.uk/archive-collections
BFI Archive
21 Stephen Street
London
W1T 1LN
Tel: 020 7255 1444
Fax: 020 7436 0165
Registered designs and un-registered design right.
20. Designs – General
A design relates to the outward appearance of a product, rather than to the product itself. Design does not relate to the way a product works – which would normally be subject to a patent.There have been a number of changes to the law as regards the protection of designs and there are now four ways in which a design may be protected in the UK:
a) Registration as a UK design under the Registered Designs Act 1949 as amended by the Copyright, Designs and Registered Designs Act 1988 (see Annex 1 paragraphs 21 to 31).
b) As a UK unregistered design (design right), which is similar to copyright (see Annex 1 paragraph 31).
c) Registration as a European Community registered design at the Office for the Harmonisation of the Internal Market as a result of EC Regulation No 6/2002 (see Annex 1 paragraph 30).
d) As a European Community unregistered design (design right), which is similar to copyright. (see Annex 1 paragraph 30).
There is a certain amount of overlap of the protection afforded by the afore-mentioned methods of protection, and similarities with other forms of intellectual property protection such as copyright and trade marks.
The majority of registered design rights effective in the UK are registered through the Trade Marks and Designs Registration Office (via The Office for the Harmonisation of the Internal Market) in Alicante, Spain, rather than directly with the UK Intellectual Property Office Designs Registry. See Annex 1 Paragraph 30 for contact details for the Trade Marks and Designs Registration Office in Alicante.
21. UK registered design
Registered design is a monopoly right for the outward appearance of an article or a set of articles of manufacture to which the design is applied by any industrial process provided they are novel or original designs.
22. Eligibility for registration of a design
In order for a design to be eligible for registration in the UK it must meet the definition of design set out in the Registered Designs Act 1949 [note 19]. be novel and have individual character [note 20]. Designs which are dictated by technical function [note 21], are contrary to accepted moral standards [note 22], have to be reproduced to exact form and dimensions, are not a visible part of the product or the design is protected (such as a royal emblems, flags or a hallmark), are not able to be registered designs. The person creating the design is considered to be the first proprietor of the design except in cases where the design was created under a commission or by an employee in the course of employment, in which case the commissioner or employer would be the first proprietor [note 23].
23. Protection afforded by a registered design
A registered design gives the designer exclusive right to use the design and any similar design. Use of the product constitutes the making, offering, selling, importing, exporting, stocking or licensing of the design [note 24].
24. Duration of a registered design
The initial protection afforded by a UK registered design is for a period of five years. Thereafter, the registration can be renewed for every five years to a maximum registration period of 25 years. The renewal fees (which are payable to the Intellectual Property Office) can be paid in the three-month period before the due date. If the renewal fee is not paid within six months of the due date then the design registration will lapse and the design will not be protected [note 25].
In these circumstances it is possible to restore the design registration by application to the Intellectual Property Office. It is necessary for the applicant to satisfy the Intellectual Property Office that he/she intended to pay the renewal fee on time. Restoration is not available for designs which were applied for before 1 August 1989 [note 26].
If the Official Receiver is considering making an application to restore a registered design in order to sell it, the Intellectual Property Office should be asked to confirm that the time limit for restoration has not expired, though they cannot give any indication of the likely success of such an application. The costs of the application should be taken into account in the negotiations relating to the sale and should not exceed the potential sale proceeds.
25. Ascertaining the owner of a registered design
The Intellectual Property Office maintains a register of designs that have been granted the protection of registration. The register is available here (www.ipo.gov.uk/.../d-find-proprietor.htm) and gives details of the owner of the design, its renewal date and details of others with an interest in the design.
26. Registered design as an asset
Once a design is registered it may be bought and sold like any other property, provided the disposition is made in writing and signed by all parties to the transaction. A registered design may also be subject to a secured loan by way of a mortgage. A registered design shall vest by operation of law in the same way as any other personal property [note 27]. A registered design owned by a company subject to a winding-up order would belong to the liquidation estate. Similarly, a registered design owned by a bankrupt would vest in the trustee of a bankruptcy estate. In the case that the owner of a design right (see Annex 1 paragraphs 31 to 34) for information on design right) is also the owner or a registered design it is assumed that any assignment of the design right also includes an assignment of the registered design, unless a contrary intention is shown.
The official receiver should establish ownership of a registered design from the insolvent’s records and/or by carrying out a search of the information held at the Intellectual Property Office.
Where a registered design (or a registered design assigned to a bankrupt or a company in liquidation) has vested in the liquidation estate or trustee, the registered design may be sold with the assignment being signed by the trustee of the bankruptcy estate or liquidator of the liquidation estate as assignor. The Intellectual Property Office should be informed of the change in ownership [note 28].
In addition, royalties may be paid by a third-party to the owner of a registered design in exchange for exploiting that registered design. The royalties may be payable under the terms of a licence, with the owner retaining the registered design. In circumstances where a winding up or bankruptcy is made against the owner of a registered design, the official receiver should make contact with the third-party paying the royalties and ask them to pay any royalties due to the liquidator/trustee.
It may be the case that a bankrupt is in receipt of royalties as a condition of the sale of a registered design. In this case the royalties cannot be claimed as an asset as the registered design does not vest in the estate. Instead, the royalties should be treated as income and can be claimed under an income payments agreement or an income payments order (see chapter 31.7).
A licence of a registered design may also be sold. The assignment should be in writing and signed by the parties. The Intellectual Property Office should be informed of the transfer.
27. Protecting a registered design
(Amended February 2013)
Where an insolvent owns a registered design, the Intellectual Property Office should be informed of the winding-up or bankruptcy order and asked to note the official receiver’s interest in the design. The Intellectual Property Office should also be asked to provide details of the remaining “life” of the registration – as this could materially affect the value and details of any renewal fees outstanding. Enquiries should be made to establish whether there are any licensees or mortgages of the patent in order that they can be informed of the making of the insolvency order and asked to note the official receiver’s interest.
The UK Intellectual Property Office contact details are as follows:
Postal Address:
Intellectual Property Office
Concept House
Cardiff Road
Newport
NP10 8QQ
Telephone: 0300 300 2000
Telephone (outside the UK): +44 (0)1633 814000
Minicom (text phone): 0300 0200 015
Fax: +44 (0)1633 817777
E-mail: information@ipo.gov.uk
28. Valuation of a registered design
(Amended February 2013)
The valuation of intellectual property is a complicated and sometimes controversial area and the value will very much depend on circumstances. It is unlikely that the official receiver’s local agents will have experience in this field and the official receiver should exercise discretion as to whether or not to employ specialist agents. A specialist in designs may be contacted through:The Chartered Institute of Patent Attorneys
95 Chancery Lane
London
WC1V 7PZ
Tel: 020 7405 9450
Fax: 020 7430 0471
E-mail: mail@cipa.org.uk
29. Jointly owned registered designs
Joint entitlement to ownership of a registered design can arise where there are co-designers or if a share of the design is sold. Where a design is registered to two or more persons they are entitled, unless there is agreement to the contrary, to equal undivided shares. The interest of each would survive his death as part of his estate. Joint owners may not sell their interest to a third party without the consent of the co-owners.
30. European Community registered designs
The rules governing the procedures, processes and requirements for European Community (EC) design registration are largely the same as those relating to the UK registration process. The guidance given in Annex 1 paragraphs 21 to 29 can be followed in respect of an insolvent that owns a EC design registration. The registration authority in this case is:
The Trade Marks and Designs Registration Office of the European Union
(part of OHIM - The Office for the Harmonisation of the Internal Market)
Avenida de Europa 4
E-03008 Alicante
SPAIN
Tel +34 96 513 9100
Fax +34 96 513 1344
The enquiries required under Annex 1 paragraph 27 should be directed to The Trade Marks and Designs Registration Office of the European Union, who maintain a searchable on-line register (available HERE) similar to that kept by the UK Intellectual Property Office in terms of its use and the information it contains.
Unregistered design right
31. General information, eligibility and duration of design right
Unregistered design right is a hybrid displaying characteristics of both registered design and copyright. It is similar to copyright in that the protection afforded is automatic and does not require registration. It shares characteristics of registered designs in that it relates to designs, but it differs in that it does not give a total right of design ownership (as outlined in Annex 1 paragraph 67), rather it gives protection against copying. The right lasts for 10 years after the date that an item made to the design is first marketed, up to a limit of 15 years from the creation of the design. Design right is exclusive for the first five years but thereafter anyone is entitled to a licence of the right to make and sell articles copying the design [note 29].
32. Exception to design right protection
Design right does not extend to “must fit” designs (for example, a component such as a spark plug for a car where the design of the shape of the plug is dictated by the need for it to fit in a certain type of engine) [note 30]. This is to ensure that competitors cannot be prevented from copying the features of a design to allow them to connect their own design to existing equipment designed by someone else. Competitors must not copy elements of the design which are not essential to the fitting.33. Ownership of design right
The designer is the first owner of the design right except in the circumstances that the design is created under a commission or in the course of employment, in which case the commissioner or employer is the first owner [note 31].34. Design right as an asset
Design right is property [note 32] and it may be bought and sold like any other property, provided the disposition is made in writing and signed by all parties to the transaction. A design right may also be subject to a secured loan by way of a mortgage. A design right shall vest by operation of law in the same way as any other personal property. A design right owned by a company subject to a winding-up order would belong to the liquidation estate. Similarly, a design right owned by a bankrupt would vest in the trustee of a bankruptcy estate [note 33].In the case that the owner of a design right is also the owner or a registered design it is assumed that any assignment of the design right also includes an assignment of the registered design, unless a contrary intention is shown.
In addition, royalties may be paid by a third-party to the owner of a design right in exchange for exploiting that right. Royalties may be payable under the terms of a licence, with the owner retaining the registered design. In circumstances where a winding-up order or a bankruptcy is made against the owner of a design right, the official receiver should make contact with the third-party paying the royalties and ask them to pay any royalties due to the trustee.
It may be the case that a bankrupt is in receipt of royalties as a condition of the sale of a design right. In this case the royalties cannot be claimed as an asset as the design right does not vest in the estate. Instead, the royalties should be treated as income and can be claimed under an income payments agreement or an income payments order (see Chapter 31.7).
A licence of a design right may also be sold. The assignment should be in writing and signed by the parties. The Intellectual Property Office should be informed of the transfer (see Annex 1 paragraph 27).
Goodwill
35. Definition of goodwill
A key definition of the term “goodwill” was given in the House of Lords on 20 May 1901 in the case of IRC v Muller & Co Margarine Ltd (1901) AC217:
"What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and disadvantage of the good name, reputation and connection of a business. It is the attractive force which brings in custom. It is the one good thing which distinguishes an old-established business from a new business at its first start."
It has been established that there are three types of goodwill:
36. Valuation of goodwill
Where a business has ceased to trade its goodwill will usually be worthless. If a director, partner or bankrupt includes goodwill in a statement of affairs or other document the official receiver should seek an explanation as to its inclusion as an asset.The valuation of goodwill is difficult because of its vague nature. The value is very much dependant on the particular circumstances of the business and is only likely to be an issue where an insolvent's business is being sold as a going concern and the goodwill will only have a value if the purchaser is willing to pay an additional sum for goodwill.
The costs associated with the sale of the goodwill (and the business as a whole) should be provided by the potential purchaser, and it is recommended that at least one independent valuation be provided by the purchaser at his/her own expense.
Trading names, domain names and company registered name
37. General information relating to names
A business generally has at least one name by which it is publicly identifiable. In the case of a sole trader this may simply be the trader’s own name – or a close variation thereof. A registered limited company will also have a registered name which may or may not also be the name under which it trades. In addition to this many businesses today will also have a domain name on the Internet, which will usually have a close connection to the trading name (see Annex 1 paragraph 45 for further information on domain names). This part of the chapter gives advice on how official receivers may deal with the sale of these identities. It should be read in conjunction with Annex 1 paragraph 35 relating to Goodwill and Annex 1 paragraph 51 and Annex 1 paragraphs 64 to 73 relating to trade marks.
38. Company registered names
When transferring the registered or trading name of a company, the implications of section 216 of the Insolvency Act 1986 should be considered (see Annex 1 paragraph 39 and Annex 1 paragraphs 21 to 23 for further information).
A limited company may not have a name which is the same as a name already appearing in the registrar’s index of company names [note 34]. Should a third party wish to purchase the registered name of a company in liquidation, it will be necessary to change the name of the company in liquidation with Companies House so that the purchaser may use the name. A company requires a special resolution of shareholders in order to change its name [note 35]. If the purchasers are also the shareholders of the company in liquidation then a special resolution will be easy to procure (but consider the implications of section 216 of the Insolvency Act 1986 where the directors or shadow-directors of the company in liquidation are to be involved in the management of the new company). See also Annex 1 paragraph 39 and Annex 1 paragraphs 21 to 23.
In the event that the purchasers are not shareholders in the company in liquidation it may be possible for them to purchase the shares to put themselves in the position whereby they can pass the necessary special resolution. It should be noted, though, that any transfer of shares after the commencement of winding-up is void, unless the court orders otherwise [note 36].
If the shareholders cannot be traced, or will not agree to the change of name, it may be possible for the purchasers to call their company by a similar name (the restrictions of section 216 would normally still apply). In these circumstances the purchaser should obtain clearance from the Registrar of Companies before adopting the new name as the Registrar can direct a company to change its name if it is too like the name of a company already registered. The official receiver can consent to the use of the similar name assuming that an agreed sum has been received. Whilst it will be difficult for official receivers to actively “police” this area, steps should be taken to inform the Registrar should the official receiver become aware that an attempt is made to register a name which is similar to that of the company in liquidation, and take steps to obtain payment from the user of the name.
In the event that the name of a company in liquidation is changed, it will be necessary to change the title of the liquidation proceedings for which an application to Court will be necessary. The new title should be along the lines of:
Xyz Limited formerly known as ABC Limited (company number 1234567) (IN LIQUIDATION).
(see Annex 1 paragraph 42 for further details)
39. Prohibited names
A person who is, or has been in the 12 months prior to the date of liquidation, a director or shadow director of the company in liquidation is prohibited from using, for a period of five years, a name which is the same or similar to the name (registered or trading) of the company in liquidation [note 37]. This is obviously something to concern official receivers when considering an offer to purchase the name of a company. References in the following paragraphs to “name” can be taken to mean the registered name and/or the trading name.
If the name of the company represents the whole or substantially the whole of the business of the company in liquidation, or if the sale of the name is part of a sale of the whole of the business, then the purchaser must follow the procedure outlined in rule 4.228 in order to avoid contravening the prohibition.
The purchaser must, prior to his/her acting in circumstances which would otherwise contravene the prohibition, give notice to every creditor whose name and address is known to him/her (or is ascertainable on the making of reasonable enquiries) and also publish the notice in the Gazette. The purchaser may give and publish such notice prior to the sale of the business, but the notice must be given and published no later than 28 days after that sale is completed.
The notice must specify the following:
Any person who correctly follows the procedure outlined in rule 4.228 may then act without the leave of court required under section 216(3). The notice is seen as being prospective in that its effect is from the date of the notice, and is not retrospective. Any actions carried out by the directors of the successor company prior to the issue of the notice may leave them open to an allegation that they have contravened section 216 and to personal liability for debts incurred [note 38 and 39].
Any sale of the name in this respect should be conditional on the requirements of rule 4.228 being followed, and note to that effect should be included in the sale contract.
If the name of the company does not represent the whole or substantially the whole of the business then the exemption offered by rule 4.228 does not apply and an application for leave of court to use the name will be required [note 40]. In these circumstances, the prospective purchasers should produce evidence to the official receiver that such application has been made and no sale of the name should be concluded until leave has been obtained.
Please see Chapter 45 of the Enforcement Investigation Guide for further details.
40. Trading Names
A trading name used by a limited company would come under the prohibition of section 216 and the guidance in the preceding paragraphs should be followed. A trading name used by a sole-trader in bankruptcy may be sold to a third party as part of a sale of the whole of the business or in its own right. It is unlikely to be appropriate to seek any payment from the bankrupt for re-use of a trading name as he/she is under an obligation to trade under the name he was made bankrupt under [note 41].
41. Valuation of a company registered name
Whether the sale is to be made to the former directors of the company in liquidation or to an un-connected party, and the name appears to have a value – perhaps, because it is well known – or a valuation cannot be agreed then agents should be engaged to provide an independent valuation. The potential purchasers should meet the costs of the valuation and agents should not be engaged until the official receiver is in receipt of funds, or a written undertaking to provide funds. A chartered surveyor or an accountant may carry out the valuation.42. Unauthorised changes of company name
Official receivers have encountered problems when the company having been wound up in its correct name (at the time) has changed its name at a later date. In some cases the official receiver will have been consulted or have been aware of the change of name, which might have been effected as part of the sale of all or part of the company’s business by an administrative receiver.
Occasionally, members of a company will seek to circumvent dealing with the official receiver in respect of the transfer of the registered name of a company in return for payment by passing a resolution to change the name of the company in liquidation and then using the name vacated by the company in liquidation for another limited company. This may be carried out without the official receiver’s knowledge, let alone consent.
It might be expected that a general meeting (at which the resolution for a change of name may be passed) could only be convened by one or more of the directors of the company, but as the directors’ powers to act in the company’s affairs cease upon the making of the winding-up order they are unable to arrange such meetings. Shareholders in a company acting unanimously have at common law the ability to waive irregularities to achieve informally a result which would otherwise require the observance of a specified procedure. It follows that where the shareholders in a company decide to act in this way it might be that all of the other requirements are met in full and there is noting the official receiver can do to halt the process, the name of the company having been lawfully changed.
To effect the change of name without the Official Receiver’s knowledge the members of the company will have met, passed the appropriate resolution and had the company’s name changed by Companies House.
Companies House have confirmed that where a resolution to change the name of a company in compulsory liquidation is received a practice has developed that the liquidator will be contacted to establish whether he/she approves of the change of name and whether the resolution is accurate before the application will be registered.
In the event that the official receiver becomes aware that the name of a company in liquidation has been changed it is important that the matter is referred to court with an application to change the title of the proceedings and a direction that this form of title be used in the future winding up of the company. The new title should follow the format below:
"Newco Limited formerly known as Oldco Limited (company number 1234567) (IN LIQUIDATION)"
The application can be made without notice and should be supported by a short report explaining how the change of name came to be effected and producing the resolution and change of name certificate as exhibits.
Failure to do this may leave the official receiver open to allegations of defamation as he/she will, essentially, be referring to a certain company name as being in liquidation when, due to the change of name, it is not. It is important that the LOIS record is changed and thereafter only the new name of the company should be used. If the change is not made it may cause difficulties for the official receiver when applying for release, as the application for release will refer to a company that is not in liquidation.
43. Official receiver asked to consent to change of the company name
If the official receiver is asked to consent to a change in the name of the company in liquidation, it might be that he/she will consider the giving of consent to be in the nature of a sale of all or part of the company’s goodwill for which a consideration should be paid (see Annex 1 paragraphs 35 and 36), especially bearing in mind that an application to court must follow, but the official receiver should avoid entering into a contact which binds the company in liquidation to change its name because the name can only be changed by special resolution and, therefore, the official receiver has no legal control over the way in which shareholders may vote on such a resolution.44. Insolvency Act provisions to be considered following the change of company name
The official receiver should consider the following provisions when dealing with a change of name (which are listed for information only):
(a) Section 207 (transactions in fraud of creditors). This section might be relevant if there is a value attaching to a company name and the shareholders who effect the change of name are also officers of the company.
(b) Section 208 (misconduct in the course of a winding-up). This section might be relevant if an officer of the company having knowledge of the passing of a resolution conceals the information from the official receiver.
(c) Section 216 (see Annex 1 paragraphs 39 and Annex 1 paragraphs 21 to 23 for further information)
45. Domain names
(Amended February 2013)
A domain name is a word sequence which users of the internet enter into the address book of an internet navigator to visit a specific web site. The name of every organisation or individual connected to the internet has to be uniquely defined so that others wishing to make contact can do so without the risk of communications being misdirected. Each domain name is assigned to a specific internet service provider. The domain system is used to translate the address of the internet service provider into words. Domain name registration is now big business and nearly every domain name is registered, and some change hands for a significant amount of money.
The Internet Corporation for Assigned Names and Numbers (ICANN) is responsible for awarding contracts to registries to operate top-level domain names. Contact details are available here: http://www.icann.org/.
A top-level domain is the last part of an internet domain name, that is, the letters which follow the final dot of any domain name e.g. uk as in http://www.bis.gov.uk. Each country has its own two-letter top domain name.
The .uk top-level domain was first used in the 1980's and at that time a voluntary group managed the .uk domain names. By the early 1990's commercial companies started to sell domain names to companies. As demand for domain names registration grew the voluntary group could not cope and Nominet UK (a private, not for profit company limited by guarantee) was set up to manage the .uk top-level domain. Top-level names ending in .com, .net and .org are registered with Network Solution Inc http://www.netsolinc.com/. The names are registered for a fee and have a limited registration time (usually three years) after which they must be re-registered or will become available for sale to the general public.
Domain names are not actually owned by the user or registrant. They are effectively a licence from the appropriate registrar to use the domain name during the period paid for. Title for the domain name always belonging to the registrar. Details of the registrant’s rights to use and transfer the domain name will be provided in the appropriate registrar's terms and conditions
If the domain name is registered to the insolvent, breaches no trademarks and has no outstanding fees it can be dealt with as any other asset. The name has little intrinsic value but there are various auction sites on the web which can give an indication as to the value of the name and deal with its transfer for value if the official receiver considers it would benefit the creditors of the insolvent estate.
When the official receiver is aware of the existence of a domain name the steps outlined at Annex 1 paragraphs 46 to 51 need to be taken:
46. Verification of registration of domain name.
The registration certificate is issued by the internet service provider in respect of each domain name registered. This certificate should verify proper registration to a named person. The official receiver should endeavor to recover this certificate from the insolvent’s records and if this certificate cannot be found enquiries should be made from the relevant internet service provided. The ownership of a domain name may be established by reference to the web-site www.who.is.47. Disputes relating to domain names
Most domain names are allocated on a first come first served basis without investigation into the applicant’s right to use the name. It is therefore possible to register a name that another party considers infringe its rights. This is occasionally done on purpose where the registrant wishes to harm the business or reputation of the other party. This can result in court action or in the use of the registrar or ICANN's dispute procedure (http://www.icann.org/).Any disputes should be resolved before any transfer is undertaken though the transfer of the domain name to the other party may be a way of settling the dispute.
48. Verification of the value.
Certain firms will provide a professional valuation of a domain name over the internet and these can be used to test the value. Depending on the costs involved and the value of the domain name the official receiver should consider seeking more than one valuation.
49. Sale or transfer of domain name.
If the domain name has a value the official receiver should arrange for its transfer. Some local agents used by official receivers have experience in transferring domain names. In addition there are numerous auction sites brokering domain names on the internet. The amount of commission charged and the buyer reach varies between sites. In order to transfer the name to the purchaser the registration certificate is required. If this cannot be found Nominet UK (www.nominet.org.uk) should be contacted for guidance on transferring domain names without the registration certificate.
50. Where domain name has no value
The registration may be cancelled subject to the registrar's terms and conditions or left to lapse at the end of the registration period.51. Trade marks or service marks as business name
Trade marks are usually attached to the products or services offered by a business rather than to the business itself. However, particularly in the case of service marks, there may be an overlap and the guidance given in this section should be considered where the trade or service mark is also the name of the business (see Annex 1 paragraphs 64 to 74 for further details regarding trade marks).Patents
52. General
A patent is essentially a deal, a bargain, between a state and an inventor. It is an intellectual property right granted by a country’s government as a territorial right for a limited period. In return for a monopoly on the manufacture, use, importing or sale of an invention, the inventor makes public his/her invention and agrees that it can be freely copied when the term of the monopoly expires.
Patent rights make it illegal for anyone except the owner or someone with the owner’s permission to make, use, import or sell the invention in the country where the patent was granted.
53. Eligibility for granting of a patent
Patents typically cover new technical or functional aspects to products or processes and are to do with how things work, how they are made or what they are made from. Not every invention is entitled to the grant of a patent. As well as being new, the invention must be inventive and capable of practical application in an industrial sense [note 42]. Theories, discoveries, rules, methods or artistic works cannot be patented [note 43], and the invention must not be in the public domain prior to the granting of the patent.54. Identity of person to whom patent is granted
A patent may be granted to the inventor or co-inventors and [note 44], in the case of an invention created in the course of employment, the applicant may be the inventor’s employer [note 45].55. International conventions relating to patents
(Amended February 2013)
A UK granted patent gives protection only in the UK and the Isle of Man. To get protection in other countries would normally require separate applications to be made in each of the countries that protection is required. However, there is an international convention, the Patent Co-operation Treaty which allows an application to be filed in one country and protection can be extended to a number of countries which are members of the World Intellectual Property Organisation. Additionally, an application may be made to the European Patent Office under the European Patent Convention. Similar to the Patent Co-operation Treaty this allows protection to countries which are members of the European Patent Convention.
The contact details of these organisations are as follows:
European Patent Office
80298
Munich
GERMANY
Tel: +49 89 2399 4636
World Intellectual Property Organisation
34, Chemin des Colombettes
CH-1211
Geneva 20
SWITZERLAND
Central Number Tel: +41 22 338 9111
Central Number Fax: +41 22 733 5428
56. Duration of a patent
In the UK a patent is fully effective from the date that the specification of the invention is published by the Intellectual Property Office and this is usually some 18 months after the filing date. In the UK a patent lasts for 20 years, but the patent must be renewed to keep it in force. The first renewal date is the end of the calendar month of the forth anniversary of the date of the application was filed (not granted). Renewal fees are then due every year for the remaining 15 years that the patent may be in force [note 46].
The renewal fees (which are payable to the Intellectual Property Office) can be paid in the three-month period before the due date or one month after that due date without attracting penalty charges for late payment. If the renewal fee is not paid within six months of the due date then the patent will lapse and the invention will not be protected [note 46].
In these circumstances it is possible to restore the patent rights by application to the Intellectual Property Office. It is necessary for the applicant to satisfy the Intellectual Property Office that he/she intended to pay the renewal fee on time and he/she must provide a witness statement or other form of statutory declaration, accompanied by evidence, setting out the circumstances in which the renewal fee was not paid. Such an application must be made within 19 months of the due date of the missed renewal payment [note 47].
If the official receiver is considering making an application to restore a patent in order to sell it, the Intellectual Property Office should be asked to confirm that the time limit for restoration has not expired, though they cannot give any indication on the likely success of such an application. The costs of the application should be taken into account in the negotiations relating to the sale and should not exceed the potential sale proceeds.
57. Ascertaining a patent owner
(Amended February 2013)
The UK Intellectual Property Office maintains a register of patents which have been applied for or granted. The register is available on-line via the Intellectual Property office until March 2013 at the following link: www.ipo.gov.uk/.../p-find-number.htm. To replace this register UK Intellectual Property Office offers an alternative new service available called Ipsum.
Also available is a service called worldwide espacenet which is available via the UK Intellectual Property Office website (www.ipo.gov.uk). This gives details of patents filed with, or granted, by, the European Patent Office, the World Intellectual Property Organisation and 20 national European Patent Offices.
58. Patent as an asset
Once a patent is granted it may be bought and sold like any other property, provided the disposition is made in writing and signed by all parties to the transaction. A patent may also be subject to a secured loan by way of a mortgage [note 48]. A patent shall vest by operation of law in the same way as any other personal property [note 49]. A patent owned by a company subject to a winding-up order would belong to the liquidation estate. Similarly, a patent owned by a bankrupt would vest in the trustee of a bankruptcy estate [note 50]. The official receiver should verify ownership of a patent through the insolvent’s accounting records and/or by searching at the Intellectual Property OfficeWhere a patent (or a patent assigned to a company in liquidation or a bankrupt) has vested in the trustee or liquidation estate, the patent may be sold with the assignment being signed by the liquidator of the liquidation estate or the trustee of the bankruptcy estate as assignor. The Intellectual Property Office should be informed of the change in ownership [note 51].
A licence of a patent may also be sold. The assignment should be in writing and signed by the parties. The Intellectual Property Office should be informed of the transfer
Royalties may be paid by a third-party to the owner of a patent in exchange for exploiting that patent. The royalties may be payable under the terms of a licence, with the owner retaining the patent [note 52]. In circumstances where a bankruptcy or winding up order is made against the owner of a patent, the Official Receiver should make contact with the third-party paying the royalties and ask them to pay any royalties due to the trustee.
It may be the case that a bankrupt is in receipt of royalties as a condition of the sale of a patent. In this case the royalties cannot be claimed as an asset as the patent does not vest in the estate. Instead, the royalties should be treated as income and can be claimed under an income payments agreement or an income payments order (see Chapter 31.7).
59. Protecting a patent
Where an insolvent owns a patent, the Intellectual Property Office should be informed of the winding-up or bankruptcy order and asked to note the official receiver’s interest in the patent. The Intellectual Property Office should also be asked to provide details of the remaining “life” of the patent – as this could materially affect the value and details of any renewal fees outstanding. Enquiries should be made to establish whether there are any licensees or mortgages of the patent in order that they can be informed of the making of the insolvency order and asked to note the official receiver’s interest.The address of the UK Intellectual Property Office is:
Concept House
Cardiff Road
Newport
NP10 8QQ
Tel: 0300 300 2000
Tel (outside the UK): +44 (0)1633 814000
Minicom (text phone): 0300 0200 015
Fax: +44 (0)1633 817777
E-mail: information@ipo.gov.uk
Where information is required in respect of international patents the official receiver should contact the relevant registration organisation. See Annex 1 paragraph 68 for further details.
60. Valuation of a patent
(Amended February 2013)
The valuation of intellectual property is a complicated and sometimes controversial area and the value will very much depend on circumstances. It is unlikely that the official receiver’s local agents will have experience in this field and consideration should be given to the employment of specialist agents. A specialist in patents may be contacted through:The Chartered Institute of Patent Attorneys
95 Chancery Lane
London WC2A 1DT
Tel: 020 7405 9450
Fax: 020 7430 0471
E-mail: mail@cipa.org.uk
61. Jointly owned patents
Joint entitlement to ownership of a patent can arise where there are co-inventors or if a share of the patent is sold. Where a patent is granted to two or more persons they are entitled, unless there is agreement to the contrary, to equal undivided shares. The interest of each would survive his/her death as part of his/her estate. Joint owners may not sell their interest to a third party without the consent of the co-owners [note 53].
62. Plant breeders' rights
(Amended February 2013)
New varieties of plants may be registered with the Controller of Plant Variety Rights [note 54] to protect against any person other than the right-holder from producing, selling, importing or exporting the plant variety. The duration of the protection is usually 25 years, but this is extended to 30 years in the case of trees, vines or potatoes [note 55]. The right can be transferred like any other form of property [note 56]. The Plant Varieties Rights Office is required to maintain a public register of protected plant varieties [notes 57 and 58], and this is searchable by application to the following:
Address:
Plant Variety Rights Office and Seeds Division
Department for Environment, Food and Rural Affairs
White House Lane
Huntingdon Road
Cambridge CB3 OLF
Telephone: 01223 277151 (operator)
or 01223 34 (plus extension if known - direct dial)
Fax: 01223 342386
E-Mail: enquiries.pvro@defra.gsi.gov.uk
www.fera.defra.gov.uk/plants/plantVarieties/
Farmers usually buy the seed as “certified seed” for which the plant breeder will receive a premium to take account of the intellectual investment in the development of the plant variety. Farmers may collect what is known as “farm-saved” seed from a subsequent harvest of the initial planting. Use of this farm-saved seed is subject to a royalty payment and the British Society of Plant Breeders Limited administers collection of these payments on a registration basis. In circumstances where an insolvent holds a plant breeders’ right the official receiver should inform the British Society of Plant Breeders of his/her interest in outstanding royalty payments. Their contact details are as follows:
British Society of Plant Breeders Limited
Woolpack Chambers
16 Market Street
Ely
Cambridgeshire
CB7 4ND
Tel: +44(0)1353 653200
Fax: +44(0)1353 661156
Email: enquiries@bspb.co.uk
63. Software/intellectual property rights
Computer software is commonly used in an insolvent’s everyday business. It is frequently leased and so is not available for assignment by the official receiver as liquidator or trustee. If the software has been purchased “off the shelf” then it is likely to be under license to the insolvent and that license will not be transferable. Alternatively the insolvent may have bespoke software. In such circumstances the official receiver should examine the agreement entered into with the supplier both for restrictions on assignments and the ownership of copyright. If a software supplier has 'invented' the software for the insolvents use it is likely that they will own it and not the insolvent.
If the software has been written 'in house' i.e. within the business this may be problematic. Individuals dealing with software are usually contractors rather than employees and in such case the agreements by which they are engaged should be examined carefully by the official receiver to determine who owns any intellectual property rights created.
For every software programme there is a source code and the software cannot be sold without this. This code enables the software to be revised and maintained and access to the code will only be permitted subject to the agreement with the insolvent.
Computer programmes may be protected with copyright, which is a saleable asset in its own right. See Annex 1 paragraphs 2 to 19 for further details.
Trade marks and service marks
64. General
Trade marks and service marks are graphics (logos), words or shapes which are used to distinguish one trader’s goods or services from those of another trader. Trade marks are applied to tangible goods whereas service marks are applied to services such as banking or retailing. It is not necessary to register a trade mark to be afforded protection as the common-law of passing off can be used to enforce rights relating to the use of a mark. However, a successful passing-off action usually relies on the wronged party proving priority and goodwill relating to the use of their mark. It is for this reason that registration of a trade mark is usually recommended.
65. Trade mark registration
In the UK, trade marks can be registered at the Trade Marks Registry, which is a branch of the Intellectual Property Office.
66. Eligibility for trade mark registration
The Trade Marks Act 1994 [note 59] defines a trade mark as follows:
"A trade mark may consist of any sign capable of being represented graphically, particularly words, including personal names, designs, letters, numerals, the shape of goods or their packaging, provided that such signs are capable of distinguishing the goods or services of one undertaking from those of other undertakings."
Marks which are capable of graphical representation can be registered even if the mark itself is not a graphic or a word. This may include tunes, packaging shapes or, in some very limited cases, smells.
Certain marks are not eligible for registration on absolute grounds [note 60], such as marks which are not distinctive, are protected emblems (such as flags or state arms) [note 61], on policy grounds (such as marks which may be considered to be in bad taste), marks which are descriptive of the goods or services to which they apply or deceptive (for example, suggesting that a product is from a particular geographical location when, in fact, it is not). Other marks are not eligible for registration on relative grounds such as conflict or potential conflict with an existing mark – even if it is not a registered mark [note 62].
Trade marks are registered under a classification system [note 63]. There are 34 classes for goods (for example, class 1 relates to chemicals, class 12 to vehicles) and 11 for services (for example, class 35 for advertising, class 41 for education). It is possible for the same mark to be registered to different owners in different classes, so long as there is no risk of confusion (for example, Puma for both cars and sporting equipment).
67. Protection afforded by trade mark registration
The proprietor, or owner, of a registered trade mark has exclusive rights to use the trade mark in the United Kingdom and his/her right is infringed if it is used without his/her consent [note 64].68. International conventions and protection relating to trade marks
Registration of a trade mark with the UK Intellectual Property Office affords protection only in the UK. Apart from making separate applications in each country in which protection is required, there are two methods by which a trader can protect a mark in more than one country using a single application:
(a) Apply for a European Community trade mark with the Office for Harmonisation of the Internal Market (OHIM) which gives protection in all European Union countries.
(b) Apply for registration in countries that have signed the Madrid Protocol through the World Intellectual Property Office (WIPO). This can be effectively joined with an application to the OHIM and extended to other nominated countries.
Applications to the OHIM or the WIPO can be channelled through the UK Intellectual Property Office.
The contact details of these international registration authorities are as follows:
The Office for the Harmonisation of the Internal Market (Trade Marks and Designs)
Avenida de Europa, 4
E-03008 Alicante
SPAIN
World Intellectual Property Organization
34, Chemin des Colombettes
CH-1211
Geneva 20
Switzerland
Tel: + 41 22 338 9111
Fax: + 41 22 733 5428
The enquiries required under Annex 1 paragraph 72 should be directed to the relevant organisation(s), who maintain searchable on-line registers similar to that kept by the UK Intellectual Property Office in terms of use and information recorded.
69. Duration of registered trade mark
The initial period of registration is for a period of 10 years [note 65], and can be renewed every ten years thereafter indefinitely [note 66]. The first registered trade mark, the Bass red triangle, was registered in 1875 and is still a live registration. If the mark is not renewed it will lapse and the protection will cease. If a mark is mistakenly allowed to lapse it can be renewed, for an additional fee, within six months of the date that it lapsed.If the official receiver is considering making an application to restore a trade mark registration in order to sell it, the Intellectual Property Office should be asked to confirm that the time-limit for restoration of the trade-mark has not expired. They are unable, though, to give advice on the likely success of such an application. The costs of the application should be taken into account in the negotiations relating to the sale and should not exceed the potential sale proceeds.
A third party can apply for a registered trade mark to be removed from the register (this is known as revocation) if it can be demonstrated that it has not been used for a period of five years (without good reason), that it has become a generic term for the product or it has become misleading [note 67].
70. Ascertaining a trade mark owner
(Amended February 2013)
The owner of a trade mark is known as a proprietor for the purposes of the registration process. The Intellectual Property Office maintains a database of trade marks which covers marks for which an application for registration has been made, are currently registered or where registration has ceased. The search facility to find trademarks by proprietor is available on the Intellectual Property Office website HERE . The information available includes a reproduction of the mark, the status of the mark (registered, lapsed, etc.) the classes of goods for which it is registered, relevant dates (application, renewal, etc.), the name and address of the proprietor and details of any agents acting.71. Trade marks as assets
A registered trade mark is an item of personal property [note 68] as is an application for a trade mark [note 69]. Trade marks can be assigned, pass under a will or by operation of law as property separate from the goodwill of the business [note 70]. A registered trade mark may be used as security for a loan or other finance by way of a charge or other mortgage [note 71]. A registered trade mark or application for a registered trade mark would form part of the estate of a company in liquidation and would vest in the trustee of a bankruptcy estate.Where a registered trade mark (including a trade mark assigned to a company in liquidation or a bankrupt ) has vested in the liquidation estate or bankruptcy trustee , the trade mark registration may be sold with the assignment being signed by the liquidator or trustee of the bankruptcy estate as assignor [note 72] The Intellectual Property Office must be informed of the assignment for it to be valid [note 73]. In addition, royalties may be paid by a third-party to the owner of a registered trade in exchange for exploiting that trade mark. The royalties may be payable under the terms of a licence, with the owner retaining the trade mark [note 74]. In circumstances where a winding-up order or bankruptcy order is made against the owner of a trade mark, the Official Receiver should make contact with the third-party paying the royalties and ask them to pay any royalties due to the liquidator or trustee.
It may be the case that a bankrupt is in receipt of royalties as a condition of the sale of a registered trade mark. In this case the royalties cannot be claimed as an asset as the trade mark does not vest in the estate. Instead, the royalties should be treated as income and can be claimed under an income payments agreement or an income payments order.
A licence of a trade mark may also be sold. The assignment should be in writing and signed by the parties. The Intellectual Property Office should be informed of the transfer [note 75].
72. Protecting a registered trade mark
(Amended February 2013)
Any person who becomes entitled to a trade mark by virtue of the making of a court order (including winding-up and bankruptcy orders) is obliged to inform the Intellectual Property Office of his/her interest in the mark [note 76].
Where an insolvent owns a registered trade mark, the Intellectual Property Office should be informed of the winding-up order or bankruptcy order and asked to note the Official Receiver’s interest in the trade mark. Enquiries should be made to establish whether there are any licensees or mortgages of the patent in order that they can be informed of the making of the insolvency order and asked to note the Official Receiver’s interest.
The address of the UK Intellectual Property Office is:
Intellectual Property Office
Concept House
Cardiff Road
Newport
South Wales
NP10 8QQ
United Kingdom
Tel: 0300 300 2000
Tel from outside the UK: +44 (0)1633 814000
Minicom (text phone): 0300 0200 015
Fax: +44 (0)1633 817777
E-mail: information@ipo.gov.uk
Website: www.ipo.gov.uk
73. Valuation of trade marks
The valuation of intellectual property is a complicated and sometimes controversial area and the value will very much depend on circumstances. It is unlikely that the Official Receiver’s local agents will have experience in this field and consideration should be given to the to employment of specialist agents. A specialist in trade marks may be contacted through:The Institute of Trade Mark Attorneys
ITMA Office
Canterbury House
2-6 Sydenham Road
Croydon
SURREY
CR0 9XE
Tel: 020 8686 2052
Fax: 020 8680 5723
74. Joint ownership of a trade mark
A registered trade mark may be granted to two or more persons jointly and, subject to agreement to the contrary, each of them is entitled to an equal, undivided share in the mark. Each proprietor is allowed to use the mark without the consent of any of the joint owners, but the mark may not be licensed or assigned without the content of the joint owner(s) [note 77].75. Client, customer or patient databases
(Amended February 2013)
Some business, particularly those providing a service requiring periodic repetition such as private dentists, opticians or vets, will be in possession of a list of clients or, as the case may be, patients. Usually, this client list will be in the form of a computerised database. This database is potentially an asset, which can be sold for the benefit of the insolvent estate.
Normally personal information in a database should not be sold if the individuals have not been told originally that their information could be passed on to other organisations. However, where a business is insolvent, bankrupt, being closed down or sold, the Data Protection Act 1998 (DPA) will not prevent the sale of a database containing the details of individual customers, providing certain requirements are met [note 78]. These requirements are detailed in Annex 1 paragraphs 76 to 78.
The Information Commissioner has published a “Data Protection Good Practice Note” on the buying and selling of databases which can be accessed at: ico - practical guide to buying and selling customer databases.
The Information Commissioner’s office website is available here: http://www.ico.gov.uk/
76. Information to be used only for purposes for which it was originally collected.
When personal information covered by the DPA is collected from individuals initially it should be clear to them what it will be used for. When a database is sold, the seller must make sure that the buyer understands that they can only use the information for the purposes for which it was originally collected. Any use of this personal information should be within the reasonable expectations of the individuals concerned. So, when a database is sold, its use should stay the same or similar. For example, if the database contains information obtained for dental treatment, the database should only be sold to another dentist providing similar dental treatments. Selling it to a business for a different use is likely to be incompatible with the original purpose and likely to go beyond the expectations of the individuals.
The buyer of any database should be made aware that they can only use the personal information on it in line with the purposes for which it was originally collected. The official receiver will need to inform any buyer what these purposes were when they buy the database. If the buyer wants to use the personal information for a new purpose, they will have to get consent for this from the individuals concerned. As the original collector of the information, the seller, in this instance the official receiver, has a responsibility to ensure that the personal information is used properly. The official receiver can achieve this by making it clear to the buyer what the information can or cannot be used for.
77. Individuals on database to be informed of change of ownership
If the database is sold it is the responsibility of the buyer to make sure that all the affected individuals are told who now has their information. This should be done as soon as practicable, giving contact details for the new owners and confirming that the personal information obtained will only be used for the same purposes as before. If the buyer wants to use the information in a new way then this will also provide an opportunity to ask individuals for their consent. Before selling the database the official receiver will need to ensure that buyer undertakes to inform all individuals that they now hold the information.
78. Restrictions on the sending of marketing material
The buyer of a database often wants to use it to send marketing material. Whether they will be able to do so will depend on the basis on which the personal information concerned was collected originally. The general rule is that unsolicited marketing can be sent to individuals where they have agreed to this or where this is nevertheless likely to be within their reasonable expectations. For example, if an individual takes on dental insurance with a particular insurance company then it is reasonable for that company to send details of insurance for the following year and details of other insurance products on offer, unless the individual has made clear that they do not wish to receive such marketing. Therefore, the buyer should check the basis on which the information was collected and whether any of the individuals have objected. The buyer should also establish whether the individuals would only expect to receive marketing via a particular medium, for example via the postal system. Particular care should be taken when using the telephone or e-mail to ensure that the special rules governing electronic marketing are complied with. Unsolicited marketing e-mails should only be sent to individuals who have consented and buyers should not assume consent if an individual does not respond. When they have established that they can use the personal information for marketing the buyer should only market products and services, which are similar to those that the information has been used to market previously. Further guidance on electronic mail marketing can be found at:
ICO - privacy and electronic communications
ICO - Guidance on Electronic Mail Marketing
Before selling the database to any potential buyer the official receiver should point out to the buyer the restrictions imposed by the DPA on the use of marketing material.
79. Length of time information on database may be held
The DPA requires that any personal information held should be adequate, relevant and not excessive, and that it should not be kept for longer than is necessary [note 79]. The official receiver should inform the new owner of a database that they will be required to decide how much of the information supplied on the database they need to keep. Any unnecessary personal information should be deleted. Personal information should not be held simply on the basis that it might become useful one day.
80. Database not to be sold
If no potential buyers can be found for a database or if the official receiver decides not to proceed with its sale the information held should be deleted or destroyed as soon as it is no longer required.
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