Intellectual property licensing and value issues in bankruptcy: assessing the risk to experience the reward

Intellectual property (IP) represents one of the most significant and fastest growing sources of a corporation's earnings. IP represents a significant portion of a company's reported intangible value as well. While companies in bankruptcy present unparalleled opportunities for entities looking to acquire additional or complementary IP, they also can present many challenges. Understanding the underlying cause of the bankruptcy or reorganization will help to establish the asset's value. There is little doubt that bankruptcy proceedings can provide excellent opportunities for buying distressed IP. Despite the risks, the rewards that IP can yield are extraordinary. And with the high rate of corporate bankruptcy filings, the market is ripe with opportunity. But understanding the interworkings of bankruptcy and intellectual property laws is imperative to realizing the full value of the IP assets and avoiding any unintended consequences from existing encumbrances attendant to the IP.