What is the advantage of setting up separate IP holding companies?

Question

I find that many companies set up separate companies to hold intellectual property. Examples follow:

• Dunkin' Brands Group, the company which operates the Dunkin' Donuts and Baskin-Robbins chains, has associated intellectual properties assigned to DD IP Holder, LLC and BR IP Holder, LLC, respectively.
• Gearbox Software, developer of the Borderlands franchise and Battleborn, has associated intellectual properties assigned to IPerion, LLC, and Necromonger, LLC, respectively.

What are the advantages of maintaining an IP holding company(ies) separate from the operating company? What disadvantages might there be for doing this? Answers should be in the context of United States law.

Answer 1

Placing assets (real or otherwise) in a holding company separate from the operating company serves a number of purposes.

It is a form of insolvency insurance; creditors of the operating company have no recourse on the assets of the holding company.

It can be a tax minimization mechanism: The holding company charges a licence fee to the operating company, either splitting profits for a jurisdiction with a progressive tax rate or transferring profits to a tax haven.

It can offer different investment profiles: some people want to own IP and collect rent, others want to operate businesses - splitting the functions allows shareholders to take different stakes in each company. This works for both private and public companies.

Answer 2

For these examples, the principle motivation is probably to separate the different brands into different companies for accounting and for potential future sale.