4

IP rights are created by law, and continue to exist even if the person who last owned them stops existing.

What about rights created under private contracts?

Say I granted my former employer the exclusive right to pop round and inspect my garage, with reasonable notice, and carry off anything with a company asset tag, as part of a severance deal.

Now, say the company in question dissolves. It isn't straight up bought (in which case the buyer would own all its rights). It is dis-incorporated, personal property, inventory, and patents are sold off, and the proceeds are distributed to shareholders.

To whom, if anyone, do I now owe the right to inspect my garage? Can that sort of generic contractual right be sold or transferred "by default", without any special language in the contract to enable it? If the company made no attempt to specifically sell it, is it destroyed or does it become jointly owned by the shareholders somehow?

1 Answer 1

2

Dissolved corporations or limited liability entities continue to have all of the same contractual rights that they did before dissolution until the rights are assigned to someone else. As a practical matter, the dissolved company may be unlikely to enforce the rights, but they don't go away.

5
  • 1
    If the company is dissolved, who would have the authority to exercise or assign its rights? Why is it merely unlikely and not actually impossible for them to be used?
    – interfect
    Commented Oct 4, 2023 at 14:06
  • 1
    @interfect The shareholders at the time of dissolution could be reactivated to appointed directors who appoint officers to deal with it. If the rights were valuable enough, they would.
    – ohwilleke
    Commented Oct 4, 2023 at 15:40
  • So the dissolved company could be re-created by the final shareholders for the purpose of using or disposing of any rights that belonged to the company when it dissolved. That makes sense. What about transferability: are these generic rights usually transferable?
    – interfect
    Commented Oct 4, 2023 at 16:26
  • 1
    @interfect The vast majority of contractual rights are transferrable, and the kind of rights mentioned in the question would be. One way to cleanly wind up a corporation or limited liability company would be to make a blanket assignment of all rights and property not specifically mentioned to an individual, such as a majority shareholder or former CEO, so that all transferrable rights are no longer owned by the corporation.
    – ohwilleke
    Commented Oct 4, 2023 at 16:31
  • @interfect One of the most important rights of a defunct company which are usually not transferrable are its net operating losses for tax purposes. One of the most important obligations of a company that cannot be transferred is the obligation to perform personal services that rely on a particular individual officer or employee's unique skills (e.g. a brain surgeon or a popular musician or a novelist).
    – ohwilleke
    Commented Oct 4, 2023 at 16:36

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .