Bona Vacantia

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In the situation where an individual passes intestate, that is, without a Will and with no next of kin or otherwise entitled blood relatives, the estate and it’s assets pass to the Crown.

A similar mechanism exists for Intellectual Property rights and in particular the IP of dissolved companies.

Why is Ownerless IP of interest?
In a world where everything retro appears to be fashionable and every other day a nostalgic automotive brand, gin company or clothing brand is revived, the purchase of bona vacantia IP rights by the individuals and companies wishing to resurrect brands is again suddenly of interest. For example, a business may have closed up shop many years ago, but suddenly, there exists an exciting opportunity to revive the brand and the wares associated with that brand to jump on the retro bandwagon and ultimately build a reinvigorated business from a previously defunct business, not unlike the phoenix rising from the flames.

How do Bona Vacantia IP rights arise?
When a company is struck off the Companies House register it is termed as being dissolved.

There are many reasons for dissolving a business both voluntary and involuntary.

Voluntary reasons may arise in the situation where a company has served its purpose. The directors may then decide that the company should cease trading. For example, a business that was set up to capitalise on a fad or rise in popularity of a product such as yo-yos or fidget spinners, will have served its purpose when demand for that item inevitably wanes.

There are also involuntary reasons why a company may be dissolved, such as, the company has fallen behind on its tax responsibilities.

No matter whether the driving force behind dissolving a company is voluntary or involuntary, unless other arrangements are made, the dissolved company assets such as property, both physical and intellectual, and goods owned by the company when the company is dissolved pass to the crown. These assets are labelled bona vacantia literally meaning ‘vacant’ or ‘unclaimed’ goods.

The property of interest to us in this case is bona vacantia IP rights such as copyright, trade marks, and patents.

Who deals with it?
In the United Kingdom, there exists the bona vacantia Division (BV Division) of the Government Legal Department. As will be appreciated, jurisdiction is an important factor when deciding who will deal with a dissolved company’s bona vacantia IP rights. Jurisdiction is determined using a simple two step flow:

1 the last registered office address of the dissolved company;
2 where the bona vacantia IP right is situated.

In more detail, if a dissolved company’s last registered office and the bona vacantia asset of interest are in England or Wales (excluding Duchies covering Cornwall, Lancashire, the majority of Merseyside, some portions of Greater Manchester, Cheshire and Cumbria) the bona vacantia IP rights are dealt with by the Treasury Solicitor.

Where a dissolved company’s last registered office and the bona vacantia asset of interest are in either the Duchy of Cornwall (i.e. Cornwall) or the Duchy of Lancaster (Lancashire, the majority of Merseyside not including the Wirral peninsula, and certain parts of the counties of Greater Manchester, Cheshire and Cumbria), jurisdiction for the bona vacantia IP rights falls in the hands of the Duchies’ solicitors details of which can be found on the Government Legal Department websites. Information regarding the specific boundaries of the Duchies can be obtained from the Duchy Office.

If a dissolved company’s last registered office and the bona vacantia IP right are both in Scotland, the Queen’s and Lord Treasurer’s Remembrancer has jurisdiction.

If the dissolved company’s last registered office and the bona vacantia IP rights are in Northern Ireland, jurisdiction passes to the Crown Solicitor’s Office

In the situation where the dissolved company’s last registered office and the bona vacantia IP right are in different jurisdictions, it is the location of the last registered office that generally has precedence and will usually determine who has jurisdiction of the bona vacantia asset.

How much does it cost?
If you are looking for bargain basement IP, then bona vacantia IP rights are not necessarily for you. The BV Division can sell bona vacantia IP rights for their full market value. The value of bona vacantia IP rights may be ascertained through professional valuation sought by bona vacantia Division, in any case there will always be a minimum price set for the bona vacantia IP rights of £1000 excluding VAT. There will also be an additional cost payable to the BV Division of £300 plus VAT per asset.

It is well worth noting that the BV Division is under no obligation to sell a bona vacantia IP right and if the BV Division does indeed offer to sell a bona vacantia IP right the sale will be under terms set out by the BV Division and must take place within a time period that they prescribe.

Is an IP right Bona Vacantia and available for purchase?
If you suspect that an IP right is bona vacantia, it is possible to contact the BV Division to express interest in the purchase of the Rights. When contacting the BV Division you must include:

• the name, company number and last registered office of the dissolved company that owned the intellectual property;
• details of the intellectual property and evidence that the dissolved company owned it;
• why you are interested in purchasing the intellectual property and what your future intentions are for using it;
• details of any past or current disputes relating to the intellectual property or its use;
• who if anyone is currently using the intellectual property;
• the name, address and reference of your solicitor or agent.

It is important to note that the onus of responsibility for demonstrating that a dissolved company owned the IP Right(s) at the time of the Company’s dissolution falls on the requester and sufficient documentation evidencing the ownership must be provided to the BV Division.

Should the BV Division agree that an IP Right is indeed bona vacantia a decision will be made as to how to dispose of the bona vacantia IP right. Indeed, the bona vacantia IP Right may not be offered for sale, or the bona vacantia IP Right may be offered to the open market to obtain the best possible price

Important Considerations
It is important to note that the dissolved company may be restored. In such a scenario, bona vacantia ceases to exist and ownership of any purchased IP Rights will revert to the previously dissolved company which is now alive. If this happens, the BV Division will refund any consideration paid for the thought to be bona vacantia IP Right less their costs for dealing with the transaction.

Furthermore, in the event that the BV Division does offer a bona vacantia IP Right for sale at a price acceptable to the purchaser, no goodwill is included with any Right, nor will any form of title guarantee be given when the BV Division sell a bona vacantia IP Right. The risk of buying a bona vacantia asset lies with the purchaser.

Help and advice
For more information on the Intellectual Property aspects of the purchase of bona vacantia IP rights please contact: Nicholas.Carrier@franksco.com

The opinions expressed in this article are for general awareness raising of the issues described and should not be relied on as legal advice. For specific legal advice please contact us.

 

Article Published March 16, 2022