Under English law, all assets, including intellectual property (IP), remaining in a dissolved company are deemed ‘bona vacantia’ – ownerless goods. Much like when an individual dies without a will or beneficiaries, these ownerless goods vest in the Crown. These assets may be available for sale.
The Bona Vacantia division (BVD) of the Government Legal Department deals with these assets. Prospective buyers may approach BVD to enquire whether the assets may be for sale.
An important point to note when considering the purchase of a bona vacantia IP asset, is that the sale will not include any goodwill associated with the asset – a buyer should consider how important or valuable this may be to them in the context of the IP and their business.
Prospective buyers must provide certain information to BVD, including:
- the name, company number and last registered office of the relevant dissolved company
- details of the IP and evidence that the dissolved company owned it (more on this below)
- details of why they are interested in purchasing the IP and what plans they have for it
- details of any past or current disputes relating to the IP or its use
- who, if anyone, is currently using the IP
- the name, address and reference of their solicitor or agent
In relation to certain types of IP, the prospective buyer must also provide additional evidence regarding the dissolved company’s ownership.
For trade marks, a copy of the registration details must be provided, which can be obtained from the Intellectual Property Office (IPO) for UK trade marks or the Office for Harmonization in the Internal Market for EU trade marks.
In respect of copyright, the prospective buyer must also provide a copy of the assignment of the copyright to the dissolved company or other evidence that demonstrates the dissolved company owned the copyright.
For any other IP, a copy of the patent registration details (available from the IPO) or other evidence that the dissolved company owned the IP, must be provided.
Using the information provided by the prospective buyer, BVD will seek to verify that the dissolved company was owner of the IP at the time of dissolution.
If BVD deem the IP bona vacantia, it will consider how best to dispose of the asset. BVD is under no obligation to the sell – it will make an independent assessment of the correct manner of disposal, and who to sell to (if anyone). BVD may choose to sell to a third party, retain the asset for itself or it may choose to disclaim the asset, giving up the Crown’s interest.
If BVD is willing to sell, it will sell at open market value - BVD is under a duty to get the best price it can for the asset and will take steps to ascertain an appropriate valuation. BVD may seek a professional valuation and the prospective buyer will be expected to pay for this valuation in advance.
BVD will not sell an asset for less than the minimum value set out below:
|Asset||Price (plus VAT)|
|UK trade mark||£1000|
|EU trade mark||£2000|
|Patent and other IP||£1000|
BVD also charges costs of £300 plus VAT per asset. If the total value of the deal exceeds £10,000 the BVD will require proof of identity in accordance with its anti-money laundering procedures.
If BVD agrees to sell, it will dictate the terms of the assignment, and will also prescribe a time frame within which the sale must be completed.
Following the sale, the new owner should arrange registration of the assignment, and will be responsible for associated fees. It is worth noting that BVD will not assist with any enquiries or requisitions raised by the registration authority.
Lack of information, as well as the absence of the usual representations and warranties a buyer might expect, is the main drawback, and potential risk, with buying IP bona vacantia.
Typically, a buyer might expect the benefit of representations or warranties as to title, quality, value, validity and infringement, as well as any implied statutory warranties. However, bona vacantia IP is sold without any title guarantee, and BVD give no representations or warranties in relation to the IP.
As such, the buyer has no assurance that BVD has the right to sell the IP and they will have no assurances or information relating to past disputes and these will be the risk and responsibility of the new owner. This highlights the importance of the buyer’s preliminary investigations.
There is an alternative approach to the one described above available to prospective buyers. If the company was dissolved in the previous six years, it may be restored to the Companies Register. In this scenario, the IP would revert to the company. However, this would not guarantee that the prospective buyer can buy the assets – a formal transfer would still be required, and whoever is acting for the restored company may refuse to sell or try to increase the sale price.