Just wondering, what happens to all those IP when a company goes bankrupt? I've heard that you're still not allowed to do anything with it, can anyone confirm? Now, for the second question.. suppose I illegally use an IP of a bankrupt company. Who's there to sue me, since the company went bankrupt? Just curious, doesn't mean I'm going to do it :D

ProTip: Bankruptcy does not mean the company is out of business.

Quote: Original post by underthesun
Just wondering, what happens to all those IP when a company goes bankrupt? I've heard that you're still not allowed to do anything with it, can anyone confirm?

Now, for the second question.. suppose I illegally use an IP of a bankrupt company. Who's there to sue me, since the company went bankrupt? Just curious, doesn't mean I'm going to do it :D

The first stage in bankruptcy is to round up all your company's assets and use them to pay off your creditors -- i.e. the people you owe money to. (Note that, in pretty much every country with similar laws, the creditors are prioritised. Shockingly -- in the "not even slightly" sense of the word -- the government usually gets first pick of the assets.)

Intellectual Property is an asset. Therefore, it will be sold on. Someone, somewhere, will buy it. They may pay peanuts for it, or they might pay a lot, depending on its perceived value, but my point is that the IP will always be owned by somebody. If no buyer is found for it, the original business' owner retains ownership. (It's also not unheard-of for employees, contractors and the like who helped create the IP to have a contractual stake in it too, but this is rare in the games industry.)

As an illustration, I designed, programmed, produced the sound effects, drew the graphics, maps and GUI for an Atari ST/Falcon game way back in 1994. It was published by Caspian Software and the IP rights to that game still belong to the publisher's owner; Caspian Software wasn't officially wound up until the turn of this century (or thereabouts) and its owner still works in the industry today.

IP doesn't just disappear or enter a state of limbo.



[Edited by - stimarco on December 19, 2008 9:31:29 PM]

In some cases the assets of the company, including the IP rights, will be sold off to another person/company in order to pay the creditors and it would be these new owners who would sue you. In addition it is often the case that the contracts for games include a revision clause, which means that the rights revert to the original developer if the publisher goes into Administration/Bankruptcy. In this case it would be the developer who would take action against you.

Of course it is possible that neither of the above happens and that the dead company and the rights to its assets sit in a box in some state archive somewhere. However this is extremely rare as people now realise the value of IP and have bought these boxes/dead companies in order to get ownership of the IP. This is what happened with Cinemaware a few years ago.