Many times it’s a bad idea to have a corporation own your patents or trademarks. This is because the Corporation may become insolvent are you going to receivership or bankruptcy. In that case, the receiver or bankruptcy trust the as the case may be is required by law to sell your intellectual property to the highest bidder. It is possible for you to buy back your intellectual property but why would you want to incur that cost and the risk that you may not be the highest bidder?

Instead we recommend that you own the intellectual property personally and then license intellectual property to your Corporation. That way if the Corporation becomes insolvent, the Corporation will lose benefit of the license agreement but it will never lose ownership of the church property because it never owned it. Instead we would set up a 2nd Corporation for the client and then license the intellectual property to the 2nd Corporation and carry on as before.

Another way of protecting your intellectual property is to have 2 corporations:

  1. Corporation #1 would own the intellectual property and would have no debt. That way it cannot be put into receivership
  2. Corporation #2 will require a license from Corporation #1 enabling Corporation #2 to use the intellectual property i.e. by manufacturing, importing or selling an invention or using your trademarks or copyrights. This corporation would have all of the debt but no assets. That way if this corporation becomes insolvent, it would lose the license agreement from Corporation #1, but it would never lose ownership of the intellectual property.

In this example, it is a critical to make sure that the first Corporation has all the assets and none of the debt in the 2nd Corporation has all of the debt and none of the assets