Patent application for patent after company goes bankrupt

Since Robert Iussa already did a great job addressing the question of who owns the asset, I'm going to addressing a complementary question: how are patents affected by BK and how does BK affect patents?

We have previously sold a patent portfolio for a client where it was necessary to put the client into BK (with the client's consent, of course) in order to make it possible to sell the patents. So while I am not an attorney, I have direct experience with the process. Of course, you should consult an attorney for any specific legal questions.

Decisions about the assets are made by the Judge, but the Trustee administers all the assets. The Trustee carries a lot of weight and can make de facto decisions about the assets.

If this is not a famous company, it's unlikely there will be a lot of bidders for the assets. Creditors want maximum money but are fortunate to get ten cents on the dollar. So assets will be auctioned, but if you have an offer to make, you can certainly approach the Trustee (see an attorney to do this in the proper manner) and make an offer. But don't overpay! It might very well be accepted. You should not comment one way or the other on the patent. If you tell them it's worth a million dollars, well, why would they accept $10,000? Fact is, you don't know how much it's worth. You can also let it go to auction. Chances are no one or almost no one will show up. That's what you're really bidding against (unless the company is known to be valuable). Again, consult an attorney but don't negotiate against yourself.

Now, a more tricky part. In order to sell any part of the estate, that part has to be free and clear of all liens and encumbrances. Otherwise you'd be buying something without any title to it and it could be repossessed from you. That's why there is something called a 363 Motion. If the creditors won't release their liens, the court can strip the liens off the asset, enabling it to be sold. Then the money from the sale goes back into the estate and the liens are put back on the cash realized. A 363 Motion is filed when a company is already in BK.

What you have to do is: Ask yourself what the value of this invention is, if anything. Most patents by themselves are worthless. Only about 2% have independent value. If yours is one of those or if you have another reason for wanting to own it, decide what your budget is. You might be able to buy it for $100. Or it might be a few thousand. There is no independent market. If your offer is too low, the judge and trustee would likely want to see if anyone else would pay more. Or if you have the patience to wait for the auction, you can just buy it then, maybe for $1.