What happens when the Crown disclaims IP rights it acquired from a dissolved company and how can a company (re)acquire those rights?
Immediately prior to dissolution of a company in the United Kingdom, whether following administration, liquidation, striking off or voluntary dissolution, all property and rights which are left behind in the dissolved company are considered ‘bona vacantia’ or ‘vacant goods’. Bona vacantia goods vest in the Crown and are governed by the Companies Act 2006 (CA).
As with any property rights, intellectual property rights, such as registered trade marks or designs, fall within the scope of the bona vacantia rules and will also vest in the Crown on dissolution.
However, there is one exception – the Crown’s statutory power, with or without notice, to disclaim or to give up its interest in bona vacantia. If property, including IP, in bona vacantia is disclaimed it is treated as though it never passed to the Crown (s.2014 CA). By disclaiming its rights in the property, all interests and liabilities of the dissolved company in the disclaimed property are terminated; however, the disclaimer does not release any other person from their rights or liabilities (s.2015 CA). It is also important to note that the disclaimer does not extinguish the Crown’s right to the Property, but only the Crown’s title in it. Rather, the disclaimed property escheats back to a different part of the Crown Estate.
Most commonly, the Crown will disclaim IP if it’s of low value, problematic or subject to a dispute or litigation. If the Crown chooses to disclaim the IP right (processed through the Crown’s representative, the Treasury Solicitor), it must first issue a notice of disclaimer which will be published in the London Gazette, with a copy sent to the Registrar of Companies, as well as to anyone that has given the Crown notice claiming an interest in the IP right. The Crown has three years from the date it became aware of the vesting or twelve months from receipt of a notice from an interested person to the disclaimed IP right.
Purchasing disclaimed bona vacantia IP
Generally, purchasing IP in bona vacantia is relatively straightforward, either by acquiring the bona vacantia goods (i.e. a registered trade mark) from the Crown for valuable consideration, or through restoration of the company, provided the Crown has not already disposed of the IP right.
However, what happens to disclaimed IP and how is it acquired by an interested purchaser?
Under section 2017 CA, an application to acquire disclaimed bona vacantia property must be made through the court. The application must state whether the person either (i) claims an interest in the disclaimed property (including a trustee) or (ii) is under a liability in respect of the disclaimed property that is not discharged as a result of the disclaimer (provided it is just to do so in order to compensate the person subject to the liability).
The court may make an order to either person, pursuant to which the disclaimed property will, without any assignment or transfer, vest in that person.
Alternatively, restoration of the dissolved company may also have the effect of reinstating the disclaimed IP right, as though it had never been disclaimed (Re Fivestar Properties Ltd  EWHC 2782 (Ch),  All ER (D) 76 (Oct)).
However, if a party neither has an interest or liability under the disclaimed property, and restoration is not possible, acquisition of the disclaimed IP right does not appear possible. In practice, however, it is rare that the Crown will disclaim IP as it is generally perceived as having a tangible value.
At Appleyard Lees, we have attorneys with first-hand experience in trade mark and design disputes. For more information, please contact Chris Hoole.Return to Articles