Bankruptcy Treatment of Intellectual Property Assets: An Economic Analysis

91 Pages Posted: 13 Mar 2007 Last revised: 16 Jan 2012

Date Written: March 1, 2007


With the rise of intellectual property in the modern economy, bankruptcy treatment of intellectual property assets has taken on ever greater importance. The law in this area must balance different approaches to asset management. Viewing the world from an ex ante perspective, intellectual property laws seek to foster investment in research and development. Freedom of contract plays a central role in maximizing the potential value of intellectual property by encouraging a robust licensing market to exploit the value of intellectual creativity. By contrast, the bankruptcy system generally views asset management from an ex post standpoint, focusing narrowly on how to maximize the value of a failing or failed enterprise. Thus, bankruptcy law affords trustees and debtors substantial leeway to rescind contracts and reorder the affairs of the failed entity. This article examines the rather complex rules governing the treatment of intellectual property assets in bankruptcy and suggests various reforms that could better promote economic efficiency.

Keywords: bankruptcy, intellectual property, patents, copyrights, trademarks, trade secrets, opportunism, economic analysis

JEL Classification: K30, O34

Suggested Citation

Menell, Peter S., Bankruptcy Treatment of Intellectual Property Assets: An Economic Analysis (March 1, 2007). Berkeley Technology Law Journal, Vol. 22, p. 733, 2007, Available at SSRN: or

Peter S. Menell (Contact Author)

UC Berkeley School of Law ( email )

2240 Bancroft Way
Berkeley, CA 94720-7200
United States

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