Protection of Creators’ Rights in Insolvency

As intellectual property rights are increasingly valuable business assets, the interaction of commercial law and IPRs assumes corresponding importance. The bankruptcy and insolvency laws in particular may affect IPRs in various ways, but sections 82 and 83 of the Bankruptcy and Insolvency Act, which date back nearly one hundred years, are the only provisions in the statute which specifically address intellectual property issues. Section 82 gives a trustee in bankruptcy the right to sell patented articles free of any restrictions, subject to the right of the manufacturer or vendor to object to the sale and re-purchase the articles. Section 83 provides for a somewhat intricate scheme governing the rights of an author who has assigned the copyright in her work to a publisher which then becomes bankrupt. This article explains the purpose and effect of these provisions, and argues that, despite their age and the fact that they have received little attention in the case law, there are sound policy reasons for retaining both. However, they were drafted in response to very specific issues and so are too narrowly focused. They should therefore be revised and expanded to comprehensively address the underlying policy concerns which we identify. We provide specific recommendations as to how they should be revised. Corresponding provisions should also be enacted in respect of alternative insolvency proceedings, namely CCAA proceedings and receiverships.