The fifth component of the Hoover Project on Commercializing Innovation studies how the possibility of bankruptcy can influence the way business deals are structured, even at the earliest stages of a venture. For example, bankruptcy proceedings do not compromise fundamentally the value of most tangible assets; tangible assets generally retain their value both during and after bankruptcy proceedings. Intellectual property assets are typically most valuable when they carry a credible threat of injunction. But the delay and coordination problems inherent in the bankruptcy system can leave a debtor’s IP rights under-enforced against infringers, even if the debtor-in-possession or trustee-in-bankruptcy has the proper incentive to pursue actively the enforcement of the debtor’s IP rights in bankruptcy. Further, there is some risk that a major transaction over the debtor’s IP could fail to occur in bankruptcy. Consequently, the bankruptcy process itself potentially can eliminate all, or at least a substantial portion, of the value of IP rights. Our project studies techniques for mitigating these risks, such as through the use of special purpose vehicles to hold title to IP assets, as well as for putting these risks to everyone's collective advantage, such as through private ordering solutions to the so-called anticommons problems.
Selected works on Bankruptcy:
IP Transactions: On the Theory & Practice of Commercializing Innovation, 42 Houston Law Review 727 (2005), F. Scott Kieff.
An Approach to Intellectual Property, Bankruptcy, and Corporate Control, 82 Washington University Law Quarterly 1313 (2004), F. Scott Kieff and Troy A. Paredes.