1 (a). What are the general principles of the treatment of IP license agreements in insolvency proceedings? Is there a difference depending on the type of proceeding (e.g., a court-appointed receivership, a bankruptcy, a restructuring, etc.)?
In Canada, IP licensing agreements are generally viewed as "executory" agreements and remain in force unless "terminated" by a so-called disclaimer or a court order. Debtors typically have the right to disclaim their IP licenses, though such requests can be rejected by the court. Even where an IP license is disclaimed, the licensee still has the continued right to use the IP and to assert rights of exclusivity, although the insolvent licensor may not have to perform certain additional obligations under the license. Upon the sale of IP assets in insolvency proceedings, buyers acquire IP licenses in accordance with their terms and must perform the accompanying obligations in the place of their original owner (except where the licenses are earlier disclaimed, in which case the licensee's rights are limited as noted).
1 (b). What are the laws governing the treatment of IP license agreements in insolvency proceedings?
In Canada, insolvency proceedings are governed primarily by the Bankruptcy and Insolvency Act (BIA) and the Companies' Creditors Arrangement Act (CCAA). The BIA is a self-contained code that deals with the liquidation of assets in a bankruptcy either where a bankruptcy trustee is appointed voluntarily or where a creditor seeks a bankruptcy order. Various sections in the BIA, including in particular sections 65 and 246.1, deal with licensing agreements. In CCAA proceedings, which are used by larger businesses seeking to restructure their debt, the key CCAA provisions are sections 11, 32 and 36. Notably, whereas a stay of a debtor's obligations is automatic under the BIA, a court has more discretion in CCAA proceedings.