Transferring IP of Deregistered Companies

Authors: Zeinab Farhat and Gianluca Pecora, Progressive Legal

Company deregistration is not always bad thing – in fact, many small-to-medium-sized businesses strategically deregister as part of corporate reorganisation or to assist with selling company assets. However, a deregistered company can create significant problems if intellectual property rights are neglected during the deregistration process.

Upon company deregistration, outstanding property vests in the Australian Securities and Investments Commission (ASIC) and can no longer be dealt with. This can come as surprise to companies who forget about their intellectual property when undergoing deregistration. 

To avoid losing valuable intellectual property, it is important for companies to transfer ownership before deregistration occurs. Alternatively, it is possible to reinstate a deregistered company. In the worst-case scenario, intellectual property rights can be transferred by ASIC directly. This article will consider: transferring intellectual property, reinstating a deregistered company, applying for transfer by ASIC and key takeaways. 

Transferring Intellectual Property

What is deregistration of a company? 

Put simply, where a company is deregistered, this means that the company no longer exists as a legal entity. Company officeholders are also no longer required to continue their obligations upon deregistration.  

In relation to transferring intellectual property, companies should aim to transfer all valuable intellectual property before the company is deregistered. This can be done by an assignment of intellectual property.

Assigning ownership of a trade mark

Section 106 of the Trade Marks Act 1995 (Cth) provides provision for the assignment of a registered trade mark, or a trade mark that’s registration is being sought.  

To transfer a trade mark, it is necessary for the registered owner to inform IP Australia. Assignment of a trade mark occurs via a deed of assignment between the current owner (‘the Assignor’) and the proposed owner (‘the Assignee’).  

At a basic level, a deed of assignment should: 

• set out the trade mark(s) being assigned; 
• clearly state that the title is being transferred from the Assignor to the Assignee; 
• protect the interests of both the Assignor and Assignee; 
• comply with legal requirements; and 
• outline whether a full or partial assignment is being sought.

Full Assignment

Full assignment is the full or partial transfer of ownership title and full transfer of all the goods and/ or services which are claimed by the registered trade mark.

Partial Assignment

Partial assignment is the full or partial transfer of ownership title, with a partial transfer of good and services. This can result in multiple trade marks with the same representation but different owners of the associated goods and services. Section 106 of Trade Marks Act 1995 (Cth) also provides that a partial assignment cannot be “partial in relation to the use of a trade mark in a particular area”.

Completion

Once the agreement is signed by an authorised person from both sides of the transfer, title has been assigned. The parties should then inform IP Australia to record the assignment on the register.

What do IP Australia need?

To amend the register, IP Australia needs an approved ‘change ownership’ request form and also supporting evidence including: 

• date of assignment (or alternatively the date the contract was executed);  
• details of the Assignor’s name, ACN/ABN, address, and assigned trade mark number(s); 
• details of the Assignee’s name, ACN/ABN, address, and assigned trade mark number(s); 
• a clear statement about the agreement and transfer; and 
• the signatures of both parties including name, authority and any relevant consents – especially consent of co-owners in the case of partial assignment.

Deeds of Assignment

Deeds of Assignment create an irrevocable and permanent transfer of IP between an Assignor and Assignee.  

Deeds of Assignment can transfer many types of intellectual property such as domain name rights, trademark rights, patent rights, inventions, business names, copyrights, and source code.

Benefits 

Deeds of Assignment are beneficial because they create: 

• clear ownership; 
• permanent transfers; 
• risk mitigation; 
• enhanced value; and 
• legal protection. 

Accessing these benefits before deregistering your company allows you to retain ownership under a different entity even after the company has been deregistered.

Reinstating a deregistered company

Reinstatement via ASIC

Applying to ASIC to reinstate a company follows different steps for former directors, secretaries or members (‘Route 1’) and third parties (‘Route 2’). 

Follow these links for ASIC’s guides to Route 1 and Route 2. 

Some requirements for Route 1 include: 

• being director, secretary or member of the company at the time of deregistration; 
• being able to confirm that upon reinstatement the company will be able to pay its debts; 
• not being disqualified from managing corporations;  
• being able to provide supporting documentation as to why the company should not have been deregistered;  
• if deregistration was voluntary by the company, it will need to be proven that the declaration made in the application for voluntary deregistration was incorrect at the time of deregistration; and  
• if ASIC deregistered the company, the company may need to prove that this was an error. 

Some requirements for third parties considering Route 2 include: 

• having begun legal proceedings against the company before its deregistration; and 
• being able to provide copies of court documentation to evidence those legal proceedings. 

Reinstatement via Court Order

A person aggrieved by company deregistration – perhaps due to lost intellectual property rights – can apply to court for an order that ASIC reinstate the company. This process follows steps provided by ASIC in this link. 

This route may be sought if ASIC has refused reinstatement in Route 1 or Route 2, or if the aggrieved party doesn’t meet the relevant criteria for those routes.  

Applying for Transfer by ASIC

If reinstating the company is unsuccessful, the last resort is to apply to ASIC seeking a transfer of intellectual property rights to a different entity. In such cases, the former director or liquidator should submit evidence of the nature of the transfer and the reason why the intellectual property was not transferred prior to deregistration.  

ASIC has provided a checklist for former company members submitting applications for transfer of property under section 601AF of the Corporations Act 2001 (Cth). Section 601AF provides that “ASIC may do an act on behalf of the company or its liquidator if ASIC is satisfied that the company or liquidator would be bound to do the act if company still existed”. It is important to note that ASIC will typically exercise its powers to deal with vested property as a last resort.  

The checklist is available via this link. 

If ASIC does not accept the submissions, the intellectual property rights will not be recoverable.

Key Takeaways

It is difficult to transfer intellectual property rights from a deregistered company, so it is important to complete such transfers before deregistration occurs. In situations where this does not happen, there are processes for reinstating a deregistered company through ASIC or a court order.  

In the worst-case scenario, a lawyer can help draft submissions for ASIC to exercise their Section 601AF power to transfer property vested in them. However, the exercise of the Section 601AF power is often a last resort.

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