Vol 21 (2024) - Issue 3

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Treatment of Intellectual Property in the Bankruptcy Legal Framework of the UAE

Synopsis
Intellectual property (IP) forms an essential part of modern innovation, spurring invention, protecting creators and businesses, generating royalties and, subsequently, recording knowledge for future generations. Different formats of intellectual property rights have existed for centuries. In our knowledge-based economy, logarithms and information are vital keys to a business’ profits and future and licenses, with royalties and licenses drawing in a large proportion of any given nation’s economic growth.
The United Arab Emirates (UAE), like other Arab countries, has made efforts to reform bankruptcy laws in recent years. One of the main reasons for these sudden changes in roughly the last four or so years is that these Arab countries have been making efforts to comport with international standards and to facilitate economic growth. Regardless, there are gaps in the laws, where they are not yet fully developed in these areas.
The modernisation of bankruptcy law in UAE presents the question of how IP assets and bankruptcy proceedings relate and intertwine. Although the interrelationship between IP and bankruptcy laws may not seem apparent, these two areas have increasingly intermingled as the protection of IP has become more widespread. The UAE as displayed interesting developments in both bankruptcy and IP.
In general, IP assets are relevant to bankruptcy proceedings in that, IP assets and bankruptcy systems can conflict in their treatment of IP assets. If IP assets are considered and treated as tangible assets, they may affect the outcome of bankruptcy proceedings. Furthermore, when a debtor infringes upon the rights of another party’s IPR, this can become problematic as well. Since IP laws protect inventors against infringement and oftentimes bankruptcy laws give debtors leeway by imposing automatic stays on action against them, among other things, this creates friction between the intended purposes of these laws and protections.
Currently, UAE bankruptcy law does not provide for IP to be exempted from bankruptcy proceedings – this would be a major development that may or may not occur as laws continue to change.
This article examines analyses bankruptcy law in the UAE and how IP assets are treated in bankruptcy proceedings. The article starts with a discussion of the UAE bankruptcy law and some of the important changes brought about by this. Then, the article covers the interaction between IP and bankruptcy. The article emphasises issues of Valuation, Monetisation of IP with special focus on licensing and perfecting security interests in IP. Finally, the article concludes with a set of conclusions and recommendations.