On September 18, 2009, after years of Parliamentary delay dating back to 2005, wide-ranging amendments to Canada's Companies’ Creditors Arrangement Act (CCAA) and Bankruptcy and Insolvency Act (BIA) (the “Amendments”) came into force, providing, among other things, new protections for licensees of intellectual property.
It is important to note that the Amendments only apply in the CCAA restructuring and BIA proposal context, and not to conventional bankruptcies or receiverships.
An insolvent licensor presents risk for licensees. Prior to the Amendments, intellectual property licensees were at serious risk of having their rights to use licensed intellectual property extinguished in a restructuring proceeding. The Amendments attempt to mitigate this risk, recognizing that intellectual property licences create unique concerns relative to other types of licences and can be of particular significance to a licensee’s business.
Below is a brief summary of the changes licensees and licensors can expect as well as a review of the new bargaining power dynamic as a result of the Amendments.