• IP Licence Provided Contractual Right, Not a Property Right in the Asset
  • October 20, 2016 | Authors: Jillian Brenner; Adrian J. Howard; Beverley Moore; Chantal Saunders
  • Law Firm: Borden Ladner Gervais LLP - Ottawa Office
  • Golden Opportunities Fund Inc v Phenomenome Discoveries Inc, 2016 SKQB 306

    The Applicant, the court appointed receiver, sought an order approving the sale of the Debtor's assets, and vesting the Debtor's assets free and clear of encumbrances, except for those permitted by the Purchase and Sale Agreement. Yol Bolsum Canada Inc. ("YCBI") objected to the relief sought by the Receiver pertaining to the draft Vesting Order. YCBI asserted that it had an interest in the property of the Respondent, provided by a Licence Agreement, which the Receiver sought to sell. Counsel for YCBI suggested that s. 65.11(7) of the Bankruptcy and Insolvency Act and s. 32(6) of the Companies' Creditors Arrangement Act now prohibits a receiver from disclaiming an agreement pertaining to intellectual property.

    The Court noted that these sections did not apply to court-appointed receivers. Rather, the Court found that the decision in Royal Bank of Canada v Body Blue Inc. (2008), 2008 CanLII 19227 (ON SC) continued to apply to licences within the context of court-appointed receiverships. In that case, the Court stated that a licence is a contractual right, and does not confer any interest or property in the thing being licenced.

    YBCI's right in the present case is a contractual right. Therefore, the Court concluded that YBCI is entitled to pursue a claim against the net sale proceeds, but has no property right in the assets of the Respondent that are the subject of the Receiver's sale.