Answer first: South Africa’s challenging economic environment is driving many businesses toward rescue or liquidation, yet intellectual property (IP)—a critical asset—is frequently neglected. With the rise of artificial intelligence accelerating IP creation, it is vital for business rescue practitioners and liquidators to audit, ma…
Patents context for IP teams
South Africa’s tough economic climate is once again pushing many businesses toward rescue or liquidation. Despite this, one of their most valuable assets—intellectual property (IP)—is often overlooked during these critical processes.
The rapid adoption of artificial intelligence has accelerated the development of IP, making it increasingly important for businesses, practitioners, and liquidators to address IP management proactively before opportunities are lost.
Key takeaways for intellectual property in business rescue South Africa
- Confirm how the development affects patents ownership, enforcement, licensing, or portfolio records.
- Separate confirmed facts from legal interpretation before advising business teams.
- Map deadlines, affected assets, contracts, and evidence files to the responsible internal owner.
- Use the issue as a prompt for monitoring, filing strategy, dispute preparation, or member education.
Practical analysis
Every business owns IP, which broadly falls into two categories: registered and unregistered rights. Registered IP includes patents—such as those protecting chemical compounds in medicines—trademark registrations for valuable brands, registered designs for packaging or containers, and plant breeders’ rights safeguarding new plant varieties.
Unregistered IP encompasses copyright, trade secrets, and knowhow. Although harder to identify, recognizing unregistered IP is essential because both registered and unregistered rights grant businesses monopolies and portfolios of assets that can be commercialized in various ways.
A business rescue practitioner should begin by auditing the company’s IP to assess whether restructuring can enhance revenue or reduce liabilities.
Under section 136(2)(a) of the Companies Act 71 of 2008, a practitioner may suspend, fully or partially, any company obligation under an agreement—including IP licences—that would otherwise become due during rescue proceedings. To cancel such obligations, an urgent court application under section 136(2)(b) is required, which must be granted on just and reasonable terms.
If IP assets are dormant with no planned use, practitioners can license them to third parties to generate revenue or have them valued and sold.
When IP is already licensed, any restrictions on further exploitation must be reviewed. If the business is paying licence fees for unused IP, terminating the licence should be considered, subject to the statutory powers mentioned above.
For example, a struggling retailer holding a dormant trademark for a discontinued store brand could license or sell that mark to a competitor entering the same market. This approach can convert a dead asset into working capital for the rescue plan rather than allowing it to lapse.
IP portfolios can be extensive and costly to maintain. Trademarks require renewal every 10 years, while patents and registered designs incur annual renewal fees starting from the third anniversary of filing.
If IP is unused, abandoning registrations may reduce company liabilities. Alternatively, collaborating with third parties to revive dormant IP can refresh the portfolio and provide lenders with confidence to extend capital.
In liquidation, a common misconception is that IP loses value once a company enters the process. On the contrary, IP can be critical to ongoing operations, especially for technology-driven companies reliant on software or proprietary systems.
Upon liquidation, all property—including IP—is sold, with proceeds distributed among secured, preferred, and concurrent creditors. Therefore, liquidators must identify and value the company’s IP before any sale.
Unfortunately, IP is often overlooked in liquidation, which can diminish creditor returns. Valuable registered IP frequently remains registered in the name of a liquidated company at the Companies and Intellectual Property Commission.
Related IIPLA reading
Unlocking the Value of Intellectual Property in South African Business Rescues and Liquidations South Africa’s challenging economic environment is driving many businesses toward rescue or liquidation, yet intellectual property (IP)—a critical asset—is frequently neglected. With the rise of artificial intelligence... Read the full IIPLA blog post: https://iipla.org/blog/unlocking-the-value-of-intellectual-property-in-south-african-business-rescues-and-liquidations