What are the three benefits of an IP holding company?

Protecting and managing intellectual property (IP) rights is of great importance to many businesses. Indeed, IP rights such as software, know-how, trademarks, logos, trade and domain names are often valuable to a company. An effective way to protect and manage these IP rights is to house them in a separate holding company. The working B.V. then uses these rights based on permission – a license – from the holding company. The working B.V. pays the holding company a fee for this. In this article I tell you more about the advantages of a so-called “IP holding company”.

Advantage 1: Protection from business risks

The main advantage of an IE holding company is the protection of this from risks. The operating company, also called the working BV, bears most of the (financial) risks. Think of customers filing claims against your operating company, starting lawsuits or even filing for bankruptcy. By placing your IP rights not in the working BV but in a separate holding company, these rights are not directly recoverable and can be seized. This is because the IP holding company has no direct involvement in the day-to-day operations of the working B.V. Should your working B.V. go under due to legal liability or even bankruptcy, this will leave your IP holding company unharmed. Your IP rights are therefore less at risk in an IP holding company.

Benefit 2: Centralization of IP rights

Does your company have several subsidiaries or do you plan to grow in the future? For example, because you sell different types of products and do so from a different limited liability company for each product. Then an IP holding company offers the advantage of centralized management of all IP rights. By centralizing your IP rights in a holding company, you prevent these rights from being scattered across different subsidiaries.

Benefit 3: Flexibility when selling a business

Another advantage of an IE holding company. Suppose you want to sell your company, a holding company structure offers flexibility. For example, you can then choose to sell only the working B.V. with its licenses obtained from the IP holding company. Then you keep your holding company with its IP rights and the license income. This gives you the opportunity to continue working with the same technology or brands, or to sell these IP rights at a later date.
Note that a potential buyer may also be interested in acquiring (part of) the IP rights. Do you choose to transfer all IP rights? Then you can transfer all rights separately. You can also choose to transfer the shares of the holding company itself. This may be easier if, for example, you have many IP rights registered in different countries.

Is there anything else you need to consider?

Yes, if you opt for an IP holding company, one thing you must take into account is that the IP rights must be transferred to the holding company. This requires a deed of transfer, recording that the rights are transferred from the working IP BV to the holding company. After the IP rights are transferred to the IP holding company, the working B.V. must obtain a license agreement from the holding company in order to still be able to legally use the IP rights.

But that is often not all, and additional actions need to be taken. Possibly your working B.V. had already granted licenses to third parties. Is this the case? Then these must now be granted by the IP holding company. Thus, those contractual lines must also be adjusted.

Are you considering an IP holding company? Then feel free to contact us. We can think along with you and tell you what else you should take into account in your situation.

Contact

Do you have any questions as a result of this article? Then contact one of our attorneys by mail, phone or fill out the contact form for a free initial consultation. We are happy to think along with you.