24.4. Assignments and other interests: Bankruptcy and winding up

Bankruptcy

Under the Bankruptcy Act 1966, rights that are the personal property of the bankrupt pass absolutely to their registered trustee or the Official Trustee (Bankruptcy Act, s 58). This includes registered design rights; it does not include unregistered designs.

Any request to the Registrar to record the transfer of design rights to a trustee in bankruptcy must be accompanied by relevant proof, such as a sequestration order or other document or order declaring the current holder of design rights bankrupt.

As there will be no deed of assignment of the rights, the Register entry should refer to the sequestration order or other document that shows the trustee’s entitlement.

Example

The effect of bankruptcy on the ownership of a patent was discussed by the Administrative Appeals Tribunal in Reilly v Commissioner of Patents (1996) 36 IPR 314. The discussion at paras 29–38 of that decision covers matters directly relevant to the Designs Act and should be referred to when dealing with bankruptcy in relation to design rights.

Winding-up of companies

Companies can be wound up under a variety of circumstances. The winding-up process involves a redistribution of the company’s assets.

When a company is insolvent, a liquidator will handle the winding-up. The liquidator has full powers to deal with the assets of the company. This includes assigning any design rights of the company.

When a company is voluntarily wound up, the redistribution of assets, including design rights, should happen before the company is deregistered. If it does not, generally the company will need to be reconstituted so that the assets can be distributed in accordance with law.

It is not enough for a ‘former director’ of a company to assert that the rights in a design belong to them following deregistration. There needs to be a formal assignment from the company to them – and this cannot occur after the company has been deregistered. If there has been an assignment after deregistration, it will need to be redone once reinstatement occurs (since entry on the Register does not establish validity of title). However, in some circumstances it is possible for ASIC to execute the assignment on the company’s behalf.