Authors' IP Rights Off Limits to Creditors - International Law Office

Section 2(2) of the Creditors Recovery Act provides that creditors are entitled to claim an interest in any asset belonging to a debtor if the asset can be sold, leased or otherwise converted into money. There are several statutory exceptions to this main rule.

The extent to which a creditor may claim an interest in a debtor's IP rights is dealt with in Section 39(l) of the Copyright Act. This states that an author's right to dispose of a literary, scientific or artistic work is not affected by any execution or other enforcement order from its creditors.

This limitation will also apply:

• to IP rights held by a third party, provided that the rights were transferred as a consequence of the author's death (under Section 39k of the Copyright Act);
  
  
• to manuscripts or similar copies, or plates or moulds created to reproduce a specific work of art; and
  
  
• to works of art which have not been exhibited, offered for sale or in any other way approved for public issue.

These limitations on the creditors' right to seize IP rights do not apply to debtors who have acquired the rights. However, their creditors are subject to further restrictions in seizing such rights. Section 39b states that any acquired right may not be sold without the author's consent, unless the right is part of a business activity and is assigned as part of a sale of the business. If these requirements are not met, the holder of acquired IP rights, and consequently its creditors, may not convert the rights into money through a sale. Therefore, the right cannot be seized by the creditors.

These restrictions only apply to the IP right itself. The creditors are free to seek satisfaction from any proceeds derived from the right. The creditors may also seek satisfaction from works of art that the author has approved for public issue. Thus, the law distinguishes between the IP right itself and the proprietary right to a certain work of art.

The limitations apply both to individual creditors and to estates in bankruptcy seizing assets belonging to a debtor.

For further information on this topic please contact Aksel Hillestad at Arntzen de Besche by telephone (+47 23 89 40 00) or by fax (+47 23 89 40 04) or by email (aksel.hillestad@arntzendebesche.no).