Will they sell my husbands plant patent?

[mrscanthus]

My husband's filed chapter 7. The trustee said he was very interested in the patent because he had never dealt with anything like it before. My husband makes about $2000 yearly from royalties on the patent. Will they force the sale of it and if so, how will the value of the patent be determined?
My husband is really worried since this is about 10% of his yearly income.
Thanks in advance.

[AngelinaCat]

Before you confer with any bankruptcy attorneys, you probably better consult a copyright and patent attorney. What type of plant is it?

Also it will help to know what state you are in and if any state or Federal exemptions will apply.

Welcome to the Forum, by the way. Please excuse my lapse in manners.

[AngelinaCatHub]

Does he consider it part of his retirement funds? If he is retired he might just throw that stone in. Ask your lawyer. After all 1/10th forever is a huge price to lose. 'Hub

[mrscanthus]

Will they sell my husbands plant patent?

Thanks for the welcome.We're in Michigan and have already filed chapter 7 and had the 341 hearing.The patent is in my husbands name and he is not retired.He's really concerned because the trustee seemed so interested in the patent...also he received a Notice of Possible Dividend to Creditors yesterday but nothing is listed as to what "monies" would be used as dividends.He has a mortgage on our home and a car loan, both of which have no equity and he has stated his intent to reaffirm both loans.He doesn't own anything else except a lawn mower and a business he runs from home.Can the trustee take any money from his business account?Should he pay himself (wages) what's in that account?

[whipster1]

An asset is an asset. Your attorney should have taken this into account, but if all he receives is 2000/yr there may not be much liquidation value there. It should get appraised to see what the present value is. If the present value is substantial the trustee may try to sell it, if not then he will abandon it.

[HHM]

I agree with Whisper, an asset is an asset.

There is NO way this BK should have been filed without at least doing some background on the issue. The basic questions you ask when you have an asset.
1. How much is the asset worth.
2. Are there any loans against the asset.
3. Is the asset (or equity in such asset) exempt or non-exempt.

If the asset is non-exempt, has more than a 0 equity value, and you file BK, it is at risk to seized by the BK trustee.

This patent is probably toast, the real question, as already pointed out, does it have any actual liquidation value. The trustee cannot take the asset to get at its income stream, he needs to liquidate it to pay creditors.

[fortunateson]

Somewhat related...

I have a provisional patent filed, which merely holds the invention date of an idea I had. A utility patent (which definitely is property) has not been filed, issued, or published. I can't afford to file for a patent since I am indigent, but once I clear my debts and accumulate a bit of money, I may try to. It's really a down payment on assuming even more debt to attain speculative valuation. Lawyer fees are typically $10,000 to $20,000 for the filing process with no guarantee it will issue.

Since I'm merely putting a date on hold so far and have not filed for a patent, do I need to list the provisional as an intangible asset in a Ch 7 filing? I would think not, since there is no value (filing fee is <$200) and it's a down payment on a money pit with indeterminable valuation, if it even issues (there's a big hurdle at the patent office just to issue the patent).

I've looked high and low, checked the couch cushions, looked under the carpets and there's nothing I could find, about whether provisional patents, which commemorate the original date of the idea and have no claims, are required to be listed as intangible assets, on the Internet.

Thanks in advance

[despritfreya]

I have a provisional patent filed. . . Since I'm merely putting a date on hold so far and have not filed for a patent, do I need to list the provisional as an intangible asset in a Ch 7 filing? I would think not, since there is no value. . .

You list it as an intangible with a proper description and an "unknown" value. What has no value in your mind may be worth millions to a Trustee and it is not up to you to determine what is or is not "valuable". It is an asset (potential property right) therefore it is listed.

What you do not want is finding out down the road that this asset does have significant value and, due to your failure to disclose it, you do not own it.

Des.

[fortunateson]

Thanks for the prompt reply, Des.

So, I do what you say, let's say I list the provisional and file on Monday for BK as a hypothetical. Provisional patent (it's holding the date, not the invention) expires end of that week.

On Thursday (remember, this is hypothetical, my understanding is that even the following day I am clean of debt and can try to rebuild my life and gain a source of income if the BK gets approved) I file an actual patent for the invention because I'm allowed(the trustee does actually, but the patent office will still allow me to file in my own name even though the trustee is sitting on the estate's right to file) to file on or before Friday. There I incur a further debt of $20,000 in lawyer fees. That is paid by an arm's length investor I have available to me. The provisional is worthless because it was not liquidated before it expired, which technically reverts it back to me, also worthless because it is an expired right.

The assignment of the patent right, a new thing of value and that the investor gains a property right to after the BK filing is when I file the patent, not the provisional. The provisional is worthless. Had I had a year, let's say, worth of runway on the provisional, it may be possible it could be sold by the trustee, but there's nothing that compels me to spend the money to file or sign the filing of a patent to turn it into a property right (it isn't one until I file the patent) and the buyer of the provisional has to file a patent, and I have to assign it to them, in order to create a value.

So the trustee is sitting on a right that expired by the time s/he gets to liquidating it, and the patent property right is something that didn't exist at the time of filing, but did due to my own acts and the investor's to create a property right after the BK filing date. The provisional is not a property right, it simply holds a date, a right for a buyer to file a patent - which they can't because the provisional has expired. It may have been worth millions, but because it expired it became worthless in the trustee's hands.

This is not weasel stuff - no investor in their right mind would put money into something they could not gain equity to and first liquidation rights. I think you can see how twisted this one is vs merely listing something, which I agree with you should be. It's what happens after the filing of the BK is what has me scratching my head. If I do nothing after the BK filing date, there is still nothing in hand for the trustee to liquidate. And while the trustee might hold the right to the provisional, in the eyes of the patent office, I can still file, which is what allows me to file and the trustee sits on an expired right that's worthless because they did not act to preserve the value of what was listed in the BK. Being a worthless right (it cannot be sold since it merely commemorates a date, nothing more), it has to revert back to me.

I appreciate your and anyone else's input here, since I cannot afford an attorney, I'm going to need to file pro se.

[despritfreya]

Unfortunately your hypothetical is too convoluted for a proper analysis in this type of a forum. Yes, this sounds like a cop-out, but patent law and what is or is not an intangible "asset" can be very complicated. Is an idea in your head an asset? Don't know. I suspect it depends upon how far along in the process you are. If you have an investor lined up and all that needs to be done is to put the plan in your head onto paper then, maybe that is an asset. What worries me is that you state (in the hypothetical) that 3 days after filing bk you might decide to "file an actual patent for the invention". Why isn't the "invention" a pre petition asset?

You really need to sit down with an attny (both a bk and a patent attny) to determine what is or is not an asset regardless of what value "you" think there may be. You just do not want to screw with this, especially if you think you can make a living off of this down the road.

Des.