In recent years, we have seen several bank closures due to financial difficulties. In fact, according to the Federal Deposit Insurance Corporation (FDIC), there have been 3 bank failures in 2023, but its only March. To this in context, there were 6 bank failures in 2021 alone. There have been 563 bank failures from 2001 through 2023.
When a bank fails, the FDIC steps in to take control of the bank’s assets and liabilities. The FDIC is responsible for selling off the bank’s assets, including its intellectual property assets, to cover the bank’s debts. This means that if a bank holds valuable intellectual property assets, those assets could be sold off to pay the bank’s debts in the event of a failure. It is important for businesses to be aware of this risk and take steps to protect their intellectual property assets.
Silicon Valley Bank (SVB) is known for its close relationship with venture capitalists and startups. So when it was closed and seized by the FDIC, it sent shockwaves throughout the industry. Silvergate Bank and Signature Bank failures followed soon after. As a bank, SVB, Silvergate, and Signature held various assets, including intellectual property (IP) assets. In the case of a bank seizure, its assets are sold to cover the losses, and it is important to understand how this process affects the IP assets held by the bank.
When an FDIC seizure occurs, the assets of the bank are typically sold off to other banks, private equity firms, or other entities that are interested in acquiring them. The sale of the assets includes the sale of the bank’s IP assets, which can include patents, trademarks, copyrights, and other forms of IP.
The sale of IP assets during an FDIC seizure is typically done through a bidding process, where interested parties submit bids for the IP assets being sold. The highest bidder is typically awarded the rights to the IP assets. It is important to note that the value of IP assets during this process is often significantly lower than their true market value, as they are being sold as part of a distressed asset sale.
Valuing IP assets during an FDIC seizure can be a complex process. The value of an IP asset is typically based on its market value, which is determined by the amount of revenue that the asset can generate. However, during an FDIC seizure, the market for IP assets is often limited, which can lead to lower valuations. In addition, the value of an IP asset can also be impacted by factors such as the strength of its legal protection and its relevance to the market.
It is important for companies to understand the value of their IP assets and how they may be affected by an FDIC seizure. This can be done by conducting a thorough IP audit and valuation, which can help identify the strengths and weaknesses of the company’s IP portfolio. This can help companies prepare for an FDIC seizure and ensure that they are able to maximize the value of their IP assets.
In conclusion, the FDIC seizure of a bank, such as Silicon Valley Bank, can have significant implications for the bank’s IP assets. Understanding how these assets are disposed of during the seizure process and how they are valued is critical for companies that hold IP assets. To ensure that your company’s IP assets are in order and to better understand how they may be affected by an FDIC seizure, it is recommended that you schedule a call with Patent Insider to conduct a thorough IP audit and valuation.