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Glenn Murphy of RatnerPrestia. Glenn Murphy of RatnerPrestia.

Both Forbes and the New York Times report that about 20% of new businesses formed in 2021 will fail within their first year of existence, about 30% within two years, about 50% within five years, and about 70% will fail by their tenth year. But even those that fail will create or acquire valuable assets, including some forms of intellectual property, whose value may survive the existence of the enterprise. For businesses that thrive and grow, they may too cease operations, whether due to a merger or other reorganization, a sale of the business or its assets, or a bankruptcy or other judicial proceeding. Whether you are a founder, shareholder, officer, director, executive, or other responsible employee, or a legal adviser to any of them, you will encounter the dissolution and winding up of a business, probably sooner than you expected. In the inevitable event that a business closes its doors, many problems involving intellectual property may be avoided by the exercise of due diligence at the inception and during the life of the business.

“Intellectual property” broadly encompasses a class of intangible assets whose use requires the consent of the owner. Typically associated with patents, trademarks, copyrights, and trade secrets, intellectual property includes any confidential information that could be the subject of any of these specific rights, or that has value independent of such rights, including confidential commercial information, software, databases, and other proprietary collections of information created or accumulated during the life of the business. For purposes of dissolution winding up, these intangible assets are treated the same as the physical assets of the enterprise.

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