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What happens to the assets of an LLC that has not been operational for 4 or more years.

Augusta, GA |

The owners of the patent assigned the patent to the LLC, there are also members of the LLC. The LLC has 18 members. The patent could not be sold since the Operating Agreement required all members to agree on the sell or use of the patent. They did not agree to sel, brand or use the patent after the company became non-operational. You can never get 100% agreement on anything, therefore the LLC could no longer operate. Can the original owner of the patent "take back" ownership of the patent?

Attorney Answers 2

Posted

Your experience is one of the reasons I often advise clients to use something other than an LLC. In my view, LLC's are not designed for more than a few members. Unless you have an operating agreement with a manger or managing member you get governance by committee and the problem you have experienced. As the story goes they went to create a horse by committee and ended up with a camel.

The owner cannot simply take back the patent, unless there was an agreement allowing that. It sounds like you may need to dissolve the LLC, either by agreement or by judicial act. It is possible that a court would as a matter of equity give the patent back to the owner if the LLC failed to capitalize on it.

There are doubtless details beyond what you have said here and any and all agreements are terribly important, but dissolution may be the answer.

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Posted

No, not unless such a "take back" was part of the agreement when it was contributed to the company. Until the patent is sold or transferred pursuant to the dissolution of the company, it remains an asset of the LLC.

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