Carve-Out, Divestiture, and Brand Separation Toolkit: Splitting Assets, Transitional Rights, and Migration

By Casey Scott McKay · 2025-06-03

A carve-out asks a question no company has ever had to answer about itself: which half of the business owns each thing. This toolkit assembles the working material for practitioners on either side of a separation. It covers the asset identification exercise that has to precede any schedule, the four-bucket allocation that turns interviews into a document, the shared rights and cross-licences that arise wherever a single asset serves both businesses, and the transitional trademark licence that lets the divested business trade under a name it will not keep. It sets out the transition services layer, the recordation programme, the brand migration milestones, and the wrong-pocket machinery for the assets nobody found in time.

IP and Technology > IP and IT in Corporate Transactions | Toolkit | Published 3 June 2025 - Updated 3 October 2025 | Casey Scott McKay - marksy.us

Summary. A carve-out asks which half of a business owns each thing, a question the business has never had to answer. This toolkit covers asset identification, the four-bucket allocation schedule, shared rights and cross-licences, the transitional trademark licence and its quality control obligations, transition services and the software consents that constrain them, recordation across registries, brand migration milestones, and the wrong-pocket machinery for what nobody found in time.

Keywords: carve-out · divestiture · asset identification · allocation schedule · shared rights · cross-licence fields · transitional trademark licence · transition services · brand migration · recordation programme · wrong pocket · house mark · chain of title · software consent · know-how · post-closing governance

Start Here

A separation is a single question repeated across thousands of assets: which entity owns this, and what does the other one get?

Nothing in the company was built to be divided. Patents cover products in both businesses. A house mark serves everything. A shared platform runs both operations. Engineers work across the line. Contracts cover the whole enterprise. None of it was structured for a split, because nobody anticipated one.

The schedule is the deal. The intellectual property allocation schedule is the operative document, and it is produced under time pressure by people who do not know the whole estate. Everything that goes wrong later traces to a line missing from it.

Time is the binding constraint. Signing to closing is typically months, and the identification exercise takes longer than anybody plans. The temptation is to describe assets by category rather than by item, and category descriptions produce disputes.

And separation continues after closing. Transition services run for a year or more, brand migration for longer, and recordation across dozens of registries longer still. The transaction closes; the separation does not.

Four questions organise the work.

What is there?

Who gets each item, and what does the other side receive back?

How does the divested business operate under a name and systems it does not own?

And what happens to what nobody found?

See Splitting a Company in Two for the doctrinal treatment, Executing an IP Carve-Out for the sequence, and the Carve-Out and Divestiture IP Checklist for the working list.

Part one: asset identification

Start from the registers and know they are incomplete. Patents, trademarks, designs, and registered copyrights are the easy part, and they are a minority of what matters.

Interview the operators. Product managers, engineers, and marketers know what the business actually uses, and the registers do not. Ask what would stop working if it disappeared.

Enumerate the unregistered. Trade secrets, know-how, formulations, process parameters, customer lists, supplier terms, tooling, and the accumulated operational knowledge of a team. This is the category most often described generically and most often disputed later.

Enumerate the software. Owned code, licensed code, open source components, development tools, and internally built systems that nobody thinks of as software.

Enumerate the data. Customer records, transaction history, telemetry, models trained on it, and the rights under which each was obtained.

Enumerate the content. Photography, video, design assets, documentation, and training material, with the licence position for each third-party element.

Enumerate the marks in use, including unregistered ones: product names, programme names, internal names that reached customers, and domain names and social handles.

Enumerate the contracts that convey rights: inbound licences, outbound licences, development agreements, joint ventures, settlement agreements, and consent agreements. Settlement and coexistence agreements are the ones nobody finds and the ones with the sharpest consequences.

Check the chain of title as you go, because a carve-out is the moment an unassigned contractor deliverable or an unrecorded assignment becomes a closing problem. See the Employee Invention Checklist and the Assignment Recordal Checklist.

And record the source of every item, so the schedule can be defended rather than merely delivered.

Part two: the four-bucket allocation

Every identified asset goes into one of four buckets, and the discipline of forcing a choice is what makes the schedule usable.

Transferred. Assets used exclusively by the divested business, which move outright. The test is exclusivity of use, not origin: an asset invented by the retained business but used only by the divested one transfers.

Retained. Assets used exclusively by the remaining business, which stay. The divested business gets nothing, and should confirm it needs nothing.

Shared — transferred with a licence back. Assets that move to the buyer with a licence back to the seller, typically where the divested business is the principal user.

Shared — retained with a licence out. Assets that stay with the seller with a licence to the buyer, typically where the retained business is the principal user or where the asset is a house mark or a platform.

Force a decision on every item. "To be agreed" in a schedule is a dispute with a delivery date.

Define the licence fields precisely for every shared asset: field of use, territory, exclusivity, duration, sublicensing, improvements, and whether the licence survives a change of control of either party.

Field-of-use definitions are the hard part, because the two businesses will both grow toward the boundary. Define by reference to something durable — a product category, an application, a customer type — rather than by reference to the current product line, which will change.

Improvements should stay with the improver, with no obligation to share, unless the parties have a genuine reason to structure otherwise.

Address exclusivity honestly. An exclusive licence in a field constrains the licensor permanently, and a seller granting one should know it is doing so.

And price the shared bucket, because a royalty-free perpetual licence is a transfer of value that should appear in the negotiation rather than in a schedule.

Part three: the house mark and brand separation

The brand is where separations become emotional and where the drafting matters most.

The house mark usually stays with the seller, and the divested business needs to trade under it while it builds a new identity.

The transitional trademark licence is the instrument: a limited, non-exclusive, non-sublicensable, royalty-free or nominal licence to use the house mark for a defined period, in defined territories, on defined goods and services, in defined forms.

Quality control is mandatory, not optional. A trademark licence without adequate control risks abandonment, and the licensor remains responsible for what the licensee does under its name. Specify standards, inspection rights, and approval of new uses. See Naked Licensing and the Trademark License Quality Control Checklist.

Set milestones rather than a single deadline. Signage by month six, packaging on the next production run, digital properties by month nine, uniforms and vehicles by month twelve, and legacy inventory sold through by month eighteen. A single cliff produces a request for an extension; milestones produce progress.

Address the transition mark. Many separations use a "formerly [House Mark]" or "a [House Mark] company" formulation. Define exactly what is permitted, for how long, and in what typography, because this is the usage most likely to persist.

Address the divested business's new name early: clearance, registration, domain acquisition, and the launch sequence. Clearance takes months and separations run on tighter timetables than trademark practice comfortably allows. See the Startup and Founder Brand Toolkit for the clearance discipline.

Split product marks properly. A product mark used by both businesses cannot simply be shared: two owners using the same mark for related goods is a recipe for confusion and for a challenge to both. Either divide by territory with a coexistence framework, or one side rebrands.

Coexistence agreements may be needed where marks are genuinely close, with territory, goods, and format conditions. See the Concurrent Use and Consent Agreement Checklist.

Domains and handles should be allocated item by item, with transfers scheduled and redirects agreed. A handle nobody allocated is a handle somebody keeps.

And plan the customer communication, because a brand migration executed without telling customers looks like a business failing rather than a business separating.

Part four: transition services and the software problem

A divested business runs on the seller's systems and cannot stop on closing day.

The transition services agreement is a services contract with an intellectual property layer that is usually thin and should not be.

Address the licence. Providing a service that involves the buyer using the seller's software requires a licence, and the transition services agreement should grant it expressly for the term and the purpose.

Third-party software consent is the recurring blocker. The seller's enterprise licences frequently do not permit use by or for a third party, and the divested business is now a third party. Identify every material licence, check the affiliate and transition provisions, and approach vendors early. Some will consent for a fee; some will require the buyer to take its own licence; some will refuse, and the answer determines the migration timetable.

Data separation is technically hard. Shared databases, shared identity systems, and shared analytics platforms hold both businesses' data, and separating them takes longer than anybody estimates. Address who may access what during the transition and how the separation will be verified.

Data protection obligations must be allocated: who is controller for what, who handles consumer rights requests, and who notifies on a breach during the transition period.

Define exit clearly. What the buyer receives on termination of each service: data in a specified format, configuration, documentation, and a defined assistance period.

Address extensions. Transition services always overrun. Provide for extension on notice, at a stated escalating rate, rather than requiring a renegotiation under pressure.

Address improvements made during the transition to shared systems, and who owns them.

Reverse transition services are common and are frequently forgotten: the seller may need something from the divested business, particularly where the divested unit held a capability the retained business used.

And connect this to the wider technology diligence, since a separation surfaces every unrecorded licence and every open source obligation in the estate. See Copyleft and Consequences and the Software Data and Open Source Toolkit.

Part five: recordation and registry work

The transaction closes; the registries do not know.

Build a recordation programme covering every jurisdiction in which a transferred right is registered. For a mid-sized portfolio this is hundreds of filings across dozens of offices.

Sequence it against the deadlines. Some offices impose time limits for recording a transfer; some require translations, notarisation, or legalisation; some require the original assignment; and some will not act on a request from a party not recorded as owner, which creates an ordering problem where a chain has intermediate steps.

Record intermediate transfers first. A portfolio transferred to a special purpose vehicle before the sale requires two recordations in the correct order.

Watch the renewal calendar during the transition. A renewal falling due while a transfer is pending, filed by the wrong entity or missed entirely, loses a right permanently. Assign responsibility for renewals explicitly and by date.

Update the address for service in every jurisdiction, because office correspondence sent to the seller's agent after closing will not reach the buyer.

Record licences where the jurisdiction permits or requires it, particularly for the transitional trademark licence, which some registries treat as recordable.

Update customs recordations where marks are recorded for border enforcement, since a recordation in the seller's name is useless to the buyer. See the Anti-Counterfeiting Program Checklist.

Reconcile at the end. A post-recordation audit comparing the register against the schedule, item by item, which will find gaps. Budget for it.

Confirm the assignment carried the goodwill for trademarks, since an assignment in gross is invalid under 15 U.S.C. § 1060. See Trademarks in the Deal.

And release the security interests over transferred assets before or at closing, since a lender's recorded interest survives the sale and surfaces at the next transaction.

Part six: wrong pockets and post-closing governance

No identification exercise is complete, and the transaction should say what happens when that becomes apparent.

The wrong-pocket clause provides that an asset used exclusively by one business but allocated to the other will be transferred on request, at no additional consideration, with each party obliged to execute the documents.

Define the test. Exclusive use by the other business as at closing is the usual formulation, and it should be stated rather than left to argument.

Set a period. Wrong-pocket clauses that run indefinitely become a channel for renegotiation; twelve to twenty-four months is usual.

Provide a mechanism. A named contact on each side, a written request, a response period, and an escalation route. Without a mechanism the clause produces correspondence rather than transfers.

Establish post-closing governance. A joint committee, meeting monthly at first and quarterly later, addressing wrong-pocket requests, licence field questions, transition service issues, and brand migration progress. It costs an hour a month and prevents most disputes.

Agree a dispute route short of litigation: escalation to named executives, then expert determination for factual questions such as whether an asset was exclusively used.

Address enforcement cooperation. Where a shared asset is infringed, who sues, who pays, who controls, and how any recovery is split. This is routinely unaddressed and is the question that arises first.

Address prosecution of shared families. Who prosecutes, who pays, who decides on abandonment, and what rights the other party has if the owner lets a case lapse.

Address maintenance and renewal of shared registrations, with a right for the licensee to step in and pay if the owner does not.

And schedule the migration reviews, because a brand migration with milestones and no review meeting is a brand migration that slips.

Clause bank

Allocation and wrong pocket. Intellectual property is allocated in accordance with Schedule [A]. If, within [24] months of Closing, either party identifies an item of Intellectual Property that was used exclusively in the other party's Business as at Closing and that was allocated to it, that party shall, on written request, transfer or licence the item to the other in accordance with the allocation principles at clause [X], for no additional consideration, and shall execute all documents reasonably required. Requests shall be made to the Contact named in Schedule [B], which shall respond within [30] days. Disputes as to exclusive use shall be referred to the Expert under clause [Y].

Shared asset cross-licence. Seller grants Buyer a non-exclusive, worldwide, perpetual, irrevocable, royalty-free, transferable licence under the Retained Patents listed in Schedule [C] to make, have made, use, sell, offer for sale, and import products and services in the Buyer Field. Buyer grants Seller a corresponding licence under the Transferred Patents in the Seller Field. Each licence includes the right to sublicense to affiliates and to suppliers and customers to the extent necessary for the licensed activity. Neither licence extends to improvements made after Closing by the licensor. The Buyer Field and the Seller Field are defined at Schedule [D] by reference to application rather than to any product existing at Closing.

Transitional trademark licence. Seller grants Buyer a non-exclusive, non-transferable, non-sublicensable, royalty-free licence to use the Licensed Marks solely in connection with the Divested Business, in the Territories and on the goods and services listed in Schedule [E], in the forms set out in the Brand Guide, until the applicable Migration Milestone. Buyer shall comply with the Standards, shall permit Seller to inspect on [notice], and shall submit any new use for approval. Buyer shall not register, or apply to register, any mark incorporating or confusingly similar to a Licensed Mark. All goodwill from Buyer's use enures to Seller. Buyer shall achieve each Migration Milestone by the date stated, and shall certify completion.

Migration milestones. Buyer shall complete: exterior and interior signage by [month 6]; packaging and labelling on all production commencing after [month 6], with existing stock saleable until [month 18]; digital properties, including websites, applications, and social media, by [month 9]; uniforms, vehicles, and stationery by [month 12]; and all remaining uses by [month 18]. Buyer may use the phrase "formerly [House Mark]" in the form specified until [month 24] and not thereafter. Seller may extend any Milestone in writing. Failure to achieve a Milestone entitles Seller to require immediate cessation of the affected use.

Transition services intellectual property. Seller grants Buyer, for the term of each Service and solely to receive it, a non-exclusive licence to use the Seller Systems identified in the Service Schedule. Seller warrants that it holds the third-party licences necessary to provide each Service to Buyer, or has identified in Schedule [F] each Service for which a consent is outstanding. Where a consent is refused, the parties shall agree an alternative or shall terminate that Service without liability. On termination of a Service, Seller shall deliver Buyer's data in [format] within [30] days, together with configuration and documentation, and shall provide [60] days of migration assistance at the rates in Schedule [G].

Enforcement of shared rights. Where a Shared Right is infringed in a party's Field, that party may enforce it at its own cost and shall control the proceedings, and shall retain any recovery. The other party shall provide reasonable assistance, including joining as a party where required for standing, at the enforcing party's cost. Where infringement affects both Fields, the parties shall confer and shall agree control, cost, and recovery sharing before either commences proceedings. Neither party shall settle in a manner that admits invalidity or unenforceability, or that grants a licence in the other's Field, without the other's consent.

Worked scenarios

The schedule described by category. A divestiture schedule allocates "all patents relating to the Divested Business" rather than listing them. Eighteen months later the parties disagree about a family covering a component used in both product lines. The clause is unresolvable on its face and the dispute costs more than the identification exercise would have. Item-level schedules are tedious and they are the deliverable.

The consent that was not obtained. A transition services agreement provides for the seller to run the divested business's enterprise resource planning system for twelve months. The seller's licence prohibits use for the benefit of a third party. The vendor, approached three weeks before closing, quotes a substantial fee and a four-month negotiation. The divested business operates without a functioning system for two months. Vendor consents should be identified in diligence and pursued from signing.

The mark that neither side could use. A well-known product mark is used by both businesses. The schedule allocates it to the buyer with a licence back to the seller for its own products. Both now sell related goods under the same mark, customers are confused, and the mark's distinctiveness erodes. A coexistence framework with clear territorial and product boundaries, or a decision that one side rebrands, would have preserved the asset. Sharing a mark between two independent companies in adjacent markets is rarely a solution.

The renewals nobody owned. During a nine-month recordation programme, four trademark renewals fall due. The seller's agent believes the buyer is handling them; the buyer believes the transfer has not completed. Two registrations lapse, one in a jurisdiction where the mark cannot be refiled without a use gap. The allocation of renewal responsibility, by date and by name, is a one-page schedule.

Failures that recur

Schedules describing assets by category rather than by item.

Unregistered rights described generically, leaving know-how and trade secrets unallocated in substance.

Settlement and coexistence agreements not found during identification, and discovered when they constrain the buyer.

Licence fields defined by reference to current products, which change.

A transitional trademark licence with no quality control provisions.

A single migration deadline instead of milestones, producing an extension request.

Third-party software consents not identified until closing.

Data separation underestimated, so shared systems persist past the transition period.

Recordation sequenced wrongly, so an office refuses to act.

Renewals unassigned during the transition, and rights lost.

Customs recordations left in the seller's name.

No enforcement or prosecution provisions for shared rights.

No wrong-pocket mechanism, so the clause produces correspondence rather than transfers.

And no post-closing governance, so every question becomes a negotiation between deal teams that have moved on.

Part seven: the timetable

A separation runs on a fixed calendar and the intellectual property workstream is the one most likely to slip.

Pre-signing. Preliminary identification from the registers. A view on the house mark. Identification of any settlement, coexistence, or exclusivity agreement that constrains the deal. A first pass on third-party software consents. This work informs the price and the structure, and doing it after signing means renegotiating.

Signing to closing, first third. Complete the identification interviews. Build the item-level inventory. Begin the four-bucket allocation. Approach the vendors whose consents are needed. Begin new brand clearance for the divested business.

Middle third. Finalise the allocation schedule. Draft the cross-licences with field definitions. Draft the transitional trademark licence with milestones. Draft the transition services intellectual property provisions. Resolve the shared marks question. Complete chain-of-title remediation on anything transferring.

Final third. Lock the schedules. Prepare the recordation pack for every jurisdiction. Assign renewal responsibility by date. Prepare the wrong-pocket mechanism and name the contacts. Prepare the customer and market communications.

Closing. Execute. Release security interests. Transfer domains and handles on a scheduled list.

First ninety days after. Begin recordation. Establish the governance committee. Start the migration milestones. Monitor renewals actively.

Months three to twelve. Recordation completion and audit. Migration milestones. Transition service exits, service by service. Wrong-pocket requests, which peak around month six when the divested business starts doing things it could not do before.

Months twelve to twenty-four. Final migration, legacy inventory sell-through, transitional licence expiry, and the closing reconciliation of the register against the schedule.

And build float into every stage, because the identification interviews always take longer, the vendor consents always take longer, and the recordation always takes longer.

Part eight: variations by deal type

A sale to a strategic buyer in the same industry produces the sharpest shared-rights questions, because the buyer is a competitor of the seller in adjacent fields and every licence field is contested.

A sale to a financial buyer produces a divested business with no infrastructure of its own, which makes the transition services layer and the software consents the dominant workstream.

A spin-off to shareholders has no third-party counterparty and therefore less adversarial negotiation, and correspondingly less rigour: schedules are drafted by one team for both sides and are frequently thinner than they should be. Insist on the same discipline.

A joint venture contribution transfers assets into an entity that both parties control, with the additional questions of what happens on deadlock and on exit, and whether contributed rights come back.

An asset sale of a product line is a small carve-out with the same structure and a shorter timetable, and the recurring failure is treating it as too small for a proper schedule.

A geographic separation — dividing a business by territory rather than by product — produces trademark coexistence questions as the primary issue and is the hardest brand structure to sustain long term.

A regulatory divestiture ordered by a competition authority adds an external deadline, a monitoring trustee, and a requirement that the divested business be viable, which raises the bar on transition services and on completeness of the asset package.

And a distressed separation compresses everything, with the additional problem that the seller may not survive the transition period, which makes the licence continuation analysis under Mission Product Holdings, Inc. v. Tempnology, LLC immediately practical rather than theoretical.

Part nine: the buyer's diligence

A buyer in a carve-out is acquiring a business that has never existed as a separate thing, and the diligence has to test whether it can.

Can it operate on day one? List every intellectual property input the divested business uses and confirm that each is either transferring, licensed, or provided under transition services. A gap here is not a valuation issue; it is an operational failure.

Is the schedule item-level? Category descriptions are a red flag and should be converted before signing, not after.

Are the licence fields workable? Model the buyer's three-year plan against the field definitions and identify where growth runs into the boundary. Renegotiating a field after closing is expensive.

Are the software consents obtained or obtainable? Get the list, get the status, and price the ones that are refused.

Is the chain of title clean on the transferring assets? Sample the most valuable families and trace them to a recorded assignment. Expect gaps in the earliest work.

What encumbrances travel? Existing licences granted to third parties, settlement and coexistence obligations, standards commitments, and security interests. An asset transferred subject to an exclusive licence somebody granted in 2014 is worth much less than the schedule suggests.

Is the brand migration achievable? Cost it. Signage, packaging, digital, uniforms, and inventory write-offs are a real number that buyers routinely underestimate.

Are the people coming? Know-how walks, and a carve-out that transfers a patent portfolio without the engineers who understand it has transferred a filing cabinet.

What is the trade secret position after separation? Both businesses lose control over information the other retains, and the reasonable measures analysis weakens on both sides. Address it with obligations in the separation agreement.

And what is the wrong-pocket exposure? Assume the schedule is incomplete, negotiate the clause accordingly, and do not accept a short period.

The three-day test

The quickest diagnostic on a separation takes three days and should be run before the schedules are locked. Pick the divested business's most important product and ask five questions.

Which items of intellectual property does it depend on, listed individually rather than by category? For each, which bucket is it in, and if shared, what field definition applies? Which third-party licences does it rely on, and has each consented to use by the divested entity? Under which brand will it be sold on day one, day 180, and day 540, and who owns each? And if an item turns out to be missing from the schedule, what is the mechanism for moving it, and who are the two named people?

A deal team that answers all five has a workable separation. A team that answers two has the ordinary position and will spend the first year after closing resolving it. A team that cannot answer the first has a schedule written by category, which is the single most reliable predictor of post-closing dispute in this field.

One paragraph to remember

A separation is an identification exercise with a transaction attached. Build the inventory item by item from interviews rather than from registers; force every item into one of four buckets; define shared licence fields by durable application rather than by current product; grant the transitional trademark licence with real quality control and staged migration milestones; identify the third-party software consents before signing, because they set the timetable; assign renewal responsibility by name and by date during the recordation programme; and negotiate a wrong-pocket clause with a mechanism and named contacts, because whatever the schedule says, something will be in the wrong place.

Documents that must exist

For each item: does it exist, who owns it, and can it be produced on request?

The asset inventory, item-level, with the source of each entry recorded.
The interview notes from the identification exercise.
The four-bucket allocation schedule, with no item marked "to be agreed".
Field definitions for every shared asset, drafted by application rather than by product.
The cross-licence agreements, executed.
The transitional trademark licence with the brand guide, the standards, and the milestone schedule.
The new brand clearance file for the divested business.
The coexistence agreement, where marks are shared or close.
The third-party software consent register, with status per licence.
The transition services schedule, with the intellectual property licence for each service.
The data separation plan, with controller allocation and verification method.
The recordation pack per jurisdiction, sequenced.
The renewal responsibility schedule, by date and by name.
The domain and social handle transfer list, with completion dates.
The customs recordation update list.
The security interest release confirmations.
The wrong-pocket mechanism, with named contacts on both sides.
The governance committee terms of reference and the meeting record.
The enforcement and prosecution provisions for shared rights.
The post-recordation audit reconciling the register against the schedule.

A note on the identification interviews

Everything in this toolkit depends on an exercise that looks clerical and is not: sitting with the people who run the business and asking what they use.

The registers will not tell you. The finance system will not tell you. The contract database will tell you a fraction. What tells you is a product manager saying "we could not ship without the calibration data from the Hamburg lab", or an engineer mentioning a licensed component nobody has thought about since 2019, or a marketer explaining that the product name customers actually use is not the registered one.

Those conversations take an hour each, forty of them are usually enough, and they produce the inventory that everything else rests on. They are also the first thing cut when the timetable compresses, which is why so many schedules describe assets by category.

The advice is simple and unglamorous: start the interviews before the deal is announced if confidentiality permits, run them in parallel rather than in sequence, and record what people say rather than summarising it. The separation that goes well is almost always the one where somebody did this properly in the first month.

The seller's side, briefly

Sellers approach separations as a disposal and should approach them as a retention exercise.

Protect what stays. The identification exercise is the seller's opportunity to confirm what the retained business needs, and a seller that allocates an asset to the buyer without a licence back has given away something it still uses.

Do not over-share. A cross-licence granted broadly to close the deal is a permanent constraint on the retained business, and it will be tested when the buyer grows into an adjacent field.

Keep the house mark clean. A transitional licence without control damages the mark the seller is keeping, and the seller bears that damage entirely.

Set migration milestones and enforce them. A buyer trading under the seller's name for three years because nobody chased the milestones has effectively acquired the brand.

Watch the trade secret position. The people going to the buyer take knowledge with them, and the seller's reasonable measures record should account for it rather than being weakened by a departure it authorised.

Charge properly for transition services, and price the extensions, because the buyer will need them.

And keep the governance meeting. The seller has as much interest as the buyer in resolving wrong-pocket questions quickly, because the alternative is a dispute with a company it will meet in the market for years.

A closing observation

The recurring lesson of separations is that a company does not know what it owns until somebody makes it divide.

Assets that have served both businesses for a decade turn out to have no clear home. Licences nobody has read turn out to prohibit the arrangement everybody assumed. Marks used interchangeably turn out to be registered to an entity that was dissolved in a reorganisation. Know-how that everybody agrees is central turns out never to have been written down.

None of that is a failure of the transaction team. It is the ordinary condition of a business that has grown without ever being asked the question. The separation asks it, once, under time pressure, with a price attached — which is why the identification exercise is worth more attention than the negotiation, and why the companies that come through separations well are usually the ones that had run an intellectual property audit before anybody proposed a deal.

Key Authorities at a Glance

Transfers and recordation. 35 U.S.C. § 261 on patent assignment and recordation; 17 U.S.C. § 204 and 17 U.S.C. § 205 on copyright transfers and recordation; 15 U.S.C. § 1060 on trademark assignment with goodwill.

Ownership foundations. 17 U.S.C. § 101 and 17 U.S.C. § 201 on work made for hire and initial ownership, with Community for Creative Non-Violence v. Reid; Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc. and FilmTec Corp. v. Allied-Signal Inc. on present assignment; 35 U.S.C. § 262 on joint owners.

Trademark licensing and control. 15 U.S.C. § 1055 on related company use; 15 U.S.C. § 1127 on abandonment; Barcamerica International USA Trust v. Tyfield Importers, Inc. on naked licensing; 15 U.S.C. § 1114 and 15 U.S.C. § 1125 on infringement; Dawn Donut Co. v. Hart's Food Stores, Inc. on territorial coexistence.

Exhaustion and licence scope. Impression Products, Inc. v. Lexmark International, Inc.; Quanta Computer, Inc. v. LG Electronics, Inc.; 35 U.S.C. § 271.

Insolvency. Mission Product Holdings, Inc. v. Tempnology, LLC on rejection of a trademark licence, which matters where a transitional licence is granted by a seller whose credit is uncertain.

Trade secret. 18 U.S.C. § 1836 and 18 U.S.C. § 1839, with Rockwell Graphic Systems, Inc. v. DEV Industries, Inc. on reasonable measures, which a separation disrupts on both sides.

| Authority | Governs | Practical consequence | | --- | --- | --- | | 35 U.S.C. § 261 | Patent transfer | Record promptly and in order | | 15 U.S.C. § 1060 | Mark assignment | Goodwill must travel | | 17 U.S.C. § 205 | Copyright recordation | Priority against later transferees | | 15 U.S.C. § 1055 | Related company use | Transitional use enures to the owner | | Barcamerica | Naked licensing | Control the transitional licence | | Dawn Donut | Territorial coexistence | The limits of sharing a mark | | Stanford v. Roche | Vesting | Chain gaps surface at closing | | 35 U.S.C. § 262 | Joint owners | Avoid joint ownership in a split | | Impression Products | Exhaustion | Downstream effect of cross-licences | | Mission Product | Insolvency | The transitional licence survives rejection | | 18 U.S.C. § 1839 | Trade secrets | Separation weakens reasonable measures | | 15 U.S.C. § 1127 | Abandonment | Uncontrolled licensing risks the mark |