Code of closed down Startups?


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Haven't been able to find a clear answer to this (as there may not be one), but what happens to the code of closed down startups? Putting aside the issue of whether they took VC or not, and subsequently the VC owns it, I'm sure there could be some value to others.I can't be the only one that has thought, if I could only get that code, I'm sure I could make something out of it?

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asked Jul 4 '13 at 03:53
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User464180
159 points
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  • Thanks for the GPL info. Never meant to convey that I simply wanted to take anyone's code. What I was trying to say was that on a seemingly-daily basis I see startups shutdown that were onto something very cool, but just couldn't find a market, and if given the opportunity to obtain (via purchase, trade, etc) I think I could make a go of it. – User464180 11 years ago

2 Answers


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So your question is what happens to the intellectual properties created by a startup if it goes bankrupt / stops being?

In broad strokes: If we assume the startup never got far enough to incorporate, or sign any other documents which transfer IP ownership: The ownership of IP rights reside with the human being who created the works .. i.e. in the case of source code, the copyright to that source code resides with the programmer who wrote it.

If we assume the startup did incorporate, and made the proper paperwork including intellectual property transfer: IP rights were transferred into the business, which is a separate legal entity. When a business is unable to pay its debts, it enters into insolvency proceedings (aka bankruptcy, liquidation).

All rights and properties remain with the bankrupt business estate. A trustee is appointed to secure the values in the estate, and retain as much money for the creditors and shareholders as possible. This trustee may attempt to sell the IP (copyrighted source code, patents, etc) in order to bring money to the creditors and shareholders if possible.

Extra note: In several cases startups today publish their work as open source, under a permissive license which grants many rights to the licensee/user, such as the GPL. If a startup has licensed their code under a GPL, MIT, Apache or other open source license, and placed it on Github, Google Code etc, then the code continues to be available for everyone under the terms of the license even if the company behind it no longer exists.

answered Jul 4 '13 at 08:43
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Jesper Mortensen
15,292 points

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The intellectual Property (IP) of a startup always has an owner. When the company fails, goes out of business, or is sold, the IP belongs to someone else. It may be extremely difficult to trace the ownership of the IP, but you can't just take it for yourself.

answered Jul 4 '13 at 05:03
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Gary E
12,510 points

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