Reviving The "Living Dead" Corporation
Cliff Ennico
www.creators.com
"In the late 1990s, I invented a product for the health care industry. I obtained patents for the product, and registered trademarks for the product name. I even formed a corporation in Delaware and registered it in Texas, where my husband and I were living at that time. Then, my husband (also an entrepreneur) moved his business to New York to be closer to his customers, and I moved with him. I had to help him with his business for a while, as well as raise two kids, so I put my dreams on hold for a while. The patents and trademarks expired because I did not renew them, and the Delaware corporation was 'voided' because I didn't pay the annual franchise tax in Delaware for a couple of years. Now my kids are off to private school, and I really want to revive this product and the company. I have some potential investors who are really excited about the product, but they want to deal with a 'real' company. Can I revive the company that I had in the 1990s, or should I start all over again from scratch?"
We all have our priorities in life, and it sounds like you made the right choices, although I would love to know more about this product. Anyway, here goes.
Your first step should be to talk to a good "intellectual property" attorney who specializes in patents and trademarks. When you invented your product back in the 1990s, it was probably "state of the art" at the time, but I'll bet you the technology for this product has advanced leaps and bounds since then. Generally, if you had a patent for this product and it expired because you didn't renew it in time, you should be able to "revive" the patent (by refiling it from scratch) unless someone else has come along and claimed a patent for improved technology. Similarly, unless someone has come along and claimed the same trademark for a similar product or service, you should be able to file an application for the trademarks you want to use to identify this product in the marketplace.
When talking to the patent attorney, there are two questions you have to ask:
whether you can "revive" your patents and trademarks that have lain dormant for several years; and
if you can, whether the patents and trademarks will be "strong" ones that will withstand challenge from new players who will claim that their designs are superior to yours because they are "state of the art".
The second question is actually the more important of the two. Even if you can revive your patents and trademarks from the 1990s, they won't be worth much if a bad person (say, in China or another Asian country where patent protection isn't that strong) can "tweak" your design (say, by adding a screw here or rounding off a corner there) and claim their product is a significant improvement from yours. "Knockoffs" are a fact of life these days, and if the "state of the art" technology of your product hasn't advanced much since the 1990s, there's a good chance that an imitator or "knockoff artist" will be able to design around your patent without too much effort. If your patent attorney can't give you solid comfort on this issue, do not proceed further.
If your "intellectual property" attorney tells you your patents and trademarks (1) are still strong, and (2) can easily be revived, spend the money on that first. When your patents and trademarks have been secured, it's time now to revive your Delaware corporation.
A Delaware corporation that has been "voided" because it hasn't paid Delaware's annual franchise tax is a bit like the "living dead" in a bad horror movie: it still has a pulse, and appears on Delaware's corporate records, but anyone who comes along and wants to use the same corporate name will be able to get it as if the "voided" corporation did not exist. To "revive" the corporation (assuming someone else hasn't grabbed the name), you have to call the Franchise Tax Unit of the Delaware Secretary of State's office (telephone 302-739-3073), and find out how much you owe in unpaid Delaware franchise taxes. Once they tell you the amount, you must:
file a Certificate of Renewal with the Delaware Secretary of State's office (your attorney will prepare this for you for a fee of one hour's time, plus a filing fee of $104);
pay the unpaid Delaware franchise taxes; and
contact the company that acted as your "registered agent" in Delaware and tell them you have revived the company - the "registered agent" will probably want an annual fee of $200 to $300 to continue acting as your "registered agent" in Delaware.
Since you no longer live in Texas, there is probably no reason for you to "revive" your Delaware corporation's presence there. Once you revive your "living dead" Delaware corporation, though, you will have to register it as a "foreign" corporation in New York, where you now live and do business. Your attorney can prepare and file the necessary paperwork for a fee equal to one hour of his or her time plus filing fees that are usually in the $200 to $300 range.
Since forming a new corporation in New York (or Delaware) to manufacture and market this product will probably cost you between $1,500 and $2,500, it probably makes economic sense to revive your Delaware corporation and register it in New York. That way your corporation will have an "unbroken" legal existence from the late 1990s to today. Just make sure you pay the annual taxes and fees in Delaware and New York to keep this corporation alive after you have "risen it from the dead". Just like in a bad horror movie, the more frequently a "zombie" dies, the harder it is for it to get back on its feet again.
Cliff Ennico (
cennico@legalcareer.com
) is a syndicated columnist, author and host of the PBS television series 'Money Hunt'. His latest book is 'Small Business Survival Guide' (Adams Media, $12.95). This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at
www.creators.com
. COPYRIGHT 2006 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE, INC. Permission granted for use on DrLaura.com.
