IP Holding Co.: a Virtual Safety Deposit Box for Business Owners?

Business Thaw

Published by Sofia Malysheva

It’s a common practice for companies with valuable trademark portfolios to implement a holding-operating company stricture in order to protect their assets and minimize tax liabilities.

The structure consists of an IP HOLDING company and one or multiple OPERATING companies.  

While operating companies actively engage in a variety of business activities (dealing with clients, suppliers and employees), the sole purpose of the holding copay is to control and shield intellectual property assets.

There is a number of variations and specifications of this structure (serving a variety of different purposes), however, in general, the simplified structure can be visualized as shown on the picture below:

Holding Co.jpg

One of the strategy variations involves establishing an IP holding company subsidiary in a lower-tax state.

The business transfers ownership of its marks to the IP holding company, which then licenses the marks back to the business in exchange for royalty payments. The payments…

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