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When a business files for bankruptcy we are used to reading about how they were insolvent and unable to make good with their lenders. This is usually the case with both companies and individuals that look to the aid and protection of the U.S. bankruptcy code. However, in a recent article from the South Florida Business Journal one Florida company has filed for bankruptcy, not because they were insolvent but because they are facing a serious patent dispute.

A Florida-based audiovisual tech company has filed for bankruptcy while in the midst of a heated patent dispute. The company is facing litigation in New York at the hands of two inventors that claim the tech company ripped off their invention that had been displayed at a trade show. The invention, a motorized frame that mounts a television behind artwork was patented by the two inventors yet sold by the Florida tech company under the name ArtScreen.

Although the tech company is not insolvent, it says it has been forced to file for bankruptcy because of pending litigation over the patent issue. Last March the company sought to have the patent dispute dismissed in federal court, but a judge denied the request. The Florida company now faces what could be a lengthy and costly litigation.

The bankruptcy filing reads that the company has already suffered financial loss because of the litigation and needs restructuring. With 2014’s reported revenue sitting at an impressive $5.3 million and their largest creditor being owed only $32,000 it is anyone’s guess how much they think this litigation may cost or how much it already has.

For large companies, filing bankruptcy rarely goes smoothly. While the protection the bankruptcy code offers comes as a relief to most, pending legal disputes can make the process much more difficult. For individuals and business owners considering bankruptcy, speaking to an experienced attorney can help.

Source: South Florida Business Journal, “Coral Springs A/V tech firm files for bankruptcy with patent dispute looming,” Eleazar David Melendez, Oct. 9, 2015