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Trademark Licenses and Bankruptcy Litigation

April 12, 2019

In February, the United States Supreme Court heard oral arguments in the case of Mission Product Holdings Inc v Tempnology, LLC to address an issue at the intersection of intellectual property and bankruptcy law. The issue presented to the Supreme Court is whether, under Section 365 of the Bankruptcy Code, a debtor-licensor’s rejection of a license agreement terminates the licensee’s rights that would survive the licensor’s breach under non-bankruptcy law.

 

In this case, the debtor, Tempnology, sought to terminate its obligations under a trademark license in addition to rescinding the licensee’s right to use the debtor’s trademark. Section 365(a) gives the debtor a statutory right to reject a contract in bankruptcy and Section 365(g) is clear that this rejection should be treated as a breach of contract. The question really turns on the court evaluating the competing interests of the license parties, including the underlying purposes of rejection under the Bankruptcy Code to free a debtor of costly commitments and the preservation of a licensee’s rights. However the court comes out on this issue, trademark license parties will feel the effects of the decision. 

 

 

JDSUPRA Blog Article: Fate of Licenses in Bankruptcy

 

National Law Review Article: Trademarks, Bankruptcy, and Leverage

Curran Antonelli represents a broad range of businesses and corporate entities, private equity funds, as well as governmental agencies and other interested parties in all phases of the bankruptcy process and in bankruptcy related transactions and litigation.  As advocates and trusted business advisors, our well-established foundation of knowledge and understanding of our clients’ business interests, enables our attorneys to deliver unparalleled individualized attention to our clients of all sizes with their litigation and corporate transactional needs.

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