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November 5, 2018

Deciding the Fate of Trademark Licenses in Bankruptcy

By Woods Drinkwater, John T. Baxter


Reprinted with permission from Law360

The U.S. Supreme Court on Oct. 26, 2018, granted certiorari in the First Circuit case, Mission Product Holdings Inc. v. Tempnology LLC (In re Tempnology LLC), to resolve a circuit split regarding ongoing trademark usage pursuant to a license agreement following the rejection of such agreement under 11 U.S.C. §§ 365(a) and (n). The question to be addressed in this case first arose in 1985, when the Fourth Circuit held in Lubrizol Enterprises Inc. v. Richmond Metal Finishers Inc. that an “executory contract” under Section 365(a) of Title 11 of the U.S. Code, or the Bankruptcy Code, included intellectual property licenses.[1] Further, the court held that rejection of an executory contract effectively terminates an intellectual property license.