Trademark licensors and licensees, as well as their stakeholders (including lenders), should heed the U.S. Supreme Court’s decision in Mission Product Holdings, Inc. v. Tempnology, LLC n/k/a Old Cold, LLC, No. 17-1657. The Justices resolved a long-standing question arising from the intersection of bankruptcy and trademark law: whether a debtor/licensor’s rejection of a trademark license terminates the licensee’s right to use a trademark after rejection. In an 8-1 decision, the Justices answered: “no,” rejection simply creates a breach, but not rescission. If the license or applicable law grant continuing rights to the licensee upon a breach by the licensor, rejection under the Bankruptcy Code does not alter or terminate such continuing rights.
Section 365(a) of the Bankruptcy Code (11 U.S.C. § 365) is the starting point of the analysis (but critically, not the ending point as discussed below). Section 365(a) permits debtors in bankruptcy to “assumeRead More