Supreme Court Resolves Circuit Split on Effect of Rejection of a Trademark Licensing Agreement in Bankruptcy
The Supreme Court recently limited the ability of debtors to use contract rejection in bankruptcy to shed unwanted trademark licensees. But the Court acknowledged that the result could change if the trademark licensing agreement had different termination rights. Going forward, parties entering into trademark licensing agreements will need to consider this decision carefully as they negotiate termination rights in the event of a bankruptcy by the licensor.
In Mission Product Holdings, Inc. v. Tempnology, LLC nka OLD Cold LLC, 2019 U.S. LEXIS 3544 (May 20, 2019), the Supreme Court held that rejection of an executory contract involving a trademark license does not deprive the licensee of the right to use the trademark, resolving a longstanding question of how trademark licensing agreements are treated in bankruptcy.
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“Supreme Court Resolves Circuit Split on Effect of Rejection of a Trademark Licensing Agreement in Bankruptcy,” by Ira L. Herman was published as a Lexis Practice Advisor® Practice Note in July 2019. Reprinted with permission.
This article was first published as a Blank Rome Trademark Advisory in May 2019.