November 5, 2018
By: John Baxter and Woods Drinkwater
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.
Three years later and in reaction to Lubrizol, Congress enacted additional legislation to define “intellectual property” within the Bankruptcy Code. Congress also added Bankruptcy Code Section 365(n) addressing what happens to intellectual property following the rejection of an executory contract.
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