In Mission Product Holdings v. Tempnology LLC, the US Supreme Court will attempt to clarify the impact of bankruptcy proceedings on trademark licenses. The court will determine whether or not the rejection of a license in bankruptcy means the licensee’s right to the trademarks is terminated.
Womble Bond Dickinson attorneys Christopher Bolen and Taylor Ey spoke with IPWatchdog on this issue, which the International Trademark Association (INTA) calls “the most significant unresolved legal issue in trademark licensing.”
“Mission Products provides the Supreme Court the much-needed opportunity to resolve a split in the Circuits regarding how trademark licenses should be treated upon a debtor-licensor’s bankruptcy. If the Court upholds the lower court decision, a debtor-licensor’s rejection of a trademark license will equate to a right of rescission. A solvent trademark licensee would lose its rights to use the licensed marks and presumably face substantial economic losses. The Bankruptcy Code clearly states that rejection of an executory contract is a breach (not rescission). Upholding the petitioner’s position, on the other hand, will provide greater predictability to trademark licensing—an important business arrangement in today’s brand-driven economy,” Bolen and Ey tell IPWatchdog.