The bankruptcy code allows debtors to reject existing contracts, but that protection doesn’t extend to trademark licensing agreements, the U.S. Supreme Court ruled recently.
In Mission Product Holdings, Inc. v. Tempnology, LLC, the court overturned a 1st Circuit decision, with the majority stating, “a rejection breaches a [trademark] contract but does not rescind it.” Going forward, companies entering bankruptcy protection with trademark license agreements in effect must be aware that licensed trademark rights remain in place through the deal’s full term.
A trademark group called the matter “the most significant unresolved legal issue in trademark licensing.”
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– David G. Oberdick, Meyer, Unkovic & Scott