Restructuring

The Supreme Court recently granted certiorari in the case of Mission Product Holdings, Inc. v. Tempnology, LLC (In re Tempnology, LLC), a First Circuit case that deepened the circuit split on whether trademark licensees are protected from a bankrupt debtor’s rejection of the underlying license.

In our blog post From Gucci to Knock-off: How Bankruptcy Leaves Trademark Licensees at Risk, we examined the rift created by divergent case law on the issue. In short, the Seventh Circuit case of Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC held that the rejection of a trademark license merely freed the estate from the obligation to perform under the contract but had no effect on the continued existence of the license, while the First Circuit case of Mission Product Holdings held that the licensee would not retain its rights if the debtor chose to reject the license in bankruptcy, because the licensor’s monitoring obligation under the licensing agreement was a real and concrete duty that was too burdensome on the debtor.

The Supreme Court did not explain why it decided to hear the case, but a decision from the high court will finally provide licensees a much-needed answer to the question of whether their designer goods will become discount bargains upon a licensor’s bankruptcy.

The Supreme Court has not yet scheduled oral arguments in the case. We will keep readers updated on any new developments in the case.