On Monday, May 20, 2019 the Supreme Court settled a decades-long circuit split regarding a licensee’s ongoing trademark usage rights following the rejection of a trademark license agreement under the U.S. bankruptcy code. In an eight to one decision, the Court found that “rejection breaches a contract but does not rescind it. And that means all the rights that would ordinarily survive a contract breach, including those conveyed here, remain in place.”

After months of negotiations, drafts, compromises, and attorney’s fees, you finally enter into a licensing agreement granting you the right to use someone else’s trademark. Months or perhaps years later, the licensor files for bankruptcy and the bankruptcy trustee rejects the license agreement. Can you continue to use the trademark or does the licensor’s rejection of the licensing agreement effectively prohibit your continued usage of the mark?

On Wednesday, February 20, 2019, the U.S. Supreme Court heard oral arguments for Mission Product Holdings vs. Tempnology, LLC. to decide what it means to “reject” a trademark license agreement in bankruptcy.