This article provides an analysis of whether a licensee retains the right to use trademarks following rejection of an intellectual property license.  The analysis centers on Section 365(n) of the Bankruptcy Code as well as a recent 7th Circuit opinion interpreting the applicability of that provision to trademarks.  In short, while there does not appear to be unanimity among the Circuits, there is growing authority for the proposition that the right to use trademarks does not necessarily terminate upon rejection of the license.

The U.S. Court of Appeals for the Seventh Circuit recently affirmed a bankruptcy court’s decision refusing to confirm debtors’ reorganization plan that included auction procedures that forbade secured creditors from “credit bidding” for the assets. Inre River Road Hotel Partners, LLC, No. 10-3597, 2011 WL 2547615 (7th Cir. June 28, 2011). In that case, the debtors (owners of various hotel properties) proposed a plan of reorganization that included auctioning certain properties encumbered by security interests.

The Seventh Circuit recently decided that a mortgage that assigns future rental income to the mortgagee creates a security interest that takes priority over a federal tax lien.  Bloomfield State Bank v. United States, No.