Decision is a Win for Trademark Licensees

What happens to the a licensee’s right to use a trademark if the licensor files for bankruptcy?

The Bankruptcy Code definition of “intellectual property” does not explicitly include “trademarks.”1 This has led to trademark licensees losing their rights to use the trademark upon rejection of the license in bankruptcy.

In In re Interstate Bakeries Corporation, ___ F.3d ___ (8th Cir. 2012) (IBC), the Eighth Circuit Court of Appeals ruled that a perpetual, royalty-free trademark license was an executory contract and therefore subject to assumption or rejection by a bankruptcy debtor. This decision is at odds with a recent decision from the Third Circuit Court of Appeals, In re Exide Technologies, 607 F.3d 957 (3d Cir. 2010), which found that such a license under similar circumstances was not an executory contract and could thus not be assumed or rejected by the bankruptcy debtor.