In reaction to a decision by the U.S. Court of Appeals for the Fourth Circuit, Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985), in which the court held that a licensee of patents, copyrights and trademarks loses its rights if the trustee or debtor in possession rejects a license under the Bankruptcy Code under which the debtor was the licensor, Congress enacted section 365(n) of the Bankruptcy Code (11 U.S.C. § 365(n)).
In a recent important decision, the 7th Circuit Court of Appeals held that a trademark licensor could not use its bankruptcy to deny the rights of a licensee to use the trademark pursuant to a pre-bankruptcy agreement. (Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, 7th Circuit Court of Appeals, No. 11-3920, decided July 9, 2012) This decision creates a conflict among the federal circuits, which often means the U.S. Supreme Court must eventually decide the issue.
Pursuant to a June 27, 2012 tribal resolution, on July 2, 2012, the Santa Ysabel Resort and Casino filed a voluntary chapter 11 bankruptcy petition. The casino is an unincorporated enterprise for economic development owned by the Iipay Nation of Santa Ysabel, a federally recognized Indian tribe. After numerous construction problems during the peak of construction pricing, the casino opened in 2007, just before the drop in the economy.
On June 28, 2012, Judge Allan Gropper of the United States Bankruptcy Court for the Southern District of New York declined to appoint an official committee of equity holders in Kodak’s chapter 11 cases. The bankruptcy court determined that the appointment of an official committee was not warranted at that time, given that the costs to the bankruptcy estates would be substantial and equity’s interests were already represented by other constituencies seeking to maximize value and by a sophisticatedad hoc group of shareholders. In re Eastman Kodak Company, Case No
Congratulations! You just successfully negotiated a prepackaged chapter 11 plan of reorganization for a multi-billion dollar enterprise which leaves general unsecured creditors unimpaired and has been unanimously approved by the debtors' creditors. It's smooth sailing from here, right?
Chapter 11 creditors’ committees and debtors continue to challenge lenders’ prepayment premiums, commitment fees and post-bankruptcy interest claims in reorganization cases. Nevertheless, courts regularly reject these challenges in well-reasoned decisions.
In June, Northstar Aerospace and various related entities (collectively, "Northstar") filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Northstar describes itself as a supplier of "components and assemblies for the commercial and military aerospace markets." The company also provides machining, repair and overhaul services for the aerospace industry. See Northstar's Declaration in Support of First Day Motions
On July 9, 2012, the Seventh Circuit decided in Sunbeam1 that the rejection of a trademark license by a bankrupt trademark licensor does not deprive the trademark licensee of its right to continue to use the trademark, and disagreed with the 1985 Fourth Circuit decision in Lubrizol2 that held to the contrary.3 In reaction to the Lubrizol decision, which held that the rejection of a license by a bankrupt licensor of intellectual property terminated the rights of the licensee, Congress enacted Section 365(n) of the Bankruptcy
Earlier this month, GameTech International, Inc., and various related entities (collectively, "GameTech"), filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. According to GameTech's Declaration in Support of its Chapter 11 Petitions (the "Decl."), the company entered the electronic bingo business in 1994 and the video lottery terminal ("VLT") and slot machine business in 2007. Decl.
In the last two weeks, the 6th Circuit and 7th Circuit Court of Appeals each issued decisions on important intellectual property issues in bankruptcy.