On May 20, 2019, United States Supreme Court settled a circuit split, deciding that a bankrupt company’s decision to reject an existing contract does not revoke a trademark licensee’s right to continue using the licensed mark.

Earlier today, the Supreme Court finally answered the question of whether a trademark licensee is protected when the trademark owner/licensor files a bankruptcy petition and rejects the trademark license in accordance with section 365 of the Bankruptcy Code. To cut to the chase, trademark licensees won.

On Monday, May 20, 2019, the United States Supreme Court issued an 8-1 decision holding that a bankrupt company’s decision to reject an existing license of its trademarks does not terminate a licensee’s right to continue using the licensed trademarks.

Mission Product Holdings, Inc. v. Tempnology, LLC, No. 17-1657

Today, the Supreme Court held in an 8-1 decision that when a debtor, acting under Section 365 of the Bankruptcy Code, rejects a contract licensing its trademarks, the contract is not rescinded and the debtor thus cannot revoke the trademark license.

Chapter 11 Debtor, Tempnology, LLC (“Tempnology”) is feeling the heat today, May 20, 2019, as the United States Supreme Court held that Mission Product Holdings, Inc., (“Mission”), a licensee of Tempnology’s “Coolcore” products, can continue to use Tempnology’s trademarks to sell and distribute its products in the United States. The Supreme Court’s decision resolved a significant circuit split, at least for trademark licensing agreements, as to whether Section 365 of the Bankruptcy Code can shield a debtor-licensor from its licensees continued use of licensed trademarks.

In Mission Product Holdings v. Tempnology LLC, the US Supreme Court will attempt to clarify the impact of bankruptcy proceedings on trademark licenses. The court will determine whether or not the rejection of a license in bankruptcy means the licensee’s right to the trademarks is terminated.

Womble Bond Dickinson attorneys Christopher Bolen and Taylor Ey spoke with IPWatchdog on this issue, which the International Trademark Association (INTA) calls “the most significant unresolved legal issue in trademark licensing.”

Oral argument before the Supreme Court was held on February 20 in the much-watched and even more intensely discussed trademark dispute Mission Product Holdings, Inc. v. Tempnology, LLC. The case presents the difficult and multifaceted question: Does bankruptcy law insulate the right of a trademark licensee to continue using the licensed mark despite the bankrupt trademark licensor’s decision to “reject” the remaining term of the trademark license?

The Supreme Court held oral argument earlier today in the Mission Products v. Tempnology case, on the issue of the effect of rejection by a licensor of a trademark license on the licensee’s rights.

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.