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.

The Eighth Circuit Court of Appeals recently held in Lewis Brothers Bakeries Incorporated and Chicago Baking Company v. Interstate Brands Corporation (In re Interstate Bakeries Corporation), 690 F.3d 1069 (8th Cir. Aug.

In 1988, Congress added section 365(n) to the Bankruptcy Code, which grants some intellectual property licensees the right to continued use of licensed property notwithstanding rejection of the underlying executory license agreement by a debtor or bankruptcy trustee. The addition came three years after the Fourth Circuit Court of Appeals ruled in Lubrizol Enters., Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985), that if a debtor rejects an executory intellectual property license, the licensee loses the right to use any licensed copyrights, trademarks, and patents.

Stephens Media, LLC is the publisher of the Las Vegas Review-Journal.  In 2009, Stephens Media filed a lawsuit in the U.S. District Court against Citihealth, L.L.C. alleging a variety of trademark related claims.  Citihealth failed to respond to the suit and Stephens Media filed a motion for a default judgment.  One of the co-owners of Citihealth then notified the court that Citihealth had dissolved and that he and the other co-owner filed for personal bankruptcy.  In ruling on the motion, U.S.

In the first decision, the U.S. Court of Appeals for the Sixth Circuit affirmed the district court decision, concluding that a defendant’s bankruptcy filing does not prevent the district court from ruling on a contempt motion for violation of a temporary restraining order protecting plaintiff’s trademarks.  Dominic’s Restaurant of Dayton, Inc. v. Mantia, Case Nos. 10-3376; -3377 (6th Circuit July 5, 2012) (Batchelder, C.J.; McKeague, J.; Quist, D.J., sitting by designation).

Acquirors of branded businesses often acquire prepaid, perpetual, exclusive trademark licenses to use the business’s trademarks.

In a recent decision authored by Chief Judge Easterbrook, the United States Court of Appeals for the Seventh Circuit (Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, Docket No. 11-3920 (7th Cir. July 9, 2012)) held that the licensee of a trademark does not necessarily lose the right to use the licensed marks when a debtor-licensor rejects the underlying license agreement in its bankruptcy case.  In so holding, the Court rejected a contrary decision reached by the United States Court of Appeals for the Fourth Circuit in Lubrizol Enterprises, Inc. v.

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.

On July 9, 2012, the U.S. Court of Appeals for the Seventh Circuit issued its decision in Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC (“Sunbeam”). It is a landmark opinion for trademark licensees whose licenses are rejected in bankruptcy by trademark owners.

The United States Court of Appeals for the Seventh Circuit recently issued its opinion in Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, in which the court clarified that the rejection of a trademark license in bankruptcy does not end the licensee’s right to use the licensed trademark.