Supreme Court To Tackle Issue of Trademark Licenses of Bankrupted Brand Owners
The U.S. Supreme Court has agreed to hear a case to resolve the circuit court split over what happens to a trademark license when the brand owner files for bankruptcy. The dispute originates from a key omission in the federal bankruptcy statute that allows a debtor the right to reject existing contracts to rid itself of obligations. An exemption to the statute addresses agreements involving intellectual property, noting that if a company built its business around licensed IP, it would unfairly impact the business owner if the licensor went out of business. The written exemption, however, does not specifically include trademarks. It is this omission that has led to different interpretations by the courts.
