Seventh Circuit issues important decision regarding trademarks in ...

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Seventh Circuit issues important decision regarding trademarks in bankruptcy

By Janet Marvel, Trademark Attorney, 16 July 2012

When a trademark licensor declares bankruptcy, the trustee may reject the trademark license.?? The trademark licensee then can lose its rights to use the licensed trademark, which obviously can be a disaster for the licensee.? The Bankruptcy Code protects patent and copyright licensees from this fate, but perhaps by fiat, trademark licensees were left out.? See 11 U.S.C. ? 365(n).

On Monday, the Seventh Circuit created a circuit split and issued a very encouraging decision for trademark licensees.? In Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC., 2012 WL 2687939 (7^th Cir. July 9, 2012), the Seventh Circuit held that a trademark licensee retained its rights to use a licensed trademark even after the bankruptcy trustee for the licensor rejected the license agreement.

Some background is necessary.? In 1985, the Fourth Circuit decided Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4^th Cir. 1985).? There, the court held that an intellectual property licensee loses its rights to use licensed property if the license is rejected in bankruptcy.? Three years later, Congress amended the Bankruptcy Code to permit ?intellectual property? licensees to continue to use licensed property after rejection, subject to certain conditions. 11 U.S.C. ? 365(n).? The Bankruptcy Code?s definition of ?intellectual property? includes?.?

Source: http://www.pmflegal.com/blog/index.php/2012/07/16/seventh-circuit-issues-important-decision-regarding-trademarks-in-bankruptcy/

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