Courts across the United States are expected to weigh in on several key trademark law issues in 2019. In one such case, the Supreme Court will rule on what happens to a trademark license when the brand owner files for bankruptcy — an important question that has deeply divided the nation's courts.
Dyan Finguerra-DuCharme, a partner in Pryor Cashman's Intellectual Property Group, spoke with Law360 about why both trademark and bankruptcy attorneys will be closely following the case. Finguerra-DuCharme, along with two colleagues from Pryor Cashman and the New York Intellectual Property Law Association (NYIPLA), where she sits on the Board of Directors, helped co-author an amicus brief which urged the Supreme Court to rule that bankruptcy trademark licensors are not permitted to terminate existing trademark licensing agreements.
Bankruptcy law gives a debtor the right to "reject" contracts in order to free itself of certain obligations, but contains an exemption for deals involving patents, copyrights and other forms of intellectual property; the idea being that if someone built a business around licensed IP rights, it would be unfair for them to suddenly lose those rights simply because the licensor went belly-up.
When Congress created that licensing carveout in 1988, however, trademarks were not included, and the lack of guidance on how to handle that type of IP has led to a split among the courts, with some allowing such rejections and others not.
In October 2018, the Supreme Court agreed to tackle this uncertainty and will hear a case called Mission Product Holdings v. Tempnology. Earlier last year, a lower court said Tempnology LLC, an insolvent trademark licensor, could revoke a trademark license it had granted to Mission, an apparel retailer.
Trademark and bankruptcy attorneys are undoubtedly hoping for a clear set of rules on how to craft licensing agreements that account for potential bankruptcies.
"It's a big issue that does come up a lot in the context of bankruptcy," Finguerra-DuCharme said. "At the end of the day, the impact of this case will be on the drafting stage."
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