The Supreme Court Will Decide if a Bankruptcy Filing Terminates a Trademark License

In February, the Supreme Court of the United States heard oral arguments in Mission Product Holdings v. Tempnology — a case that raises a number of important questions pertaining to the intersection of trademark law and bankruptcy law. Most notably, can a company revoke a trademark license as part of its bankruptcy filing? In this post, our top-rated West Palm Beach trademark litigation lawyers explain the details and implications of this Supreme Court case.

Case Analysis: Mission Product Holdings v. Tempnology  

The Facts 

Tempnology, LLC created and owned the intellectual property for a number of consumer products — towels, socks, etc — that were designed to maintain a low temperature during the course of vigorous exercise. In 2012, Tempnology reached a commercial agreement with Mission Product Holdings. Under the terms of the deal, Mission obtained distribution rights for certain Tempnology products along with the rights to use the Tempnology trademarks in the course of selling and marketing these products.

Eventually, Tempnology was forced to file for Chapter 11 bankruptcy protection after it suffered considerable business losses. Among other things, companies that successfully file for Chapter 11 can get out of certain commercial agreements. In 2015, Tempnology moved to reject its deal with Mission Product Holdings under bankruptcy rules that allow companies to reject non-beneficial contracts. As part of this move, the company sought to revoke the trademark license. 

The Legal Issue in Dispute 

The fundamental question at stake in this case is the following: Can a party insist that a debtor’s rejection of a commercial agreement not apply to any trademark license? In other words, can a company that files for bankruptcy protection revoke the licensee’s right to use a trademark? 

The Stakes  

There has long been a circuit split on this issue. In fact, some intellectual property observers have even referred to this as the most important unresolved issue in all of trademark licensing. Under the general principles of United States bankruptcy law, financially insolvent companies are given a path out of burdensome, non-beneficial business agreements. However, under the general principles of United States trademark law, a trademark license is often considered to be a ‘property interest’ — something that cannot simply be revoked or reclaimed.

Simply put, trademark law and bankruptcy law conflict on this issue. It is now up the Supreme Court to resolve this matter and bring consistency across the circuit courts. A decision on this case is expected by the end of the term. As always, our South Florida trademark litigation lawyers will carefully watch these proceedings and all other important developments in the field.

Get Help From Our West Palm Beach, FL Trademark Litigation Attorneys Today

At Pike & Lustig, LLP, our West Palm Beach trademark litigation lawyers have extensive experience representing individuals and companies all over South Florida. To get immediate assistance with your case, please contact us today. In addition to our main office in West Palm Beach, we also have an office in Miami.

Resource:

oyez.org/cases/2018/17-1657