LexisNexis Emerging Issues Analysis, 2019 Emerging Issues 8743

In an 8—1 decision authored by Justice Kagan, the Supreme Court of the United States holds that a debtor-licensor’s rejection of a trademark licensing agreement pursuant to Bankruptcy Code section 365 does not necessarily deprive the trademark licensee of its rights to use the mark.  In reaching this conclusion, the Court articulates a general principle applicable to all executory contracts and unexpired leases: “A rejection breaches a contract but does not rescind it,” which means that “all the rights that would ordinarily survive a contract breach” by the debtor outside of the bankruptcy context will “remain in place.”

This commentary analyzes the holding and implications of the Tempnology opinion.