Split Among Us Circuit Courts Involving Licensees of a Trademarks
Split among US Circuit Courts of 4th, 7th, 1st Circuit, and maybe 3rd Circuit, as to whether or not the licensee of a trademark has a right to keep using the trademark, when the licensor of the trademark files bankruptcy, and rejects the trademark license contract, pursuant to 11 USC 365. Compare: Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F2d 1043 (4th Cir. 1985) (debtor’s rejection of trademark licenses stops non-debtor licensee from continuing to use trademark); In re Sunbeam Products, Inv. v. Chicago American Manufacturing, LLC, 686 F.3d 372 (7th Cir. 2012) (rejection does NOT stop trademark licensee from continuing to use trademark), In re Exide Technologies, 607 F.3d 957, 964 (3d Cir. 2010) (see concurrence of Third Circuit Judge Thomas L. Ambro), and now In re Tempnology, LLC (Mission Product Holdings, Inc. v. Tempnology, LLC, 879 F.3d 389 (1st Cir. 1/12/18) (rejection STOPS non-debtor licensee from continuing to use trademark).
This Circuit split arises do to the failure of 11 USC §365(n) to refer to trademarks. When a debtor uses 11 USC §365 to reject a patent license, 11 USC §365(n) protects the non-debtor license of the patent, allowing the non-debtor licensee of the patent to continue using the patent, despite the debtor having rejected the patent license. However, 11 USC 365(n) does NOT say that trademark licenses are similarly protected.
For splits among US Circuit Courts, the next step is that some party files a petition for certiorari, in the US Supreme Court, and the US Supreme Court grants certiorari, and rules, to resolve the split among US Circuit Court.