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Delaware Bankruptcy Court Trumps An Automatic Stay By Allowing Suit To Terminate A Trademark Licensing Agreement, Olivia Cheung

Bankruptcy Research Library

(Excerpt)

Trademark licensees that file for bankruptcy protection may encounter difficulties and uncertainties regarding their continued use of trademarks that are critical for their businesses. An issue that remains unsettled with courts is whether a licensee can assume a trademark license without the licensor’s consent. Circuits are divided on whether Section 365(c)(1) of title 11 of the United States Code (the “Bankruptcy Code”) prohibits a debtor from assuming an intellectual property license without the consent of the licensor. Courts on one side of the issue apply the “actual test,” which permits a debtor to assume a license as long as …