Tag: Intellectual Property

Building Resilient Businesses — Fall 2018 Collaborations

As noted on the About page, this blog focuses on essential aspects of building resilient businesses:   protecting assets, navigating change, solving problems, and getting deals done effectively.

Key components of resiliency are awareness and openness to change.  Denial is absolutely not a strategy.   Resilient business keep  pace with innovation, think strategically,  exercise sound judgment, rely on core values  and build  effective teams.

This Fall has offered numerous opportunities to connect with others on topics at the intersection of technology and  finance – each fundamental to any resilient business.   This post  highlights a few recent and upcoming events/writings  and provides links to those interested in exploring further.

  • In late September, I was pleased to attend a TMA Global Executive Board meeting in connection with the 2018 TMA Annual Conference.   Plenty  of interesting discussions there — but I particularly enjoyed the keynote from Frits van Paasschen, who held the CEO position at  Coors then Starwood and several senior positions at other global companies before that.   He  authored The Disruptors’ Feast — which carries the apt subtitle “How to avoid being devoured in today’s rapidly changing global economy.”   Based on his remarks, I very much look forward to reading the book.
  • This summer, I received an invitation from the American Bar Association Law Practice Division to serve on the board of its Legal Technology Resource Center (LTRC).   The LTRC is focused on  providing legal technology guidance and resources for the efficient and effective practice of law.  Guidance is provided through a technology blog, regular webinars,  various publications and a dedicated website — Law Technology Today.  As  technology continues to evolve rapidly, I look forward to working with the LTRC team who I enjoyed meeting earlier this month.
  • Coming up next week on October 23,  I will join Silvia De Sousa of Thomson Dorman Sweatman LLP in Winnipeg and Kiriakoula Hatzikiriakos of the National Bank of Canada in Montreal (who recently published Secured Lending in Intellectual Property) to present a webinar sponsored by the Canadian Bar Association focused on Secured Transactions in Domain Names & Websites  As has been proven time and again, websites and domain names can be sources of value for companies and creditors — but critical to unlocking that value is successfully navigating various legal issues and understanding cross-border implications.
  • Each year, Massachusetts Continuing Legal Education hosts a New England Bankruptcy Law Conference.   This year, I will join Adrienne Walker from Mintz and Lindsay Zahradka Milne from Bernstein Shur on a business panel focused on trade creditor issues.  With stories of significant trade creditor issues emanating from the Toys R Us case and similar situations, a discussion focused on  practical tools for trade creditors is timely.
  • Finally,  the 2018 Norton Annual Survey of Bankruptcy Law  was published this Fall.  The book contains my chapter analyzing technology and intellectual property issues  in distressed circumstances — including a discussion of the Tempnology case which was the subject of  an earlier blog post here.   Since that blog post in early September,  activity before the Supreme Court has continued with petitioner Mission Product Holding filing a reply brief on September 25 arguing that the High Court should grant review and resolve the question of whether rejection requires termination of a licensee’s rights.   Stay tuned.

In sum, the Fall has offered some interesting opportunities to collaborate with others in  thinking through effective solutions for companies dealing with rapid change.   Technology, finance, and disruption are sure to remain constant partners going forward.

Filing Urges Supreme Court To Decline Review of Case Involving Trademark Rights After License Rejection

Although there has been much attention on the Supreme Court this week, a filing made earlier  today  will draw little popular notice.  Yet, the filing could have significant impact on whether the Court decides to accept a case this term which would impact the rights of trademark licensors and trademark licensees.

The filing  was made by Tempnology, LLC in opposition to a petition for a writ of certiorari filed by Mission Products Holdings, Inc. in June 2018.  Mission filed the petition to  seek Supreme Court review of a  January, 2018 opinion from the United States Court of Appeals for the First Circuit.   In that decision, the First Circuit determined that Mission, a licensee, retained no rights to continue to use trademarks previously licensed from Tempnology upon the rejection of the  license agreement by Tempnology in its chapter 11 proceeding.  See here for a copy of the petition for writ of certiorari along with a brief in support filed this summer by The International Trademark Association and another brief  in support from a  group of law professors.

The litigation over the trademark rights has been brewing for quite some time.  I wrote about the First Circuit decision in January 2018 as a LinkedIn article here and wrote about the Bankruptcy Appellate Panel opinion which proceeded that for the American Bankruptcy Institute Journal here (co-authored with Andrew Hellman).   For the past three years, I have included discussion of the issues in chapters contributed to the Norton Annual Survey of Bankruptcy Law (2018 edition due out soon, 2017 edition, and 2016 edition).

In seeking Supreme Court review of the First Circuit decision, Mission  emphasized the existence of a circuit split with the Seventh Circuit’s reasoning in Sunbeam Products Inc. v. Chicago American Manufacturing LLC, which held that although rejection constitutes a breach of contract, rejection does not terminate a trademark license or strip the nondebtor licensee of its post-breach rights under applicable nonbankruptcy law.  The First Circuit’s 2-1 decision  specifically rejected the Seventh Circuit’s reasoning in  Sunbeam.

Today’s filing acknowledges the existence of the circuit split but urges the Court to deny review on three fundamental grounds:

  • “First, the Petition overstates the depth and duration of the circuit split by attempting to recast the issue as implicating all types of intellectual property rights including patents. That way, according to the Petition, a 1985 Fourth Circuit decision on patent rights, Lubrizol Enters., Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985), gets swept into the calculus. But not only is Lubrizol a patent case, the issues it raised were squarely addressed by Congress and put to bed in 1988 by the enactment of 11 U.S.C. § 365(n)(1).”
  • “That brings us to the second, perhaps more fundamental, reason that the Court should deny the Petition: Congressional intent. In passing section 365(n)(1) to address issues raised by the decision in Lubrizol, Congress expressly considered the impact of rejection under the then-new statute on other intellectual property rights such as patents, but deliberately chose not to include trademarks at that time, given the disparate and complex issues involving trademarks. Instead, the legislative history reflects that Congress intended to leave issues involving trademarks for further development and evolution in the courts. At the Court of Appeals level, that exploration has only just begun. In the three decades since the enactment of section 365(n)(1), this issue has only arisen a handful of times and only twice at the Court of Appeals. Until the issues are further fleshed out by other Courts of Appeals, it would be premature for the United States Supreme Court to step in and terminate the judicial developments that Congress envisioned.”
  • “Third, even assuming a single split of circuit authority warrants the attention of this Court, the present case is not the proper vehicle for the Court to resolve these complex issues. This case is a particularly poor choice for the Supreme Court to forestall either bankruptcy court evolution of the law or appropriate legislative action to try to create new standards, because key points such as the burdens on the debtor of the continued policing of the trademark, the debtor’s balancing of those costs versus any benefits derived from that effort, and the impact of a “stranding” of the trademark were the mark to become “abandoned,” were not litigated on a developed evidentiary record below. If the Court were to take up this abstract question on such a thin evidentiary record, that would likely lead either to new standards based largely on speculation, or a further remand for fleshing out the evidence. Far better to await further development of the issues involving trademark licenses in courts as Congress expressly intended or to allow Congress to address the issue as it also contemplated.”

 If the Supreme Court declines review of the First Circuit decision, then confusion will continue to reign about trademark rights in the event of license rejection by a debtor licensor.   Although greater clarity might come someday through Congressional action or a future case finding its way to the Supreme Court neither of those paths seem likely at the moment.  Well drafted license agreements tailored to the needs of the parties and monitored carefully can help save parties years of litigation given the current legal uncertainty.