Licensee May Continue Using a Trademark after Rejection, Supreme Court Rules
The Supreme Court handed down its decision in Mission Product Holdings Inc. v. Tempnology LLC, 17-1657 (Sup. Ct.), reversed the First Circuit and held that rejection of an executory trademark license does not bar the licensee from continuing to use the mark. As Justice Elena Kagan said, “A rejection breaches a contract but does not rescind it.”
The opinion was almost unanimous, with Justice Neil M. Gorsuch dissenting; he believes the petition for certiorari should have been dismissed as improvidently granted. In his view, the Court could not grant effective relief. Justice Sonia Sotomayor wrote a concurring opinion to say that nondebtor parties to rejected trademark licenses may have more rights following rejection than parties to other types of intellectual property licenses whose rights are limited by Section 363(n). The Court granted certiorari in October to resolve a split of circuits.
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