Trademark Licensee Retains Rights Post-Rejection

The Bottom Line

The Bankruptcy Court for the District of Connecticut in In re Sima Int'l, Inc., Case No. 17-21761, 2018 WL 2293705  (Bankr. D. Conn. May 17, 2018), recently held that rejection of a license agreement did not terminate the licensee's right to use the trademarks or enforce its exclusivity rights. In so holding, the court adopted a plain language reading of Section 365(g) and 365(n) of the Bankruptcy Code and found, respectively, that rejection of an executory contract is a breach, not a termination, and therefore the contractual rights of the trademark licensee remained in place post-rejection and the licensee's exclusivity rights were preserved.  The case adds to the split among courts over whether the Bankruptcy Code's protections of "intellectual property" rights extend to "trademarks" which are not expressly included in the Code.  With the increased prominence of the potential value of intellectual property rights in bankruptcy cases – such as