Survival of the Trademark License: In re Tempnology and Contract Rejection in Bankruptcy

Abstract

On January 12, 2018, the United States Court of Appeals for the First Circuit held, in In re Tempnology, that forcing specific performance of a trademark license after a contract rejection in a bankruptcy case would be contrary to the plain-language of Section 365(n) of the Bankruptcy Code and conflict with the goal of providing debtors with a “fresh start.” In so doing, the First Circuit joined the Fourth Circuit in a split with the Seventh Circuit, which has characterized a contract rejection as a breach in the context of non-bankruptcy law, therefore not extinguishing any trademark license rights. This Comment argues that the Seventh Circuit approach is the correct one as it takes legislative intent into consideration, does not impede a debtor’s ability to have a fresh start, and will likely not have any detrimental economic effects.