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The Paul, Weiss Bankruptcy & Corporate Reorganization Department serves as a critical advisor in almost every major, complex restructuring matter, helping companies, creditors and investors facing rapid market transformation respond to business challenges with comprehensive and innovative strategies. Diversity of matters and clients, senior-level attention and seamless delivery of multidisciplinary services distinguish the practice.

New Considerations for Trademark Licenses in a 363 Sale

November 17, 2014 download PDF

On October 31, 2014, Bankruptcy Judge Kaplan of the District of New Jersey addressed two issues critically important to intellectual property licensees and purchasers: (i) can a trademark licensee use section 365(n) of the Bankruptcy Code to keep licensed marks following a debtor-licensor's rejection of a license agreement?; and (ii) can a "free and clear" sale of intellectual property eliminate any rights retained by a licensee?  In re Crumbs Bake Shop, Inc., et al., 2014 WL 5508177 (Bankr. D.N.J. Oct. 31, 2014).  He concluded that section 365(n) protects trademark licenses, notwithstanding the omission of trademarks from the Bankruptcy Code's definition of protected "intellectual property," and that a "free and clear" sale does not extinguish a licensee's section 365(n) rights, absent clear and knowing consent by the licensee.

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