Supreme Court Finds Bankrupt Licensor of Cannot Rescind Trademark

On May 20, 2019, the Supreme Court, in an 8-1 decision authored by Justice Elena Kagan, decided that a trademark holder who becomes bankrupt can reject, but not rescind, a license contract.  In Mission Product Holdings, Inc. v. Tempnology, LLC, 587 U.S. ___, No. 17-1657, Slip op. (May 20, 2019), Kagan wrote that Section 365 of the Bankruptcy Code and general provisions of contract law allow a licensor to reject and breach a contract, but not to rescind it.  The licensee can then continue to operate under the license or decide to walk away.  The decision provides far greater certainty about the rights of a licensee of a bankrupt trademark owner, but leaves questions such as what happens if the trademark or its use is somehow dependent on action by the owner.