PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 12-1802

MICHAEL JAFFÉ, Insolvency Administrator,

Plaintiff - Appellant,

v.

SAMSUNG ELECTRONICS COMPANY, LIMITED; INFINEON TECHNOLOGIES 

AG; INTERNATIONAL BUSINESS MACHINES CORPORATION; HYNIX 

SEMICONDUCTOR, INC.; INTEL CORPORATION; NANYA TECHNOLOGY 

CORPORATION; MICRON TECHNOLOGY,

Defendants - Appellees.

------------------------------

UNITED STATES OF AMERICA,

Amicus Curiae,

VERBAND INSOLVENZVERWALTER DEUTSCHLANDS E.V.,

Amicus Supporting Appellant,

THE FEDERATION OF GERMAN INDUSTRIES, a/k/a Bundesverband der 

Deutschen Industrie; INTELLECTUAL PROPERTY OWNERS 

ASSOCIATION; SEMICONDUCTOR INDUSTRY ASSOCIATION; CHAMBER OF 

COMMERCE OF THE UNITED STATES OF AMERICA; NATIONAL 

ASSOCIATION OF MANUFACTURERS; BUSINESS SOFTWARE ALLIANCE,

Amici Supporting Appellees.

Appeal from the United States Bankruptcy Court for the Eastern 

District of Virginia, at Alexandria. Stephen S. Mitchell, 

Bankruptcy Judge. (09-14766-RGM)
2

Argued: September 17, 2013 Decided: December 3, 2013

Before NIEMEYER, WYNN, and FLOYD, Circuit Judges.

Affirmed by published opinion. Judge Niemeyer wrote the 

opinion, in which Judge Floyd joined. Judge Wynn wrote a 

separate opinion concurring in Parts I, II, and III and the 

judgment.

ARGUED: Jeffrey A. Lamken, MOLOLAMKEN LLP, Washington, D.C., 

for Appellant. William H. Pratt, KIRKLAND & ELLIS LLP, New 

York, New York, for Appellees. Mark R. Freeman, UNITED STATES 

DEPARTMENT OF JUSTICE, Washington, D.C., for Amicus Curiae the 

United States of America. ON BRIEF: Robert K. Kry, MOLOLAMKEN 

LLP, Washington, D.C., for Appellant. Jennifer M. Selendy, John 

P. Del Monaco, New York, New York, Timothy Muris, Daniel A. 

Bress, Washington, D.C., William E. Devitt, Dennis J. Abdelnour, 

KIRKLAND & ELLIS LLP, Chicago, Illinois; Stephen E. Leach, LEACH 

TRAVELL BRITT, P.C., Tysons Corner, Virginia, for Appellees 

Infineon Technologies AG, Samsung Electronics Company, Limited, 

and International Business Machines Corporation. Lawrence A. 

Katz, LEACH TRAVELL BRITT, P.C., Tysons Corner, Virginia; 

Theodore G. Brown, III, KILPATRICK TOWNSEND & STOCKTON LLP, 

Menlo Park, California, for Appellee Hynix Semiconductor, Inc. 

Joseph E. Mais, Timothy J. Franks, Phoenix, Arizona, John K. 

Roche, Washington, D.C., Alan D. Smith, PERKINS COIE LLP, 

Seattle, Washington, for Appellee Intel Corporation. Marc 

Palay, Geneva, Switzerland, Jonathan Cohn, SIDLEY AUSTIN LLP, 

Washington, D.C., for Appellee Nanya Technology Corporation. 

Maurice Horwitz, New York, New York, M. Jarrad Wright, Adam P. 

Strochak, Washington, D.C., Alfredo R. Perez, Houston, Texas, 

Jared Bobrow, WEIL, GOTSHAL & MANGES LLP, Redwood Shores, 

California, for Appellee Micron Technology. Christopher J.

Wright, Timothy J. Simeone, WILTSHIRE & GRANNIS, LLP, 

Washington, D.C., for Amicus Verband Insolvenzverwalter 

Deutschlands E.V. Neil H. MacBride, United States Attorney, 

OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia; 

Stuart F. Delery, Acting Assistant Attorney General, Robert M. 

Loeb, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, 

Washington, D.C., for Amicus Curiae the United States of 

America. Richard F. Phillips, Kevin H. Rhodes, INTELLECTUAL 

PROPERTY OWNERS ASSOCIATION, Washington, D.C.; Jeffrey K. 

Sherwood, Gary M. Hoffman, Megan S. Woodworth, DICKSTEIN SHAPIRO 

LLP, Washington, D.C., for Amicus Intellectual Property Owners 
3

Association. Timothy J. Coleman, FRESHFIELDS BRUCKHAUS DERINGER 

LLP, Washington, D.C., for Amicus Federation of German 

Industries. David Isaacs, SEMICONDUCTOR INDUSTRY ASSOCIATION, 

Washington, D.C., for Amicus Semiconductor Industry Association; 

Paul D. Clement, D. Zachary Hudson, BANCROFT PLLC, Washington, 

D.C., for Amici Semiconductor Industry Association, Chamber of 

Commerce of the United States of America, National Association 

of Manufacturers, and Business Software Alliance; Robin S. 

Conrad, NATIONAL CHAMBER LITIGATION CENTER, Washington, D.C., 

for Amicus Chamber of Commerce of the United States of America; 

Quentin Riegel, NATIONAL ASSOCIATION OF MANUFACTURERS, 

Washington, D.C., for Amicus National Association of 

Manufacturers; Timothy A. Molino, BSA/THE SOFTWARE ALLIANCE, 

Washington, D.C., for Amicus Business Software Alliance.
4

NIEMEYER, Circuit Judge:

This appeal presents the significant question under Chapter 

15 of the U.S. Bankruptcy Code of how to mediate between the 

United States’ interests in recognizing and cooperating with a 

foreign insolvency proceeding and its interests in protecting 

creditors of the foreign debtor with respect to U.S. assets, as 

provided in 11 U.S.C. §§ 1521 and 1522.

Qimonda AG, a German corporation that manufactured 

semiconductor devices and was, for a brief time, one of the 

world’s largest manufacturers of dynamic random access memory 

(“DRAM”), filed for insolvency in Munich, Germany, in January 

2009. The principal assets of Qimonda’s estate consisted of 

some 10,000 patents, about 4,000 of which were U.S. patents.

These patents were subject to cross-license agreements with 

Qimonda’s competitors, as was common in the semiconductor 

industry to avoid infringement risks caused by the “patent 

thicket” resulting from the overlapping patent rights of some 

420,000 patents in the semiconductor industry.

Ancillary to the German insolvency proceeding, Dr. Michael 

Jaffé, the insolvency administrator appointed by the Munich 

court, filed an application in the Bankruptcy Court for the 

Eastern District of Virginia under Chapter 15 of the U.S. 

Bankruptcy Code, petitioning the U.S. court to recognize the 

German insolvency proceeding as a “foreign main proceeding” in 
5

order to obtain an array of privileges available under Chapter 

15. Among other relief, Jaffé specifically requested that the 

bankruptcy court entrust to him, pursuant to 11 U.S.C. §

1521(a)(5), the administration of all of Qimonda’s assets within 

the territorial jurisdiction of the United States, which largely 

consisted of the 4,000 U.S. patents.

Contemporaneously with the Chapter 15 proceeding, Jaffé 

sent letters to licensees of Qimonda’s patents under its crosslicense agreements, declaring that, under § 103 of the German 

Insolvency Code, the licenses granted under Qimonda patents “are 

no longer enforceable,” including the licenses under the

company’s 4,000 U.S. patents. As Jaffé later indicated to the 

bankruptcy court, he intended to re-license Qimonda’s patents

for the benefit of Qimonda’s creditors, replacing licenses paid 

for in-kind with cross-licenses with licenses paid for with cash 

through royalties.

The bankruptcy court entered an order recognizing the 

German insolvency proceeding as a foreign main proceeding and a

separate order granting Jaffé the discretionary relief he 

requested under § 1521(a)(5). But, following a four-day 

evidentiary hearing, it conditioned the § 1521 relief with the 

requirement that Jaffé afford the licensees of Qimonda’s U.S. 

patents the treatment they would have received in the United 

States under 11 U.S.C. § 365(n), which limits a trustee’s 
6

ability to reject unilaterally licenses to the debtor’s 

intellectual property by giving licensees the option to retain 

their rights under the licenses. After balancing the interests 

of Qimonda’s estate with the interests of the licensees of its 

U.S. patents, the bankruptcy court concluded that the 

application of § 365(n) was necessary to ensure, as required by

§ 1522(a), that the licensees were “sufficiently protected,”

even though it would adversely affect Qimonda’s estate. The 

bankruptcy court also concluded, pursuant to 11 U.S.C. § 1506, 

that allowing Jaffé to cancel unilaterally Qimonda’s licenses of

U.S. patents “would be manifestly contrary to the public policy 

of the United States,” recognizing “a fundamental U.S. public 

policy promoting technological innovation,” which would be 

undermined if it failed to apply § 365(n) to the licenses under 

Qimonda’s U.S. patents.

In this direct appeal from the bankruptcy court, Jaffé 

challenges both of these conclusions, arguing that the court 

erred in its construction of Chapter 15 and abused its 

discretion in applying it.

We conclude that the bankruptcy court properly recognized 

that Jaffé’s request for discretionary relief under § 1521(a) 

required it to consider “the interests of the creditors and

other interested entities, including the debtor” under § 1522(a) 

and that it properly construed § 1522(a) as requiring the 
7

application of a balancing test. Moreover, relying on the 

particular facts of this case and the extensive record developed 

during the four-day evidentiary hearing, we also conclude that 

the bankruptcy court reasonably exercised its discretion in

balancing the interests of the licensees against the interests 

of the debtor and finding that application of § 365(n) was 

necessary to ensure the licensees under Qimonda’s U.S. patents

were sufficiently protected. Accordingly, we affirm.

I

The German insolvency proceeding

Qimonda AG filed an application to open a preliminary 

insolvency proceeding in the Munich Insolvency Court on January 

23, 2009, which was converted to a final proceeding on April 1, 

2009. Upon converting the proceeding to a final one, the court 

appointed Dr. Michael Jaffé to serve as the estate’s insolvency 

administrator, a position akin to a bankruptcy trustee under 

U.S. law. Subsequently, Qimonda ceased all manufacturing 

operations and began to liquidate its estate. The principal 

assets of the estate consisted of its approximately 10,000 

patents, including about 4,000 U.S. patents. Most of these 

patents covered products or processes related to DRAM, but some 

covered other types of semiconductor technology.
8

The “patent thicket” and the practice of cross-licensing

At the time Qimonda opened its insolvency proceeding, its 

patents were subject to numerous cross-license agreements with 

other semiconductor manufacturers, including Infineon 

Technologies AG (from which Qimonda had spun off in 2006), 

Samsung Electronics Company, International Business Machines 

Corporation (“IBM”), Intel Corporation, Hynix Semiconductor, 

Inc., Nanya Technology Corporation, and Micron Technology, Inc. 

While some of these cross-license agreements were designed to 

facilitate specific joint ventures, most simply reflected the 

strategy widely adopted in the semiconductor industry in 

response to infringement risks arising from the industry’s 

“patent thicket” -- a term used to describe “a dense web of 

overlapping intellectual property rights.” Carl Shapiro, 

Navigating the Patent Thicket: Cross Licenses, Patent Pools, and 

Standard Setting, in 1 Innovation Policy and the Economy 119, 

120 (Adam B. Jaffe et al. eds., 2001). As the bankruptcy court 

in this case aptly explained and all parties agreed, there are 

so many patents implicated by any new semiconductor product that 

“it would be all but impossible to design around each and every” 

one. In re Qimonda AG, 462 B.R. 165, 175 (Bankr. E.D. Va. 

2011). “Indeed, such is the number of potentially applicable 

patents that it is not always possible to identify which ones 

might cover a new product . . . .” Id.
9

The problem of the patent thicket is exacerbated by the 

enormous costs incurred to bring a new semiconductor product to 

market. According to one expert, the price of building a new 

semiconductor fabrication facility can now exceed $5 billion. 

These sunk costs could create a classic “holdup” problem if a 

new product were ultimately found to infringe someone else’s 

patent, with the patent’s owner being able to extract a 

substantially higher royalty after the investment had been made 

than if a license had been negotiated beforehand. Thus, to 

avoid this holdup premium and enhance their design freedom, 

competitors in the semiconductor industry have routinely entered 

into broad, non-exclusive cross-license agreements with each 

other, “sometimes with the addition of equalizing payments 

(either up-front payments or so-called running royalties) to 

account for differences in the size and breadth of the 

respective patent portfolios.” In re Qimonda AG, 462 B.R. at 

175.

Consistent with this industry practice, Qimonda had patent 

cross-license agreements with nearly every other major 

semiconductor manufacturer at the time it opened its insolvency 

proceeding.
10

The Chapter 15 proceeding

Jaffé commenced this Chapter 15 proceeding on June 15, 

2009, for recognition of the German insolvency proceeding as a 

“foreign main proceeding” under 11 U.S.C. § 1517. Jaffé’s

petition identified Qimonda’s known assets in the United States 

as including its “active patents and patent applications filed 

with the United States Patent and Trademark Office,” and it 

sought relief designed to “give effect to the German Proceedings 

in the U.S., protect the U.S. Assets, and to prevent creditors 

in the U.S. from taking actions that [might] frustrate the 

German Proceedings.” Jaffé also sought an order entrusting to 

him, under § 1521(a)(5), “[t]he administration or realization of 

all or part of the assets of [Qimonda] within the territorial

jurisdiction of the United States” and further declaring that 

the “German Proceedings . . . be granted comity and [be] given 

full force and effect” in the United States.

The bankruptcy court granted the relief Jaffé requested,

entering an order granting recognition of the German insolvency 

proceeding as a “foreign main proceeding” under § 1517. At the 

same time, it also entered a separate Supplemental Order

“grant[ing] further relief under 11 U.S.C. § 1521.” The 

Supplemental Order made Jaffé “the sole and exclusive 

representative of Qimonda AG in the United States” and, as 

requested, specifically gave him the power to “administer the 
11

assets of Qimonda AG within the territorial jurisdiction of the 

United States.” It authorized Jaffé “to examine witnesses, take 

evidence, seek production of documents, and deliver information” 

concerning Qimonda. Finally, it specified that, “in addition to 

those sections [of the Bankruptcy Code] made applicable pursuant 

to § 1520,” a number of other provisions of the Bankruptcy Code 

would be “applicable in this proceeding,” including 11 U.S.C. §

365. That provision gives a bankruptcy trustee power to assume 

or reject any of the debtor’s executory contracts. But one 

subsection, § 365(n), limits the trustee’s ability to 

unilaterally reject licenses to the debtor’s intellectual 

property, reserving to the licensees the option to elect to 

retain their rights under the licenses.

Shortly after the bankruptcy court entered its Supplemental 

Order, Jaffé began sending letters to companies that had crosslicense agreements with Qimonda, invoking § 103 of the German

Insolvency Code and declaring that the licenses under Qimonda’s 

patents were “no longer enforceable.” Section 103 of the German 

Insolvency Code, much like § 365 of the U.S. Bankruptcy Code, 

permits an insolvency administrator to decide whether to 

continue to perform the debtor’s executory contracts. But, 

unlike § 365, which includes the § 365(n) exception, § 103 does 

not specifically address intellectual property licenses. In 

Jaffé’s view, however, the licenses under Qimonda’s patents fell 
12

within the scope of § 103, and it was his duty, as insolvency 

administrator, not to recognize them since they provided no 

useful compensation to Qimonda’s estate.

After receiving these letters, Samsung and Elpida Memory, 

Inc., responded with letters, taking the position that 11 U.S.C. 

§ 365(n) protected their licenses under Qimonda’s U.S. patents

and announcing that they were electing to retain their rights 

under the licenses.

The letters from Samsung and Elpida prompted Jaffé to move 

to amend the bankruptcy court’s July 22, 2009 Supplemental Order

to delete entirely its reference to § 365. Alternatively, Jaffé 

asked the court to add a proviso to the Supplemental Order 

specifying that “Section 365(n) applies only if the Foreign 

Representative rejects an executory contract pursuant to Section 

365 (rather than simply exercising the rights granted to the 

Foreign Representative pursuant to the German Insolvency Code).” 

Several companies that had licenses under Qimonda’s U.S. patents 

through cross-license agreements -- namely, Infineon, Samsung, 

Micron, Nanya, IBM, Intel, and Hynix (hereafter, the 

“Licensees”) -- opposed Jaffé’s motion to amend the Supplemental 

Order.1

 1 Infineon, Samsung, Micron, Nanya, and Elpida originally 

objected to the motion, while IBM, Intel, and Hynix were later 

allowed to intervene as objectors. Elpida, which also had 
13

By an opinion dated November 19, 2009, the bankruptcy court 

granted Jaffé’s motion, stating that its inclusion of § 365 was 

“improvident.” The court explained that consistent with Chapter 

15’s goal of “providing a systematic and consistent resolution 

to cross-border insolvencies,” the fate of the patent crosslicense agreements should be decided in the German insolvency

proceeding by applying German law. The court accordingly 

amended its Supplemental Order to include the alternative 

proviso that Jaffé had requested as an amendment.

The appeal to the district court and its remand order

The Licensees appealed the bankruptcy court’s amended order 

to the district court, which thereafter remanded the case back 

to the bankruptcy court to consider 11 U.S.C. § 1522(a)’s 

requirement that the bankruptcy court ensure that “the interests 

of the creditors and other interested entities, including the 

debtor, [were] sufficiently protected.” The district court 

explained that § 1522(a) required the bankruptcy court “to 

balance the relief granted to the foreign representative and the 

interests of those affected by such relief, without unduly 

favoring one group of creditors over another.” In re Qimonda AG 

 

elected to enforce its licenses from Qimonda under § 365(n),

subsequently reached a settlement with Jaffé and therefore is 

not an objecting Licensee.
14

Bankr. Litig., 433 B.R. 547, 557 (E.D. Va. 2010) (emphasis 

omitted) (quoting In re Tri-Cont’l Exch. Ltd., 349 B.R. 627, 637 

(Bankr. E.D. Cal. 2006)). The court found it “unclear on [the]

somewhat anemic record whether the Bankruptcy Court adequately 

balanced the parties’ interests, as required by § 1522,” noting 

that the bankruptcy court had not adequately explained why the 

application of § 365(n) would unduly prejudice Jaffé or, 

conversely, fully considered “whether cancellation of licenses 

for [Qimonda’s U.S. patents] would put at risk [the Licensees’] 

investments in manufacturing or sales facilities in this country 

for products covered by the U.S. patents.” Id. at 558.

As a separate basis for remand, the district court also 

found that the bankruptcy court had failed to consider “whether 

§ 365(n) embodies the fundamental public policy of the United 

States, such that subordinating § 365(n) to German Insolvency 

Code § 103 is an action ‘manifestly contrary to the public 

policy of the United States,’” under 11 U.S.C. § 1506. 433 B.R. 

at 565. The district court concluded that there were two 

primary circumstances in which a bankruptcy court should invoke 

§ 1506: first, when “the foreign proceeding was procedurally 

unfair;” and second, when “the application of foreign law or the 

recognition of a foreign main proceeding under Chapter 15 would 

severely impinge the value and import of a U.S. statutory or 

constitutional right, such that granting comity would severely 
15

hinder United States bankruptcy courts’ abilities to carry out . 

. . the most fundamental policies and purposes of these rights.” 

Id. at 568-69 (internal quotation marks omitted). Finding the 

application of that standard “unclear on [the] record,” the 

court also directed the bankruptcy court on remand to consider 

“whether conditioning the applicability of § 365(n) was a 

prohibited action ‘manifestly contrary to the public policy of 

the United States’ under § 1506.” Id. at 570-71.

On remand to the bankruptcy court

On remand, Jaffé filed papers in the bankruptcy court in 

which he committed to re-license Qimonda’s patent portfolio to 

the Licensees at a reasonable and nondiscriminatory (“RAND”) 

royalty. He stated that he was prepared to “enter into good 

faith negotiations” with the Licensees to set the royalty rates 

and, if necessary, to submit the rate amounts to arbitration 

before the World Intellectual Property Organization (“WIPO”).2

 2 RAND royalties are relatively common in high-tech 

industries because of the role played by standard-setting 

organizations, which help ensure the interoperability of 

products, among other functions. To avoid the holdup problem in 

this context, standard-setting organizations typically require 

their members to agree in advance to license any patent 

identified as necessary to a standard at RAND terms. Both 

Qimonda and the Licensees belong to such an organization. 

Nonetheless, the Federal Trade Commission has observed that 

“there is much debate over whether such RAND . . . commitments 

can effectively prevent patent owners from imposing excessive 

royalty obligations on licensees,” noting complaints by industry 
16

In March 2011, the bankruptcy court held a four-day 

evidentiary hearing, receiving testimony regarding the likely 

effects of applying § 365(n) to licenses under Qimonda’s U.S. 

patents. Jaffé testified at the hearing that a ruling applying 

§ 365(n) would render “the central assets of [Qimonda’s] estate, 

that is [its] U.S. patents . . . largely worthless.” He also 

said that such a ruling would “violate the principle of equal 

treatment of creditors under German law” by giving the Licensees 

preferential treatment over Qimonda’s other creditors.

Jaffé also presented the expert testimony of Dr. William 

Kerr, an economist, who concluded that based on his review of 

existing licenses and licensing practices in the semiconductor 

industry, Qimonda’s estate would receive approximately $47 

million per year if Jaffé were allowed to re-license Qimonda’s 

U.S. patents covering DRAM products at RAND terms. Observing 

that $47 million would represent a small fraction of what the 

Licensees spend on research and development every year, Kerr 

gave his opinion that “discontinuance of the cross-licenses at 

issue [and subsequent re-licensing at a RAND rate] would not 

 

representatives that the term RAND is “vague and ill-defined --

particularly with regard to what royalty rate is ‘reasonable.’”

Fed. Trade Comm’n, The Evolving IP Marketplace: Aligning Patent 

Notice and Remedies with Competition 192-93 (2011).
17

unduly impair the function of the semiconductor industry or the 

[Licensees].”

By contrast, the Licensees’ witnesses testified to the harm 

that would befall the Licensees, as well as the semiconductor 

industry as a whole, if the reference to § 365(n) were removed 

from the Supplemental Order. For example, Dr. Jerry Hausman, 

the Licensees’ economist, gave his opinion that “[b]y 

destabilizing the system of licensing that has enabled the 

extraordinary success of the semiconductor industry and other 

industries, failure to apply Section 365(n) would reduce 

investment, innovation, and competition, which would harm U.S. 

productivity growth and U.S. consumers as well as worldwide 

productivity and consumers.” Hausman also disputed Kerr’s 

calculation of the likely RAND royalty rates, forecasting 

significantly higher sums and arguing that the holdup threat 

could not be eliminated. Moreover, in Hausman’s view, Jaffé’s 

offer to re-license the U.S. patents at RAND terms could not 

“provide adequate protection for the interests of the 

[Licensees],” in part because of the danger that Jaffé would 

subsequently sell the patent portfolio to an entity that might 

itself file for bankruptcy, thus “extinguish[ing] the 

[Licensees’] licenses once again.”
18

The bankruptcy court’s decision on remand

At the conclusion of the hearing, the bankruptcy court 

issued a memorandum opinion denying Jaffé’s motion to amend the 

Supplemental Order and confirming “that § 365(n) applies with 

respect to Qimonda’s U.S. patents.” In re Qimonda AG, 462 B.R. 

at 185. The court assumed for the purpose of its analysis that 

Jaffe’s interpretation of German law was correct and that § 103 

of the German Insolvency Code would authorize him to terminate 

the Licensees’ right to practice Qimonda’s patents. With that 

assumption, the court concluded that “the balancing of debtor 

and creditor interests required by § 1522(a) . . . weighs in 

favor of making § 365(n) applicable to Dr. Jaffé’s

administration of Qimonda’s U.S. patents.” Id. at 182.

Explaining its balancing analysis, the bankruptcy court 

recognized that its ruling would “result in less value . . . 

being realized by the Qimonda estate” but noted that Qimonda’s 

patents would “by no means be rendered worthless.” 462 B.R. at 

182. On the other hand, the court found that a contrary ruling 

would create a “very real” “risk to the very substantial 

investment the [Licensees] . . . [had] collectively made in 

research and manufacturing facilities in the United States in 

reliance on the design freedom provided by the cross-license 

agreements.” Id. at 182-83. The court acknowledged that

Jaffé’s offer to re-license Qimonda’s patents on RAND terms
19

would lessen the holdup risk, but observed that, because of the 

Licensees’ “sunk costs, [they would] not have the option of 

avoiding royalties altogether by designing around the patent.” 

Id. at 181-82.

As an independent ground for its decision, the bankruptcy 

court also concluded, under 11 U.S.C. § 1506, that “deferring to 

German law, to the extent it allows cancellation of the U.S. 

patent licenses, would be manifestly contrary to U.S. public 

policy.” 462 B.R. at 185. Referencing the legislative history 

of Congress’s enactment of the Intellectual Property Licenses in 

Bankruptcy Act, Pub. L. No. 100-506, 102 Stat. 2538 (1988), the 

court noted that § 365(n) resulted from Congress’s determination 

“that allowing patent licenses to be terminated in bankruptcy 

would ‘impose[] a burden on American technological 

development.’” In re Qimonda AG, 462 B.R. at 184 (quoting S. 

Rep. No. 100-505, at 1 (1988), reprinted in 1988 U.S.C.C.A.N. 

3200, 3200). Informed by this congressional policy choice, the 

court reasoned that “[a]lthough innovation would obviously not 

come to a grinding halt if licenses to U.S. patents could be 

cancelled in a foreign insolvency proceeding, the court is 

persuaded by Professor Hausman’s testimony that the resulting 

uncertainty would nevertheless slow the pace of innovation, to 

the detriment of the U.S. economy.” Id. at 185. On this basis, 

the court concluded that “failure to apply § 365(n) under the 
20

circumstances of this case and this industry would ‘severely 

impinge’ an important statutory protection accorded licensees of 

U.S. patents and thereby undermine a fundamental U.S. public 

policy promoting technological innovation.” Id.

The bankruptcy court thus held that “public policy, as well 

as the economic harm that would otherwise result to the 

[L]icensees, require[d] that the protections of § 365(n) apply 

to Qimonda’s U.S. patents.” 462 B.R. at 167-68.

The direct appeal to the court of appeals

Jaffé appealed the bankruptcy court’s ruling and sought 

from the district court a certification under 28 U.S.C. §

158(d)(2) for a direct appeal to this court. The district court 

concluded that the bankruptcy court’s order qualified for 

certification, and, by order dated June 28, 2012, we authorized 

the direct appeal. See 28 U.S.C. § 158(d)(2).

II

Congress enacted Chapter 15 of the Bankruptcy Code in 2005 

as part of the Bankruptcy Abuse Prevention and Consumer 

Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23, stating 

that its purpose was “to incorporate the Model Law on CrossBorder Insolvency,” which had been developed in 1997 by the 

United Nations Commission on International Trade Law

(“UNCITRAL”), “so as to provide effective mechanisms for dealing 
21

with cases of cross-border insolvency.” 11 U.S.C. § 1501(a); 

see also H.R. Rep. No. 109-31, pt. 1, at 105 (2005), reprinted 

in 2005 U.S.C.C.A.N. 88, 169. In this respect, Chapter 15 

replaced former 11 U.S.C. § 304, which authorized bankruptcy 

courts to award appropriate relief in a case ancillary to a 

foreign proceeding but which was largely discretionary. See 11 

U.S.C. § 304(c) (2000). Chapter 15 lists five specific 

objectives: (1) to encourage cooperation with “the courts and 

other competent authorities of foreign countries involved in 

cross-border cases;” (2) to increase “legal certainty for trade 

and investment;” (3) to promote the “fair and efficient 

administration of cross-border insolvencies” so as to “protect[] 

the interests of all creditors, and other interested entities, 

including the debtor;” (4) to protect and maximize “the value of 

the debtor’s assets;” and (5) to facilitate “the rescue of 

financially troubled businesses.” 11 U.S.C. § 1501(a); see also

H.R. Rep. No. 109-31, pt. 1, at 105.

To further these stated objectives, Chapter 15 authorizes 

the representative of a foreign insolvency proceeding to 

commence a case in a U.S. bankruptcy court by filing a petition 

for recognition of the foreign proceeding. 11 U.S.C. §§ 1504, 

1509(a), 1515. If the petition meets the requirements listed in 

§ 1517, the court must enter an order granting recognition of

the foreign proceeding. And if that foreign proceeding “is 
22

pending in the country where the debtor has the center of its 

main interests,” it is recognized as a “foreign main 

proceeding.” 11 U.S.C. § 1517(b)(1); see also id. § 1502(4). 

With the entry of an order recognizing a foreign main 

proceeding, the foreign representative of the proceeding 

automatically receives relief as stated in § 1520, including the

automatic stay created by § 362 with respect to the debtor and 

its property within the United States and the ability to operate 

the debtor’s business within the United States under § 363, as 

well as the right to sue and be sued and the right to “intervene 

in any proceedings in a State or Federal court in the United 

States in which the debtor is a party.” Id. §§ 1520(a), 

1509(b)(1), 1524. Moreover, the statute provides that following 

entry of a recognition order, “a court in the United States 

shall grant comity or cooperation to the foreign 

representative,” thereby implementing a principal purpose of 

Chapter 15. Id. § 1509(b)(3).

Even before entry of the order granting recognition, § 1519 

authorizes the bankruptcy court, on the foreign representative’s 

request, to grant preliminary relief when “urgently needed to 

protect the assets of the debtor or the interests of the 

creditors.” 11 U.S.C. § 1519.

In addition to the automatic relief that comes with the 

entry of an order granting recognition of a foreign main 
23

proceeding, § 1521 authorizes the bankruptcy court to grant 

discretionary relief. Specifically, § 1521 provides that “where 

necessary to effectuate the purpose of this chapter and to 

protect the assets of the debtor or the interests of the 

creditors, the court may, at the request of the foreign 

representative, grant any appropriate relief.” 11 U.S.C. §

1521(a). This discretionary relief may include “entrusting the 

administration or realization of all or part of the debtor’s 

assets within the territorial jurisdiction of the United States 

to the foreign representative,” id. § 1521(a)(5), as well as 

“entrust[ing] the distribution of all or part of the debtor’s 

assets located in the United States to the foreign 

representative,” id. § 1521(b). The bankruptcy court, however, 

may only grant discretionary relief under § 1521 if it 

determines that “the interests of the creditors and other 

interested entities, including the debtor, are sufficiently 

protected.” Id. § 1522(a). It may also subject the 

discretionary relief it grants under § 1521 “to conditions it 

considers appropriate, including the giving of security or the 

filing of a bond.” Id. § 1522(b).

Finally, all of the actions authorized in Chapter 15 are 

subject to § 1506, which provides that “[n]othing in this 

chapter prevents the court from refusing to take an action 

governed by this chapter if the action would be manifestly 
24

contrary to the public policy of the United States.” 11 U.S.C. 

§ 1506.

Chapter 15 thus authorizes an “ancillary” proceeding in a 

United States bankruptcy court that is largely designed to 

complement and assist a foreign insolvency proceeding by, among 

other things, “bring[ing] people and property beyond the foreign 

main proceeding’s jurisdiction into the foreign main proceeding 

through the exercise of the United States’ jurisdiction.” In re 

ABC Learning Centres Ltd., 728 F.3d 301, 307 (3d Cir. 2013); see 

also H.R. Rep. No. 109-31, pt. 1, at 106 (“Cases brought under 

chapter 15 are intended to be ancillary to cases brought in a 

debtor’s home country . . .”). This structure reflects “the 

United States policy in favor of a general rule that countries 

other than the home country of the debtor, where a main 

proceeding would be brought, should usually act through 

ancillary proceedings in aid of the main proceedings, in 

preference to a system of full bankruptcies (often called 

‘secondary’ proceedings) in each state where assets are found.” 

H.R. Rep. No. 109-31, pt. 1, at 108. Notwithstanding this 

general policy, Chapter 15 also expressly contemplates that 

“[a]fter recognition of a foreign main proceeding, a case under 

another chapter of [the Bankruptcy Code] may be commenced . . . 

if the debtor has assets in the United States.” 11 U.S.C. 

§ 1528.
25

Thus, taken as a whole, Chapter 15 -- like the Model Law on 

which it was based -- takes “several modest but significant” 

steps toward implementing “a modern, harmonized and fair 

framework to address more effectively instances of cross-border 

insolvency.” UNCITRAL, Guide to Enactment of the UNCITRAL Model 

Law on Cross-Border Insolvency, in Legislative Guide on 

Insolvency Law 307, 307 (2005) (hereinafter, “Guide to 

Enactment”).

III

Jaffé contends that the bankruptcy court erred by employing

§ 1522(a)’s sufficient protection requirement to subject his 

“right to administer [Qimonda’s] U.S. patents . . . to the 

constraints imposed by § 365(n),” thus allowing the Licensees to

elect to retain their license rights under Qimonda’s U.S. 

patents, contrary to German law as he understands it. In re 

Qimonda AG, 462 B.R. at 183. The bankruptcy court limited the 

authority it conferred on Jaffé under § 1521(a)(5) by balancing 

the interests of the Licensees with the interests of Qimonda’s 

estate under § 1522(a) and concluding that the Licensees should 

receive the protection of § 365(n). Id. at 180-83. In support 

of his challenge, Jaffé makes essentially three arguments: (1) 

that the district court and the bankruptcy court erred in even 

considering § 1522(a), because that section applies only to 
26

relief granted under § 1521, that the relief granted under §

1521 may be requested only by the foreign representative, and 

that he, as the foreign representative, never requested the 

inclusion of § 365(n) as part of the § 1521 relief; (2) that the 

bankruptcy court misunderstood the type of protection afforded 

by § 1522(a) by applying a test that balanced the debtor’s 

interests and the creditors’ interests instead of a test that 

placed all creditors on an equal footing; and (3) that in 

balancing the competing interests, the bankruptcy court 

overstated the risks to the Licensees, especially in view of 

Jaffé’s offer to re-license Qimonda’s patents to them, and

failed to treat all creditors’ interests equally. We address 

these points in order.3

 3 We note as well that the United States has appeared as 

amicus curiae to express its concern that the bankruptcy court 

overstepped its authority below. Specifically, it criticizes 

the bankruptcy court as “approach[ing] this case as though it 

were empowered to decide whether the Foreign Administrator 

should be permitted to reject appellees’ license agreements” 

based on an erroneous assumption that it could “superimpose 

Section 365(n) on the operation of German insolvency law in a 

German proceeding.” The United States therefore urges us to 

“reverse[] on the threshold ground that Section 365(n) cannot 

constrain the operation of German insolvency law in Germany.” 

As already made clear, however, we take a different view of 

the scope of the bankruptcy court’s holding. Rather than 

purporting to “constrain the operation of German insolvency law 

in Germany,” the bankruptcy court conditioned its grant of power 

to Jaffé to “administer the assets of Qimonda AG within the 

territorial jurisdiction of the United States” with the 

limitation that he was taking the company’s U.S. patents subject 
27

A

First, Jaffé argues that both the bankruptcy court and the 

district court erred in even considering § 1522’s sufficient 

protection requirement because § 1522(a) applies to relief that 

may be granted under § 1521, and § 1521(a), in turn, provides 

that “the court may, at the request of the foreign 

representative, grant any appropriate relief.” (Emphasis 

added). He asserts that he “never asked the bankruptcy court to 

include § 365 in its Supplemental Order or sought other relief 

relating to § 365(n)” such that the Licensees would have the 

option to retain their licenses under Qimonda’s U.S. patents. 

Thus, according to Jaffé, because application of § 365 was not 

specifically requested by him, the bankruptcy court’s sua sponte

inclusion of § 365 was legal error, the correction of which must 

precede any consideration of § 1522(a)’s sufficient protection 

requirement.

We believe that Jaffé’s view of the relationship between §

1521(a) and § 1522(a) is too myopic. While it is true that 

 

to the preexisting licenses, which he was obliged to treat in a 

manner consistent with § 365(n). As a result, Jaffé is 

precluded from rejecting the U.S. patent licenses as a matter of 

U.S. law. Although this limitation may have indirect effects in

the German proceeding, it does not represent an impermissible 

application of U.S. law extraterritorially, which we understand 

to be the main concern animating the United States’ position in 

this case.
28

Jaffé “never affirmatively requested rejection authority under §

365,” he did request several forms of discretionary relief under 

§ 1521, among which was the privilege, pursuant to § 1521(a)(5),

to have the bankruptcy court entrust him with “[t]he 

administration or realization of all or part of the assets of 

[Qimonda] within the territorial jurisdiction of the United 

States,” specifically identifying the company’s U.S. patents as 

among the U.S. assets he sought to control. And, as a 

prerequisite to awarding any § 1521 relief, the court was 

required to ensure sufficient protection of the creditors and 

the debtor. Section 1522(a) states this explicitly, providing

in relevant part, “The court may grant relief under section . . 

. 1521 . . . only if the interests of the creditors and other 

interested entities, including the debtor, are sufficiently 

protected.” 11 U.S.C. § 1522(a) (emphasis added). 

Additionally, the court was authorized to “subject” any § 1521

relief “to conditions it considers appropriate.” Id. § 1522(b); 

see also H.R. Rep. No. 109-31, pt. 1, at 116 (describing § 1522 

as “giv[ing] the bankruptcy court broad latitude to mold relief 

to meet specific circumstances, including appropriate responses

if it is shown that the foreign proceeding is seriously and 

unjustifiably injuring United States creditors”).

This is precisely what the bankruptcy court did here. It 

granted discretionary relief under § 1521 and, as mandated, 
29

considered the question of sufficient protection under §

1522(a). Upon such consideration, it conditioned its § 1521

relief on application of § 365(n), finding that such protection 

was appropriate in the circumstances presented.

To be sure, the bankruptcy court did not frame its initial

inclusion of § 365 in the Supplemental Order as a condition on 

the authority it was granting Jaffé under § 1521. Indeed, when 

initially faced with Jaffé’s motion to amend, the court 

described the inclusion of § 365 as “improvident.” But on the 

Licensees’ appeal, the district court correctly recognized that 

it was incumbent on the bankruptcy court, on remand, to consider 

whether “the interests of the creditors and other interested 

entities, including the debtor, [would be] sufficiently 

protected” under § 1522(a) were the court to modify its earlier 

order so as to grant Jaffé control over the administration of 

Qimonda’s U.S. patents without providing for the application of 

§ 365(n) to the licenses on those patents. See In re Qimonda AG

Bankr. Litig., 433 B.R. at 557-58.

The bankruptcy court’s consideration of § 1522(a) was thus 

undoubtedly appropriate when authorizing relief under § 1521.

B

Jaffé next contends that even if the bankruptcy court was 

correct to consider § 1522’s sufficient protection requirement 
30

in granting § 1521 relief, the court nonetheless employed the 

wrong test in applying § 1522(a). He maintains that the 

bankruptcy court’s “ruling fundamentally misunderst[ood] the 

‘interests’ § 1522(a) protects” by failing to recognize that §

1522(a) is merely a procedural protection “designed to ensure 

that all creditors [could] participate in the bankruptcy 

distribution on an equal footing” and thus should not be used to 

protect parties from the substantive bankruptcy law that would 

otherwise apply in the foreign main proceeding. (Emphasis 

added). He asserts that “[d]isregarding foreign law based on an 

open-ended balancing test under § 1522(a) is contrary to Chapter 

15’s basic design,” which, according to Jaffé, requires U.S. 

courts to defer to foreign substantive law except only as 

allowed under § 1506, which provides a narrow exception when the 

court’s action would otherwise violate “the most fundamental 

policies of the United States.” H.R. Rep. No. 109-31, pt. 1, at 

109. In sum, he argues (1) that the bankruptcy court erred by 

interpreting § 1522’s sufficient protection requirement as 

incorporating a balancing test that could achieve a result that 

treated creditors differently and that would therefore be in 

tension with German law, and (2) that, to the extent § 1522(a) 

was implicated at all, the bankruptcy court should have limited 

its analysis to ensuring that the doors of the German insolvency 
31

proceeding would be open to the Licensees on equal footing with 

Qimonda’s other creditors.

Jaffé’s theory of how the sufficient protection requirement 

of § 1522(a) operates is not illogical. The text of the statute 

is broad and somewhat ambiguous regarding the test that courts 

should employ to determine “if the interests of the creditors 

and other interested entities, including the debtor, are 

sufficiently protected.” 11 U.S.C. § 1522(a). But we are not 

convinced that Jaffé’s theory can fully be squared with the text 

or with Congress’s intent in enacting the text.

Section 1522(a) requires the bankruptcy court to ensure the 

protection of both the creditors and the debtor. 11 U.S.C. §

1522(a). The provision thus requires the court to ensure that 

the relief a foreign representative requests under § 1521 does 

not impinge excessively on any one entity’s interests, implying 

that each entity must receive at least some protection. And 

because the interests of the creditors and the interests of the 

debtor are often antagonistic, as they are here, providing 

protection to one side might well come at some expense to the 

other. The analysis required by § 1522(a) is therefore

logically best done by balancing the respective interests based 

on the relative harms and benefits in light of the circumstances

presented, thus inherently calling for application of a 

balancing test.
32

We also find support for this interpretation in the Model 

Law on Cross-Border Insolvency, on which Chapter 15 was based. 

In enacting Chapter 15, Congress stated that it intended to 

codify the Model Law. See 11 U.S.C. § 1501(a). And, in doing 

so, it also indicated strongly that the Model Law, and the 

accompanying Guide to Enactment issued by UNCITRAL in 

conjunction with its adoption of the Model Law, should inform 

our interpretation of Chapter 15’s provisions. Indeed, Chapter 

15 provides that “[i]n interpreting this chapter, the court 

shall consider its international origin, and the need to promote 

an application of this chapter that is consistent with the

application of similar statutes adopted by foreign 

jurisdictions.” Id. § 1508; see also H.R. Rep. No. 109-31, pt. 

1, at 109-10 (“Interpretation of this chapter on a uniform basis 

will be aided by reference to the Guide and the Reports cited 

therein, which explain the reasons for the terms used and often 

cite their origins as well. . . . To the extent that the United 

States courts rely on these sources, their decisions will more 

likely be regarded as persuasive elsewhere” (emphasis added)). 

Thus, the Model Law and its Guide to Enactment also provide 

relevant guidance in determining the appropriate meaning of 

Chapter 15’s provisions.

The Guide to Enactment contains a number of paragraphs that 

bear directly on the question of how a court should assess the
33

interests of others and protect them prior to granting the 

discretionary relief sought by a foreign representative. For 

example, the Guide acknowledges that the representative of a 

foreign main proceeding will “normally seek[] to gain control 

over all assets of the insolvent debtor.” Guide to Enactment

¶ 158, at 347. But it stresses that the Model Law makes “[t]he 

‘turnover’ of assets to the foreign representative . . . 

discretionary,” adding that “the Model Law contains several 

safeguards designed to ensure the protection of local interests

before assets are turned over to the foreign representative.” 

Id. ¶ 157, at 347 (emphasis added). Chief among those 

“safeguards” is Article 22 of the Model Law, which is largely 

codified as § 1522.4

 According to the Guide, “The idea 

 4 Article 22 of the Model Law provides in full:

1. In granting or denying relief under article 19 or 

21, or in modifying or terminating relief under 

paragraph 3 of this article, the court must be 

satisfied that the interests of the creditors and 

other interested persons, including the debtor, are 

adequately protected.

2. The court may subject relief granted under article 19 or 

21 to conditions it considers appropriate.

3. The court may, at the request of the foreign 

representative or a person affected by relief granted 

under article 19 or 21, or at its own motion, modify 

or terminate such relief.

Comparing Article 22 and § 1522 reveals that Congress 

relied heavily on the language of the Model Law. One of the few 
34

underlying [A]rticle 22 is that there should be a balance 

between relief that may be granted to the foreign representative 

and the interests of the persons that may be affected by such 

relief. This balance is essential to achieve the objectives of 

cross-border insolvency legislation.” Id. ¶ 161, at 348 

(emphasis added). The Guide to Enactment separately indicates 

that Article 22 is designed to “protect the interests of the 

creditors (in particular local creditors), the debtor and other 

affected persons.” Id. ¶ 35, at 314. Finally, the Guide 

states, “[i]n addition to [Article 22’s] specific provisions,” 

Article 6 of the Model Law “in a general way provides that the 

court may refuse to take an action governed by the Model Law if 

the action would be manifestly contrary to the public policy of 

the enacting State.” Id. ¶ 36, at 314 (emphasis added).

Informed by the Guide to Enactment’s description of the 

relationship between Articles 22 and 6 of the Model Law (§§ 1522 

and 1506 in the U.S. Bankruptcy Code), we do not share Jaffé’s 

view that § 1506’s public policy exception forecloses use of a 

balancing analysis under § 1522. Contrary to Jaffé’s position, 

 

alterations that Congress made was to change “adequately” in 

Article 22(1) to “sufficiently” in § 1522(a) -- a modification 

that the legislative history indicates was made in order “to 

avoid confusion with . . . ‘adequate protection,’” “a very 

specialized legal term in United States bankruptcy.” H.R. Rep. 

No. 109-31, pt. 1, at 115.
35

Chapter 15 does not require a U.S. bankruptcy court, in 

considering a foreign representative’s request for discretionary 

relief under § 1521, to blind itself to the costs that awarding 

such relief would impose on others under the rule provided by 

the substantive law of the State where the foreign insolvency 

proceeding is pending. Instead, Chapter 15, like the Model Law, 

anticipates the provision of particularized protection, as 

stated in § 1522(a).

We therefore conclude, through interpretation of 

§ 1522(a)’s text and consideration of Chapter 15’s international 

origin, that the district court correctly interpreted 

§ 1522(a)’s sufficient protection requirement as requiring a 

particularized balancing analysis that considers the “interests 

of the creditors and other interested entities, including the 

debtor,” 11 U.S.C. § 1522(a), and, in this case in particular, a 

weighing of the interests of the foreign representative (the 

debtor) in receiving the requested relief against the competing 

interests of those who would be adversely affected by the grant 

of such relief (here, the Licensees). And we also agree that 

§ 1506 is an additional, more general protection of U.S. 

interests that may be evaluated apart from the particularized 

analysis of § 1522(a).

In reaching this conclusion, we join the Fifth Circuit, 

which interpreted § 1522(a) similarly, based largely on the 
36

language in the Guide to Enactment. See In re Vitro S.A.B. de 

C.V., 701 F.3d 1031, 1060, 1067 n.42 (5th Cir. 2012); see also

In re Int’l Banking Corp. B.S.C., 439 B.R. 614, 626-27 (Bankr. 

S.D.N.Y. 2010); In re Tri-Cont’l Exch. Ltd., 349 B.R. 627, 637 

(Bankr. E.D. Cal. 2006).

C

Finally, Jaffé contends that the bankruptcy court’s 

balancing analysis, even if assumed appropriate, was flawed in 

implementation. He argues that the court dramatically 

overstated the risk to the Licensees’ investments made in 

reliance on the cross-license agreements, especially in light of 

his offer to re-license Qimonda’s U.S. patents to the Licensees 

at a RAND royalty rate. In this regard, he maintains that the 

court’s balancing analysis failed to recognize that “§ 1522(a)

requires courts to protect the interests of all ‘creditors and 

other interested entities, including the debtor’ -- not just one 

set of contracting parties.”

The Licensees respond, arguing that “the bankruptcy court 

properly recognized that Dr. Jaffé’s offer to relicense did not 

change the balance of harms” and that the bankruptcy court 

correctly “concluded that, without § 365(n) protection, the 

Licensees would face both the immediate harm of a hold-up and 

the future . . . destabilization of the licensing regime in the 
37

semiconductor industry.” They maintain that in light of the

bankruptcy court’s detailed findings and careful reasoning, 

Jaffé simply “cannot meet his heavy burden to demonstrate that 

the bankruptcy court abused its discretion in its application of 

§ 1522.”

It should be noted that after hearing four days of 

evidence, the bankruptcy court considered the outcome of its 

balancing analysis to be a close one. But in the end it 

concluded, reasonably we believe, “that the balancing of debtor 

and creditor interests required by § 1522(a), Bankruptcy Code, 

weigh[ed] in favor of making § 365(n) applicable to Dr. Jaffé’s 

administration of Qimonda’s U.S. patents.” In re Qimonda AG, 

462 B.R. at 182. The court recognized Jaffé’s claim that the 

“application of § 365(n) [would] result in less value . . . 

being realized by the Qimonda estate.” Id. But it noted that 

“Qimonda’s patent portfolio [would] by no means be rendered 

worthless” because the “U.S. patents [could] still be licensed 

to parties that [did] not already have a license, and Dr. Jaffé, 

to the extent permitted by German law, [would] be able to fully 

monetize the non-U.S. patents.” Id. Additionally, the 

bankruptcy court found it significant that “[a]pplication of 

§ 365(n) . . . [would impose] no affirmative burden on Dr. 

Jaffé,” id., but instead would merely limit his ability -- and,

importantly, the ability of the patents’ subsequent owners -- to 
38

bring infringement actions against the very entities that 

Qimonda had previously promised not to sue. See Imation Corp. 

v. Koninklijke Philips Elecs. N.V., 586 F.3d 980, 987 (Fed. Cir. 

2009) (characterizing a patent cross-license agreement as 

essentially “a promise by the licensor not to sue the licensee” 

for infringement (citation omitted)).

In considering and weighing the Licensees’ interests, the 

bankruptcy court largely credited their evidence indicating that 

entrusting Jaffé with the right to administer Qimonda’s U.S. 

patents without making § 365(n) applicable to the preexisting 

licenses under those patents would have broad-ranging ill 

effects. It explained that “the risk to the very substantial 

investment the [Licensees] -- particularly IBM, Micron, Intel, 

and Samsung -- [had] collectively made in research and 

manufacturing facilities in the United States in reliance on the 

design freedom provided by the cross-license agreements, though 

not easily quantifiable, [was] nevertheless very real.” In re 

Qimonda AG, 462 B.R. at 182-83. While the bankruptcy court 

acknowledged that the Licensees had been unable “to identify 

specific Qimonda patents implicated by the products they 

manufacture[d] and s[old],” it noted that the lack of such 

evidence was “not at all surprising, since the whole point of 

portfolio cross-licenses [was] to eliminate the necessity (and 

in some cases impossibility) of individually analyzing each and 
39

every patent that might possibly apply to determine if a new 

design infringe[d] on it.” Id. at 181. Thus, although the 

bankruptcy court could not, in the course of its balancing 

analysis, make “a finding that cancellation of the [Licensees’] 

right to use Qimonda’s U.S. patents would have a specific dollar 

impact on them,” it did find that it “create[d] a substantial 

risk of harm,” adding that “the threat of infringement 

litigation can be as damaging as an actual finding of 

infringement.” Id.

We find the bankruptcy court’s thorough examination of the 

parties’ competing interests to have been both comprehensive and 

eminently reasonable.

Jaffé relies heavily on the mitigation that would result 

from his commitment to re-license Qimonda’s patents to the 

Licensees on RAND terms, arguing that it would provide 

sufficient protection for their interests. Of course, his 

proposal -- first mentioned after the district court’s remand --

does weigh in his favor by decreasing the Licensees’ holdup 

risks. But just because the RAND proposal would reduce the 

Licensees’ risks does not mean that their interests would be 

sufficiently protected by Jaffé’s promise to re-license. The 

bankruptcy court expressly recognized this, explaining that “the 

hold-up risk is lessened by Dr. Jaffé’s offer to re-license the 

patents on RAND terms,” but emphasizing that “even if the WIPO 
40

expert determination process were to arrive at the same figure 

that would have been agreed to in an ‘ex ante’ scenario, the 

[Licensees], because of their sunk costs, [would] not have the 

option of avoiding royalties altogether by designing around the 

patent.” In re Qimonda AG, 462 B.R. at 181-82. We conclude 

that the bankruptcy court’s findings in this regard are not 

unreasonable and that the bankruptcy court was justified in its 

skepticism of Jaffé’s claim that the Licensees’ interests would 

now be “sufficiently protected” by his commitment not to charge 

them an exorbitant rate during their re-licensing negotiations.

Moreover, the bankruptcy court also noted that it remained 

an “open question” whether any new license issued by Jaffé on 

RAND terms would itself be secure, expressing its concern that

Dr. Jaffé could still sell the underlying patents to a 

purchaser -- whether a practicing entity or a ‘troll’ 

-- that might itself file for insolvency under German 

law or transfer the patent to a special purpose entity 

for the purpose of having it file for insolvency under 

German law.

Id. at 181-82 n.13. The court’s recognition of this concern was 

also reasonable, as it is far from clear whether, having once 

facilitated the termination of license rights in a foreign 

insolvency proceeding, the genie could ever be put back into the 

bottle. Rather, as indicated by expert testimony that the 

bankruptcy court credited, it would seem all too likely that 

such a result would introduce a dangerous degree of uncertainty 
41

to a licensing system that plays a critically important role in 

the semiconductor industry, as well as other high-tech sectors 

of the global economy.

At bottom, we affirm the decision of the bankruptcy court, 

finding reasonable its exercise of discretion in conducting the 

balancing analysis under § 1522(a) and concluding that attaching 

the protection of § 365(n) was necessary when granting Jaffé the 

power to administer Qimonda’s U.S. patents. See In re Vitro 

S.A.B. de C.V., 701 F.3d at 1069 (noting in the course of 

affirming a bankruptcy court’s decision not to enforce the 

reorganization plan adopted in a foreign main proceeding that 

“[i]t is not our role to determine whether the above-summarized 

evidence would lead us to the same conclusion” and adding that 

“[o]ur only task is to determine whether the bankruptcy court’s 

decision was reasonable” (emphasis added)).

IV

It is important, we think, to recognize, as Jaffé would 

have us do, the importance of Chapter 15 to a global economy, in 

which businesses needing bankruptcy protection increasingly have 

assets in various countries. In mimicking the U.N.’s Model Law 

on Cross-Border Insolvencies, Chapter 15 furthers a policy of 

the United States of cooperating with other countries in 

providing fair and efficient insolvency proceedings for such 
42

international businesses. Consistent with its stated purposes,

Chapter 15 provides for the ready recognition of foreign 

insolvency proceedings, see 11 U.S.C. § 1517, and grants 

automatic relief to protect U.S. assets upon entry of an order

granting recognition, see id. § 1520. It also provides for a 

broad range of discretionary relief under § 1521. Thus, it 

represents a full commitment of the United States to cooperate 

with foreign insolvency proceedings, as called for by the U.N.’s

Model Law on Cross-Border Insolvency. And at bottom, such 

cooperation will provide greater legal certainty for trade and 

business to the benefit of the global economy.

But the United States’ commitment is not untempered, as is 

manifested in both Chapter 15 and the Model Law on which it was 

based. Thus, § 1522(a) requires that a bankruptcy court, when 

granting the discretionary relief authorized by § 1521, ensure 

sufficient protection of creditors, as well as the debtor. And 

at a more general level, § 1506, which covers any action under 

Chapter 15, authorizes a bankruptcy court to refuse to take an 

action that would be manifestly contrary to U.S. public policy.

In this case, it is sufficient for us to affirm the 

bankruptcy court, based on its application of § 1522(a). But in 

doing so, we understand that, by affirming the bankruptcy 

court’s application of § 365(n) following its balancing analysis 

under § 1522(a), we also indirectly further the public policy 
43

that underlies § 365(n). The Senate Report accompanying the 

bill that became § 365(n) explicitly recognized that licensees 

have a strong interest in maintaining their right to use 

intellectual property following the licensor’s bankruptcy and 

that to deny them that right would “impose[] a burden on 

American technological development that was never intended by 

Congress.” S. Rep. No. 100-505, at 1. The Report added that 

“[t]he adoption of this bill will immediately remove that burden 

and its attendant threat to the development of American 

Technology.” Id. at 2.

In this case, the bankruptcy court, in weighing the 

respective interests of the Licensees and the debtor under §

1522(a), found that without the protection of 365(n), the risk 

of harm to the Licensees would be very real, impairing the 

“design freedom provided [them] by the cross-license 

agreements.” In re Qimonda AG, 462 B.R. at 183. And as the 

bankruptcy court otherwise found, this potential harm to the 

Licensees would, in turn, threaten to “slow the pace of 

innovation” in the United States, to the detriment of the U.S. 

economy. Id. at 185. Thus, the court’s findings, which were, 

to be sure, focused on the Licensees’ interests, nonetheless 

necessarily furthered the public policy underlying § 365(n).

We thus recognize that by affirming the bankruptcy court, 

even though on its § 1522(a) analysis, we too necessarily 
44

further the public policy inherent in and manifested by 

§ 365(n).

The judgment of the bankruptcy court is accordingly

AFFIRMED.
45

WYNN, Circuit Judge, concurring in the judgment:

The only question we need to address in this appeal 

concerns the bankruptcy court’s discretion in ensuring that “the 

interests of the creditors and other interested entities, 

including the debtor, are sufficiently protected” under Chapter 

15 of the Bankruptcy Code, 11 U.S.C. § 1522, and whether the 

bankruptcy court abused that discretion here. I agree with the 

majority opinion that in reviewing this issue, we look not to 

whether the record evidence “would lead us to the same 

conclusion” but that “[o]ur only task is to determine whether 

the bankruptcy court’s decision was reasonable.” In re Vitro 

S.A.B. de C.V., 701 F.3d 1031, 1069 (5th Cir. 2012). 

Accordingly, I am happy to concur in the language in Parts I, 

II, and III of the majority opinion that analyzes and addresses 

only this issue. I do not join in Part IV because it is 

unnecessary dictum.