Source: https://mediatbankry.com/2018/08/16/effects-of-executory-contract-rejection-at-u-s-supreme-court/
Timestamp: 2019-04-19 00:56:40+00:00

Document:
Here’s a case about the effects of executory contract rejection. While its focus is on “intellectual property” rights under § 365(n) [Fn. 1], the case also delves into the effects of rejection for all types of executory contracts under § 365(g) [Fn. 2].
And this case demonstrates the hazards of a failure to reach settlement in an early mediation.
The case is Mission Product Holdings, Inc. v. Tempnology, LLC, nka Old Cold LLC. It’s Petition for a Writ of Certiorari is pending at the U.S. Supreme Court (Case No. 17-1657), with Conference scheduled for September 24, 2018.
Yet, Debtor goes from profits of $3.4 million in 2013 and $1.9 million in 2014 to a projected loss of $3.5 to $4.0 million in 2015. Debtor blames such change-in-fortunes on its “Co-Marketing and Distribution Agreement” with Distributor (the “Agreement”).
In July of 2015, Debtor starts looking for a buyer of its business as a going concern.
On September 1, 2015, Debtor files Chapter 11 bankruptcy in New Hampshire (Case No. 15-11400).
02/03/2016 – A stipulated Order “stays” prosecution of disputes between Debtor and Distributor, until both pending appeals are resolved.
06/30/2016 – The Agreement expires.
And it rules in Debtor’s favor on both the “exclusive distribution rights” and “trademarks” issues.
Distributor “has not cited any case” that applies § 365(n) as broadly as Distributor argues.
The Bankruptcy Court adopts the majority approach, ruling in Debtor’s favor on Distributor’s trademark rights.
On appeal, the Bankruptcy Appellate Panel for the First Circuit (“BAP”) affirms the Bankruptcy Court’s ruling on the “exclusive distribution rights” issue.
“Debtor’s rejection of the Agreement did not vaporize [Distributor’s] trademark rights,” and Distributor’s right to continue using Debtor’s trademarks continues in effect.
Upon initial evaluation, the Mission v. Tempnology rulings appear specific to intellectual property rights under § 365(n), with little impact beyond that context.
Upon closer review, however, Mission v. Tempnology has the potential to affect every rejection of every executory contract in a wide variety of contexts—under § 365(g)!
Mission v. Tempnology looks like a good candidate for granting certiorari.
If certiorari is granted, the U.S. Supreme Court decision could result in a narrow-and-limited holding under § 365(n).
But the case also has a potential for becoming a watershed decision on the impact of executory contract rejections, generally, under § 365(g).
The term “intellectual property” means–(A) trade secret; (B) invention, process, design, or plant protected under title 35; (C) patent application; (D) plant variety; (E) work of authorship protected under title 17; or (F) mask work protected under chapter 9 of title 17; to the extent protected by applicable nonbankruptcy law.
Footnote 4: The BAP is following the view expressed and applied in Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, 686 F.3d 372 (7th Cir. 2012).

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