Intellectual Property Bankruptcy Protection Act of 1987
PL 100-506 (S.1626), enacted 10/18/1988

102 STAT. 2538 
PUBLIC LAW 100-506—OCT. 18, 1988 
Public Law 100-506 
100th Congress 
An Act 
Oct. 18, 1988 
To keep secure the rights of intellectual property licensors and licensees which come 
[S. 1626] 
under the protection of title 11 of the United States Code, the bankruptcy code. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. AMENDMENTS TO TITLE 11 OF THE UNITED STATES CODE. 
(a) DEFINITION.—Section 101 of title 11, United States Code, is 
amended— 
(1) in paragraph (50) by striking "and" at the end, and 
(2) in paragraph (51) by striking the period at the end and 
inserting in lieu thereof a semicolon, and 
(3) by adding at the end the following: 
"(52) 'intellectual property* means— 
"(A) trade secret; 
"(B) invention, process, design, or plant protected under 
title 35; 
"
(
C
D
) 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; and 
"(53) 'mask work' has the meaning given it in s^ion 901(aX2) 
of title 17.". 
(b) E
^
X
B
C
U
T
O
R
T CONTRACTS LICENSING RIGHTS TO INTELLECTUAL 
PROPERTY.—Section 365 of title 11, United States Code, is amended 
by adding at the end the following: 
"(nXl) If the trustee rejects an executory contract under which the 
debtor is a licensor of a right to intellectual property, the licensee 
under such contract may elect— 
"(A) to treat such contract as terminated by such rejection if 
such rejection by the trustee amounts to such a breach as would 
entitle the licensee to treat such contract as terminated by 
virtue of its own terms, applicable nonbankruptcy law, or an 
agreement made by the licensee with another entity; or 
"(B) to retain its rights (including a right to to enforce any 
exclusivity provision of such contract, but excluding any other 
right under applicable nonbankruptcy law to specific perform-
ance of such contract) under such contract and under any 
agreement supplementary to such contract, to such intellectual 
properly (including any embodiment of such intellectual prop-
erty to the extent protected by applicable nonbankruptcy law), 
as such rights existed inunediately before the case commenced, 
for— 
"(i) the duration of such contract; and 
"(ii) any period for which such contract may be extended 
by the licensee as of right under applicable nonbankruptcy 
law. 
PUBLIC LAW 100-506—OCT. 18, 1988 
102 STAT. 2539 
"(2) If the licensee elects to retain its rights, as described in 
paragraph (1)(B) of this subsection, under such contract— 
"(A) the trustee shall allow the licensee to exercise such 
rights; 
"(B) the licensee shall make all royalty payments due under 
such contract for the duration of such contract and for any 
period described in paragraph (1)(B) of this subsection for which 
the licensee extends such contract; and 
"(C) the licensee shall be deemed to waive— 
"(i) any right of setoff it may have with respect to such 
contract under this title or applicable nonbankruptcy law; 
and 
"(ii) any claim allowable under section 503(b) of this title 
arising from the performance of such contract. 
"(3) If the licensee elects to retain its rights, as described in 
paragraph (1)(B) of this subsection, then on the written request of 
the licensee the trustee shall— 
"(A) to the extent provided in such contract, or any agree-
ment supplementary to such contract, provide to the licensee 
any intellectual property (including such embodiment) held by 
the trustee; and 
"(B) not interfere with the rights of the licensee as provided in 
such contract, or any agreement supplementary to such con-
tract, to such intellectual property (including such embodiment) 
including any right to obtain such intellectual property (or such 
embodiment) from another entity. 
"(4) Unless and until the trustee rejects such contract, on the 
written request of the licensee the trustee shall— 
"(A) to the extent provided in such contract or any agreement 
supplementary to such contract— 
"(i) perform such contract; or 
"(ii) provide to the licensee such intellectual property 
(including any embodiment of such intellectual property to 
the extent protected by applicable nonbankruptcy law) held 
by the trustee; and 
"(B) not interfere with the rights of the licensee as provided in 
such contract, or any agreement supplementary to such con-
tract, to such intellectual property (including such embodi-
ment), including any right to obtain such intellectual property 
(or such embodiment) from another entity.". 
SEC. 2. EFFECTIVE DATES; APPLICATION OF AMENDMENTS. 
11 USC 101 note. 
(a) EFFECTIVE DATE.—Except as provided in subsection (b), this Act 
and the amendments made by this Act shall take effect on the date 
of the enactment of this Act. 
102 STAT. 2540 
PUBLIC LAW 100-506—OCT. 18, 1988 
(b) APPUCATION OF AMENDMENTS.—The amendments made by this 
Act shall not apply with respect to any case commenced under title 
11 of the United States Code before the date of the enactment of this 
Act. 
Approved October 18, 1988. 
LEGISLATIVE HISTORY—S. 1626 (H.R. 5348): 
HOUSE REPORTS: No. 100-1012 accompanying H.R. 5348 (Comm. on the Judiciary). 
SENATE REPORTS: No. 100-505 (Comm. on the Judiciary). 
CONGRESSIONAL RECORD, Vol. 134 (1988): 
Sept. 20, considered and passed Senate. 
Oct. 3, 4, H.R. 5348 considered and passed House; proceedings vacated and 
S. 1626 passed in lieu.