Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Franchisor Wins IP Dispute

By Craig R. Tractenberg

In bankruptcy, the debtor is entitled to reject (not perform) burdensome contracts. For franchise agreements that contain trademark licenses, the effects of rejection are decided on a case-by-case basis. Sometimes the licensees of the trademarks can continue to use the trademarks over the objection of the franchisor and sometimes not. This issue arose in the Crumbs Bake Shop case in connection with the sale of its assets.

The franchisees (called licensees) of baked goods retailer Crumbs Bake Shop Inc. can continue to use the Crumbs trademark and sell products under the Crumbs brand for the remainder of their licenses' terms, even though the retailer, acting as debtor-in-possession, had moved to reject the licenses following the court's approval of the sale of the business's assets, in In re Crumbs Bake Shop, No. 14-24287, Bankr. N.J. (Oct.31, 2014, Kaplan, M.). The licensees could elect, under 11 U.S.C. Section 365(n), to retain their rights under their respective licenses even though “trademarks” were not included in the Bankruptcy Code definition of “intellectual property.” In addition, sale of the retailer's assets pursuant to 11 U.S.C. Sections 363(b) and (f) did not affect the rights of third-party licensees under Section 365(n). The court held royalties generated as a result of this use were payable to the retailer, because the agreements themselves had not been assumed, assigned, or rejected, and thus continued to be the retailer's property.

Read These Next
Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs Image

A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.

Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It Image

Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?

Blockchain Domains: New Developments for Brand Owners Image

Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.

Coverage Issues Stemming from Dry Cleaner Contamination Suits Image

In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.