The pending petition in Ariosa v. Illumina focuses on a narrow but important issue of prior-art status of a provisional patent application.  Really, the question is: what is the “prior art date” of a provisional patent application?

Whether disclosures in a published application that refers back to an earlier filed provisional application are prior art as of the filing date of the provisional application.

The basic answer that we received from the Federal Circuit is “sometimes.” A provisional application will only count as “prior art” as of its filing date if the later published application (or issued patent) sufficiently supports all of the claims in the resulting non-provisional application as published (or issued patent).

This impacts a large number of US patents: Although I have not recently measured, I my expectation is that most non-provisional patent applications add some amount of new matter beyond their provisional priority documents.  If that new information makes it into some of the claims — the result is that the provisional filing date will be immaterial with regard to prior art (under current Federal Circuit precedent).

CVSG: The petition for certiorari is well written, and the Supreme Court called for the views of the Solicitor General. The SG has now submitted his brief — joined by the USPTO — suggesting denial of cert.

In its brief, the US Gov’t argues that the Federal Circuit is totally wrong in its analysis, but that this case is not a good vehicle for reviewing its approach because petitioner’s argument is also mistaken.

The government brief follows my approach outlined in my 2015 Dynamic Drinkware post:

Anyone who works with prior art knows that this [priority requirement] setup is an oddball way to address the situation.  A patent’s disclosure for prior art purposes should not depend upon what was claimed or not but instead should focus on what was disclosed.  My belief is that, once publicly available, all provisional applications should be considered prior art as of their filing dates.

The government brief agrees that interpretation of proper priority claim under “119(e) has no bearing on the date on which a patent application qualifies as prior art under Section 102(e). There is no textual basis for using that provision’s priority rules to backdate patent applications sought to be relied on as prior art.”

Rather, the Government argues that, under the statute, all provisional applications count as prior art as of their filing dates once relied upon for priority by a published non-provisional application. According to the government brief, publication of the underlying application also lays-upon the file history and effectively publishes the provisional as well.  Thus, at that point, the provisional counts as “‘an application * * * published under section 122(b)’ and therefore constitutes prior art as of its own filing date.”

The Government brief acknowledges that Section 122(b) states flatly that a provisional application “shall not be published.”  Although this appears to contradict their statement that the PTO is publishing those applications, the Government brief argues that the statement only refers to provisional applications abandoned without being relied upon for priority.

Where, as here, a provisional application has been incorporated by reference into a later non-provisional application, the referenced provisional application effectively becomes part of the non-provisional application. Under those circumstances, the USPTO’s obligation to publish the non-provisional application encompasses the contents of the provisional application.

In its Brief, the Government explains that “the Federal Circuit has not directly addressed the question whether a provisional application may itself qualify as prior art under Section 102(e)(1), without recourse to Section 119(e).”

The brief here suggests a GVR (Grant-Vacate-Remand) order from the Supreme Court to address this particular issue on remand.

Solicitor General Brief

Interesting to read this particular brief for style.  Although this is certainly a complicated area, the SG brief did not really attempt to simplify it in any way — perhaps to further discourage the Supreme Court from taking up the issue.

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Note here that this particular case focuses on “old” pre-AIA Section 102(e).  Although the AIA substantially altered Section 102, I don’t believe that the alterations will change the outcome in this case.  As such, the case is important.

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Ariosa Diagnostics v. Illumina: Prior Art Date of a Provisional Patent Application

Federal Circuit Backtracks (A bit) on Prior Art Status of Provisional Applications and Gives us a Disturbing Result

The Senate today continues Day II of its hearings on Patent Eligibility.  In all, the Senate is planning to hear from 45 witnesses — most of whom are arguing in favor of statutory reform that would tighten-up the law of eligibility.

• Eligibility Hearing I
• Eligibility Hearing II
• Eligibility Hearing III

Editor’s Note – Grant Harrison is a new Bits-and-Bytes author for Patently-O focusing on rising software law issues. Welcome Grant! – DC

by Grant Harrison

GNU Licensing: GNU licensing serves to keep software developed and maintained by open source developers free and open to the public. If an entity takes software that is licensed with a GNU and then they modify it, they must re-release the modified software back to the public.

Recent Articles:

• Glyn Moody: US Court Upholds Enforceability Of GNU GPL As Both A License And A Contract (Source: techdirt )
• Markus Deck and Philippe Heinzke: China’s courts pass controversial rulings on open-source licensing (Source: Lexology)

MIT Licensing: MIT licensing for software is perhaps the most common permissive license due to the fact that it has very few restrictions on reuse as long as developers include the MIT license terms and copyright notice. If an entity takes open source software and then adds to it, they do not need to re-release their version of the software back to the public.  The extreme permissiveness of MIT licensing means that we rarely see lawsuits arise.

Recent Articles:

• Scott K Peterson: Why so little love for the patent grant in the MIT License? (Source: opensource.com )

DODOcase recently petitioned the Federal Circuit for en banc rehearing on patent licensing law.  The petition raises two questions – paraphrased below:

1. Should a general forum selection clause (“disputes shall be litigated before . . . California [Courts]”) be interpreted to exclude AIA trials brought by the licensee?
2. What is the enforceability of a license term that prevents a licensee from filing an AIA trial petition (inter partes review of post grant review).

For its part, the Federal Circuit opinion held that the generic forum selection clause did indeed prevent an AIA petition brought by the licensee and assumed that the clause was enforceable – not even considering the impact of Lear.

Two groups have now filed amicus briefs supporting the petition.

Law Professors: A group of 21 law professors signed-on to a brief drafted by Stanford’s IP Clinic run by Phillip Mallone.  The brief explains that Lear, Inc. v. Adkins, 395 U.S. 653 (1969), should apply with equal strength (if not more) to contracts barring AIA Trial Challenges by the licensee.

The panel’s sweeping elevation of boilerplate forum selection clause language is contrary to Congress’s clear intent to allow and even facilitate licensee validity challenges before the PTAB. Lear requires courts to consider the exceptionally important patent policy interests in validity challenges. Because the panel failed to engage in any such consideration and ignored binding precedent, this Court should grant rehearing to correct the error.

An industry brief was also filed by a group of companies, including SAS, Vizio, Zilinix, and Garmin as well as the Consumer Electronics Ass’n and Engine.  This brief argues that the federal circuit misinterpreted the contract — arguing that boilerplate forum selection clauses pre-AIA licenses should not be interpreted to limit AIA trials.  The Brief also explains that the licensing parties already knew and understood at the time of drafting that the terms restricting validity challenges by the licensee were not enforceable.

Read the briefs:

• [Non Precedential Federal Circuit Decision]
• [En Banc Petition]
• [Amicus Brief IP Profs]
• [Amicus Brief Industry]

Contracting Around AIA Trials

Subcommittee on Intellectual Property
DATE: Tuesday, June 4-5, 2019 02:30 PM each day.

WITNESSES
Panel I
The Honorable Paul R. Michel; The Honorable Q. Todd Dickinson;
The Honorable David J. Kappos; Mr. Charles Duan; Professor Jeffrey A. Lefstin

Panel II
Mr. Robert A. Armitage; Professor David O. Taylor; Ms. Sherry M. Knowles, Esq.;
Ms. Alex Moss; Professor Mark A. Lemley

Panel III
Mr. Michael Rosen; Professor Paul R. Gugliuzza; Professor Joshua D. Sarnoff; Mr. Patrick Kilbride; Professor Adam Mossoff

Day 2:

Panel I
Ms. Barbara Fiacco; Mr. Scott Patridge; Mr. Henry Hadad; Mr. David Jones; Ms. Stephanie Martz

Panel II
Mr. Paul Morinville; Mr. Phil Johnson; Dr. William G. Jenks; Mr. Christopher Mohr; Mr. Jeffrey A. Birchak

Panel III
Mr. Jeff Francer; Mr. Hans Sauer; Ms. Natalie M. Derzko; Mr. Rick Brandon; Ms. Kate Ruane

Uniloc USA, Inc. v. ADP, LLC (Fed. Cir. 2019)

This case includes a number of interesting twists — but at its core it is an eligibility decision.

Uniloc’s Patent No. 7,069,293 claims a method of centralized software distribution where the application program file being distributed (called a “packet” in the patent) includes software to initiate installation of the program (called a “registration operation” in the patent).  Here is the relevant portion of claim 1:

A method … comprising … preparing a file packet associated with the application program and including a segment configured to initiate registration operations for the application program at the target on-demand server.

You are thinking – this seems obvious and anticipated even with the 1998 priority date.  But, the district court decided to end the case early on eligibility and so did not reach the question of obviousness. On appeal here, the Federal Circuit reversed – holding that Uniloc’s claims are patent eligible — and not directed to an abstract idea. The court writes:

[T]he claims of the ’293 patent are directed to the use of file packets with segments configured to initiate centralized registration of an application from an application server, and that this is not an abstract idea. It is true, as Appellees argue, that the goal of the claims is functional: to allow centralized distribution of
software. . . . But the patent claims a particular improvement in how this is done—i.e. by use of a file packet to enable the further functionality of initiating on-demand registration of the application. This is the clear “focus” of the claims and the asserted advance described in the specification.

Patent No. 6,324,578: In this second case, the Federal Circuit also found the claims eligible.  These client-server method claims basically require (1) obtaining preferences from both a user and administrator and then (2) executing an application program using the set preferences.  The Federal Circuit found these steps eligible:

We agree with Uniloc that this is not just a functional claim using conventional technological components. Instead, the claim is directed to a particular way of using a conventional application server to nevertheless allow on-demand installation of an application incorporating preferences from two different sources…. This is not an abstract idea under Alice step one. The two specific added components do not merely fulfill their ordinary roles—their use together on an application server represents a different way of achieving the improvement claimed in the ’578 patent.

Moreover, even if the claim was abstract under step one, it would still be eligible under step two.

Although the appellate panel sided with the patentee as to these two patents, the other two patents in the case did not survive.

Patent No. 6,510,466 is based on the same 1998 filing date as the ‘293, but has a vastly different set of claims.  The client-server claims here require: (a) receiving a login request of a user on the client; (2) in response to the login request, creating a desktop interface on the client that includes icons for some applications installed on the server; (3) upon selection by the user, providing an instance of the program to the client for execution.  In this case, the court found the claims too abstract:

The focus of the claims here is on the abstract idea of using a desktop interface to access an application server. The alleged functional improvements in efficiency arise wholly out of the conventional advantages of using networked computers as tools, not a particular improvement in the computer or network.

Patent No. 6,728,766: The claims here are directed to license management — and the server provides an “availability indication” based upon a “user policy.”  The court explains that “this is an abstract idea” that “does not go beyond requiring the collection, analysis, and display of available information.”

This quad of cases may be helpful for some folks because all four have the same specification but with dramatically different results regarding eligibility.  In my mind, however, the distinctions are hard to comprehend — especially as between the first three cases.

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The heads of the Senate and House Intellectual Property Subcommittees recently released a draft bill focusing on reforming Section 101 of the Patent Act — the proposal is “intended to solicit feedback.”  A number of hearings are beings scheduled over the course of the next month.  What this means is that we have a substantial effort to make something happen.

The draft proposal:

Section 101:

(a) Whoever invents or discovers any useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

(b) Eligibility under this section shall be determined only while considering the claimed invention as a whole, without discounting or disregarding any claim limitation.

Section 100 (Definitions):

(k) The term “useful” means any invention or discovery that provides specific and practical utility in any field of technology through human intervention.

Section 112

(f) Functional Claim Elements Element in Claim for a Combination— An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof shall be construed to cover the corresponding structure, material, or acts described in the
specification and equivalents thereof.

The proposal also suggests further language be added to construe the statute “in favor of eligibility” and to expressly eliminate the non-statutory exceptions to eligibility.

Sony Corp. v. Iancu (Fed. Cir. 2019)

Sony’s patent no. 6,097,676 is directed toward multiplex audio recordings with each channel having a different language translation.  Back in 2015, SONY sued ARRIS for infringing the ‘676 patent. (One of several infringement lawsuits between the companies).  In 2016, ARRIS turned-around and filed for inter-partes-review (IPR). The PTAB instituted as to two claims (5 and 8) and found them unpatentable (obvious).  That final written decision was issued in September 2017. ARRIS and SONY subsequently settled their ongoing litigation and in November 2017.  At that point SONY appealed and the USPTO intervened to defend the PTAB decision.  The patent had also already expired (August 2017).

On appeal, the majority and dissent argued over standing — whether there was any ongoing case-or-controversy since the patent expired in 2017 and the parties settled. Judge Newman – The Great Dissenter – argued that the court lacked jurisdiction:

There is no interest, neither private interest nor public interest, in the fate of this patent. There appears to be no consequence of either our appellate decision today or the potential PTAB decision on the remand now ordered by the court.

The majority opinion authored by Judge Dyk and joined by Chief Judge Prost held otherwise:

It is well-established that our decision (and the Board’s decision on remand) would have a consequence on any infringement that occurred during the life of the ’676 patent.

I agree with the majority here. The patentee has a right to defend its patent against cancellation by the USPTO even after expiration — and up to the six-year timeline for back-damages.

Setting procedure aside. On the merits, the majority agreed with the patentee Sony – that the PTAB had erred in claim construction.  Here, this is a case where means-plus-function language helped the patentee with a narrow claim construction.

The patent here appears to be fairly broadly drafted — claiming an “information reproducing device” that is able to play “a plurality of voice data, each voice
data having similar contents translated into different languages are multiplexedly recorded as audio data of plural channels.”  The device has a “default code” for which language to play.

The argument on appeal involved the term “reproducing means for reproducing the audio data of the channel designated by the default value stored in the storing means.”  As a means-plus-function term, the element was interpreted on appeal under 112(f):

(f) Element in Claim for a Combination.— An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

Here, although you might imagine that the “reproduction means” is some piece of hardware, the patent only describes it in software form.  The result is that the best interpretation of the claim term also limits it to software form — since means plus function limitations are construed only “to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.”  The prior art described the claimed means in hardware form rather than software. On remand, the PTAB will need to determine whether the claims remain obvious in light of that narrowed claim construction.

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Important quote from the case:

We are not bound by the parties’ arguments as to claim construction. See Exxon Chem. Patents, Inc. v. Lubrizol Corp., 64 F.3d 1553, 1555–58 (Fed. Cir. 1995) (“[T]he [court] has an independent obligation to determine the meaning of the claims, notwithstanding the views asserted by the adversary parties.”).

Guest Post by University of Missouri Law Professor Brook Gotberg.  Prof. Gotberg is an expert in debtor-creditor relationships, including bankruptcy. I asked her for thoughts on the Supreme Court’s recent Bankruptcy-IP decision in Mission Product Holdings. – DC

by Brook Gotberg

As a guest blogger on this site invited to talk a bit about Mission Product Holdings, Inc. v. Tempnology, LLC, I approach this topic with some consternation.  The Supreme Court’s position in this case has broken the traditional understanding of § 365 of the Bankruptcy Code, and may have larger ramifications for how we read the Bankruptcy Code overall.

Let me back up a bit.  Bankruptcy provides some pretty fantastic opportunities for debtors to shift the traditional balance of power between them and their creditors, which is typically why companies are motivated to file.  A struggling or insolvent company doesn’t need bankruptcy – they could attempt a creditor-by-creditor workout, use state court proceedings, or just throw in the towel and let the creditors snap up assets in a race to the courthouse.  Provisions in the Bankruptcy Code are intended to preserve and maximize value, often by restraining creditors from invoking their rights under state law.  For example, the automatic stay prohibits secured creditors from repossessing the debtor’s property, even if the debtor has clearly defaulted on its security agreement.  As long as the debtor remains in bankruptcy, it retains control of the property and there is nothing the creditor can do about it, other than petition the court for so-called “adequate protection” to cover the risk of loss or depreciation, or for an order of relief from the automatic stay, which will only be granted if the debtor doesn’t need the property to reorganize.  The stay gives a debtor the chance to make more of the property, which benefits all creditors of the estate.  There are tons of other examples, all of which paint the picture of the Bankruptcy Code as a place where rights are reevaluated and often held in abeyance, so long as this reevaluation is in the interest of the debtor’s bankruptcy estate, and by extension, its creditors.

Under the view of § 365 that prevailed prior to this opinion, the debtor’s ability to reject executory contracts and all of their associated rights falls right in line with the idea of value preservation for the estate.  The debtor’s use of § 365 is typically unfortunate for any the creditor on the other side of the contract, but is only approved by the bankruptcy court when in the best interests of the estate.  Section 365 allows the debtor to cut off a creditor’s rights to ongoing performance under the contract at a discount rate – whatever percentage the debtor plans to pay all other unsecured creditors pursuant to the plan of distribution.  It also allows the debtor to put whatever resources or performance requirements that existed on its end of the contract to more advantageous uses.  The typical example of how § 365 works is a futures contract.  If the debtor made a contract to sell soybeans at $9.25 a bushel, but the price has since gone up to $10.00 a bushel, upon filing for bankruptcy the debtor can reject its contract and go sell the soybeans at the higher price, increasing the overall amount to be distributed while simultaneously decreasing the amount the original soybean purchaser will benefit from the transaction.

How does this view of § 365 apply in a case about trademark licenses?  Tempnology was able, pursuant to § 365, to reject its contract with Mission Products.  Tempnology had previously granted Mission Products the license to use its trademark and logo to sell and promote Tempnology products, while simultaneously granting a right to distribute those products.  Under a traditional view of § 365, this would mean that Mission Products loses the right to use the trademark and logo, but has a claim against Tempnology for damages caused, which is treated like a pre-petition debt.  Tempnology can pay that debt as an unsecured claim, and also give those trademark and logo rights to someone else, even if the original agreement was for exclusive rights.  (The one in this case was not.)

For many, including the original bankruptcy court and the First Circuit, who both ruled on this issue in Tempnology’s favor, this outcome is supported by the language of the statute and one of the stated exceptions, laid out in § 365(n), which gives a licensee of “intellectual property” the ability to retain its rights under the contract for the duration of the contract if it chooses.  “Intellectual property” is defined under the Bankruptcy Code to include patents, trade secrets, and copyrights to semiconductor chip products, but not trademarks.  See 11 U.S.C. § 101(35A).  If there is a carve out to retain contract rights under the exception in § 365(n), then by negative inference, that carve out doesn’t apply in other situations, even analogous situations involving trademarks.

But the Supreme Court reads it all differently.  They see § 365(n) as a manifestation of what the rule ought to be, rather than an exception.  They note that Congress drafted the exceptions in § 365(n) to “correct” former judicial rulings, and conclude that a breach of contract in a trademark licensing situation doesn’t give the licensor the right to claw back the trademark.

I find the rejection of the negative inference to be a bit shocking, along with the apparent willingness of the entire court to reinterpret the Code on Congress’ behalf to read out that inference.  I also wonder, how does Tempnology breach the contract by rejecting it if Mission Products retains all its rights to the trademark?

Perhaps even more alarming is the Court’s reference to the trustee’s avoidance actions as an argument for a more narrow reading of § 365.  The Court suggests that giving power to a debtor to pull value back into the estate should be limited to §§ 544-553, which allows a trustee to avoid transfers away from the state for fraudulent conveyances and preference actions.  These provisions are, again, intended to maximize the estate, even when doing so hurts individual creditors.  Rather than seeing these provisions as consistent with § 365, the Court notes how “far away” § 365 is from those provisions.  This is a bizarre argument from the perspective of individuals who work with the Code.  Both chapter 3 and 5 in the Code contain “general” provisions that apply to all bankruptcy cases, from chapter 7 to chapter 15.  (The automatic stay, which affects creditor rights as noted above, is in § 362).  It feels like the Justices just created a reason for the ordering of the Bankruptcy Code sections that didn’t exist previously, namely, that the drafters of the Code wanted to restrict any efforts to enlarge the bankruptcy estate to trustee avoidance actions, and that these actions themselves should be “cabined.”

So, wow.  Congressionally drafted exceptions to the rule in the Bankruptcy Code could just mean that we misinterpreted the rule to begin with, and bankruptcy isn’t about maximizing the estate by expanding the pie except for closely cabined provisions, which can be identified by virtue of their spatial separation from other provisions.  Maybe I need to rewrite my Bankruptcy syllabus.

We’re looking to hire a new director for our Entrepreneurship Legal Clinic (ELC) fairly quickly here at the University of Missouri School of Law.  The clinic is transactional (no litigation) and works with start-up companies and small businesses.

I don’t have a salary range, but it will almost definitely be a pay-cut for anyone coming out of private practice.  Hey, my salary as a law professor is still lower than my starting salary at MBHB as a first-year associate in 2003 (and I don’t get a bonus from my state-funded institution).

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The Entrepreneurship Legal Clinic (ELC) at the University of Missouri School of Law, part of the Center for Intellectual Property and Entrepreneurship (CIPE), provides free transactional legal services to creators, entrepreneurs, innovators, and inventors. The School of Law is seeking a dynamic new director to expand the ELC’s outreach to business clients in the campus, municipal, and regional communities.  The ELC director will directly supervise students participating in the transactional legal clinic, build partnerships with legal and related services firms committed to supporting start-ups positively impacting the university and community, and participate in the CIPE, Law School, and university communities.  The ELC Director provides classroom instruction, participates in client interviews, assists in and supervises the drafting legal documents, and offers legal advice regarding a range of issues faced by small businesses, including issues related to corporate formation, choice of entity, intellectual property, employment and licensing agreements, leasing, and financing decisions. The ideal candidate will have significant transactional experience including due diligence and document drafting related to business formation and intellectual property creation and protection.

Other duties will include:
•giving regular and detailed oral and written feedback to students on their performance;
•working with the CIPE Director and Law School Development office on ELC-specific fundraising efforts
•delivering instruction in relevant lawyering and practice skills;
•ensuring professional, ethical, high-quality representation of clinic clients;
•engaging in client and expertise development, including monitoring of relevant legal and business developments; outreach and programming for potential clients and collaborators; and maintaining relationships with clients and external partners such as campus and university system units, industry groups, and law firms;
•participating in advising students participating in the School of Law’s Business, Entrepreneurship & Tax Law Review
•assisting with curriculum design, development of teaching materials, and clinic administration and operations; and
•engaging in independent on-going client representation when necessary.

Qualifications:
•At least three years of experience in relevant transactional, business, or intellectual property practice areas or the equivalent;
•superior writing, editing and verbal skills;
•outstanding academic credentials;
•sound judgment and exceptional ethical standards;
•excellent teamwork and teambuilding skills;
•potential for successful teaching and student supervision;
•publication of articles, essays, or client alerts in media relevant to the practicing bar including municipal or state bar journals, ABA sponsored publications, or specialized journals
•strong organizational and management skills and an aptitude for law practice management and clinic management; and
•admission to practice in Missouri or ability to obtain eligibility no later than December 31, 2019.

The University of Missouri-Columbia is the flagship campus of the University of Missouri system and is one of only 34 public universities in the country belonging to the Association of American Universities. As both a research and land grant university, we have extraordinary opportunities for interdisciplinary research and teaching. In addition, Columbia is regularly ranked as one of the most livable cities in the country.

Application Procedure: Review of applications will begin immediately and continue until the position is filled. To apply, please submit a cover letter indicating teaching and scholarly interests, a CV and three references to the university’s employment portal. Questions about the application process may be directed to Associate Dean Paul Litton at littonp@missouri.edu or CIPE Director Sam Halabi at halabis@missouri.edu.

Additional information about the School of Law is available at law.missouri.edu. The University of Missouri is an equal opportunity/ADA institution and encourages applications from women, candidates of color and other under-represented communities in the legal academy. To request ADA accommodations, please call the Disability Inclusion and ADA Compliance Manager at 573-884-7278

by Dennis Crouch

Today’s Supreme Court trademark case has several important nuggets for intellectual property owners.  Here are two: First, TM licensing is somewhat clarified with the holding that a bankrupt mark-holder cannot simply cancel prior licenses as part of the bankruptcy. Second, the court’s holding here treats a  TM license effectively as a property right that has been transferred rather than a contract with ongoing mutual obligations.  In bankruptcy proceedings, ongoing contracts can ordinarily be rejected by the bankruptcy trustee while prior property transfers are only rarely rolled-back.

Mission Product Holdings Inc. v. Tempnology, LLC (Supreme Court 2019)

The details of this case are fairly obscure bankruptcy issues, but basically begin with the most interesting rule of bankruptcy law that allows the trustee to reject prior executory contracts and leases.

Here, the trademark owner has filed for bankruptcy and rejected a prior trademark license. The question in the case is whether “rejection” under the statute also rescinds the already-granted license. Here, the court holds no – if the rights would survive a contract breach by the licensor then they also survive rejection under the bankruptcy code. Writing for an 8-1 majority, Justice Kagen explains:

The question is whether the debtor-licensor’s rejection of that contract deprives the licensee of its rights to use the trademark. We hold it does not. A rejection breaches a contract but does not rescind it. And that means all the rights that would ordinarily survive a contract breach, including those conveyed here, remain in place.

Entering into property-like language, the court explains the holding as based upon “the general bankruptcy rule that the estate cannot possess anything more than the debtor did outside bankruptcy.”

I’ll note here that the court alludes to the possibility of drafting trademark licenses in ways that they could be rescinded in bankruptcy. So, be cautious about that language.

Justice Gorsuch wrote in dissent – arguing that the case should be dismissed because there is no longer any live controversy since. The license expired during litigation.