Editor’s Note: The following article, “From Sunbeam to In re Tempnology: Solving the Trademark Puzzle with a Burden-Shifting Framework” won the prize for second place in the Tenth Annual ABI Bankruptcy Law Student Writing Competition. Mr. Li is a recent graduate of  Cornell Law School in Ithaca, NY He will begin clerking at the SDNY Bankruptcy Court later this year. Thank you to Wolcott | Rivers | Gates for sponsoring this prize.

In January 2018, the First Circuit Court of Appeals issued its decision in In re Tempnology, the most recent attempt by a federal appellate court to clarify post-rejection protections for licensees of executory trademark agreements. Acknowledging the Seventh Circuit’s contrary view in Sunbeam Products, the First Circuit decided that the debtor-licensor’s rejection of a trademark license terminated the nondebtor-licensee’s rights.

In the recent case of Mission Product Holdings Inc. v. Tempnology LLC, the U.S. Court of Appeals for the First Circuit added to the already uncertain fate of trademark licenses in bankruptcy cases.

By way of background, in bankruptcy cases, intellectual property licenses most often fall into the category of executory contracts. Many courts rely on the definition of executory contracts contained in Vern Countryman’s 1973 Article, “Executory Contracts in Bankruptcy: Part I.” Professor Countryman defined an executory contract as a contract under which the obligations of both the bankrupt and the other party to the contract are so far unperformed that the failure of either to complete performance would constitute a material breach excusing the performance of the other.