The United States Supreme Court issued a decision in the case of Mission Product Holdings, Inc. (“Mission”) versus Tempnology, LLC. The original case involved a trademark licensing agreement and whether the Tempnology’s rejection of the agreement during its bankruptcy deprived Mission’s right to use the trademark under the agreement. Justice Kagan delivered the opinion.
Tempnology utilized the brand name “Coolcore” for its manufactured clothing designed to stay cool during exercise. Mission and Tempnology entered into a non-exclusive licensing agreement for Mission to use the Coolcore trademarks anywhere in the world in 2012. While the agreement would have expired in July 2016, Tempnology filed for Chapter 11 bankruptcy in September 2015. Soon after, Tempnology asked for permission to “reject” the licensing agreement it had with Mission under Section 365(a). 11 U.S.C. § 365(a). Pursuant to Section 365 of the Bankruptcy Code, a debtor may reject any contract that neither party has finished performing. That rejection under Section 365 “constitutes a breach of such contract.” 11 U.S.C. § 365(a).
Both parties agreed that Mission has a claim for damages against Tempnology, however, under 365(g), Mission would be in the same boat as an unsecured creditor and would likely not receive its total damages. Tempnology also believed by rejecting the licensing agreement, Mission would no longer be able to utilize the Coolcore trademarks.