Undefined: Court Holds Trademark Licensee Protected Notwithstanding § 363 Sale
On Oct. 31, 2014, Hon. Michael B. Kaplan of the U.S. Bankruptcy Court for the District of New Jersey issued an opinion addressing the rights of trademark licensees following a sale of substantially all assets under § 363 of the Bankruptcy Code. The decision arose out of the Crumbs Bake Shop bankruptcy case and the sale of substantially all of the debtors’ assets to Lemonis Fischer Acquisition Co. LLC (LFAC), which was approved by the bankruptcy court in August 2014.
While operating, the debtors sold cupcakes, baked goods and other products in retails stores. They also licensed their trademark and trade secrets through certain license agreements to Coastal Foods Baking LLC, Pelican Bay Ltd., White Coffee Co., Uncle Harry’s Inc., Mystic Apparel LLC, and POP! Gourmet (the “licensees”). The license agreements were procured by Brand2 Squared Licensing (BSL) under a representation agreement with the debtors. Following approval of the sale to LFAC, the debtors filed motions seeking to reject the license agreements, but later withdrew that motion (as it related to the license agreements) following responses from BSL asserting the licensees’ rights under § 365(n) of the Bankruptcy Code. LFAC then filed a motion for an order in aid of the sale order to determine the effect of that order on each of the parties’ rights.
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Recommendations of the ABI Commission to Study the Reform of Chapter 11: Intellectual Property Licenses
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Beginning in 2012, a distinguished group of bankruptcy attorneys, academics and judges known as the American Bankruptcy Institute (ABI) Commission to Study the Reform of Chapter 11 (the Commission) held periodic meetings throughout the U.S. to analyze and discuss comprehensive reforms to chapter 11 of the Bankruptcy Code. The results of their analyses and recommendations were published on Dec. 8, 2014, in a written format, Final Report and Recommendations (the Report). Not counting appendices, the Report is 331 pages long and covers just about every aspect of chapter 11 practice. For each topic, the Commission made specific recommendations to amend the Bankruptcy Code in an attempt to make chapter 11 more efficient and useful and generally to bring chapter 11 practice in alignment with the current realities of a 21st Century financial world. These recommendations included addressing intellectual property licenses.
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Review the Committee’s 2014 Work & Look for More in the New Year
Review the committee webpage to see what happened in 2014 and get a head start on the new year! On the committee’s website, you’ll find topic-relevant materials, Journal articles, CLE sessions, past newsletters and all articles published in 2014, including Dylan Trache’s new article published in this newsletter. Bookmark the committee's page for quick reference this year!
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