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Mission Product Holdings v. Tempnology LLC

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Supreme Court of the United States
Mission Product Holdings Inc. v. Tempnology, LLC
Term: 2018
Important Dates
Argument: February 20, 2019
Decided: May 20, 2019
Outcome
Reversed and remanded
Vote
8-1
Majority
Chief Justice John G. Roberts • Clarence Thomas • Ruth Bader Ginsburg • Stephen Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan • Brett Kavanaugh
Dissenting
Neil Gorsuch

Mission Product Holdings Inc. v. Tempnology, LLC is a trademark licensing case argued before the Supreme Court of the United States on February 20, 2019, during the court's 2018-2019 term. The court reversed and remanded the ruling of the United States Court of Appeals for the First Circuit, holding that a debtor-licenser's rejection of a contract neither party has finished performing does not revoke the trademark license.[1] The case came on a writ of certiorari to the 1st Circuit.[2]

HIGHLIGHTS
  • The case: Tempnology, LLC, made and owned the intellectual property to products designed to keep a person cool while exercising. Tempnology and Mission Product Holdings entered an agreement that stated the company had distribution rights to some of Tempnology’s products, a nonexclusive license to Tempnology’s intellectual property, and a license to use Tempnology’s trademark and logo. Tempnology filed for Chapter 11 and tried to reject its agreement with Mission. The bankruptcy court found that Mission could only claim damages for breach of contract and that Tempnology was not required to perform the license agreement.
  • The issue: Whether, under §365 of the Bankruptcy Code, a debtor-licensor's "rejection" of a license agreement which "constitutes a breach of such contract," 11 U .S.C. §365(g)-terminates rights of the licensee that would survive the licensor's breach under applicable non-bankruptcy law.[3]
  • The outcome: The court reversed and remanded the ruling of the United States Court of Appeals for the First Circuit, holding that a debtor-licenser's rejection of a contract neither party has finished performing does not prevent the licensee from using the trademark.[1]


    • You can review the lower court's opinion here.[4]

    Timeline

    The following timeline details key events in this case:

    • May 20, 2019: U.S. Supreme Court reversed and remanded the 1st Circuit Court's ruling
    • February 20, 2019: Oral argument
    • October 26, 2018: U.S. Supreme Court agreed to hear case
    • June 11, 2018: Petition filed with U.S. Supreme Court
    • January 12, 2018: First Circuit affirmed the bankruptcy court's decision

    Background

    Tempnology, LLC, made and owned the intellectual property to "Coolcore" exercise clothing and accessories that were designed to maintain a low temperature and keep a person cool while exercising. In 2012, Tempnology and Mission Product Holdings entered an agreement that "(1) granted Mission distribution rights to some of Tempnology’s products, (2) granted Mission a nonexclusive license to Tempnology’s intellectual property, and (3) granted Mission a license to use Tempnology’s trademark and logo to sell and promote the products," according to Oyez.[4][5]

    In 2015, Tempnology filed for Chapter 11 bankruptcy and tried to "reject its agreement with Mission under Section 365(a) of the Bankruptcy Code, which allows a debtor-in-possession to 'reject any executory contract' that is not beneficial to the company," according to Oyez.[5]

    The bankruptcy court found that Mission could only claim damages for breach of contract and that Tempnology was not required to perform the license agreement. The First Circuit affirmed the bankruptcy court's decision.[4]

    Mission appealed to the Supreme Court, and the court agreed to hear the case on October 26, 2018.

    Question presented

    The petitioner presented the following question to the court:[3]

    Question presented:
    • Whether, under §365 of the Bankruptcy Code, a debtor-licensor's "rejection" of a license agreement which "constitutes a breach of such contract," 11 U .S.C. §365(g)-terminates rights of the licensee that would survive the licensor's breach under applicable non-bankruptcy law.

    Outcome

    In an 8-1 opinion, the court reversed and remanded the ruling of the United States Court of Appeals for the First Circuit, holding that a debtor-licenser's rejection of a contract neither party has finished performing does not prevent the licensee from using the trademark. Justice Elena Kagan delivered the opinion. Justice Sonia Sotomayor filed a concurring opinion. Justice Neil Gorsuch dissented.[1]

    Opinion

    In her opinion, Justice Kagan wrote:[1]

    “ Section 365 of the Bankruptcy Code enables a debtor to "reject any executory contract"—meaning a contract that neither party has finished performing. 11 U. S. C. §365(a). The section further provides that a debtor’s rejection of a contract under that authority "constitutes a breach of such contract." §365(g). ...


    Under Section 365, a debtor’s rejection of an executory contract in bankruptcy has the same effect as a breach outside bankruptcy. Such an act cannot rescind rights that the contract previously granted. Here, that construction of Section 365 means that the debtor-licensor’s rejection cannot revoke the trademark license.[6]

    		”

    Concurring opinion

    Justice Sotomayor filed a concurring opinion. In her concurring opinion, Justice Sotomayor said she wrote separately to " highlight two potentially significant features of today’s holding."[1]

    “ First, the Court does not decide that every trademark licensee has the unfettered right to continue using licensed marks postrejection. ...


    Second, the Court’s holding confirms that trademark licensees’ postrejection rights and remedies are more expansive in some respects than those possessed by licensees of other types of intellectual property. [6]

    		”

    Dissenting opinion

    Justice Gorsuch filed a dissenting opinion. In his opinion, Gorsuch wrote:[1]

    “ This Court is not in the business of deciding abstract questions, no matter how interesting. Under the Constitution, our power extends only to deciding "Cases" and "Controversies" where the outcome matters to real parties in the real world. Art. III, §2. Because it’s unclear whether we have anything like that here, I would dismiss the petition as improvidently granted. [6] ”

    Text of the opinion

    Read the full opinion here.

    Audio



    Transcript

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 Supreme Court of the United States, Mission Product Holdings v. Tempnology LLC, May 20, 2019
    2. ↑ Supreme Court of the United States, "17-1657 Mission Product Holdings Inc. v. Tempnology, LLC," accessed January 28, 2019
    3. ↑ 3.0 3.1 Supreme Court of the United States, "17-1657 Mission Product Holdings Inc. v. Tempnology, LLC," accessed January 29, 2019
    4. ↑ 4.0 4.1 4.2 SCOTUSblog, "Mission Product Holdings Inc. v. Tempnology, LLC," accessed January 29, 2019
    5. ↑ 5.0 5.1 Oyez.org, "Mission Product Holdings v. Tempnology LLC," accessed January 29, 2019
    6. ↑ 6.0 6.1 6.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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