Mission Product Holdings, Inc. v. Tempnology, LLC

Tempnology, LLC, a debtor in Chapter 11 bankruptcy, moved to reject a trademark license agreement with Mission Product Holdings under Section 365 of the Bankruptcy Code, seeking to terminate Mission Product's rights to use the trademarks. Mission Product argued that rejection could not revoke its already granted rights. The Supreme Court ruled 8-1 in favor of Mission Product, holding that rejection of an executory contract constitutes a breach, not a rescission, and therefore does not eliminate the non-debtor licensee's right to continue using the licensed trademarks. The decision clarified that trademark licensees retain their rights despite the licensor's bankruptcy rejection.

The Supreme Court held that rejection is treated as a breach of contract, not a rescission, so the licensee retains its rights to use the trademarks. Justice Kagan delivered the majority opinion, Justice Sotomayor concurred, and Justice Gorsuch dissented.

Whether a debtor-licensor's rejection of a trademark license agreement under Section 365 of the Bankruptcy Code terminates the licensee's right to continue using the licensed marks.

The ruling protects trademark licensees from losing their rights when licensors file for bankruptcy, preventing debtors from using contract rejection to reclaim valuable intellectual property. It resolved a long-standing circuit split, harmonized the treatment of trademark licenses with other intellectual property licenses in bankruptcy, and provided greater certainty for businesses relying on licensing arrangements.