In re Tempnology, LLC
541 B.R. 1
Bankr. D.N.H.2015Background
- Tempnology, LLC (Debtor) and Mission Product Holdings entered a Co-Marketing and Distribution Agreement granting Mission exclusive U.S. distribution rights for certain “Cooling Accessories,” purchase-forecast obligations, and limited trademark use for the Agreement term.
- The Agreement separately granted Mission a broad, perpetual, royalty-free non-exclusive license to "CC Property" (excluding certain Marks) with rights to reproduce, modify, sublicense, and exploit the CC Property.
- The Agreement allowed termination by either party but created a two-year wind-down during which Mission could continue to purchase, distribute, and sell Cooling Accessories.
- Debtor filed chapter 11 and moved to reject the Agreement; the court allowed rejection subject to Mission’s election under 11 U.S.C. § 365(n).
- Debtor moved for a determination that Mission’s § 365(n) election preserved only the non-exclusive intellectual-property license (§ 15(b)), not the exclusive distribution rights (§§ 1, 5, 6, 7) or trademark usage; Mission opposed.
Issues
| Issue | Plaintiff's Argument (Debtor) | Defendant's Argument (Mission) | Held |
|---|---|---|---|
| Whether Mission’s exclusive distribution rights are protected under § 365(n) | Those exclusivity provisions are commercial distribution rights, not "rights to intellectual property," so § 365(n) does not preserve them | The exclusivity is effectively an exclusive license to embodiments of the Debtor’s intellectual property (patented Cooling Accessories), so § 365(n) protects them (including enforcing exclusivity) | Court held exclusivity rights are not protected by § 365(n); they are distribution/contractual rights, not IP rights preserved post-rejection |
| Whether Mission retains rights to use Debtor’s trademarks after rejection | Trademarks are excluded from the Bankruptcy Code’s definition of protected "intellectual property," and the Agreement’s trademark license was limited, so § 365(n) does not preserve trademark rights | Trademarks should be preserved under § 365(n) or, alternatively, equity permits post-rejection trademark protection (relying on minority precedents) | Court held trademarks are not preserved under § 365(n) (majority view; trademarks omitted from § 101(35A)) |
| Whether § 365(n) preserves the non-exclusive intellectual-property license (§ 15(b)) | Debtor concedes this license is protected | Mission contends it retains the § 15(b) license (and argues broader protections) | Court confirmed Mission retains the non-exclusive license under § 365(n) (undisputed) |
Key Cases Cited
- Lubrizol Enters., Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir.) (rejection of IP license extinguished licensee rights pre-§ 365(n))
- In re Exide Techs., 607 F.3d 957 (3d Cir. 2010) (§ 365(n) preserves licensee’s rights following licensor’s rejection)
- In re Crumbs Bake Shop, Inc., 522 B.R. 766 (Bankr. D.N.J.) (minority view: courts may use equity to protect trademark licensees post-rejection)
- United States v. Hernandez-Ferrer, 599 F.3d 63 (1st Cir. 2010) (expressio unius canon cited for statutory-interpretation principle)