Pursuant to section 365(n), if a trustee rejects an executory "intellectual property" license under section 365(a), the licensee may elect either:

(A) to treat such contract as terminated by such rejection if such rejection by the trustee amounts to such a breach as would entitle the licensee to treat such contract as terminated by virtue of its own terms, applicable nonbankruptcy law, or an agreement made by the licensee with another entity; or

(B) to retain its rights (including a right to enforce any exclusivity provision of such contract, but excluding any other right under applicable nonbankruptcy law to specific performance of such contract) under such contract and under any agreement supplementary to such contract, to such intellectual property (including any embodiment of such intellectual property to the extent protected by applicable nonbankruptcy law), as such rights existed immediately before the case commenced, for—

(i) the duration of such contract; and

(ii) any period for which such contract may be extended by the licensee as of right under applicable nonbankruptcy law.

This means that an "intellectual property" licensee has a powerful and important option not available to other kinds of contracting parties: To retain certain rights in the face of the debtor's rejection.

For purposes of section 365(n), "intellectual property" has a specific definition that excludes certain important classes of IP. Section 101 (35A) defines "intellectual property" to mean a:

(A) trade secret;
(B) invention, process, design, or plant protected under title 35;
(C) patent application;
(D) plant variety;
(E) work of authorship protected under title 17; or
(F) mask work protected under chapter 9 of title 17

to the extent protected by applicable nonbankruptcy law. Thus, trademarks, service marks, trade names, and rights of publicity are all excluded from the section 365(n) election provision.113 Furthermore, foreign patents and copyrights are not included within the scope of section 365(n), as they are not covered by title 35 or 17 of the United States Code.

If the licensee elects to retain its rights under the license, it must make all royalty payments due under the contract and will be deemed to have waived any administrative claim arising from the performance of the contract.114 While the Bankruptcy Code does not define "royalty payments," the legislative history suggests a broad interpretation of the concept:

It is important that courts, in construing the term "royalty" used in this subsection, and in deciding what payments are royalty payments, look to the substance of the transaction and not the label. The underlying nature of the payments must be considered. For example, payments based upon the use of intellectual property or on a percentage of sales of end products that incorporate or are derived from the intellectual property should be treated as royalty payments.115

Based on the legislative history, the Prize Frize court held that even flat license fees should be viewed as "royalties" for the purpose of section 365(n).116

By opting to retain its license pursuant to section 365(n), the licensee generally does not retain any ability to enforce affirmative obligations for things such as maintenance, support, and development obligations.117 The licensee may still be able to enforce confidentiality and other "passive" obligations.118

Timing is critical to whether a licensee may retain rights pursuant to section 365(n) because that section applies only to rights existing at the time the bankruptcy commences. The court in In re Storm Tech., Inc. held that contingent rights to IP will not be preserved by a licensee's section 365(n) election: "The unambiguous language of § 365(n) limits the scope of the rights retained to those that existed immediately before the petition date."119 The contract at issue provided that if Storm Technology failed to pay a $4 million note in full by a date certain, "Logitech will have a worldwide, non-exclusive royalty-free, fully paid-up license...."120 The court held that this "springing" license was a contingent IP right and as such was not within the scope of section 365(n) protection.121

Section 363 and Sales of Intellectual Property by a Debtor-Licensor. A trustee in bankruptcy may enter into contracts "in the ordinary course of business" without the need for court approval.122 In contrast, notice and a hearing are required before a trustee may enter into contracts that are not in the ordinary course of business.123 As such, any contract for the sale of IP outside the ordinary course of a debtor's business will require court approval.

Sections 363(b) and (f) allow a debtor-in-possession to sell the debtor's assets free and clear of any third-party interest under certain conditions. Section 363(f) provides:

The trustee may sell property under subsection (b) or (c) of this section free and clear of any interest in such property of an entity other than the estate, only if


(1) applicable nonbankruptcy law permits sale of such property free and clear of such interests;


(2) such entity consents;


(3) such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property;


(4) such interest is in bona fide dispute; or


(5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.


In addition, section 1123(b)(4) of the Bankruptcy Code authorizes the sale of a debtor's assets pursuant to a chapter 11 plan.

The interaction of the "free and clear" provisions of section 363 with the licensee's election rights pursuant to section 365(n) can create complex issues regarding who owns what rights when the licensee opts to retain its use rights. A thorough analysis of this scenario is presented by the court in In re Dynamic Tooling Systems.124 In this case, the debtor sought to transfer its entire IP portfolio to the subsidiary of a creditor.125 The court characterized the creditor's subsidiary's acquisition of the debtor licensor's assets as a sale pursuant to the debtor's plan under section 1123(b)(4).126 To the extent the sale was made free and clear of liens and interests, that sale implicated section 363(f).127 The court acknowledged the licensee's fears that the transfer of IP assets would be free and clear of the licensee's rights, despite the licensee's rights to elect to continue use of the debtor's intellectual property pursuant to section 365(n).128

Noting a lack of case law directly on point, the court found that the licensee's concerns could easily be resolved by the court's use of its section 363(e) powers to limit or prohibit a sale free and clear of interests to protect those interests.129 Ultimately, the court held that "[Licensee's] interests can be protected by this Court's express order that to the extent [debtor]'s intellectual property is included in the asset transfer, that property is subject to whatever license rights [licensee] may have under the Agreement."130

While this approach provides protection for a licensee of "intellectual property" that fits within the section 101 (35A) definition, vigilance is important. Pursuant to section 363(e), the power invoked by the court to protect the licensee's rights is triggered "on request of an entity that has an interest in property used, sold, or leased, or proposed to be used, sold, or leased." Therefore, licensees should pay close attention to licensor bankruptcy notices to make sure that all appropriate requests for protection are made to the court.

Another important source of rights for a licensee is Section 363(f), which provides, inter alia:

The trustee may sell property under subsection (b) or (c) of this section free and clear of any interest in such property of an entity other than the estate, only if—


(1) applicable nonbankruptcy law permits sale of such property free and clear of such interest;


(2) such entity consents....131


Again, vigilance is critical for a licensee to preserve its rights. As noted in FutureSource LLC v. Reuters Ltd., "[i]t is true that the Bankruptcy Code limits the conditions under which an interest can be extinguished by a bankruptcy sale, but one of those conditions is the consent of the interest holder, and lack of objection (provided of course there is notice) counts as consent."132

Bankruptcy of a Licensee

A licensee in bankruptcy, like a licensor, may choose to assume, reject, or assume and assign its executory contracts, including IP licenses. A debtor-licensee will, however, have a somewhat different set of related considerations in bankruptcy than will a typical debtor-licensor. For example, section 365(n) is inapplicable when a debtor-licensee rejects a license—the licensor owns the underlying IP so there are no "use" rights that the licensor might need to retain—leaving fewer restrictions on the debtor-licensee in this regard. On the other hand, a licensee's ability to assume and assign a license will vary greatly depending on the kind of IP that is at issue and the exclusivity of the rights conferred. Perhaps the most complex issue facing a licensee is whether it can assume a license outright—in some circuits, assumption is only possible if a hypothetical assignment would also be permissible.

Assignment of IP Licenses by Debtor Licensees. Whether an IP license can be assigned or not will depend on the type of license at issue. Licenses may be treated differently (assignable or nonassignable) based on the kind of IP that is at issue—for example, patent, copyright, or trademark rights—and may also be treated differently depending on whether the license is exclusive or nonexclusive.

Courts have found nonexclusive patent licenses to be nonassignable unless the patent owner consents. "It is well settled that a non-exclusive licensee of a patent has only a personal and not a property interest in the patent and that this personal right cannot be assigned unless the patent owner authorizes the assignment or the license itself permits assignment."133

Moreover, even though exclusive licenses confer a broader ability on the licensee to sue for patent infringement, most courts hold that exclusive patent licenses are also generally nonassignable absent consent. For example, the court In re Hernandez held that the licensor's consent to assign the license would be required even for exclusive licenses.134 While an exclusive licensee has a sufficient property interest to give standing to sue, that does not mean that the exclusive licensee can freely assign the license.135 The court reasoned that if an exclusive licensee could assign that license, a patent holder would lose its control over the identity of its license holders whenever the license agreement provided the licensee with an exclusive right.136 Because that result would render an exclusive license the equivalent of an outright patent assignment, such result would be inconsistent with federal case law that carefully distinguishes between the two.137 This view has been adopted by other courts as well.138 The In re Hernandez approach does, however, allow assignment by the exclusive licensee if the licensor has "pre-consented" to such an assignment, though such assignment must strictly comply with the terms of such "pre-consent."139

Similarly, nonexclusive copyright licenses are generally not assignable.140 As with nonexclusive patent licenses, nonexclusive copyright licenses do not transfer any rights of ownership—such rights remain in the licensor.141 Accordingly, a nonexclusive license is personal to the transferee, and the licensee cannot assign it to a third party without the consent of the copyright owner.142

On the other hand, case law regarding the assignability of exclusive copyright licenses is mixed. Some courts have indicated that an exclusive copyright licensee can assign that license, as was the case in In re Golden Books Family Entm't.143 There, the court found that under applicable copyright law, exclusive licenses convey an ownership interest to the licensee that allows the licensee to freely transfer its rights.144 Therefore, copyright law did not prevent the assumption and assignment of the exclusive copyright license in question.145

Other courts, however, have come to the opposite conclusion. For example, in Gardner v. Nike, the court analyzed the Copyright Act and held that copyright licensees cannot freely transfer rights even under an exclusive license.146 The Gardner court noted that there is no indication that Congress intended to bestow upon exclusive licensees the right to sublicense the subject matter of their license.147 Furthermore, while Congress was aware that prior to the 1976 Copyright Act, licensees could not sublicense their right in an exclusive license, Congress nevertheless chose to limit exclusive licensees' "benefits" under the 1976 Copyright Act to "protection and remedies."148 Therefore, the court held that the assignment of rights by the exclusive licensee was invalid.149

With respect to trademarks, courts have held that "under applicable trademark law, trademarks are personal and nonassignable without the consent of the licensor."150

Assumption of an IP License by a Debtor Licensee—Hypothetical Test vs. Actual Test. As mentioned above, the literal language of section 365(c) suggests that if a debtor-licensee cannot assign a contract, it cannot assume that contract. This is a strange and counterintuitive result, with particularly serious potential consequences for debtor-licensees in bankruptcy.

Circuits have split on the proper interpretation of this language. The first interpretation, called the "hypothetical test," adheres strictly to the plain statutory language in examining whether, hypothetically, the contract at issue could be assigned under applicable federal law.151 When applying the hypothetical test, courts do not consider what the debtor actually intends to do—merely assume the contract, or in fact assign it to a third party: "[I]f a contract could not be assigned under applicable nonbankruptcy law, it may not be assumed or assigned by the trustee [or the debtor in possession]."152 Circuits adopting this approach include the Third, Fourth, Ninth, and Eleventh.153 The "hypothetical test" is potentially onerous because, as discussed above, many kinds of IP licenses are not assignable by the licensee, and are therefore not assumable.

Other circuits, including the First and Fifth, have rejected the "hypothetical" test in favor of an "actual test." Under the "actual test," section 365(c)(1) will apply only after "a showing that the nondebtor party's contract will actually be assigned or that the nondebtor party will in fact be asked to accept performance from or render performance to a party—including the trustee—other than the party with whom it originally contracted."154 The court in In re Leroux captures the practical effects of this difference in approaches:

Under the actual test ... assumption will be denied only if performance of the assumed contract by the debtor in possession will in fact deprive the nondebtor party to the contract of the benefit of the bargain. Since the debtor is the very party with whom the nondebtor party contracted, it is usually quite difficult for the nondebtor party to persuade the court that performance by the debtor will eviscerate its contractual expectations.155

At least two justices have indicated that the time for a Supreme Court resolution of this issue may be coming soon. Justice Kennedy, joined by Justice Breyer, issued a three-page statement on the issue to accompany the Supreme Court's denial of certiorari with respect to the N.C.P. Marketing Group appeal. Though Justice Kennedy voted to deny the review, his statement suggested that the issue is a "significant question." Justice Kennedy wrote:

The division in the courts over the meaning of §365(c)(1) is an important one to resolve for Bankruptcy Courts and for businesses that seek reorganization. This petition for certiorari, however, is not the most suitable case for our resolution of the conflict. Addressing the issue here might first require us to resolve issues that may turn on the correct interpretation of antecedent questions under state law and trademark-protection principles. For those and other reasons, I reluctantly agree with the Court's decision to deny certiorari. In a different case the Court should consider granting certiorari on this significant question.156

Justice Kennedy's discussion of the hypothetical and actual tests in his statement suggests that he may be leaning toward the actual test. He characterized the actual test as aligning section 365 with "sound bankruptcy policy," although noting that this alignment only comes "at the cost of departing from at least one interpretation of the plain text of the law...."157

Conclusion

A party's ability to enforce its patent rights in litigation may be significantly affected by an adverse party's decision to file for bankruptcy. The automatic stay adds additional complexity to litigation proceedings, potentially creating asymmetrical scenarios where one party can proceed but the other is stayed, and the need for judicial approval of settlements creates an additional layer of uncertainty for all parties concerned.

Similarly, a licensing party's bankruptcy may profoundly affect the rights of other parties. A debtor's ability to reject, assume, or assume and assign an IP license will vary greatly depending on the kind of IP at issue, whether or not the license is exclusive, and whether the debtor is the licensor or the licensee. In some contexts, the debtor has extraordinary latitude to decide among all options, while in other contexts, certain options are available only subject to the counterparty's rights or consent, or are prohibited altogether. A circuit split on the critical issue of the actual test versus the hypothetical test adds another source of variance with respect to the treatment of the parties to an IP license. Consideration of these issues as early as possible—ideally at the time that a license is drafted, and preferably pre-petition—and vigilance in monitoring the bankruptcies of licensing counterparties may mean the difference between retaining one's rights and having those rights extinguished.

Footnotes

1. See Statistics maintained by the American Bankruptcy Institute, Quarterly Business Filings By Year (1994-2009) at http://www.abiworld.org/AM/AMTemplate.cfm?Section=Home&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=58409 .

2. William L. Norton, Jr., 4 Norton Bankr. Law & Prac. § 74:2 (3d ed. 2009).

3. See, e.g., Monaco v. United States Dep't of Educ. (In re County Schs., Inc.), 163 B.R. 424, 430 (Bankr. D. Conn. 1994).

4. In re Krohn, 886 F.2d 123, 125-128 (6th Cir. 1989).

5. See, e.g., Official Comms. of Unsecured Creditors v. Anderson Senior Living Prop. LLC (In re Nashville Senior Living, LLC), 407 B.R. 222, 227 n.6 (B.A.P. 6th Cir. 2009).

6. See, e.g., Goldberg v. Craig (In re Hydro-Action, Inc.), 341 B.R. 186, 192 (Bankr. E.D. Tex. 2006).

7. 11 U.S.C. § 1102.

8. 11 U.S.C. § 1103.

9. See, e.g., In re Deer Park, Inc., 136 B.R. 815, 818 (B.A.P. 9th Cir. 1992).

10. See, e.g., Myers v. Raynor (In re Raynor), 406 B.R. 375, 376 (B.A.P. 8th Cir. 2009).

11. See, e.g., Carbaugh v. Carbaugh (In re Carbaugh), 278 B.R. 512, 524 (B.A.P. 10th Cir. 2002).

12. H.R.Rep. No. 95-595, 95th Cong., 1st Sess., at 340 (1977).

13. Rijos v. Vizcaya (In re Rijos), 263 B.R. 382, 389 (B.A.P. 1st Cir. 2001).

14. 11 U.S.C. § 108.

15. 11 U.S.C. § 362(c).

16. See, e.g., Int'l Consumer Prods. of N.J., Inc. v. Complete Convenience, LLC, No. 07-325 (MLC), 2008 WL 2185340, at *1 (D.N.J. May 23, 2008).

17. Hazelquist v. Guchi Moochie Tackle Co., Inc., 437 F.3d 1178, 1180 (Fed. Cir. 2006).

18. In re Mahurkar Double Lumen Hemodialysis Catheter Patent Litig., 140 B.R. 969, 977 (N.D. Ill. 1992) (Judge Easterbrook sitting by designation); see also Lancaster Composite, Inc. v. Hardcore Composites Operations, LLC, No. Civ. 04-1414-SLR, 2005 WL 121794, at *977 (D. Del. Jan. 14, 2005) (noting that default judgment had been entered against bankrupt debtor regarding post-petition acts of infringement; also noting that the Official Committee of Unsecured Creditors acknowledged that the automatic stay is not applicable to infringement claims arising post-petition).

19. Alloc, Inc. v. Unilin Decor N.V., No. 02-C-1266, 2005 WL 3448060, at *1 (E.D. Wis. Dec. 15, 2005).

20. Voice Sys. and Servs., Inc. v. VMX, Inc., 26 U.S.P.Q.2d 1106, 1113 (N.D. Okla. 1992).

21. Id. at 1112.

22. Id.

23. In re Television Studio Sch. of N.Y., 77 B.R. 411, 412 (Bankr. S.D.N.Y. 1987).

24. In re Telegroup, Inc., 237 B.R. 87, 95 (Bankr. D.N.J. 1999).

25. Id.

26. Id.

27. Reform Act of 1978, H. Rep. No. 595, 95th Cong., 1st Sess., at 343 (1977); S. Rep. No. 989, 95th Cong., 2d Sess., at 52 (1978).

28. In the Matter of Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same, Inv. No. 337-TA-605, 2009 ITC LEXIS 841 (ITC June 3, 2009).

29. Id. at *109-110.

30. In re Qimonda AG, No. 09-14766-RGM, 2009 WL 2210771, at *2-3 (Bankr. E.D. Va., July 16, 2009).

31. Id.

32. Id. at *5-6.

33. In re Certain Semiconductor Integrated Circuits Using Tungsten Metallization and Products Containing the Same, Order No. 110, No. 337-TA-648, 2009 WL 2122070 (U.S.I.T.C. July 15, 2009).

34. In re Spansion, Inc., No. 09-10690 (KJC), 09-11480 (KJC), 2009 WL 3170304 (Bankr. D. Del., Oct. 1, 2009).

35. Id. at *6.

36. Id. at *7.

37. Id. at *8.

38. Id. Samsung has appealed this decision to the District Court, which in turn has referred the case to an Appellate Mediation Panel.

39. In re Qimonda AG, No. 09-14766-RGM (Chapter 15)(Bankr. E.D. Va., February 16, 2010).

40. Id. at 1-2.

41. Id. at 3.

42. Id. at 5.

43. Id. at 6.

44. Id.

45. Id. at 8.

46. Id. at 8-9.

47. Id. at 9.

48. Id.

49. Id. at 10.

50. Id.

51. Id.

52. See also, e.g., Martin-Trigona v. Champion Fed. Sav. & Loan Ass'n, 892 F.2d 575, 577 (7th Cir. 1989).

53. See, e.g., In re White, 186 B.R. 700, 704 (B.A.P. 9th Cir. 1995). Note, however, that the automatic stay may restrict certain litigation activities of the debtor to the extent that they relate to claims that are otherwise subject to the automatic stay. For example, courts have held that the debtor will be stayed by section 362 from appealing an unfavorable judgment in an action that was originally brought against the debtor. Id. at 704-05.

54. Martin-Trigona, 892 F.2d at 577.

55. Ingersoll-Rand Fin. Corp. v. Miller Mining Co., Inc., 817 F.2d 1424, 1426-27 (9th Cir. 1987); see also Cathey v. Johns-Manville Sales Corp., 711 F.2d 60, 62 (6th Cir. 1983), cert. denied, 106 S.Ct. 3335 (1986).

56. In re Sheppard, No. 06-65467, 2006 Bankr. LEXIS 1368, at *3 (Bankr. N.D. Ga. July 12, 2006).

57. Koolik v. Markowitz, 40 F.3d 567, 568 (2d Cir. 1994).

58. Id.

59. See, e.g., Maritime Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1205 (3d Cir. 1991).

60. Id. at 1204-05 (internal citations omitted).

61. Id.

62. Id.

63.Robert Tyer & Assocs., Inc. v. Envtl. Dynamics, Inc., No. 95-1270, 1995 WL 470526, at * 2 (Fed. Cir. July 14, 1995).

64. Id.

65. Id.

66. Id.

67. Halmar Robicon Group, Inc. v. Toshiba Int'l Corp., 127 Fed. Appx. 501, 503 (Fed. Cir. 2005).

68. Id. at 502-3.

69. Id.

70. Id.

71. In re Curtis, 40 B.R. 795, 799 (Bankr. D. Utah 1984).

72. See, e.g., In re Tucson Estates, Inc., 912 F.2d 1162, 1166 (9th Cir. 1990); In re MacDonald, 755 F.2d 715, 717 (9th Cir. 1985).

73. See, e.g., In re Olmstead, 608 F.2d 1365, 1367 (10th Cir. 1979).

74. In re Curtis, 40 B.R. 795, 799-802 (Bankr. D. Utah 1984); see also, e.g., Kronemyer v. Am. Contractors Indem. Co. (In re Kronemyer), 405 B.R. 915, 921 (B.A.P. 9th Cir. 2009) (endorsing the Curtis factors as "appropriate, nonexclusive, factors" to consider in determining whether to allow pending litigation to proceed against the debtor in another forum.).

75. See, e.g., In re Deep, 279 B.R. 653, 657-660 (Bankr. N.D.N.Y. 2002)(analyzing the equivalent of the twelve Curtis factors to find that "cause" existed to lift stay to allow copyright holders to pursue their request for preliminary injunction); Truebro, Inc. v. Plumberex Specialty Products, Inc. (In re Plumberex Specialty Products, Inc.), 311 B.R. 551, 559 (Bankr. C.D. Cal. 2004)(analyzing the Curtis factors to find that no "cause" existed to lift stay to allow a contempt action for violation of an injunction where such contempt action would be new and separate from the previous litigation).

76. Larami Ltd. v. Yes! Entm't Corp., 244 B.R. 56, 58 (D.N.J. 2000).

77. Fed. R. Bankr. P. 9019(a); see also Key3Media Group, Inc. v. Pulver.com, Inc. (In re Key3Media Group, Inc.), 336 B.R. 87, 92 (Bankr. D. Del. 2005); 11 U.S.C. § 105 (setting forth broad discretionary powers of court).

78. In re TSIC, Inc., 393 B.R. 71, 78 (Bankr. D. Del. 2008) (quoting In re Louise's, Inc., 211 B.R 798, 801 (D. Del. 1997)).

79. Will v. Nw. Univ. (In re Nutraquest, Inc.), 434 F.3d 639, 645 (3d Cir. 2006).

80. In re World Health Alternatives, Inc., 344 B.R. 291, 296 (Bankr. D. Del. 2006) (internal quotations and citations omitted).

81. In re Key3Media Group, Inc., 336 B.R. at 93.

82. Myers v. Martin (In re Martin), 91 F.3d 389,393 (3d Cir. 1996) (citing Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424-25 (1968)).

83. In re Martin, 91 F.3d at 393.

84. In re Spansion, Inc., No. 09-10690(KJC), 2009 WL 1531788, at *1 (Bankr. D. Del. June 2, 2009).

85. Id. at 8.

86. Id. at 14.

87. Id.

88. Id.

89. Id. at 15.

90. Id. at 16.

91. Morrow v. Microsoft Corp., 499 F.3d 1332, 1335 (Fed. Cir. 2007).

92. Id.

93. Id.

94. Id. at 1342.

95. Id. at 1335.

96. Id. at 1342.

97. Id.

98. Id. at 1343.

99. Id. at 1343.

100. 11 U.S.C. § 365(a) (2000).

101. In re Walnut Assocs., 145 B.R. 489, 494 (Bankr. E.D. Pa. 1992).

102. See, e.g., COR Route 5 Co., LLC v. Penn Traffic Co. (In re Penn Traffic Co.), 524 F.3d 373, 383 (2d Cir. 2008).

103. In re G Survivor Corp., 171 B.R. 755, 757 (Bankr. S.D.N.Y. 1994).

104. In re Wegner, 839 F.2d 533, 536 (9th Cir. 1988).

105. NLRB v. Bildisco & Bildisco, 465 U.S. 513, 522 n. 6 (1984).

106. See, e.g., In re Qintex Entm't, Inc., 950 F.2d 1492, 1495 (9th Cir. 1991).

107. Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043, 1045 (4th Cir. 1985).

108. In re Kmart Corp., 290 B.R. 614, 618 (Bankr. N.D. Ill. 2003) (quoting Novon Int'l v. Novamont S.P.A. (In re Novon Int'l), 96-BK-15463B, 2000 WL 432848, at *4 (W.D.N.Y. March 31, 2000)).

109. In re Aerobox Composite Structures, LLC, 373 B.R. 135, 139 (Bankr. D.N.M. 2007).

110. 11 U.S.C. § 365(f).

111. 11 U.S.C. § 365(c) (emphasis added).

112. Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043, 1046-48 (4th Cir. 1985), cert. denied, 475 U.S. 1057, 106 S. Ct. 1285, 89 L. Ed. 2d 592 (1986).

113. See also, e.g., In re Old Carco LLC, 406 B.R. 180, 211 (Bankr. S.D.N.Y. 2009).

114. 11 U.S.C. § 365(n)(2)(B)-(C); Encino Bus. Mgmt. v. Prize Frize, Inc. (In re Prize Frize, Inc.), 150 B.R. 456, 458 (B.A.P. 9th Cir. 1993).

115. H.R. Rep. No. 1012, 100th Cong., 2nd Sess., at 9 (1988).

116. In re Prize Frize, Inc., 150 B.R. at 460.

117. See, e.g., Biosafe Int'l, Inc. v. Controlled Shredders, Inc. (In re Szombathy), Bankr. No. 94 B 15536, 1996 WL 417121, at *11 (Bankr. N.D. Ill., July 9,1996), rev'd on other grounds in Szombathy v. Controlled Shredders, Inc., No. 97 C 481, Bankr. No. 94B15536, 1997 WL 189314 (N.D. Ill. April 14, 1997).

118. Id.

119. In re Storm Tech., Inc., 260 B.R. 152, 157 (Bankr. N.D. Cal. 2001)(internal citations omitted).

120. Id. at 154.

121. Id. at 157.

122. 11 U.S.C. section 363(c)(1); see also, e.g., In re Roth Am., Inc., 975 F.2d 949, 952 (3d Cir. 1992).

123. Id., citing section 363(b)(1).

124. In re Dynamic Tooling Sys., Inc., 349 B.R. 847, 855-56 (Bankr. D. Kan. 2006).

125. Id. at 849.

126. Id. at 855.

127. Id.

128. Id.

129. Id. at 856.

130. Id.

131. Emphasis added.

132. FutureSource LLC v. Reuters Ltd., 312 F.3d 281, 285 (7th Cir. 2002).

133. Gilson v. Republic of Ireland, 787 F.2d 655, 658 (D.C. Cir. 1986); see also, e.g., Perlman v. Catapult Entm't (In re Catapult Entm't), 165 F.3d 747, 750 (9th Cir. 1999)(holding that nonexclusive patent licenses do not give rise to ownership rights and are not assignable over the objection of the licensor); In re Access Beyond Tech., 237 B.R. 32, 44 (Bankr. D. Del. 1999)(holding that nonexclusive patent license is not assignable).

134. In re Hernandez, 285 B.R. 435, 440 (Bankr. D. Ariz. 2002).

135. Id.

136. Id.

137. Id. at 440-41.

138. ProteoTech, Inc. v. Unicity Intern., Inc., 542 F. Supp. 2d 1216, 1219 (W.D. Wash. 2008) ("This Court agrees with the [In re Hernandez] Court that the rationale for requiring actual or constructive consent of the licensor applies regardless of whether the license is exclusive or non-exclusive.").

139. In re Hernandez, 285 B.R. at 441.

140. See, e.g., In re Patient Educ. Media, 210 B.R. 237, 240-43 (Bankr. S.D.N.Y. 1997).

141. See, e.g., MacLean Assocs., Inc. v. William M. Mercer-Meidinger-Hansen, Inc., 952 F.2d 769, 778-79 (3d Cir. 1991).

142. See, e.g., In re Patient Educ. Media, 210 B.R. at 240.

143. In re Golden Books Family Entm't, Inc., 269 B.R. 311, 319 (Bankr. D. Del. 2001).

144. Id.

145. Id.

146. Gardner v. Nike, Inc., 110 F.Supp. 2d 1282, 1287 (C.D. Cal. 2000).

147. Id.

148. Id.

149. Id.

150. N.C.P. Mktg. Group v. Blanks (In re N.C.P. Mktg. Group, Inc.), 337 B.R. 230, 237 (D. Nev. 2005), aff'd, In re N.C.P. Mktg. Group, Inc., 279 Fed. Appx. 561 (9th Cir. 2008).

151. In re Catapult Entertainment, Inc., 165 F.3d 747, 749-50 (9th Cir. 1999) (citing City of Jamestown v. James Cable Partners, L.P. (In re James Cable Partners), 27 F.3d 534, 537 (11th Cir. 1994)); In re West Elec. Inc., 852 F.2d 79, 83 (3d Cir. 1988); Breeden v. Catron (In re Catron), 158 B.R. 629, 633-38 (E.D. Va. 1993); RCI Tech. Corp. v. Sunterra Corp. (In re Sunterra Corp.), 361 F.3d 257, 266-67 (4th Cir. 2004).

152. Cinicola v. Scharffenberger, 248 F.3d 110, 121 (3d Cir. 2001).

153. In re West Elec. Inc., 852 F.2d at 83; In re Sunterra Corp., 361 F.3d at 266-67; In re James Cable Partners, 27 F.3d at 537; In re Catapult Entertainment, Inc., 165 F.3d at 754-55.

154. Bonneville Power Admin. v. Mirant Corp. (In re Mirant Corp.), 440 F.3d 238, 248 (5th Cir. 2006).

155. In re Leroux, No. 92-20403-WCH, 1997 WL 375677, at *2 n.5 (Bankr. D. Mass., June 30, 1997).

156. Statement of Kennedy, J., N.C.P. Mktg. Group, Inc. v. BG Star Prods., Inc., 556 U. S. ____ (2009), On Petition for Writ of Certiorari to the United States Court of Appeals For the Ninth Circuit, No. 08–463, decided March 23, 2009.

157. Id.

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