In Re Exide Technologies

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 08-1872
In re: EXIDE TECHNOLOGIES,
Debtors
ENERSYS DELAWARE, INC., formerly known as
EnerSys Inc.,
Appellant.
On Appeal from the United States District Court
for the District of Delaware
(D. C. No. 1-06-cv-00302)
District Judge: Hon. Sue L. Robinson
Argued on May 12, 2009
Before: AMBRO, ROTH and ALARCÓN*, Circuit Judges
(Opinion filed: June 1, 2010 )
Robert Lapowsky, Esquire (Argued)
Neil C. Schur, Esquire
Stevens & Lee, P. C.
1818 Market Street, 29 th Floor
Philadelphia, PA 19104
Joseph Grey, Esquire
Stevens & Lee, P. C.
1105 North Market Street, 7 th Floor
Wilmington, DE 19801
Counsel for Appellant Enersys Delaware, Inc.
Laura Davis Jones, Esquire
James O’Neill, Esquire
Pachulski, Stang, Ziehl & Jones, LLP
919 North Market Street, 17 th Floor
P. O. Box 8705
Wilmington, DE 19899-8705
*Honorable Arthur L. Alarcón, Senior United States
Circuit Judge for the Ninth Circuit, sitting by designation.
Matthew N. Kleiman, Esquire (Argued)
Matthew N. Kleiman, P. C.
2506 North Clark Street, Suite 307
2
Chicago, IL 60614
Roger P. Furey, Esquire
John P. Sieger, Esquire
Andrew L. Wool, Esquire
Katten, Muchin, Rosenman, LLP
2900 K Street NW, Suite 200
Washington, DC 20007-5118
Counsel for Appellee Exide Technologies
OPINION
ROTH, Circuit Judge:
This case presents the question whether the parties’
Agreement is an executory contract. EnerSys Delaware, Inc.,
appeals the judgment of the District Court, which affirmed the
Bankruptcy Court’s order that the Agreement was an executory
contract, subject to rejection under 11 U.S.C. § 365(a), and that
Exide Technologies could reject it. We conclude, however, that
EnerSys has substantially performed the Agreement. As a
result, EnerSys does not have any unperformed material
obligations that would excuse Exide from performance. We
hold, therefore, that the Agreement is not an executory contract.
We will vacate the District Court’s order and remand this case
to the District Court with instructions to remand it to the
Bankruptcy Court for further proceedings consistent with this
3
opinion.
I. BACKGROUND
A. Factual background
On April 15, 2002, Exide filed a voluntary petition for
bankruptcy protection under Chapter 11 of the Bankruptcy
Code, 11 U.S.C § 1101, et seq. After filing for bankruptcy,
Exide sought to reject various agreements that it had with
EnerSys arising from their June 1991 transaction. In June 1991,
Exide sold substantially all of its industrial battery business to
EnerSys for about $135 million.1 The assets that Exide sold to
EnerSys included physical manufacturing plants, equipment,
inventory, and certain items of intellectual property. To
formalize the sale, Exide and EnerSys entered into over twenty-
three agreements. Four of these agreements constitute the crux
of the dispute: (1) the Trademark and Trade Name License
Agreement, (2) the Asset Purchase Agreement, (3) the
Administrative Services Agreement, and (4) a letter agreement.
The Bankruptcy Court held, in an order predating the order
challenged here, that the four agreements constituted a single
integrated Agreement (the Agreement). In re Exide Techs., 340
B.R. 222, 227 (Bankr. D. Del. 2006). Neither Exide nor
EnerSys have challenged this determination. We therefore take
the next step of determining whether the Agreement is an
executory contract.
1
EnerSys was known then as Yuasa Battery (America), Inc.
4
Under the Agreement, Exide licensed its “Exide”
trademark to EnerSys for use in the industrial battery business.
Exide wanted to continue to use the Exide mark outside of the
industrial battery business. To accommodate the needs of both
parties, Exide granted EnerSys a perpetual, exclusive, royalty-
free license to use the Exide trademark in the industrial battery
business. This division worked, and, for almost ten years, each
party appeared satisfied with the results of the transaction.
In 2000, however, Exide expressed a desire to return to
the North American industrial battery market. After the parties
agreed to the early termination of a ten-year noncompetition
Agreement (thus granting Exide permission to reenter the
market), Exide made several attempts to regain the trademark
from EnerSys, but EnerSys refused. Exide wanted to regain the
mark as a part of its strategic goal to unify its corporate image.
Exide hoped to use a single name and trademark on all the
products that it produced; this single name and trademark were,
naturally, “Exide.”
Exide reentered the industrial battery business by
purchasing GNB Industrial Battery Company. Exide, however,
remained bound by the ongoing obligation to forbear from using
the Exide trademark in that business for as long as the license
continued in effect. Thus, from 2000 until Exide filed for
bankruptcy protection in 2002, Exide was forced to compete
directly against EnerSys, which was selling batteries under the
name “Exide.” Then, when Exide filed for bankruptcy under
Chapter 11, Exide was presented the opportunity to try to regain
the Exide trademark by rejecting the Agreement. Exide sought
the Bankruptcy Court’s approval to do so.
5
B. Bankruptcy and District Court Proceedings
On April 3, 2006, the Bankruptcy Court entered an order
granting Exide’s motion to reject the Agreement. The court held
that the Agreement was an executory contract, subject to
rejection under 11 U.S.C. §365(a), and that rejection terminated
Exide’s obligations under it. About three months later, on July
11, the Bankruptcy Court entered an order approving the
transition plan and denying EnerSys’s motion to stay. EnerSys
appealed these two orders to the District Court. The District
Court, on February 27, 2008, affirmed the Bankruptcy Court’s
orders.
EnerSys appeals the District Court’s order, arguing two
issues: (1) the District Court erred in holding that Agreement
was an executory contract, and (2) it erred in holding that
rejection terminates EnerSys’s rights under the Agreement.
II. DISCUSSION
The Bankruptcy Court had jurisdiction under 28 U.S.C.
§§ 157(a) and 1334(b). The District Court had jurisdiction to
decide EnerSys’s appeal under 28 U.S.C. §158(a). We have
jurisdiction under 28 U.S.C. §§ 158(d) and 1291 to review the
District Court’s final order.
We exercise plenary review of an order from a district
court sitting as an appellate court in review of a bankruptcy
court. E.g., In re CellNet Data Sys., Inc., 327 F.3d 242, 244 (3d
6
Cir. 2003). We will review both courts’ legal conclusions de
novo. Id.; In re Gen. DataComm Indus., Inc., 407 F.3d 616, 619
(3d Cir. 2005). Furthermore, we will set aside a bankruptcy
court’s factual findings only if clearly erroneous. In re CellNet
Data, 327 F.3d at 244. For mixed questions of law and fact, we
will engage in “a mixed standard” of review, “affording a
clearly erroneous standard to integral facts, but exercising
plenary review of the lower court’s interpretation and
application of those facts to legal precepts.” Id.A. Executory contract
The policy behind Chapter 11 of the Bankruptcy Code is
the “ultimate rehabilitation of the debtor.” Nichols v. United
States, 384 U.S. 678, 687 (1966). The Code therefore allows
debtors in possession, “subject to the court’s approval, . . . [to]
reject any executory contract or unexpired lease of the debtor.”
11 U.S.C. § 365(a). But the Bankruptcy Code does not define
“executory contract.” Relevant legislative history demonstrates
that Congress intended the term to mean a contract “on which
performance is due to some extent on both sides.” H.R. Rep.
No. 95–595, 347 (1977); see In re Columbia Gas Sys. Inc., 50
F.3d 233, 238 (3d Cir. 1995).
With congressional intent in mind, this Court has adopted
the following definition: “‘An executory contract is a contract
under which the obligation of both the bankrupt and the other
party to the contract are so far underperformed that the failure
of either to complete performance would constitute a material
breach excusing the performance of the other.’” In re Columbia
Gas, 50 F.3d at 239 (alteration omitted) (quoting Sharon Steel
7
Corp. v. Nat’l Fuel Gas Distrib. Corp., 872 F.2d 36, 39 (3d
Cir.1989)).2 “Thus, unless both parties have unperformed
obligations that would constitute a material breach if not
performed, the contract is not executory under § 365.” In re
Columbia Gas, 50 F.3d at 239. The party seeking to reject a
contract bears the burden of demonstrating that it is executory.
And “[t]he time for testing whether there are material
unperformed obligations on both sides is when the bankruptcy
petition is filed.” Id. at 240. Finally, to conduct this
determination, we “consider contract principles under relevant
nonbankruptcy law.” Id. at 240 n.10; see In re Gen. DataComm,
407 F.3d at 623. New York, because it is the forum selected in
the Agreement’s choice-of-law provision, provides the relevant
nonbankruptcy law.
Accordingly, our inquiry is to determine whether the
Agreement, on April 15, 2002, contained at least one obligation
for both Exide and EnerSys that would constitute a material
breach under New York law if not performed. If not, then the
Agreement is not an executory contract.3 See In re Gen.
DataComm, 407 F.3d at 623.
2
Professor Vern Countryman, a leading bankruptcy scholar,
created and advocated this definition in a law-review article.
See Sharon Steel Corp., 872 F.2d at 39 (citing Countryman,
Executory Contracts in Bankruptcy: Part I, 57 Minn. L. Rev.
439 (1973)).
3
There is no remaining contention made that Exide had any
unperformed obligations.
8
Under New York law, a material breach, which
“justif[ies] the other party to suspend his own performance,” is
“a breach which is so substantial as to defeat the purpose of the
entire transaction.” Lipsky v. Commonwealth United Corp., 551
F.2d 887, 895 (2d Cir. 1976) (citation omitted); see In re
Lavigne, 114 F.3d 379, 387 (2d Cir. 1997):
[U]nder New York law, only a breach in a
contract which substantially defeats the purpose
of that contract can be grounds for rescission.
The non-breaching party will be discharged from
the further performance of its obligations under
the contract when the breach goes to the root of
the contract.
Id. (internal quotation marks omitted).
But when a breaching party “has substantially performed”
before breaching, “the other party’s performance is not
excused.” Hadden v. Consolidated Edison Co., 312 N.E.2d 445,
449 (N.Y. 1974); see Merrill Lynch & Co. Inc., v. Allegheny
Energy, Inc., 500 F.3d 171, 186 (2d Cir. 2007).
New York’s high court has instructed how to determine
when a party has rendered substantial performance:
There is no simple test for determining whether
substantial performance has been rendered and
several factors must be considered, including the
ratio of the performance already rendered to that
9
unperformed, the quantitative character of the
default, the degree to which the purpose behind
the contract has been frustrated, the willfulness of
the default, and the extent to which the aggrieved
party has already received the substantial benefit
of the promised performance.
Hadden, 312 N.E.2d at 449. “The issue of whether a party has
substantially performed is usually a question of fact and should
be decided as a matter of law only where the inferences are
certain.” Merrill Lynch & Co. Inc., 500 F.3d at 186 (citing
Anderson Clayton & Co. v. Alanthus Corp., 457 N.Y.S.2d 578,
579 (App. Div. 1983)).
The Bankruptcy Court here failed to properly measure
whether either party had substantially performed. Our
inspection of the record, however, reveals that the inferences are
clear that EnerSys has substantially performed. Applying
Hadden’s balancing test, EnerSys’s performance rendered
outweighs its performance remaining and the extent to which the
parties have benefitted is substantial. Specifically, EnerSys has
substantially performed by paying the full $135 million purchase
price and operating under the Agreement for over ten years.
EnerSys has been producing industrial batteries since 1991,
using all the assets transferred under the Agreement, including
real estate, real-estate leases, inventory, equipment and the right
to use the trademark “Exide.” Moreover, EnerSys has provided
Exide with the substantial benefit of assuming the latter’s
liabilities, including numerous contracts and accounts
receivable, within the business EnerSys purchased.
10
Exide argues that EnerSys’s ongoing, unperformed
obligations outweigh its performance. It relies on the following
four obligations of EnerSys: (1) an obligation to satisfy the
Quality Standards Provision, and obligations to observe (2) the
Use Restriction, (3) the Indemnity Obligations, and (4) the
Further Assurances Obligations. 4 We reject Exide’s argument;
these four obligations do not outweigh the substantial
performance rendered and benefits received by EnerSys.
First, EnerSys’s obligation to observe the Use
Restriction, i.e., not to use the Trademark outside the industrial
battery business, is not a material obligation because it is a
condition subsequent that requires EnerSys to use the mark in
accordance with the terms of the Trademark Licence. A
condition subsequent is not a material obligation. See In re
Columbia Gas System, Inc., 50 F.3d 233, 241 (3d Cir. 1995)
(“Non-occurrence of a condition is not a breach by a party
unless he is under a condition that the condition occur.” (quoting
R ESTATEMENT (S ECOND) OF C ONTRACTS § 225(3) (1981)).
Moreover, the Use Restriction does not relate to the purpose of
the Agreement – which is that Exide would transfer its industrial
battery business and the concomitant assets and liabilities to
EnerSys and EnerSys in exchange would pay Exide about $135
million. Therefore, even if the obligation were not a condition
subsequent, it nevertheless would not affect the substantial
performance of the Agreement.
4
Exide does not argue in its Brief that other obligations, set
out by the Bankruptcy Court, such as the pension obligation, are
substantially unperformed.
11
Second, EnerSys’s obligation to observe the Quality
Standards Provision is minor because it requires meeting the
standards of the mark for each battery produced; it does not
relate to the transfer of the industrial battery business.
Furthermore, the record reveals that Exide never provided
EnerSys with any quality standards. (J.A. 297.) The parties, in
fact, do not ever seem to have discussed any such standards.
(See id. at 321–22.) It is an untenable proposition to find an
obligation to go to the very root of the parties’ Agreement when
the parties themselves act as if they did not know of its
existence.
Finally, the other two obligations that Exide argues are
substantial, the Indemnity Obligation and the Further
Assurances Obligation, do not outweigh the factors supporting
substantial performance. In regard to the Indemnity Obligation,
under the Asset Purchase Agreement, all representations and
warranties arising from it expired in 1994, on the third
anniversary of the closing and Exide did not present any
evidence that any liability assumed by EnerSys was still
pending. Similarly, under the Further Assurances Obligation,
EnerSys agreed to cooperate to facilitate the 1991 transaction.
Exide has identified no remaining required cooperation.
Exide argues, however, citing Hadden, that the
substantial-performance doctrine is “irrelevant here” because it
applies only in cases involving construction or employment
contracts. See Hadden, 312 N.E.2d at 449. Our review of New
York law reveals that no New York court has held (or even
intimated, see id.) that the doctrine should be confined to the
construction/employment contract areas. Indeed, the Second
12
Circuit Court of Appeals, applying New York law, recently
applied Hadden’s substantial-performance doctrine in a $490
million asset-purchase contract that formalized the sale of an
energy trading commodities business to a larger energy business.
See Merrill Lynch, 500 F.3d at 186. That contract was neither
a construction nor employment contract. We also now conclude
that we will not confine the doctrine to construction and
employment contract cases.
III. CONCLUSION
For the reasons stated above, we have determined that the
Agreement is not an executory contract because it does not
contain at least one ongoing material obligation for EnerSys.
Because the Agreement is not an executory contract, Exide
cannot reject it. We will vacate the District Court’s order and
remand this case to it for remand to the Bankruptcy Court for
further proceedings consistent with this opinion.
13
In Re: Enersys Delaware, Inc.
No. 08-1872
AMBRO, Circuit Judge, concurring
I join Judge Roth’s opinion in full, and write separately
to address the Bankruptcy Court’s determination, adopted by the
District Court, that “[r]ejection of the Agreement leaves EnerSys
without the right to use the Exide mark.” In re Exide Techs.,
340 B.R. 222, 250 (Bankr. Del. 2006). I disagree with that
determination, as I believe a trademark licensor’s rejection of a
trademark agreement under 11 U.S.C. § 365 does not necessarily
deprive the trademark licensee of its rights in the licensed mark.
In Lubrizol Enterprises, Inc. v. Richmond Metal
Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985), cert. denied, 475
U.S. 1057 (1985), a licensor, Richmond Metal Finishers, granted
a nonexclusive technology license to Lubrizol. The license
stated that Richmond and Lubrizol owed each other certain
duties. See id. at 1045. Shortly thereafter, Richmond filed for
bankruptcy protection and sought to rescind the license by
rejecting it under § 365. The Fourth Circuit Court granted this
request and “deprive[d] Lubrizol of all rights” under the license:
Under 11 U.S.C. § 365(g), Lubrizol would be
entitled to treat rejection as a breach and seek a
money damages remedy; however, it could not
seek to retain its contract rights in the technology
by specific performance even if that remedy
would ordinarily be available upon breach of this
type of contract.
Id. at 1048. The Court acknowledged that this interpretation of
rejection as a termination “could have a general chilling effect
upon the willingness of . . . parties to contract at all with
businesses in possible financial difficulty.” Id. “But,” it said,
“under bankruptcy law such equitable considerations may not be
indulged by courts in respect of the type of contract here in
issue.” Id.Reacting to industry concerns that “after Lubrizol any
patent or trademark licensor could go into Chapter 11 and
invalidate a license perfectly valid under contract law,”
Congress enacted 11 U.S.C. § 365(n). Jay Lawrence
Westbrook, A Functional Analysis of Executory Contracts, 74
Minn. L. Rev. 227, 307 (1989). Through this provision,
Congress sought “to make clear that the rights of an intellectual
property licensee to use the licensed property cannot be
unilaterally cut off as a result of the rejection of the license
pursuant to Section 365 in the event of the licensor’s
bankruptcy.” S. Rep. No. 100-505, at 1 (1988), reprinted in
1988 U.S.C.C.A.N. 3200, 3200.
Section 365(n) reads in relevant part:
If the trustee rejects an executory contract under
which the debtor is a licensor of a right to
intellectual property, the licensee under such
contract may elect—
(A) to treat such contract as terminated by
such rejection if such rejection by the
trustee amounts to such a breach as would
2
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 the 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 . . . , 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.
11 U.S.C. 365(n)(1). Thus, in the event that a bankrupt licensor
rejects an intellectual property license, § 365(n) allows a
licensee to retain its licensed rights—along with its
duties—absent any obligations owed by the debtor-licensor.
Congress, however, did not include trademarks within the
relevant definition of “intellectual property.” Instead, it defined
3
“intellectual property” only to include 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.
11 U.S.C. § 101(35A).
Because Congress did not protect trademark licensees
under § 365(n), courts have reasoned by negative inference that
it intended for Lubrizol’s holding to control when a bankrupt
licensor rejects a trademark license. See, e.g., In re Old Carco
LLC, 406 B.R. 180, 211 (Bankr. S.D.N.Y. 2009) (“Trademarks
are not ‘intellectual property’ under the Bankruptcy Code . . . [,
so] rejection of licenses by [a] licensor deprives [the] licensee of
[the] right to use [a] trademark . . . .”); In re HQ Global
Holdings, Inc., 290 B.R. 507, 513 (Bankr. D. Del. 2003)
(“[S]ince the Bankruptcy Code does not include trademarks in
4
its protected class of intellectual property, Lubrizol controls and
the Franchisees’ right to use the trademark stops on rejection.”);
In re Centura Software Corp., 281 B.R. 660, 674–75 (Bankr.
N.D. Cal. 2002) (“Because Section 365(n) plainly excludes
trademarks, the court holds that [the licensee] is not entitled to
retain any rights in [the licensed trademarks] under the rejected
. . . [t]rademark [a]greement.”); In re Chipwich, Inc., 54 B.R.
427, 431 (Bankr. S.D.N.Y. 1985) (“[B]y rejecting the
[trademark] licenses[,] the debtor will deprive [the licensee] of
its right to use the . . . trademark for its products.”).
The Bankruptcy Court here adopted this reasoning:
Congress certainly could have included
trademarks within the scope of § 365(n)[,] but
saw fit not to protect them. Therefore, the
holding in [Lubrizol v.] Richmond Metal
Finishers, as well as the holdings in the other pre
and post § 365(n) trademark rejection cases . . . ,
still retain vitality insofar as they relate to
trademark licenses. As a result, a trademark
license is terminated upon rejection and the
licensee is left only with a claim for damages.
In re Exide, 340 B.R. at 250 n.40.
But while the Supreme Court has endorsed reasoning
from negative inference in the context of § 365, see NLRB v.
Bildisco & Bildisco, 465 U.S. 513, 522–23 (1984) (holding that
§ 365(a) applied to collective-bargaining agreements covered by
the National Labor Relations Act because Congress failed to
5
draft an exclusion for them), I believe such reasoning is inapt for
trademark license rejections.
When Congress enacted § 365(n), it explicitly explained
why it excluded trademark licensees from the protection
afforded to “intellectual property” licensees:
[T]he bill does not address the rejection of
executory trademark, trade name or service mark
licenses by debtor-licensors. While such rejection
is of concern because of the interpretation of
section 365 by the Lubrizol court and others, see,
e.g., In re Chipwich, Inc., 54 Bankr. Rep. 427
(Bankr. S.D.N.Y. 1985), such contracts raise
issues beyond the scope of this legislation. In
particular, trademark, trade name and service
mark licensing relationships depend to a large
extent on control of the quality of the products or
services sold by the licensee. Since these matters
could not be addressed without more extensive
study, it was determined to postpone
congressional action in this area and to allow the
development of equitable treatment of this
situation by bankruptcy courts.
S. Rep. No. 100-505, at 5, reprinted in 1988 U.S.C.C.A.N. at
3204. “Nor does the bill address or intend any inference to be
drawn concerning the treatment of executory contracts which are
6
unrelated to intellectual property.” Id.1
In light of these direct congressional statements of intent,
it is “simply more freight than negative inference will bear” to
read rejection of a trademark license to effect the same result as
termination of that license. Michael T. Andrew, Executory
Contracts Revisited, 62 U. Colo. L. Rev. 1, 11 (1991). “[T]he
purpose of § 365” is not “to be the functional equivalent of a
rescission, rendering void the contract and requiring that the
parties be put back in the positions they occupied before the
contract was formed.” Thompkins v. Lil’ Joe Records, Inc., 476
F.3d 1294, 1306 (11th Cir. 2007). It “merely frees the estate
from the obligation to perform,” and “has absolutely no effect
upon the contract’s continued existence.” Id. (internal citations
omitted); see also 3 Collier on Bankruptcy ¶ 365.14 n.3 (Alan
N. Resnick & Henry J. Sommer eds., 16th ed. 2009) (noting
some take the view that “rejection by the debtor terminates the
1
This statement may stem from the recommendation of the
National Bankruptcy Conference that “there should be in this
legislative history a caveat that makes it clear that no negative
inferences are to be drawn or should be drawn by courts that,
because Congress has legislated in a particular way a licensing
agreement, those other agreements that are not within the
parameters of the legislation are to be dealt with in any
particular way.” Intellectual Property Contracts in Bankruptcy:
Hearing on H.R. 4657 Before the Subcomm. on Monopolies and
Commercial Law of the H. Comm. on the Judiciary, 100th Cong.
101 (1988) (statement of George Hahn, Esq., Representative,
National Bankruptcy Conference).
7
rights of the other parties to the contract as opposed to being
simply a determination not to perform, more in the nature of an
abandonment, which was the intellectual source of the rejection
concept”); 2 Norton Bankruptcy Law and Practice § 46:57 (3d
ed. 2008) (“The Bankruptcy Code instructs us that rejection is
a breach of the executory contract. It is not avoidance,
rescission, or termination.” (footnotes omitted)).
By permitting Exide to “extinguish[]” EnerSys’s right in
the “Exide” mark through § 365 rejection, the Bankruptcy and
District Courts failed to follow this path. Rather than reasoning
from negative inference to apply another Circuit’s holding to
this dispute, the Courts here should have used, I believe, their
equitable powers to give Exide a fresh start without stripping
EnerSys of its fairly procured trademark rights. Cf. In re
Matusalem, 158 B.R. 514, 521–22 (Bankr. S.D. Fla. 1993)
(suggesting that rejection of a trademark license would not
deprive a licensee of its rights in the licensed mark).
Courts may use § 365 to free a bankrupt trademark
licensor from burdensome duties that hinder its reorganization.
They should not—as occurred in this case—use it to let a
licensor take back trademark rights it bargained away. This
makes bankruptcy more a sword than a shield, putting debtor-
licensors in a catbird seat they often do not deserve.
8