Amicus Brief of the Intellectual Property Owners Association
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No. 17-1657 In the Supreme Court of the United States MISSION PRODUCT HOLDINGS, INC., PETITIONER, v. TEMPNOLOGY, LLC, N/K/A OLD COLD LLC, RESPONDENT. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT BRIEF OF THE INTELLECTUAL PROPERTY OWNERS ASSOCIATION AS AMICUS CURIAE IN SUPPORT OF NEITHER PARTY HENRY HADAD WENDY C. LARSON President TRAVIS R. WIMBERLY* JAMES TRUSSELL GIULIO YAQUINTO Chair, Amicus Brief PIRKEY BARBER PLLC Committee 600 Congress Avenue MARK W. LAUROESCH Suite 2120 Executive Director Austin, TX 78701 INTELLECTUAL (512) 322-5200 PROPERTY OWNERS [email protected] ASSOCIATION [email protected] 1501 M Street, NW, Suite 1150 Washington, DC 20005 (202) 507-4500 * Counsel of Record 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. (I) II TABLE OF CONTENTS QUESTION PRESENTED .......................................... I TABLE OF AUTHORITIES ..................................... IV INTEREST OF THE AMICUS CURIAE ................... 1 STATEMENT .............................................................. 2 SUMMARY OF THE ARGUMENT ........................... 4 ARGUMENT ............................................................... 5 I. The Court of Appeals’ Bright-Line Rule Is Needlessly Restrictive and Problematic. .............. 5 A. Neither Trademark Licensors Nor Licensees Benefit in the Long Run from the Court of Appeals’ Rule. .............................. 6 B. The Court of Appeals Relied on Misguided Concerns About a Licensor’s Quality- Control Obligations. ....................................... 12 C. The Court of Appeals’ Rule Creates Potentially Unreasonable Results. ................ 18 D. The Court of Appeals Relied on Incorrect Assumptions—Disproved by the Statutory Text and the Legislative History—About Congress’ Intent. ............................................ 22 II. Until Congress Acts, the Best Rule for Trademark Licenses is an Equitable, Case-by- Case Approach with a Presumption in Favor of the Licensee’s Rights. ...................................... 24 A. Courts Should Start with Sunbeam’s Rule as a Presumption, but Then Consider Whether Case-Specific Factors Overcome That Presumption. ......................................... 25 III B. The Approach Urged Here Strikes the Best Balance Between Various Interests. ..... 29 CONCLUSION ......................................................... 30 APPENDIX .................................................................1a IV TABLE OF AUTHORITIES Cases: Page(s) Am. Foods, Inc. v. Golden Flake, Inc., 312 F.2d 619 (5th Cir. 1963) .................................. 6 Animal Fair, Inc. v. Amfesco Indus., Inc., 620 F. Supp. 175 (D. Minn. 1985), aff’d, 794 F.2d 678 (8th Cir. 1986) ................................................ 19 Bouchat v. Baltimore Ravens Ltd. P’ship, 619 F.3d 301 (4th Cir. 2010) ................................ 15 Carol Cable Co. v. Grand Auto, Inc., 4 U.S.P.Q.2d 1056 (N.D. Cal. 1987) ..................... 19 City of Carlsbad v. Shah, 850 F. Supp. 2d 1087 (S.D. Cal. 2012) ................. 19 Creative Gifts, Inc. v. UFO, 235 F.3d 540 (10th Cir. 2000) .............................. 14 Doeblers’ Penn. Hybrids, Inc. v. Doebler, 442 F.3d 812 (3d Cir. 2006) ............................ 14, 17 Edwin K. Williams & Co. v. Edwin K. Williams & Co.-E., 542 F.2d 1053 (9th Cir. 1976) .............................. 14 Embedded Moments, Inc. v. Int’l Silver Co., 648 F. Supp. 187 (E.D.N.Y. 1986) ........................ 17 Eva’s Bridal Ltd. v. Halanick Enters., Inc., 639 F.3d 788 (7th Cir. 2011) ................................ 14 Exxon Corp. v. Oxxford Clothes, Inc., 109 F.3d 1070 (5th Cir. 1997) .............................. 16 V Glow Indus., Inc. v. Lopez, 273 F. Supp. 2d 1095 (C.D. Cal. 2003)................. 17 Hokto Kinoko Co. v. Concord Farms, Inc., 738 F.3d 1085 (9th Cir. 2013) .............................. 17 In re Crumbs Bake Shop, Inc., 522 B.R. 766 (Bankr. D.N.J. 2014) ........................ 7 In re Exide Techs., 607 F.3d 957 (3d Cir. 2010) .................................... 8 In re Jartran, Inc., 732 F.2d 584 (7th Cir. 1984) ................................ 11 In re Matusalem, 158 B.R. 514 (Bankr. S.D. Fla. 1993) ........ 7, 10, 21 In re SIMA Int’l, Inc., No. 17-21761 (JJT), 2018 WL 2293705 (Bankr. D. Conn. May 17, 2018) ............................................. 21 In re XHM Corp., 647 F.3d 690 (7th Cir. 2010) .................................. 8 Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628 (9th Cir. 2008) ................................ 19 Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368 (5th Cir. 1977) .................... 13, 16, 30 Kurt S. Adler, Inc., v. World Bazaars, Inc., 897 F. Supp. 92 (S.D.N.Y. 1995) .......................... 19 Land O’Lakes Creameries, Inc. v. Oconomowoc Canning Co., 330 F.2d 667 (7th Cir. 1964) ................................ 17 VI Lubrizol Enters., Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985) ...................... passim NLRB v. Bildisco & Bildisco, 465 U.S. 513 (1984) ........................................ 22, 26 Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. DE C.V., 188 F. Supp. 3d 22 (D.D.C. 2016) ........................ 13 Patsy’s Italian Rest., Inc. v. Banas, 658 F.3d 254 (2d Cir. 2011) .................................. 13 Reader’s Digest Ass’n, Inc. v. Conservative Digest, Inc., 821 F.2d 800 (D.C. Cir. 1987) ............................. 19 Sands, Taylor & Wood v. Quaker Oats Co., 34 F.3d 1340 (7th Cir. 1994) ................................ 10 SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348 (2018) .......................................... 23 Stock Pot Rest., Inc. v. Stockpot, Inc., 737 F.2d 1576 (Fed. Cir. 1984) ........................ 17,18 Sunbeam Prods., Inc. v. Chicago Am. Mfg., LLC, 686 F.3d 372 (7th Cir. 2012) ........................ passim Syntex Labs., Inc. v. Norwich Pharmacal Co., 315 F. Supp. 45 (S.D.N.Y. 1970) .......................... 17 Taco Cabana Int’l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1121 (5th Cir. 1991) .............. 14, 15 VII Thompkins v. Lil’ Joe Records, Inc., 476 F.3d 1294 (11th Cir. 2007) ............................ 22 TMT N. Am., Inc. v. Magic Touch GmbH, 124 F.3d 876 (7th Cir. 1997) .......................... 13, 14 Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001 (9th Cir. 1985) .............................. 17 Tumblebus Inc. v. Cranmer, 399 F.3d 754 (6th Cir. 2005) ................................ 14 Walt Disney Co. v. Powell, 698 F. Supp. 10 (D.D.C. 1988), aff’d in relevant part, 897 F.2d 565 (D.C. Cir. 1990) ..................... 19 Warner Bros. Entm’t, Inc. v. X One X Prods., 840 F.3d 971 (8th Cir. 2016) ................................ 19 Statutes: Page(s) 11 U.S.C. § 101(35A) .............................................. 2, 21 11 U.S.C. § 365 ................................................... passim 11 U.S.C. § 365(a) .............................................. passim 11 U.S.C. § 365(g) ........................................ 3, 7, 25, 29 11 U.S.C. § 365(n)(1)(B) ............................................. 20 11 U.S.C. § 502(g) ........................................................ 7 11 U.S.C. § 544-551 ................................................... 22 15 U.S.C. § 1055 ........................................................... 9 15 U.S.C. § 1117 ......................................................... 28 15 U.S.C. § 1127 ........................................................... 9 VIII Other Authorities: Page(s) 133 Cong. Rec. S11651-01 (1987) .............................. 21 David M. Jenkins, Licenses, Trademarks, and Bankruptcy, Oh My!: Trademark Licensing and the Perils of Licensor Bankruptcy, 25 J. Marshall L. Rev. 143 (1991) ............................................... 15, 16 Irene Calboli, The Sunset of “Quality Control” in Modern Trademark Licensing, 57 Am. U. L. Rev. 341 (2007) ............................................................. 18 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition (5th ed. 2018) ............... passim Kayvan Ghaffari, The End to an Era of Neglect: The Need for Effective Protection of Trademark Licenses, 87 S. Cal. L. Rev. 1053 (2014) ................ 8 Mark A. Lemley, Property, Intellectual Property, and Free Riding, 83 Tex. L. Rev. 1031 (2005) .............. 8 Raymond T. Nimmer & Jeff C. Dodd, Modern Licensing Law § 9:17 (2018) ................................. 20 Restatement (Third) of Unfair Competition § 33 (1995) ........................................................................... 9, 15 Richard Craswell, FTC Office of Policy Planning, Trademarks, Consumer Information & Barriers to Competition (1979) ............................................... 12 S. Rep. No. 100-505, 100th Cong., 2d Sess. 6 (1988) ....................................................................... passim Xuan-Thao N. Nguyen, Bankrupting Trademarks, 37 U.C. Davis L. Rev. 1267 (2004) .............................. 8 INTEREST OF THE AMICUS CURIAE Amicus curiae Intellectual Property Owners Association (IPO) is an international trade association representing companies and individuals across all industries and fields of technology who own or are otherwise interested in intellectual property rights.1 IPO’s membership includes