On October 26, 2018, the Supreme Court of the United States (“SCOTUS”) granted certiorari in two IP cases. In Mission Product Holdings, Inc. v. Tempnology, LLC, SCOTUS will address a circuit split on the effect bankruptcy has on trademark license rights. In Return Mail, Inc. v. U.S. Postal Service, et al., SCOTUS will address whether the government may challenge patents as a “person” under the America Invents Act (“AIA”).
In Mission Product Holdings, Tempnology, LLC (“Tempnology”) filed for Chapter 11 bankruptcy protection and cancelled a trademark licensing agreement that it had with Mission Product Holdings, Inc. (“Mission”). Mission, the licensee, objected to the cancellation, arguing that Section 365(n) of the Bankruptcy Code permitted it to continue using Tempnology’s trademark. The First Circuit disagreed, holding that Mission’s right to use the trademark did not survive Tempnology’s cancellation of the licensing agreement. The Fourth Circuit also follows this approach. In contrast, the Seventh Circuit previously has held that a licensee’s right to use a trademark does not terminate upon the licensor’s cancellation of the trademark license in a bankruptcy proceeding. In adopting this approach, the Seventh Circuit reasoned that a licensor’s rejection of a contract in bankruptcy is merely a breach of contract and not a wholesale termination of a licensee’s rights under that contract.
In Return Mail, Return Mail, Inc. (“Return Mail”) brought suit against the U.S. Postal Service under 28 U.S.C. § 1498(a) for unlicensed use of Return Mail’s patent for processing undeliverable mail. The U.S. Postal Service challenged the patentability of Return Mail’s patent under the AIA by filing a petition with the Patent Trial and Appeal Board (“PTAB”). In response, Return Mail argued that the government is not statutorily permitted to institute a proceeding under the AIA. The PTAB sided with the U.S. Postal Service and held that the government is not barred from initiating proceedings under the AIA. The Federal Circuit upheld the PTAB’s decision, noting that the government should be permitted to initiate a proceeding under the AIA when “like a party sued in federal district court . . . it ha[s] interests at stake with respect to the patent it has been accused of infringing.”