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Archive for October, 2012

Trademark licensees in Bankruptcy

Saturday, October 20th, 2012

stock-photo-trademark-license-102953267A trademark license is an agreement through which one organization allows another to draw on its trademark. Ostensibly, till last year, no court had been asked to decide if a trademark licensee in bankruptcy can presume, or presume and consign, a non-licensed trademark license without the consent of the trademark owner. The first answer to that query was found in a case named In re: N.C.P. Marketing Group, Inc., 337 B.R. 230, at a time when the U.S. District Court (Nevada) declared that trademark licenses are private and non-convertible, deficit of a regulation in the trademark license on the other hand. In the concluding part, the court stated that according to the Lanham Act, (the federal trademark statute), a trademark holder has the right and responsibility to supervise the quality of products sold under the trademark:

Given that the holder of the trademark has an interest in the entity to whom the trademark is consigned so that it maintains the quality, value, and goodwill of its merchandise and thereby its brand name; trademark licenses are exclusive to the beneficiary and not freely transferable to a third party.

The U.S. Court of Appeals for the Ninth Circuit (including California, Nevada and other western states) had formerly improvised that the key Bankruptcy Code terms involved, Section 365(c)(1), in order to prevent a debtor from taking on a contract while it does not hold the right to consign it.

Constituting on the Ninth Circuit law, the trade name holder in the N.C.P. Marketing Group event disputed that under trademark act the defaulter could neither assign nor assume the non-transferable trademark permit at issue. This was agreed by the district court, stating that the bankruptcy court rightly allowed the trademark holder’s action to induce the debtor to decline the trademark permit, compelling the debtor to renounce its license rights.

For trademark owners, this judgment is good news. A lot of people have been apprehensive that if a licensee declares bankruptcy, it could use the Bankruptcy Code’s universal authority to assume and assign executory agreements to consign trademark permits to third parties over the trademark holder’s disapproval. The decision of the N.C.P. Marketing Group extends to trademark holders insurance already acknowledged by various courts for copyright and patent owners. The instance does not state whether the same law would be applicable for special trademark licenses. However, known that the trademark holder has analogous rights and responsibilities to supervise the quality of products traded under a certified mark, the upshots could be the same.

For trademark licensees declaring bankruptcy, the judgment is, certainly, bad news. In case the decision is trailed by other courts, trademark licensees declaring bankruptcy shall be powerless to give their rights to third parties or to retain those authorities for themselves without the consent of the trademark holder.  The merit of these debtors, as well as their capability to pay off creditors, could suffer too.

If you have additional questions please contact us by filling out the contact form or giving us a call at 206-682-7975.

ESPN Documentary “Broke” Should be Must See TV For All Future Professional Athletes

Tuesday, October 2nd, 2012

Some debtors need to file bankruptcy due to no fault of their own. These individuals usually have suffered some kind of enormous medical expense or maybe their home is severely under water.  For others, such as the athletes profiled in ESPN’s new 30for30 documentary “Broke” need to file for bankruptcy because they had a really good time living outside of their means, with nothing saved up for a rainy day. The documentary profiles athletes who were at the top of their game and then lost/spent all their money, only to be living a very pedestrian lifestyle in this day and age.  What viewers and readers need to realize is that most athletes professional careers only last on average 3-4 years, and most don’t make superstar money.  Athletes have a short time frame to make serious money before having to get a real job outside of sports.  Many athletes fall into the trap of spending all of their hard earned paychecks because they are young and are often times from under privileged backgrounds and have no concept of saving money, because they never had any money to begin with.  Often times athletes help out their friends and families with bad investments and then they go on to blow a substantial amount of money on cars and bars to name just a few of the bad choices.

So what can we learn from these athletes as well as various lottery winners and entertainers?  Be smart with your money.  If you got it, invest in things that will show you a profit, unlike vehicles, alcohol, and zany start up business.  Go with what works and get professional investment advise before making any substantial decisions, and always live within your means.  You don’t want to have to file for bankruptcy because you charged up your cards trying to keep up with what everybody else around you was doing.  If you have made bad investments or end up going late on your credit card payments which end up hurting your credit or you end up getting sued by a debt collector, you can either hire help or seek out legal help online to represent yourself.  Either way the worst thing somebody can do is nothing, so consumers and athletes need to take action and get help if they are in need.

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Richard J. Symmes, Esq
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