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Legal Update

Fourth Circuit Addresses Protections for US IP Licenses in Case Under Chapter 15 of the Bankruptcy Code

11 December 2013
Mayer Brown Legal Update
The US Court of Appeals for the Fourth Circuit recently held that a bankruptcy court did not err by requiring that the protections of section 365(n) of the Bankruptcy Code apply with respect to a foreign debtor’s US intellectual property licenses as a condition of granting the debtor’s foreign representative relief under chapter 15 of the Bankruptcy Code. The decision in Jaffé v. Samsung Electronics Co. (In re Qimonda)affirms that the significant protections for IP licensees pursuant to section 365(n) of the Bankruptcy Code can apply in an ancillary chapter 15 case to US IP licenses even where licensees would receive no similar protections in the foreign debtor’s home country insolvency proceeding. The Fourth Circuit, however, did not answer the question of whether application of section 365(n) is mandated as a matter of law in all chapter 15 cases where no similar protections exist in the home country insolvency proceeding, leaving the important issues discussed in this note open for even further judicial development.

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