Protecting a Trademark License Against Insolvency: A Practitioner's Guide to Drafting, Diligence, and Bankruptcy Court
By Casey Scott McKay ·
This guide is the operational half of the Marksy article on Mission Product Holdings, and it assumes you know that rejection is breach rather than rescission. It works the problem from both ends: fifteen stages beginning with the counterparty risk assessment that should happen before a license is signed, running through the drafting choices that matter far more than any bankruptcy clause, and ending with what a licensee actually does in bankruptcy court once the petition is filed. Its center is a set of structural moves - severing the brand license from the supply agreement, designing the license so it may not be executory at all, making quality standards self-executing, and taking a perfected security interest in the licensed marks - each of which does more for a licensee than the boilerplate insolvency paragraph it usually replaces. The second half is a courtroom timeline: the first seventy-two hours, the rejection motion, the sale hearing where brand cases are actually decided, the quality-control takeover that preserves the mark, and the decision whether to bid for the brand. It closes with the licensor's mirror-image playbook and realistic costs.
IP and Technology > IP and IT in Corporate Transactions | Guide | Published 9 October 2023 - Updated 15 August 2025 | Casey Scott McKay - marksy.us
Summary. This guide is the operational half of the Marksy article on Mission Product Holdings, Inc. v. Tempnology, LLC, 587 U.S. 370 (2019), and it assumes you know that rejection is breach rather than rescission. It works the problem from both ends: fifteen stages beginning with the counterparty risk assessment that should happen before a license is signed, running through the drafting choices that matter far more than any bankruptcy clause, and ending with what a licensee actually does in bankruptcy court once the petition is filed. Its center is a set of structural moves — severing the brand license from the supply agreement, designing the license so it may not be executory at all, making quality standards self-executing, and taking a perfected security interest in the licensed marks — each of which does more for a licensee than the boilerplate insolvency paragraph it usually replaces. The second half is a courtroom timeline: the first seventy-two hours, the rejection motion, the sale hearing where brand cases are actually decided, the quality-control takeover that preserves the mark, and the decision whether to bid for the brand. It closes with the licensor's mirror-image playbook and realistic costs.
Keywords: license insolvency drafting · severability of hybrid agreements · non-executory license design · quality control self-executing · security interest for licensee · bankruptcy remote licensor · parent guarantee license · first 72 hours bankruptcy · rejection motion response · 363 sale objection · adequate assurance · cure amount · credit bid · registration maintenance in bankruptcy · licensee committee · escrow trigger enforceability · portfolio triage · counterparty monitoring · distressed brand acquisition
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