Tag Archives: Bankruptcy

“Dear Licensor” — Part II

Dear John Letter

Permission: Casey Berry

Last spring I excerpted from and linked to an article by my friends Richard Bergovoy (of the Licensing Law Blog) and Oliver Herzfeld (of Beanstalk) concerning the dizzying concept of a trademark licensee gone bankrupt.  Now I’m told that Part II is out and about as well.

Here’s a highlight:

Richard Bergovoy

Richard Bergovoy

If Licensee Seeks to Assume and the Licensor Objects

The licensor may believe that the licensee or its proposed assignee are incapable of properly performing the license agreement. One of the fundamental principles of U.S. trademark law is that a licensor must control the quality of the goods and services provided by the licensee under the licensed mark. This rule is designed to fulfill the public policy objective of consumer protection, in that trademark laws help prevent the public from being misled as to the quality of branded products and services. A prohibited “assignment in gross of a mark” or other failure to maintain quality control standards could give rise to a so-called “naked license” claim. The consequences of such a claim can be quite severe. In particular, “a court may find that the trademark owner has abandoned the trademark, in which case the owner would be estopped from asserting rights to the trademark.” To prevent such damage from occurring, the licensor may object to a licensee’s assumption or assumption and assigument of a license agreement on the following four grounds …

The four grounds, and the rest of the article, can be found here.

“Dear Licensor”

Dear John Letter

used with permission of Casey Berry

Talk about “Dear John” letters!  In the June issue of Royaltie$ magazine, Oliver Herzfeld (of Beanstalk) and Richard Bergovoy (of the Licensing Law Blog) sure know how to grab your attention, if you license trademarks or just love someone who does:

An envelope arrives from bankruptcy court. You open it and realize with shock that one of your trademark licensees has filed a bankruptcy petition and listed you as a creditor. Over the past two years, this has become an increasingly common occurance.

Beanstalk's Oliver Herzfeld

Oliver Herzfeld (we only have one picture!)

It’s going to be all right, though!

But from a trademark licensor’s point of view, a licensee entering bankruptcy is not always the disaster it might appear to be.  This two-part article—the next article will be in the August issue—will provide an overview of the main issues faced and decisions to be made by a trademark licensor whose licensee has filed for bankruptcy.


They tried to make me a bankruptcy lawyer once.  Don’t get me started!  But this is something I can glom.  Onto.

You can download the first part of Handling Trademark Licensees in Bankruptcy here (permission obtained, of course).  For the second part, you’ll have to wait until August like everyone else.

Clever is as clever shifts fees

Richard Bergovoy:

The only thing worse for a licensor than losing money when its licensee files for bankruptcy is paying attorneys’ fees on top of that to stop the bleeding.

Two of the most common bankruptcy proceedings that licensor creditors get involved in are: 1) hearings related to the licensee’s attempt to assume an executory license agreement; and 2) lawsuits against the licensor to recover so-called preferential transfer payments from the licensee.

But can a clever licensor recover attorneys’ fees incurred in post-petition bankruptcy proceedings, if it had the foresight to include a well-drafted attorneys’ fee provision in its boilerplate license agreement?

He says that clever licensor maybe, possibly can — say, if he has a clever lawyer, like Richard Bergovoy.  Click the link to read about how it might be done.