Mission Product Holdings, Inc. v. Tempnology, LLC (2019)
Citation: 587 U.S. 370 (No. 17-1657; U.S. Reports cite per CourtListener, retrieved 2026-10-16) · Court: Supreme Court of the United States · Argued: Feb. 20, 2019 · Decided: May 20, 2019 · Opinion: Kagan, J., for the Court; Sotomayor, J., concurring; Gorsuch, J., dissenting.
Case page. Legal information, not legal advice. Last verified: 2026-10-16.
Facts
Tempnology made “Coolcore” athletic products. Its agreement with Mission gave Mission an exclusive licence to distribute certain Coolcore products in the United States and “a non-exclusive license to use the Coolcore trademarks, both in the United States and around the world.” Tempnology filed Chapter 11 and rejected the agreement under 11 U.S.C. § 365, arguing that rejection “also terminated the rights it had granted Mission to use the Coolcore trademarks.” (Source: https://www.law.cornell.edu/supremecourt/text/17-1657 , retrieved 2026-10-16.)
Holding
“A debtor’s rejection of an executory contract under Section 365 of the Bankruptcy Code has the same effect as a breach of that contract outside bankruptcy. Such an act cannot rescind rights that the contract previously granted.” (Syllabus.)
Reasoning
Section 365(g) provides that rejection “constitutes a breach,” and “‘breach’ is neither a defined nor a specialized bankruptcy term—it means in the Code what it means in contract law outside bankruptcy.” “Outside bankruptcy, a licensor’s breach cannot revoke continuing rights given to a counterparty under a contract (assuming no special contract term or state law).” Allowing rejection to rescind would “circumvent the Code’s stringent limits on ‘avoidance’ actions.”
Practical impact
A buyer of a bankrupt licensor’s trademarks (or other IP) may take them subject to licensees’ continuing contractual rights even if the debtor rejects the licence. A licensee keeps the rights the contract gave it, subject to contract terms and state law.
Good-law status
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Applies in →
intellectual-property-and-licenses, businesses-and-going-concerns
Legal information, not legal advice. Verify against the current primary source before relying on this summary.