Perlman v. Catapult Entertainment, Inc. (1999)
Citation: 165 F.3d 747 · Court: U.S. Court of Appeals for the Ninth Circuit · Decided: Jan. 28, 1999 · Opinion: Fletcher, Circuit Judge.
Source note (2026-10-18):
- Links on this page to
https://static.case.law/f3d/165/cases/0747-01.jsonare an (unofficial Caselaw Access Project copy, retrieved before 2026-10-18; host disallows automated access); no official or otherwise permitted full-text copy was located on 2026-10-18.
Case page. Legal information, not legal advice. Last verified: 2026-10-16.
Facts
Catapult, a Chapter 11 debtor, sought to assume patent licences it held from Perlman as part of its reorganization. Perlman objected, contending that federal patent law made the licences non-assignable without his consent and that 11 U.S.C. § 365(c)(1) therefore barred assumption. (Source: https://static.case.law/f3d/165/cases/0747-01.json , retrieved 2026-10-16.)
Holding
“[W]e hold that we are bound by the plain terms of the statute and join the Third and Eleventh Circuits in adopting the ‘hypothetical test.‘”
Under that test, “a debtor in possession may not assume an executory contract over the nondebtor’s objection if applicable law would bar assignment to a hypothetical third party, even where the debtor in possession has no intention of assigning the contract in question to any such third party.”
Reasoning
The court read § 365(c)(1)‘s text literally, acknowledging that other courts apply an “actual test” focused on whether the debtor actually intends to assign.
Practical impact
A buyer of a business whose value depends on inbound patent licences (and, by extension, other licences treated as personal under applicable law) cannot count on § 365 to transfer them without the licensor’s consent. In hypothetical-test circuits the debtor may not even keep them over objection. Licensor consent is a closing condition.
Good-law status
No citator check run this session; the circuit split on hypothetical versus actual test is noted
but a current survey was not retrieved (needs_verification).
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.