Section 365(a) of the Bankruptcy Code permits a debtor or trustee, subject to bankruptcy court approval, to reject an executory contract and release the debtor’s estate from burdensome contractual obligations that may impede the debtor’s successful reorganization. Section 365(n) sets forth a provision that affords special protection to licensees of “intellectual property,” as that term is defined by Section 101(35A) of the Bankruptcy Code. The provision allows such licensees, in the event of rejection, to make an election to retain their rights to the debtor’s intellectual property, subject to certain requirements and conditions set forth therein.

Section 365(n) was enacted in 1998 in response to the Fourth Circuit Court of Appeals’ decision in Lubrizol Enterprises v. Richmond Metal Finishers, 756 F.2d 1043 (4th Cir. 1985), in which it was held that a debtor’s rejection of an intellectual property license terminated all of the licensee’s contractual rights under the license agreement and left the licensee with nothing more than a claim for money damages.