The U.S. Court of Appeals for the Seventh Circuit has issued a ruling that strengthens the position of trademark licensees when the licensor goes bankrupt. The court held that these licensees retain contractual rights to use the trademarks, even if the bankruptcy trustee rejects the license — setting up a circuit split on the issue.

On July 9, a unanimous panel affirmed, although on different grounds, a ruling by U.S. Bankruptcy Judge Pamela Hollis of the Northern District of Illinois that a licensee’s rights survived a bankruptcy trustee’s rejection of a supply agreement with the bankrupt licensor.

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