Patent, copyright and trade secret licensees, and the licensing professionals representing them, have taken comfort in the protection afforded by §365(n) of the Bankruptcy Code since its enactment. In the event of the licensor’s bankruptcy, the license would survive.
But a closer examination reveals key areas where this comfort is unwarranted. Consequently, a licensee should approach a licensor in a weak or potentially weak financial position with great caution before investing in, and building a business around or business line based on, the in-licensed technology.
