Mission Product Holdings, Inc. v. Tempnology, LLC

Summary

The Supreme Court held that a debtor's rejection of an executory contract under § 365 of the Bankruptcy Code constitutes a breach rather than a rescission. Accordingly, rejection does not terminate contractual rights that would survive a breach outside bankruptcy, including a licensee's right to use trademarks. The Court reversed and remanded the First Circuit's decision.

Holdings

1. The case was not moot because Mission presented a plausible claim for money damages arising from its inability to use the trademarks during the remaining license term.
2. A debtor's rejection of an executory contract under § 365 has the same effect as a breach of that contract outside bankruptcy; rejection does not rescind the contract or terminate contractual rights previously granted.
3. Tempnology's rejection of the executory licensing agreement could not revoke Mission's previously granted license to use the Coolcore trademarks.

Questions Presented

1. Whether Mission's claim for damages based on its inability to use Tempnology's trademarks preserved a live controversy.
2. Whether a debtor's rejection of an executory contract under 11 U.S.C. § 365 terminates contractual rights previously granted to the counterparty.
3. Whether rejection of a trademark licensing agreement terminates the licensee's rights to use the trademarks because trademark licenses are not covered by the specific protections in § 365(n).

Disposition

reversed_and_remanded