Technology & Intellectual Property Committee

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Seventh Circuit Recognizes Nonassignability of Trademark Licenses in Bankruptcy – with a Caveat


On July 26, 2011, the U.S. Court of Appeals for the Seventh Circuit issued In re XMH Corp.,[1] recognizing for the first time in a published U.S. Court of Appeals opinion that a trademark license is not assignable in bankruptcy without the licensor’s consent. This recognition, however, comes with a significant caveat. Although the opinion, authored by the respected Judge Richard A. Posner, makes a lengthy exploration of the policies underpinning the rule against nonconsensual assignments of trademarks, virtually everything the court had to say on this topic is, technically speaking, judicial dictum. Ultimately, the case turned on the fact that at the time of the challenged assignment, the trademark license had expired and what remained was only a services contract.

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