## Facts

- Qimonda AG, a German semiconductor manufacturer, held roughly 4,000 U.S. patents and had extensive cross-licensing agreements with major semiconductor companies, including Samsung, Intel, IBM, Micron, and others.
- Qimonda entered German insolvency proceedings in 2009, and Michael Jaffé was appointed insolvency administrator.
- Invoking German Insolvency Code § 103, Jaffé elected not to perform the executory patent cross-license agreements and asserted that the licensees’ rights were no longer enforceable.
- Jaffé filed a Chapter 15 petition in the U.S. Bankruptcy Court (E.D. Va.) to recognize the German insolvency as a foreign main proceeding; the court granted recognition.
- Jaffé then sought discretionary “additional relief” under 11 U.S.C. § 1521 to administer U.S. assets consistent with German law, without extending 11 U.S.C. § 365(n) protections to licensees.
- After an evidentiary hearing, the bankruptcy court conditioned Chapter 15 relief under § 1522(a) on providing licensees § 365(n) protection for their rights in Qimonda’s U.S. patents; the district court affirmed.

## Issues

1. Whether § 1522(a) requires a bankruptcy court to apply a balancing test and ensure “sufficient protection” of creditors and interested parties when granting discretionary relief under § 1521(a) in a Chapter 15 case.
2. Whether the bankruptcy court abused its discretion by conditioning Chapter 15 relief on applying § 365(n) to preserve U.S. patent licensees’ rights despite the foreign representative’s election under foreign insolvency law.

## Decision

- The Fourth Circuit affirmed the district court and the bankruptcy court.
- The court held that § 1522(a) imposes a substantive constraint on discretionary relief under § 1521(a) and requires a balancing of interests to ensure parties are “sufficiently protected.”
- The court held the bankruptcy court reasonably exercised its discretion in requiring § 365(n) protections for the licensees’ rights in U.S. patents as a condition of Chapter 15 relief.
- The court rejected the argument that comity required deference to the foreign insolvency rule where doing so would inadequately protect U.S. creditors and licensees in U.S. patent rights.

## Legal Principles

- In Chapter 15, discretionary relief under § 1521(a) may be granted only if § 1522(a)’s “sufficiently protected” requirement is satisfied; this calls for a balancing of the foreign representative’s and debtor’s interests against those of creditors and other interested entities.
- Chapter 15 comity is conditional and operates within statutory limits, including § 1522(a) and the public-policy constraint reflected in § 1506.
- Section 365(n) expresses a strong U.S. policy protecting intellectual-property licensees by allowing them, upon rejection, to retain licensed rights in U.S. intellectual property subject to continued royalty obligations.
- A bankruptcy court may condition Chapter 15 assistance to a foreign main proceeding to preserve U.S. patent licensees’ rights where denial of protection would materially harm licensees and conflict with U.S. statutory policy.

## Conclusion

The Fourth Circuit held that Chapter 15 courts must ensure adequate protection through an interests-balancing analysis under § 1522(a) when granting discretionary relief, and it upheld conditioning relief on applying § 365(n) to protect U.S. patent licensees against a foreign representative’s attempt to extinguish license rights under foreign insolvency law.


Jaffé v. Samsung Elecs. Co., 737 F.3d 14 (4th Cir. 2013)