## Facts

- Tempnology, LLC made athletic apparel and accessories marketed under the “Coolcore” brand and related trademarked logos and labels.
- Tempnology and Mission Product Holdings, Inc. entered a 2012 agreement that, among other terms, gave Mission distribution rights for certain products in the United States and a license to use Tempnology’s Coolcore trademarks in connection with selling the goods in other markets, subject to quality-control terms.
- About a year before the agreement was set to expire, Tempnology filed a Chapter 11 petition and sought court approval to reject the executory contract under 11 U.S.C. § 365(a).
- The bankruptcy court approved rejection and ruled that Mission’s distribution and trademark rights ended upon rejection, leaving Mission with only a claim for damages.
- On appeal, the Bankruptcy Appellate Panel reversed in part, treating rejection as a breach and concluding Mission could keep certain rights; the First Circuit reversed and reinstated the bankruptcy court’s conclusion that Mission’s right to use the trademarks did not survive rejection.
- The Supreme Court granted certiorari to decide whether rejection of an executory trademark license ends the licensee’s continued right to use the marks when that right would survive an ordinary breach under nonbankruptcy law.

## Issues

1. Whether, under 11 U.S.C. § 365, a debtor-licensor’s rejection of an executory license agreement that “constitutes a breach” terminates the licensee’s rights to use trademarks, or instead leaves in place rights that would survive a breach under applicable nonbankruptcy law.
2. Whether the case was moot given that the agreement’s term had expired by the time the Court decided the case.

## Decision

- The Supreme Court reversed and remanded in an 8–1 opinion by Justice Kagan.
- The Court held that rejection under § 365 “constitutes a breach” and therefore has the same effect as a breach outside bankruptcy; it is not a rescission that unwinds rights previously granted to the counterparty.
- Because rejection is treated as breach, Mission retained whatever rights to continue using the Coolcore marks that would remain after a breach under the contract and governing nonbankruptcy law.
- The Court rejected the argument that § 365(n)’s protection for certain intellectual property licenses implies that trademark licenses must be cut off upon rejection; § 365(g)’s baseline rule (rejection = breach) controls.
- The Court held the dispute was not moot because Mission had a live claim for damages tied to Tempnology’s refusal to recognize Mission’s post-rejection rights.
- Justice Sotomayor concurred, stressing that post-rejection rights depend on the agreement and nonbankruptcy law and may be limited by trademark doctrines such as quality-control requirements.
- Justice Gorsuch dissented only on mootness grounds, concluding the Court lacked a live controversy once the contract term ended.

## Legal Principles

- Under 11 U.S.C. § 365(g), rejection of an executory contract is treated as a breach occurring at the time specified by the statute; it is not a rescission.
- A debtor’s rejection relieves the estate from performing remaining contractual duties, but it does not erase the counterparty’s rights already granted under the agreement.
- Bankruptcy rejection cannot be used as an avoidance tool to claw back or cancel interests previously transferred by contract; it places the parties in the same posture they would occupy after a breach outside bankruptcy.
- The survival of specific post-breach rights is determined by the contract and applicable nonbankruptcy law; § 365 does not supply a special rule that automatically strips a trademark licensee of continued use rights.
- Section 365(n) does not support a negative inference that trademark licensees lose all rights upon rejection; the starting point remains § 365(g)’s breach rule.

## Conclusion

Mission Product Holdings, Inc. v. Tempnology, LLC, 139 S. Ct. 1652 (2019), holds that a Chapter 11 debtor’s rejection of an executory trademark license under § 365 is treated as a breach, not a rescission, so the licensee keeps any trademark-use rights that would survive a breach under nonbankruptcy law, and the case remained justiciable because the licensee maintained a live damages claim.
