April 19, 2009
Supreme Court Denies Cert in NCP Marketing Case - Kennedy and Breyer Signal Preference for Actual Test
About a month ago the U.S. Supreme Court denied certiorari in the NCP Marketing Case. A link to the denial is here. Robert Eisenbach provides a detailed analysis of why this is significant in a March 26, 2009, post on his In the Red Blog.
In a nutshell, the NCP Marketing case dealt with the ability of a debtor to assume a trademark license. The bankruptcy court held that the license had been terminated pre-petition, and therefore could not be assumed. It also stated, in dicta, (and in my opinion incorrectly) that the trademark license was not assignable as a matter of common law and therefore, under applicable law in the 9th circuit, not assumable. Appeals ensued and the decision was affirmed at each step.
What makes the denial of certiorari in this case interesting is that two justices, Kennedy and Breyer, felt the need to issue a statement on the matter. While they agreed that denial of certiorari was appropriate in this particular case, they welcomed the opportunity to hear a case on the issue of whether the actual test or the hypothetical test is the correct test for analyzing section 365(c). And, from Judge Kennedy's comments, it seemed likely that they would support adoption of the actual test.
I would note that these are only two justices and they are among those more likely to support the policy driven reasons for adopting the actual test as opposed to the strict statutory construction theories behind the hypothetical test. On the other hand, only four Justices are needed to grant certiorary and it seems likely that Kennedy and Breyer would not have signaled their interest in taking a case on this issue if they expected the outcome to go against their viewpoints.
Labels: actual test, hypothetical test, ncp marketing, trademark license
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