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Tech Bankruptcy
March 31, 2007
  Patent License Assignments in the First Circuit - Glycogenesys
In October 2006, a Bankruptcy Judge for the District of Massachusetts examined a chapter 7 trustee's ability to assume and assign the debtor's interest as a licensee under a patent license. In In re Glycogenesys, Inc., 352 BR 568 at 576-77 (Bankr. D. Mass. 2006), the Court looked to the license terms, in addition to the "federal common law" prohibition on patent license assignability, and determined that the licensor was not excused from accepting performance from the proposed license assignee.

The contract for the license in question stated that the debtor could transfer the license to "a successor in interest of all, or substantially all of its business..." provided the assignee agreed to be bound by the terms and conditions of the license contract. The Court held that the proposed sale (which included other assets in addition to the license) was a sale of substantially all of the business. Thus, taking the contract provisions into account, the licensor was not excused as a matter of law from accepting performance from the proposed assignee and the trustee could assume and assign the license.

Contrary to the decision in Sunterra, which failed to recognize that contractual provisions should effect the 365(c)(1)(A) analysis, the Glycogenesys decision recognized that as a matter of non-bankruptcy law a licensor can be required to accept performance from a third party when the transfer of performance is consistent with the license terms.

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Warren E. Agin is a partner in Swiggart & Agin, LLC, a boutique law firm in Boston, Massachusetts focusing on the needs of technology companies. Mr. Agin heads its bankruptcy department. The author of the book Bankruptcy and Secured Lending in Cyberspace (3rd Ed. West 2005), Mr. Agin also chaired the ABA's E-commerce and Insolvency Subcommittee from 1999 to 2005, co-chaired the Boston Bar Association's Internet and Computer Law Committee (2003-2005), and served on the American Bar Association's Standing Committee on Technology and Information Services (2008-2011). Mr. Agin currently co-chairs the Editorial Board of Business Law Today. A contributing editor to Norton Bankruptcy Law and Practice, 3d, and co-author of its chapter on intellectual property for the past fifteen years, he is author of numerous legal articles and addresses on topics of technology, internet and bankruptcy law.

Patent License Assignments in the First Circuit - Glycogenesys
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